How to implement effective tax planning for individuals

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What does moving to advisory services mean?

Determining the need for 1040 advisory services

How to start your firm’s 1040 advisory journey

Is the success of your accounting firm built on a 1040 client base? Are you interested in expanding into advisory services? While many accountants don’t think there is room for both, there is — and here’s how.  

Consider this: Individual taxation impacts the day-to-day lives of every single American, yet very few understand how to make strategic tax decisions. Most Americans lack even the most basic knowledge of how taxes work — and therein lies an opportunity for accountants to implement effective tax planning for their individual clients. Even the most fundamental insights into individual taxation can be extremely valuable to your 1040 clients.  

What does moving to advisory services mean?

Shifting to an advisory services model enables accounting firms to take advantage of an opportunity to share the knowledge you’ve worked so hard for, whether you serve individual 1040 clients, business clients, or both.  

Further, the move to advisory can also remedy challenges many firms face — including unpredictable workloads, proper staff planning, and cash flow issues — through the implementation of advisory service agreements. These agreements require clients to opt in at the beginning of the year and provide them with tax guidance throughout the year.  

As a result, clients get access to your expert tax knowledge and personalized insight year-round — and you gain a better understanding of who your clients are and what they need, all while bringing consistency to your revenue stream.   

Determining the need for 1040 advisory services

So how do you know if offering 1040 advisory services makes sense for your firm? 

Think about your interactions with individual clients. If they’ve come to you with a question that goes beyond the scope of their tax return, you have an opportunity to offer 1040 advisory services.  

Ask yourself: 

• Are your 1040 clients asking for counsel on tax-related legislation, business decisions, or strategic planning? When clients send those “I have a quick question” emails, use that opportunity to educate them and give them the answers they’re searching for to build trust and strengthen relationships. 

• Do you have unique knowledge and experience that can become part of your value proposition to 1040 clients? Create ways to help your clients understand the individual tax fundamentals (i.e., tax efficiencies, tax-privileged accounts, sources of income, etc.) and package them in a way that can be used again and again.  

• Are you passionate about helping 1040 clients achieve their goals? Understand what your 1040 clients want and align your advice to address what they want to accomplish. Also consider onboarding their services months ahead of tax season with advisory service agreements so you can establish trust early on and plan to support them year-round.  

By shifting to an advisory services business model, your firm can build a trusted brand, price your services competitively, and provide your clients with valuable tax advice that saves them money and builds their wealth.   

How to start your firm’s 1040 advisory journey

There is tremendous value in implementing effective tax planning for your individual clients. By understanding what their priorities and needs are, you can provide them with tax guidance that deepens their knowledge of their individual tax position and helps them improve their financial situation. 

But where do you begin? Let’s start with the basics: 

1. Decide the bare minimum your 1040 clients deserve to be advised on. Many clients don’t have a proficient understanding of rudimentary concepts including tax brackets and marginal tax rates.
2. Create a foundation of concepts and mutual language that dynamically serves the relationship. Consider building content and offering guidance on topics that enrich your clients’ understanding of individual taxation.
3. Use their information to create personal and actionable insights. Deepen your relationships and become a true advisor with customized information that can help your clients save money and make better decisions for their family.
4. Identify areas where more advanced knowledge or concepts are needed (i.e., specialty tracks). Put your specific knowledge and experience in specialty tax areas to work for your clients to level up their learning and show off your expertise.  

At the end of the day, there is no doubt the accounting profession is moving toward an advisory-centric approach to client service. Whether you serve individuals or businesses, there is an opportunity to implement an advisory model that capitalizes on your personal knowledge and expertise.  

Make the most of tax planning opportunities with 1040 clients

To identify advisory service opportunities for your firm and how you can move forward, take the Advisory Progress Report quiz. 

Report Quiz Thomson Reuters Advisory Report Quiz Learn more about where your firm stands in its Advisory journey