There are only three ways to increase profits in your practice

Is your accounting firm properly poised for a revenue boost?

Do you want to increase your take-home profits in 2020?

Do you know the fundamental mechanics for making this happen?

Do you love emails that start with a series of questions?

If you’re going to increase revenues, and most importantly, profits, within your tax or accounting practice, then you need to be aware of the three ways for doing so.

Yes, there are three ways to make more money…. and only three.

Once you understand these three things, you’ll also understand the fundamental formula for growing any business.

Every business, from your local car wash to Pepsi to Saudi Aramco, all rely on these exact same three fundamentals to grow their top (and bottom) lines.

What’s the formula? What’s the secret sauce? What are the magic three ways to make more money?

1). Get more customers.
2). Get more money from each customer transaction.
3). Get more transactions from each customer.

I’m sure you’ve heard this before. It’s not secret, magical, or hidden. Well, maybe hidden in plain sight, but I digress.

These are the only three methods that exist on the face of the Earth to grow your revenue. Understand this basic business concept, and you’ll be at least 1 AU (astronomical unit….light years are too cliche) ahead of your competitors.

Now, you can evaluate your marketing and other business decisions against the standard set by these three things. Whenever you are faced with a business decision, a potential expenditure, an opportunity…ask yourself if it achieves one of the three objectives:

-Will this get me more clients?
-Will this increase my revenue per client for a particular service?
-Will this increase the number of times I can get paid by a client?

In my book “Tax Season Profitability Guide: 8 Big Ideas For A More Profitable Tax Season”, the first chapter goes into greater detail about this specific business growth concept. This big idea doesn’t just apply to tax season, of course (thus why I consider the book title to have been a bad choice), but rather applies to every service you offer, year-round.

Out of the 10 books I’ve written, I consider this one to be the most important one for you to read. You can snag your copy here:

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How to offload your tax prep work

In reply to yesterday’s email, one CPA in Missouri lamented:

“You are correct. So what are you selling?”

Yesterday, nothing. Today… Keep reading. 🙂

The more obvious reply to yesterday’s email is: How does one execute a transition to other service offerings?

For this, I have a straightforward answer. If you’re sick and tired of filing season, pay attention.

First, start **marketing** for your new service offering. It doesn’t matter what time of year it is, what the service offering is, whether you have the necessary tools and tech in place, the lack of relevant staff, your lack of specific skills. None of that matters. Seriously, none of it.

Start. The. Marketing.

Too many accountants get bogged down in the minutiae of setting up a service offering. They spend way too much time evaluating software providers…waiting for the “perfect” time to start…waiting to meet that perfect potential new hire.

Stop waiting. Start the marketing. Everything else will come about from there, out of necessity. Hiring the perfect person or buying the perfect software is absolutely irrelevant without lead flow.

That’s step one.

Step two: Start offloading your tax prep work.

This is far easier than you might think it is. Tens of thousands of return preparers have already done this, and thousands more are going to be doing it each year. There are several options for doing it.

Option 1: Quit cold turkey. Several of our Tax Resolution Academy® have chosen this option over the years. Last year, Carlos Samaniego, EA in Los Angeles chose this option, simply telling clients he would no longer be preparing tax returns. I advise sending a letter AND an email to clients, with a referral to a trusted tax prep colleague (a colleague that you arranged a referral fee arrangement with in advance, of course — always the capitalist!). You could either do this NOW, or prepare returns this one final year and then turn people offer to somebody else.

Option 2. Offshore your tax prep. Like I mentioned yesterday, IPA 100 public accounting firms have been doing this for 20+ years. It’s the *norm* in large accounting firms, because tax prep simply isn’t the most profitable thing these firms can spend their time doing, by a long shot. You need to disclose the fact that you’re doing this, via your 7216 disclosure (which you should already being giving to clients anyway). You then need to choose a Business … Continue reading

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