What’s the greatest tragedy of the accounting profession? It’s the fact that most small-business owners and individuals believe their accountant is saving them money on taxes, when in truth the majority of tax preparers never reduce anyone’s tax liability. For the few accountants who try to save clients money, most don’t know how to communicate the value they create for their clients in a way that would allow them to charge for that service.
If you want to have a strategy that lets you build a successful, fast-growing, profitable firm designed to help save clients millions of dollars every year, then look no further than tax planning as a service. If done right, the fees can be five to seven times higher than tax preparation, and the value to the client can be exponentially higher.
Before we get to pricing and packaging, let’s quickly review the purpose of a tax plan, which is to do a full analysis on a client’s life and business, getting them to a better state where they are paying less in taxes. For many accountants, the Tax Code is too complex to understand all of the options out there — but you do not need to know every single tax strategy to begin selling tax plans. Even if a firm is able to save a client three to five times what they are paying for a tax plan, they are still in a better place than without one.
In fact, at a recent tax planners’ roundtable , participants noted they typically just need to find four or five strategies to make a great tax plan for a typical client. One of the most popular of these tax planning strategies is entity optimization, which is figuring out if the client is organized under the best business structure. Approximately 75% of small businesses are organized as a Schedule C. But it rarely makes sense for a business owner to remain a Schedule C. By moving them over to an S corporation, partnership, LLC or even a C corporation, accountants will often be able to significantly minimize their taxes.
Below are five ideas of what other successful firms are currently doing, and what your firm can do. The key point to remember is that tax preparation by itself is not very profitable. For this reason, tax planning should be added to every successful firm’s service menu and ideally bundled with one or more other services. Taken together, these proven packaging strategies can help you not only increase pricing, but also create value for your clients.
