Q. As we approach yet another tax season (didn’t we just finish the last one?) I am dreading all the work I will have to do to accommodate a large group of individual 1040 tax clients. Not only are these clients not that profitable, but they are also a source of stress for me and my staff. Our firm is on the fence about whether we should continue serving these types of clients. Can you please advise?
A. I have these conversations with my CPA clients all the time and I am glad you are asking these questions – it is time for some honest soul searching – and to take some advice.
Here are TIERNEY’s Top Tips for Those Ten 40s –
If you a partner at your firm, you should NOT be serving these clients yourself. If you are pressed to keep the work inhouse, then please do invest in some technology (and training staff on this) and try to get some profit on these. If you are open to outsourcing these, then please do so. I have found that there are competent and reliable freelancers (here in the US or outside the US) that can help you with this – remember, with remote access we are no longer bound by geography.
If you are delegating or outsourcing, consider how you will pay for the work – be creative and think outside the box. Offer bonuses inhouse (or tiered compensation outhouse) on how many passes the returns take; pay more for a one -pass clean return, and pay less accordingly – $200, $150, $125, etc. (Yes, these numbers are realistic for freelancers in the US – use LinkedIn, Upwork and Indeed.
Try to think how you can best utilize the technology you have to offer access from all tax professionals to the work that is in the que – ideally, there is one place that everyone routinely goes to review the status on jobs and pick-up new work – prepare and/or return – create a buddy system for staff to check each other’s work. This creates / nurtures a culture of accountability and uses a collaborative approach. Encourage staff to document FAQs or make notes on unusual items with clients. This style of open forum working educates and inspires.
Consider charging a bit less to clients who bring you accurate detailed information in a timely manner; consider charging higher fees for those who are late; why not set a clear cut-off date for accepting new clients?
I encourage my CPA firm clients to have a minimum fee of what they will charge any individual client. Another option is to offer regular (bi-annually or quarterly) strategic tax planning for ALL clients and charge accordingly. Another way to purge the 1040 client list is to only keep those which represent ties / introductions to businesses – and ASK for access to those.
If you are not ready or unwilling to let go of any of these clients, then use this time with them to ask pertinent questions to identify additional needs and/or services that either you – or your trusted referral sources – can provide. Another way to preserve your profitability is to ensure that all engagements with these clients is done digitally / electronically (in other words, no more in-person meetings at their homes, etc.).
If you have any questions about this content or would like to schedule a complimentary coaching session, please e-mail email@example.comLisa Tierney, CLSC is a certified life strategies coach and a marketing strategist who has empowered professional service providers in the accounting and law professions for over twenty years. She is founder & President of TIERNEY Coaching & Consulting, Inc. which offers a unique and highly effective blend of traditional consulting in tandem with professional coaching to address all the nuances of success – including mind, body & spirit. The professionals who work with TIERNEY coaches enjoy increased self-confidence and higher self-esteem, adopt a more relaxed, yet authoritative demeanor, start asking power questions, treat their clients with a more consultative approach – and benefit from a natural growth in their practice or service area. They usually report a significant increase in their overall satisfaction of their professional experience.