Annual Reminder: Preparing tax returns is optional (for you)

It’s that wonderful time of year in which I must take a few minutes to remind all my readers about two specific facts that many either want to ignore or simply forget.

Fact #1: Tax prep as a professional service is dying.
Fact #2: Offering tax prep services in your practice is 100% optional.

If you enjoy preparing tax returns, and dealing with those type of clients, then you can just ignore this message.

But if you’re sick and tired of dealing with the returns….sick and tired of dealing with the cheapskates…sick and tired of the procrastinators, whiners, and complainers, then you should keep reading.

In case you’ve had your head buried in the sand, 1040 return preparation, the revenue backbone of most independent tax professionals, is DYING.

Yes, dying. It’s going away. Within 5-10 years, the majority of your clients will NOT be coming to your for their tax returns.

Some uncomfortable information for you…

…the 2019 filing season saw the first drop in paid preparer usage since the launch of e-file in the early 90’s.

…large public accounting firms (e.g., the IPA 100), have been offshoring most of their 1040 tax prep for two decades. There’s a reason that about 10% of all licensed EAs are based in China and India.

…artificial intelligence is already eating in the 1040 prep market. Two AI-driven tax prep solutions launched last filing season, and they’re going to be running even more marketing this year. H&R Block has been using IBM’s Watson AI system for a few years, and they just launched their new mobile app that will serve the majority of simple 1040 customers.

…as more W-2, 1099, etc. data is able to be imported electronically, eliminating the data entry, the software becomes more capable of running without YOU. It’s never been easier to prepare a US 1040 for the vast majority of returns.

…even tax pros are shifting to automation systems, such as Gruntworx and SurePrep, to eliminate the data entry for many returns and insert the right numbers into the right place (and then an AI system double-checks everything).

The role of the professional 1040 return preparer is going the way of the travel agent. It’s happening right now, with or without you, and if you choose to ignore this, then that’s on you.

So, what is a tax professional to do? I offer up two simple, but powerful, solutions:

Solution #1: Niche your … Continue reading

The Internet is not the tax resolution marketing panacea that you may think it is

We are obviously neck deep in the Internet age.

With that, business owners are constantly bombarded with the message that if they’re not “all in” on digital marketing, then their business will simply implode within the next X years.

For some businesses, this is absolutely true.

For other types of businesses, it couldn’t be further from the truth.

Taxpayer representation is one of the latter.

Yes, you need a website (with a blog). Yes, you need to be creating content. Yes, you need to be building an email list of leads and prospects.

These are certainly things you should be doing. I’ll never tell you otherwise.

But, like many things in business, it’s an 80/20 thing. Ye olde Pareto Principle.

The simple, unvarnished fact of the matter is that the majority of all tax resolution services sold in the United States is still done through cold call telemarketing.

You can choose not to accept this fact, that’s up to you. But fake news it is not. The large, national tax resolution firms are still primarily telemarketing driven.

What about smaller practitioners, like us? The vast majority of smaller tax practices are generating these clients through either referrals from other CPAs, EAs, attorneys, financial advisors, bookkeepers, etc., or from delivering speaking presentations to niche industry groups.

Seriously. That’s how most small tax practices are generating leads. Referrals from other professional service providers and through speaking gigs.

So if you ignored any of Dan’s emails last week about the power of public speaking, I’ve got some uncomfortable news for you. 🙂

Before I left on my current vacation, I asked readers to email me their questions that I could answer in future emails, blog posts, YouTube videos, etc (there is a marketing lesson right there, btw, for those of you inclined to learn it).

The vast majority of the questions I got back were along the lines of:

  • How do I get clients?
  • Where should I buy leads from?
  • I have $X dollars to spend. Should I do Facebook ads or direct mail?
  • I tried X, Y, and Z, and they didn’t work. What should I be doing for marketing?

Well, what you do is:

  • Network with other financial service providers and ask them for referrals.
  • Start giving Tax Talks to specific, niche groups with a high propensity for tax debt or audit problems.
  • Cold call tax liens.

Seriously, do that, and you’ll be doing 90% of … Continue reading

Riches in Niches: Cliche, but true

As Colorado currently sits mired in a couple feet of snow, I suddenly have the time to make new rhymes. What I should be doing is moving out of my house today, but the snow and forecast 90 mph wind gusts put the kibosh on the moving truck showing up.
This is, of course, my annual move out from an owner occupant financed house for the purposes of converting it to a rental property. This is how I’ve purchased more than half my rental properties, and will continue doing so. This is a niched form of real estate investing.
This reminds me that I haven’t reminded you about niches in a while. It’s one of those things that is worthy of frequent repetition.
In short, if you haven’t hitched your wagon to a specific niche target market, you’re doing it wrong.
The tax and accounting practices that will survive the up and coming AI apocalypse will not be the firms that do nothing but provide the same ol’ compliance services to anybody and everybody. You can ignore this all that you want, despite me and everybody else in the tax/accounting/financial media warning you about it for years. If you’re close to retirement, you can safely ignore it. If you’re far from retirement, however, then ignoring it is, quite bluntly, stupid.
If you want to be in business 20 years from now, you have to niche. It’s simply not optional anymore.
You need to niche the services you provide, and you need to niche down to whom you provide those services.
Pick your niches, then dominate them.
The reason I was successful in tax resolution is because I niched. That’s the hands down, #1 factor. I didn’t offer any other services — none. And I focused almost entirely on two easily identifiable niche target markets, and focused all my marketing on them and only them.
That’s all there was to it, and you have to do the same.
Seriously, if you have no intention or desire of ever focusing your practice in this manner, then I can’t help you — I don’t know how, and neither does anybody else. If you hired McKinsey to consult for your firm, one of the first things they would tell you is to narrow down your practice and focus on serving a niche. This is just that fundamentally important.
I’ve presented numerous webinars on how to niche, written about
Continue reading