Accounting Firms That Bill by the Hour Give Clients Every Hour AI Saves

If your firm bills its compliance work by the hour, the returns, the monthly books and the year-end packages are getting cheaper to produce and cheaper to buy at the same time.

AI now does part of that work: it sorts the transactions, reads the documents and drafts the research answer. On an hourly invoice, every hour it takes out of the job comes out of the bill.

We build AI agents for this kind of preparation, and we price our own work as a fixed price for a defined result, agreed upfront, which is the move I'd make with your compliance work too.

Put your repeatable compliance work on a fixed fee per engagement, starting at the next renewal. By the hour, at the same rate, the client gets the whole saving automatically. On a fixed fee, you decide how much of it to share, and you keep the rest as margin and capacity.

The fee holds only if it prices what still takes time with AI in the work: the review, the exceptions and the tools, never the minutes the AI took.

The claim covers compliance work that repeats with a scope you can see in advance. Work whose scope nobody can see in advance, which is most advisory work and one-off projects, stays outside it.

Hours Times a Rate Hands the Saving to the Client

Sergio de la Fe, a partner at RSM US, told Bloomberg Tax that a report his tax advisory teams take about 20 hours to build could take about 10 with generative AI, checking its output included.

That's a forecast for one kind of advisory report, but the question he asked next applies to every return you bill by the hour: "Is that all margin for me or is that all price reduction for our client?"

On an hourly invoice, the firm doesn't get to answer it. Hours times a rate answers it: all of it is price reduction.

The books are moving the same way. Jung Ho Choi of Stanford and Chloe Xie of MIT studied 79 smaller firms using one company's AI accounting software, and set the accountants who used AI against those working the usual way:

That's bookkeeping, not tax returns, and it shows what adopters did rather than what the software caused. On the tax side, 84% of more than 1,000 U.S. tax professionals agreed AI saves time in a survey run by Blue J, which sells AI tax research, and CPA.com.

Firms have two ways to keep hourly revenue where it was, and neither holds up.

The first is the rate. The median net hourly billing rate rose nearly 7% over two years to $170, by the AICPA's 2025 survey of more than 1,000 firms, most of them small, as Bloomberg Tax reported it.

A rate rise shows on every invoice, has to be defended every year, and raises the price of the work AI didn't touch along with the work it did.

The second is to keep billing the hours the work used to take. That holds until a client asks how long it took.

The profession's own survey points the other way. The AICPA found a slow but steady increase in value and fixed pricing against a decline in hourly billing, and its report recommended that firms consider moving away from hourly billing faster.

Price the Return, Not the Minutes, Starting With the Work That Repeats

Start where the scope is already written down. A returning client's individual or business return, the monthly books, the year-end package: each comes with last season's file, which tells you what documents to expect, which schedules, and how messy the books were. That file is your estimate.

Work without such a file stays on its own terms.

Then build the fee from what the work still costs with AI in it:

• Preparation: the AI's pass plus the preparer's check of what it produced.
• Review: plan for it to stay the same or grow, because someone now checks what the AI read as well as what the preparer did. Treasury's rules for practice before the IRS require due diligence in preparing, approving and filing a return, and an AI draft doesn't change who owes it.
• Exceptions: a missing document, a new rental, a messier year. Price an allowance, and write into the engagement letter what starts a new price.
• Tools: inside the fee rather than as a line on the invoice. One preparer heard "pretty immediate negative feedback" from clients they share with a firm that added a "tech fee" to its invoices.
• Questions: the calls and emails during the year.

The preparation step is the kind of job we build agents for. For a returning client's individual return, one would work like this:

What it reads: the documents the client uploads to your portal, and last year's return.

What starts it: a document landing in that client's folder.

What it checks: each document against last year's list, marking what's missing and what's new; then each figure into the workpaper, with the page it came from.

What it hands back: a prepared workpaper and a short list of missing and changed items for the preparer.

What a person keeps: the preparer checks every figure against its page, and the reviewer and the signer do what they did before. The agent never files and never writes to the client.

