[Anonymous]

Hi everyone! I live in Atlanta GA and just passed all exams and all i can think about is making more money. I work in Tax and am also an EA. I have right about 5 years of experience and make right around 75k after bonus. Not sure if this is above or below average. All i know is I want more and feel underpaid for how much work i put in. BTW i started at Big4 (2 years) in a different tax service line before this one (3 years). Anyone willing to talk expectations relating to compensation after obtaining CPA license? I will be having this conversation with my director next quarter who is a huge supporter of mine.

[Recked]

Start with your billing rate, x hours worked, x realization rate.
Figure out how much you are making for your firm, and then how much they are making off your back.
If you are able to work in overhead figures as well that will help.
75k seems like it might be a little low, but you also only have 5 years experience, and just now received your license.
If you can attract new business to the firm, that will make you immensely more valuable.

[Anonymous]

@Recked – for someone who has no idea what you're talking about.. could you explain in more detail how to figure out how much one is making for one's firm as well as the overhead part? I'm really curious on how to figure this out to see how i'm doing and what I can be doing better. Honestly I wish I could just grab a cup of coffee and a notebook and let you rant!

[Recked]

Overhead is tricky, especially if its a larger firm. The firm I work for is very small, and I have access to the QB file, so I can work up overhead figures.
If your firm does hourly billing with time tracking, you should know how much they bill for your time, how many billable hours you currently produce, and what the realization rate is.
2 factors affecting realization is non-paying clients, as well as billable hours in excess – which means you have to eat time as you were slower at the task than expected, or more PC it took longer than budgeted, the fault might be the client, or the partner that priced it out/sold the job.
Once you know how much $$ you generate, then figure out how much you cost.
Your salary, plus any portion of health insurance they pay, plus any perks, bonuses, comps, retirement they pay, plus payroll related items including SS, Medicare, and unemployment, and any other taxes or fees.
How much you generate, less your total cost, less your portion of overhead = how much they make off of you.
A typical (very) profitable firm runs 1/3 overhead, 1/3 wages, 1/3 profit distribution to equity holders, of course it all depends on the size of the firm, and economies of scale blah blah blah.

[Anonymous]

Thanks Recked! Once I find that out how to do I start to determine what seems like fair compensation? Also, I'm not sure what you mean by your last line, could you help clarify using a more simple explanation?

[Recked]

If you're working for a large firm you should do market research and job interviews to see if you are being fairly compensated.
If you work in a smaller firm, you can do the same, or you can try and back into compensation based on productivity to see if you are being paid fairly.

Last line = lets say the firm does 1 million gross revenue. You would expect the payroll to be 333,333, the overhead to be 333,333, and the last third to go to the partner(s).

[Anonymous]

So I work for a small firm. I can see my effective hourly is about $35/h higher than my billable and I can see my margin (or at least a decent estimate) for what I make the company. I guess I just don't know what to do with that information or what is “normal”. At the end of the day, I'm worth whatever someone is willing to pay!

Edit: also.. would it be good to know that my effective hourly is $100/h more than my actual paid salary? This is all excluding OH as far as I can tell

[StudyNowCPA]

I posted on the wrong thread sorry!

[Author]

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