It’s no secret that tax preparation is not as lucrative as it used to be for accounting professionals. The service has been commoditized with the rise of do-it-yourself online solutions and more recently the use of AI in preparing a return. During tax season, there’s no shortage of advertising for solutions promising taxpayers they are “cheaper than your accountant last year”. Whether we like it or not, the reality is that preparing a simple tax return has been likened to data entry for consumers and is valued as such (and face it, we don’t place much value on data entry).
The way forward is to provide more than the standard return preparation—to offer advisory services such as tax planning and strategy. Taxpayers won’t pay much to get a correct tax return – they expect that as a baseline – but will they pay to save money? You bet. Will they pay to know that if they are selected for audit, you’ll be there to walk them through it? Of course. Will they pay to know that whenever they have a question about their business you’ll be there to assist? Absolutely! Will they pay to better understand their business’ financial health? Totally. These are just a few services your firm could offer clients that not only provide real value but also have high perceived value.
As more and more firms have shifted towards advisory over the past several years, you’ll need to do more than simply offer these services to stand out. You’ll need to focus on the client experience in order to attract and retain clients. And if you really nail it, your customers will become your marketing machine, recommending you to everyone they know.
Build Trust Through Compliance
One area of expertise that is often overlooked by accountants but can help your firm stand out is reasonable compensation for S Corp owners. Reasonable compensation is a huge compliance issue for S Corp shareholder owners with the IRS specifically calling it out as an area of enforcement. But the reality is that many owners are ill-informed of their duty to pay themselves a reasonable salary, and even more have had no real professional help in setting that salary.
With a tool like RCReports™ in your arsenal, you can really shine in this area and provide exponential value to S Corp clients. First, all RCReports customers have access to an extensive library of resources to help educate business owners on the ins and outs of reasonable compensation, which helps you build credibility and rapport with your clients.
Second, the platform allows you to do a full compensation analysis for S Corp owners using the methods outlined in the IRS Job Aid on Reasonable Compensation and in various court cases over the years. The best part is that this analysis only requires your clients to take 10-15 minutes to fill in a questionnaire on how they spend their time in their business and the technology does the rest. You get a branded PDF report to review with your client that pinpoints what they should pay themselves via W-2 to satisfy the reasonable compensation requirement. In many cases, this value will be less than they have paid themselves in the past, thus saving them tons of money on additional taxes. In other cases, it may be more but can save them from potential issues in future audits.
Being able to educate your clients on this topic and then deliver a professional data-backed report will help to establish you as a true advisor for your client.
Leverage Your Tech Stack for More Advisory Opportunities
As shown above, utilizing technology to automate reporting and analysis allows you more time to spend on strategy for your clients. We talked about how RCReports allows you to quickly create a reasonable compensation study, but as a subscriber you’ll have access to other tools you can leverage to offer different advisory services to your clients.
One of my favorites is their Entity Planning Tool. With this tool, you input information about the client’s business, and it will provide a 10-year projection that shows whether an S Corp or LLC is more beneficial financially for the business. It also creates a branded PDF report that you can provide to your client to spark a meaningful conversation around their goals so you can better identify ways you can help them succeed.
Another great tool RCReports users have access to is their instant Wage Lookup. This allows you to pull wage data on a national, state, and county level across 5 different proficiency levels for any occupation in their database (which is a lot – they have over 100 million wage data points). You can use this information in a variety of ways, including wage benchmarking for a client whose business is growing.
Once you understand what your client’s needs are, and what tools you can leverage in your tech stack, you can define a lucrative set of advisory offerings that create a win-win for everyone.
Create a Memorable Client Experience
Studies have indicated that clients using a CPA or tax preparer say they want MORE advice from their tax and accounting professional. Your clients value your expertise and professional knowledge and are looking to you for new solutions and strategies to help them reduce taxes, optimize their bottom line personally and in their business, and be more effective in their work, plus avoid compliance issues—they are looking to you to be a partner in their business success! Be proactive in educating your clients about compliance issues, tax strategies, and other ways their business can succeed and you’ll have clients that won’t stop referring other people to you.
