As we hurtle towards the 9/15 business return deadline, it seems like a good time to remind you of how much gooder this market segment is than the 1040 side of things.
In case you’re new to these missives, verily, I say unto thee:
1). The 1040 prep middle market is rapidly dying due to consumer software and RPA.
2). If >50% of your annual revenues are from the 1040 middle market, your business is totally screwed in the long term unless you pivot.
3). 2020 marks the second year in a row in which 1040 returns prepared by paid preparers has declined — and this decline will accelerate, whether you like it or not.
I could drone on and on about the impact of the two existing AI tax prep companies… How Block’s adoption of the Watson AI is just the beginning of the end… How applications like PwC’s internal K-1/W-2/1099 OCR engine will trickle down to our level in 3-5 years… How nearly 2/3 of IPA 400 public accounting firms already use either RPA or offshoring to complete their 1040 prep… Blah blah blah.
Yes, I’m telling you bluntly and unapologetically that if your tax firm’s revenue are primarily rooted in seasonal 1040 return preparation, your business will be DEAD within a decade. Yes, dead.
OOB, if you want me to use official IRM parlance.
I’ve been singing this song for about 3 years now, and the signs are all around us.
It’s time for you to either:
c). Suffer the consequences.
I hope that you choose (a).
But how do you adapt?
Some quick, dirty, and broad suggestions:
- Pivot to the SMB (small-medium business) space.
- Target a specific high-income market (the subject of our December 2020 issue of The Profitable Accountant).
- Eliminate tax prep from your firm altogether (a solution I embraced for 5 years).
- Go do something entirely different.
In all seriousness, the SMB market is where it’s at. I spent eight years in tax resolution in that space, and if all my other business exploded into oblivion tonight at 8:42pm, it’s exactly where I would go back to.
Businesses will always need YOU.
Heck, do you remember the Great Depression???
Eh? Eh? No? Yeah, me neither. I wasn’t born until about 50 years later.
But when history and economics collide, awesomeness ensues. Back in 1929, when even the CPA credential was routinely scoffed at by new accounting grads (seriously, look it up), the predecessor to the AICPA, in conjunction with the still-new Federal Reserve Board, issued a non-binding statement on financial statement auditing, called the “Verification of Financial Statements”. It was literally just a pamphlet, and it was the very first effort by anybody to publish a standard by which the accounting side of business operations should be judged.
We obviously live in a much more developed world, in terms of accounting standards and tax laws.
In fact, the regulatory schema that exists today compared to 90 years ago is… Well, I’ll keep my politics to myself.
But regardless, the fact is that businesses need your help. They need your guidance. They need your coaching. They need your expertise.
And, lo and behold, tech innovations are thus far proving to be far more difficult to deploy in the SMB space.
Ten years from now, I could be proven wrong. Derp.
But I may also find myself slurping on the sweet, fermented elixir of being right.
I don’t know what you think of this future.
But if you can see the robots coming… If you’ve followed the data… Then it should be clear to you that pivoting away from the 1040 market into the 1120S and 1065 and ES and C and E, etc… markets is the path to fame and fortune in your tax firm…
Then wander over yander to my short training course: How to Rapidly Accelerate Your Tax Season Profits Via 1120S Returns
Yes, this is being offered and hosted on a site you’ve probably never seen before. That’s on purpose, and I’ll explain more about that at a later date.
But for now, pick up this business return marketing course, and then forward me your receipt. Once I receive your receipt, I’ll send you a special bonus that will help you further implement what I’m talking about here. That bonus will include:
- A copy of my IDEAL Client Profile Exercise worksheet
- The 75-minute explanatory video walking through that exercise to help you define your niche target market