Tax season is a critically busy time of the year for accountants, and we all know the stress that can come with such a high demand for services during that part of the year. But for some tax and accounting firms, the high volume of clients from January to April represents the majority of their business for the year. Figuring out how to stabilize revenue throughout the year can help you reduce overall stress and improve income potential.
Why revenue stability is important for small and mid-sized tax and accounting firms
Beyond the clear bottom-line benefits of revenue sustainability, there are other reasons to focus on building year-round revenue opportunities. Tax professionals who have stable receivables throughout the year can:
- Attract high-quality employees. If you spend a lot of time hiring temporary employees just to help with tax season, you could be missing out on a lot of potential talent—those employees who are looking for long-term positions. Having a steady flow of business throughout the year means you can keep great employees on staff.
- Find better office space options. Tax accountants who only need office space for a few months out of the year must spend a lot of time before tax season looking for good options. In a tight real estate market, that can be hard to find.
- Save money on equipment and furnishings. Renting office equipment for a short period of time has a higher cost over several years than purchasing (and depreciating) equipment like computers, desks, and printers.
- Stay top-of-mind with tax and accounting clients all year. Companies that only offer tax services have to start over each year building a brand through marketing and advertising. By offering services that last throughout the year, you can keep your business at the forefront of customers’ minds even when they don’t need tax preparation.
- Avoid cash flow fluctuations. Tax accountants who only earn an income part of the year have to figure out how to stretch that income through the lean months. Finding new revenue streams helps you balance out cash flow for smoother business operations.
7 revenue stability strategies and tactics
To realize the benefits of an accounting business that does more than taxes, you have to diversify the services you offer to clients (these insights for tax professionals can help). These options can create sustainable revenue throughout the year.
Small businesses often have very limited staff, which means the owner or one of the employees is in charge of payroll. That can be a challenge for a business owner who has little or no experience in accounting and payroll. Getting it wrong can be costly, especially for a small business. If you aren’t sure whether you can handle payroll management services during tax season in addition to your other work, approach businesses that have their own seasonal employment cycles in the summer and fall (such as landscapers).
Bookkeeping is another service many small businesses can use, especially those with a small staff or without anyone on staff who has experience managing daily finances and transactions. If you’re not familiar with bookkeeping services, you can take courses online, and you do not need an accounting degree to perform bookkeeping services. If you aren’t familiar with bookkeeping or need a refresher, you can find online bookkeeping courses to get up to speed.
3. Business tax preparation
While individual tax season is at the beginning of the year, businesses have tax obligations throughout the year. That includes:
- Preparing federal and state income taxes
- Preparing and filing 1099 forms at the end of the year
- Filing quarterly employment taxes
- Calculating and submitting property taxes, sales tax, and any other applicable taxes based on the business
- Helping with tax audits or legal concerns related to taxes
Some of these services overlap with personal income tax season, so make sure you are ready to take on both if you decide to offer this to your clients.
4. Financial advising
Offering financial advising and other financial products can help you build trust with clients. It also allows you to stay in touch year-round, not just when tax season comes. Millions of individuals and small business owners could use help planning out their financial strategy. A trusted tax accountant who understands the person’s financial situation or business is the perfect person to offer advice and guidance. To become a financial advisor, you will need to get a securities license and pass several exams administered by the Financial Industry Regulatory Authority (FINRA).
5. Insurance sales
Selling insurance is another natural fit for many tax accountants and professionals. You can get a securities license and pass the appropriate exams to sell life insurance and other similar products to clients as an agent on behalf of large insurance agencies. When tax season comes, you can back off the insurance sales for a bit to accommodate for the surge in tax business.
6. Taxpayer representation
It’s not easy to deal with the IRS, but someone with experience in tax and accounting can provide insight and help for clients who are forced to do so. When you prepare someone’s taxes, you can represent them, but if you become an IRS Enrolled Agent (EA), you can represent anyone—even those for whom you did not prepare and sign their taxes. This can open a broader pool of potential clients who need your help and expertise after tax season is over.
7. Freelance or contract tax preparation work
Offer your services to large tax accounting firms as a freelance or contract worker. While many accounting firms hire contract workers during tax season, there may be opportunities to help with other forms and filings throughout the year. Reach out to your contacts to learn about what kind of work might be available.
Consulting beyond tax season for better revenue stability
These additional service lines offer you an opportunity to feel confident in an advisor role beyond the person who prepares taxes. You can expand into consulting services that add value for individual and small business clients, improving their financial position or helping them with things they struggle to do on their own. Become a trusted partner to help them strategize about what is possible in the future with our 2021 Insights for Tax Professionals report.
Enhancing client relationships with extended tax advisory services
Setting yourself apart from the competition with more comprehensive tax services can help you reach new clients and strengthen existing client relationships. Modern CPA and tax accounting businesses that understand how to diversify beyond just preparing tax returns for a few months of the year can stabilize revenue and be better positioned for long-term growth.
For tools and customized coaching designed to enhance your firm’s advisory services, we encourage you to learn more about our next-generation consulting and advisory solution, Practice Forward.