How you count it: preparation hours and review corrections per return, against last season. What to set up first: last season's returns and their source documents, to test the agent on before it touches this season's.

Now price one return. Say a returning client's individual return took your team 4.25 hours last season, exceptions averaged in, and with AI in the preparation it takes 3.25: preparation halves and review grows a little.

Use $170 as a stand-in for your own rate: the survey's firms were mostly smaller, so yours may well be higher, and the shape holds at any rate. Say the AI costs $15 a return.

By the hour, the client's bill falls 23.5% and the firm takes in less per hour of work than before AI, because the tool is now its cost.

On the fixed fee the client still pays 10% less than last year, and the firm takes in 14.9% more per hour of team time. Of the $170 the saved hour was worth, the client keeps $72.50 and the firm $97.50, before the tool.

Those are revenue per hour, not profit: salaries and overhead come out of every column the same way.

And $650 is one choice. The fee can sit anywhere between what the hours would bill, $552.50, and last year's $722.50. From $567.50 up the firm takes in at least its old $170 an hour, below $722.50 the client pays less than last year, and where it sits is your firm's call.

If the review on a return grows as much as its preparation shrinks, there's no saving to split, and that return can stay where it is.

The saved hour pays in full only if you fill it, with another client, as Choi and Xie's adopters did, or with advisory work.

If you don't, the hourly invoice loses $170 of last year's revenue on that return and the fixed fee loses $72.50, with the $15 tool on top of both, while the salaries stay the same.

So keep counting the hours; just stop billing them. One preparer who bills flat fees tallied a year of clients and found a $300 client took about 45 minutes and a $750 client about 10 hours. Without the count, a fixed fee can't tell a good engagement from a bad one.

If your firm still prices most returns by the hour, the preparation step is where to start.

The Client Will Want the AI Discount, and Some of It Is Fair

The best case against all this goes like this. Clients will learn the work got faster, and some already ask.

On a plain individual return, a competitor with the same tools may drop its price, and the client may go. And if the work costs less to do, charging last year's price for it looks like keeping something that isn't yours.

Look at what each model does with that pressure.

You can always set a fixed fee at what the hours would bill, so the model never forces a lower price on the firm. The risk it does take on is the file that runs long, which is what the exceptions allowance and the engagement letter's boundary are for.

When a competitor moves, you can lower the fee on the returns you choose, by as much as you choose.

By the hour, the price falls the day the hours do, on every return at once, by the whole saving.

The hourly invoice was a fair price for a preparer's time. It was never a price for the return.

Clients also pay for the firm behind the return. One preparer said their clients pay over doing it themselves in TurboTax because "they want the assurance of a CPA firm backing their return should anything happen".

A tax partner at RKL told Bloomberg Tax that hourly billing often doesn't give a client complete clarity at the start about a project's price or scope. A fixed fee gives them the number before the work starts, which the hourly invoice never could.

Move the Repeatable Work at Your Next Renewal

So stop billing hours for the compliance work AI now does part of, and price the engagement instead. Before the next renewal letters go out:

1. 01

   List your compliance engagements by how alike they are year to year

   Returning clients' returns and the monthly books usually top it; advisory stays off.

2. 02

   Price the top ones from last season's files

   Build each fee the way the one above is built. Start with that group, not the whole book, and compare its hours, tool cost and overruns with last season.

3. 03

   Write the boundary into the engagement letter

   Say what the fee covers and what starts a new price. One preparer who prices this way contacts the client as soon as the documents show the estimate was short, and finds most agree to an adjustment.

4. 04

   Change what you measure your people on

   If staff are still judged on billable hours, the fee changed and the incentive didn't. Wipfli's chief practice officer called that a conflict and is adding measures like cycle time.

5. 05

   Keep the clock running inside the firm

   Hours per return are how you'll know next season whether each fee was right.

A fixed fee is a decision your firm makes once a year. The hourly invoice makes the same decision on every return, and it decides for the client every time.

If AI is already in your firm's returns, the next question is which job it should take on after them.