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8 Bold Steps to Take Pressure Off Your Next Tax Season

Ira RosenbloomBy Ira S. Rosenbloom, CPA (Inactive)

During the height of the pandemic, many accounting practices were forced to operate in a way they never thought would be needed. There were firms that had anticipated the need to make operational changes beforehand, but most didn’t anticipate that it would all happen so quickly.

Fast forward to today. Staffing issues have become more stressful and complicated than ever thanks in large part to the pandemic and a drying supply of talent. Team members are either leaving the profession to retire or jumping ship for bigger salaries, bigger bonuses, and bigger roles.  

To survive and thrive, quite a few firms are looking at big, bold solutions to ease the daily pressures on their practices and, more importantly, to position themselves for more success. For example, some practitioners are making progress with outsourcing, and even off-shoring.

Binder of new policies for a tax practiceWe have all heard of accounting firms exploring or deploying technologies to streamline processes, reduce staff hours, and create more satisfied clients. That’s a great step to explore, but “bold” is now the name of the game.

There are a number of bold steps not covered very often in the industry press that some CPA firms are enlisting to relieve the pressure on their practices and strengthen them before the next tax season kicks into high gear. Here are eight “go big” ideas to improve your practice before tax season.  

  • Fees Per Engagement – Take a hard look at your clients that are paying fees in the lower 20% of your fees-per-engagement. Determine how many should be dismissed. Limiting yourself to just looking at the lowest 10% will not set the stage for the significant change that may be needed.
  • Second Tier – Look at the second tier of clients in your second largest 10% of fees. Determine how you can better grow this group by increasing services and, in turn, raising fees.
  • Minimum 1040 Fees – Make sure your minimum fee for a 1040 is at least 50% higher than national retail tax preparers, such as H&R Block.
  • Fee Controls for Family – If business clients are asking you to do tax returns for their family members, plan now for how you will handle those requests at tax time. Create a scale. It may be based on the types of tax returns requested and your relationship with each client. Perhaps the fee for families with simple returns and income under $35,000 should be based on a percentage of a client’s fees being currently billed. Once you create a fee policy for these kinds of returns, update it annually.
  • Reduce Staff Hours – Set a plan in place now to reduce staff hours during busy season by 10% from last year. Here are a few ideas. Program tax-filing extensions ahead of time. Do you need to outsource work? Can you shift work to business clients to make them do more than they’re currently doing? There is often a lot of “junk” from business clients you could send back for them to fix instead of having your team fix it, which costs money and time.  
  • Prioritize Clients – Look through your client list and prioritize “A” clients ahead of all others. This can help you set the stage for billing more dollars in a year and potentially working with fewer, but more profitable, clients.
  • Stop Using an Hours Plan – Create a production benchmark by week and commit to it. You should stop using a production plan based on hours, no matter the metric.
  • Value-Added Billing – Shift your clients to value-added billing, whether that means a certain percentage of clients or a percentage of fees. As a trusted adviser, you have an opportunity to help clients with much more than accounting and taxes. And that is a premium billing and service opportunity.

Instead of looking at this tax season as business-as-usual, doesn’t it make more sense to find the ways your practice can lead the pack? The industry is calling for bold solutions to the challenges we all face. What will you do to transform your practice this year?

Ira S. Rosenbloom, CPA (inactive), is chief operating executive at Optimum Strategies in Spring House, Pa., and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at ira@optimumstrategies.com.

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