Your Tax Season Review Starts Now

You can change your business starting today with a plan

Too many tax professionals sacrifice their health and sanity to file tax returns. They also impose unreasonable expectations on their staff and, in some cases, fire them on April 15 after promising them a full-time job because they only wanted seasonal help. I have also heard stories where crying, sleepless nights, and extreme stress are the norm. Stop the insanity!

For some of you, this does not resonate because you have persevered and fought the industry norms to make positive changes in your business. Build on that work!

Tax Season Review

In either situation, after you take some time off, please do a tax season review now. Starting to make plans now while you still remember how you feel in these closing days helps you commit to real change for the next tax season.

Here are items to consider in your review:

1. Celebrate Wins. What parts of your tax season process went really well? How can you continue to build on those successes and leverage them in other areas?

2. Process Pain Points. What parts of your tax season process could have gone better this year? How can they be improved?

3. Identify Staff Successes and Challenges. In what areas did the staff excel? In what areas is improvement needed? Is continuing education or other skills training required to get them to the level they need to be?

4. Commit to Disengagements. Ask yourself and your staff which clients were rude, abusive, or refused to observe firm rules (for example, emailing documents with sensitive information) and send them a disengagement letter this summer.

If you are an employee and your firm is not committed to a healthy work environment or will not consider any material changes, it is time to leave. Professionals should not support firms that do not support them or abuse them to increase their bottom line. There is no better time to build a tax practice as the demand for tax professionals is high. You can make a tax business that meets your needs from the start without the baggage and bad practices of the past.

Better Math

I’ve seen some advocate for a permanent tax return deadline change to solve the overwork problem. However, changing how we work and view our businesses will do far more to alleviate that problem than adding time to tax season. Firms that overwork will use the extra time to onboard more clients; this frequently occurred during the pandemic postponements in 2020 and 2021.

Today’s reality is that good tax professionals are in high demand. You can price your services competitively, and by doing this, you can offer enhanced services to clients because you will have more time to devote to them. If your firm charges less than a tax preparation chain, that is a wake-up call that immediate actions are needed.

My friend Dominique Molina, CPA, CTS, President of the American Institute of Certified Tax Planners (AICTP), advocates for “better math” in the tax industry, and I agree. The first step is to determine the ideal business size, which drives the type of business you want. Perhaps you need to gross $1 million per year due to overhead; on the other hand, maybe you are a sole practitioner with low overhead and $200,000 is just enough for you. There is no one correct answer to this.

Let’s assume you want to gross $200,000 in your tax practice. You can achieve that goal in many different ways. Here are three examples:

1. $250 average fee per client and 800 clients (yikes)

2. $2,000 average fee per client and 100 clients (definitely better)

3. $10,000 average fee per client and 20 clients (yes, this is possible)

You can develop an ideal client base and appropriate pricing to create a healthy work-life balance year-round. An ideal client base considers the total number of clients and the types of clients. In addition, the right tech stack (i.e., the collection of integrated technologies used to build, run, and grow your business) can increase efficiencies so that you can focus more on your clients and less on administration.

Many of you want to help as many people as possible, so you don’t want to increase prices and turn clients away. But are you really helping them? The increasing complexity of tax returns and the increasing need for advisory services make a high-volume practice not ideal. Does the extreme workload cause you to make errors or miss opportunities for your clients? Is simply getting the return off of your desk the primary goal all too often? Is any of that in the client’s best interests?

Don’t forget your health: you can’t help anyone if you are dead, sick, or incapacitated. You deserve restful sleep and time with family and friends from January through April. Early in my career, I was diagnosed with leukemia, and it made me realize that I wanted and needed to work on my terms so that I could recover and thrive in a lower-stress work environment.

Different Services

Historically, tax professionals could justify the extreme workload of January through April by taking off the rest of the year. That isn’t feasible anymore in today’s tax environment: clients get IRS and state notices, refunds and return processing are delayed, and clients need help navigating a host of IRS and state issues. Clients also need ongoing advisory services — they may not ask for it, and they may not realize they need it, but your advice can have a positive effect on their tax situation and overall financial health.

Tax professionals can offer high-value, higher-priced services year-round to meet revenue goals, thus allowing fewer tax return preparation engagements during the January through April period. It also provides staff year-round, consistent work.

I started my career doing tax controversy representation, and I still love it. This can be a significant revenue stream for the off-season (and during tax season as long as you devote the appropriate amount of time). It is easy to start with small cases after you get proper training. I recommend the National Tax Practice Institute (NTPI), offered by the National Association of Enrolled Agents.

Offering comprehensive tax planning services for new or existing clients on a monthly payment model is another excellent way to avoid high-stress tax preparation. Working with clients throughout the year makes the tax preparation process much smoother, and you can find quantifiable tax savings to show them the value of your services.

You may think your current clients may not need this level of planning — but if they are searching TikTok for tax savings advice because you do not provide it, then they want it. The other option is shifting your ideal client to someone who wants ongoing tax planning services. I recommend AICTP membership and training to learn how to add these services to your firm.

Commit to Change

Change is scary. It involves risk, but without risk, there is no reward. I would like you to commit to doing something in the next few months to improve your business next year, no matter how small. You can do it!

Share Your Thoughts!

As a paid subscriber, you can discuss this topic in the comments section. Please keep the discussion related to this edition’s topic.

Learn More About Tom

Please take a look at my Linktree to learn about the educational opportunities I offer the tax professional community.