This tax year is shaping up to be another memorable one, given last-minute changes to the tax law, as well as the IRS’s efforts to better safeguard taxpayer information and prevent tax fraud. Although the full impact of those variables will depend upon the taxpayer, CPAs can minimize the potential impact on their efficiency and profitability. Here are five to-dos to ensure a successful tax season.
Reach out to existing clients and prospective clients. Reach out to clients now to be on their minds when they’re ready to start their taxes. Consider a simple greeting while offering a tax tip or reminder, or invite them to meet and discuss the specifics of their tax situation. Encouraging current clients to refer their friends and family is a great way to grow one’s client list. Consider offering clients a discount on this year’s preparation fees for referrals. Additionally, consider a quarterly or monthly communication piece to keep clients (past, current, and potential) engaged throughout the year. Use them to share timely tax tips and promote year-round services.
Meet with clients who may need more guidance. Review last year’s client list to identify those who may benefit from spending extra time with you this year. For instance, additional guidance may be needed for clients who—
- experienced a major life change in 2015, like starting a family, moving, or retiring;
- claimed the standard deduction last year, but have the potential to itemize this year;
- had losses to carry over to this year;
- received an advanced premium tax credit for health insurance through a government-sponsored marketplace; or
- need to make a contribution to an IRA or other retirement fund.
Clients who have health insurance through a government-sponsored marketplace or could have been uninsured for part of 2015 should be top priority. Remind clients about the increased penalty for 2015 ($325 per person or 2% of household income, whichever is greater). Even if clients qualify for an exclusion, they may not know that some exceptions require them to apply for a certificate from their marketplace. They need to do this well in advance of preparing the return. Have specific data ready to share with clients to help them make educated decisions.
Be in the know. There are hundreds of tax law changes each year, and several changes affecting 2015 returns were just recently passed by Congress. Tax preparers must stay educated on new developments. From e-newsletters to videos, the IRS offers great tips, reminders, and resources specifically for tax professionals. Additionally, many tax preparation software solutions and professional associations offer educational resources.
Start on 2015 returns now. CPAs can save time by—
- importing last year’s returns,
- updating client information,
- preparing and distributing client organizers,
- setting up invoice and instruction letter templates,
- testing new software features and enhancements,
- entering your preparer tax identification number (PTIN) and Electronic Filing Identification Number (EFIN),
- verifying your EFIN with your software solution provider, and
- scanning and organizing tax documents and information from clients.
That way, as soon as clients start sending their 2015 W-2s, 1099s, and other information, everything else will already be ready.
Explore software options. Switching tax preparation software is not something most CPAs look forward to, but doing so can improve your efficiency and profitability. Spending lesstime preparing returns leads to more billable hours. Tax preparers in the market for different software should ask themselves these questions when shopping and comparing:
- How efficient are the data entry options?
- Can you enter data directly onto IRS tax forms?
- How much insight do you have into the behind-the-scenes calculations and how easily can they be accessed?
- Do you need to purchase multiple software licenses?
- Does the software allow local storage as well as cloud storage?
- Are you going to use all the products that are included in the software package, or are you paying high prices for features you don’t need?
- What ancillary products and services does the software support and would they benefit clients?
- What do colleagues like and dislike about their tax preparation software?
- Is there adequate information about the software available?
While time spent now preparing for tax season won’t eliminate all of a CPA’s headaches, it can help cut down on the number and severity of issues during the busiest time of the year