With the Tax Cuts and Jobs Act (TCJA) coming into effect, completely new forms being issued, and the aftereffects of the government shutdown being felt, this tax season is likely to be one of the most difficult in recent memory. But it also makes this the time to make changes to practice that have been a long time in the offing. Below are a few changes that both firms and sole practitioners can make this tax season.
Implement Mandatory Electronic Delivery of Tax Returns
In the past, CPAs have generally given clients a choice between an electronic or paper copy of their return. This is the year to switch to mandatory electronic delivery. Assembling a paper return takes approximately 15 minutes, while assembling an electronic return takes two minutes and saves money on paper, envelopes, and other office supplies. It’s a no-brainer. This author’s firm has used Safe Send returns (https://safesend.com/safesend-returns/) for over six months and cannot recommend their product enough.
Use an E-Signature Program for Collecting Form 8879
Clients hate to print out paper, sign it, and then scan it back to the firm. Not only does it take a lot of time on their end; it results in slower turnaround for the firm and much more administrative time to get clients to actually do it in the first place. There are numerous products that will handle Form 8879 signatures automatically. All of the major tax products have their own, as do third-party programs such as Adobe Sign or DocuSign.
Take Electronic Payments
It’s 2019. Firms that aren’t accepting credit card or automatic clearing house (ACH) payments are woefully behind the times. Most people don’t even own a checkbook anymore. Firms have to make it easy for clients to pay them. Anyone worried about the 3% fees should just charge clients 3% more; the convenience will more than make up for it.
This is the year, if any, that CPA firms can raise prices. In this author’s opinion, any good CPA should be charging at least double the price of H&R Block (pricing available at https://www.hrblock.com/tax-offices/tax-pro-go/). That license ought to mean something. And this year, CPAs who already meet that threshold should raise prices anyway because the TCJA has made everyone’s return more complex.
Meet with Clients
Spend some time with clients this tax season. Don’t just have them drop off or send in their information without speaking to them. This is the year to turn the firm into an advisor. Talk with them about the TCJA, how it affected them, and what they can do to minimize their taxes in the future. Not only will this make clients happy, it may also lead to the firm providing additional financial planning or investment advising services.
Develop a Client Ranking System
Now is also the time to weed out undesirable clients. This tax season, the author’s firm is implementing an ABC, 123 ranking system. First, clients are ranked on their intangibles. An “A” is perfect, always organized, and nice to everyone, and understands the value of our services. A “B” is nice, somewhat organized, and normally on time but doesn’t always have everything the firm needs. A “C” is rude or abusive, is never organized, and causes more grief than joy when they come to the office. Then they are ranked on the complexity of the return. A “1” has just a W-2, 1099-R, and no itemizing; a “2” has a few additional items and itemizing; and a “3” needs a Schedule C, K-1s, the whole works. From the A1s to C3s, every client will be evaluated after tax season to see whether they’re worth keeping on.
Establish Hard Due Dates for Clients
A firm’s engagement letter should specify the last date possible for the client’s tax return to be completed, and make it clear that returns that have to go on extension incur additional charges. The author’s firm uses February 1 for corporate/partnership returns and March 15 for individuals.
Making some of these changes will not only improve a firm’s bottom line, it will make tax season less stressful for the team and clients.