Tax season preparation: How two firms keep their businesses in top shape

‘Tis the season in which every accountant has a love-hate relationship: tax season. As you prepare your firm, your staff, and your technology for the long haul, you may be asking yourself: Is my firm going into this tax season in tip-top shape?

If you’re not sure, it may be time to consider looking at your firm and understanding how healthy it is, both now and for the future.

In this white paper, moderator Heather Walker, Head of Business Integration for Tax and Accounting Professionals at Thomson Reuters, is joined by two successful firm owners: Chris Papin, owner of Papin CPA, and Ali Williams, owner of Yakima CPA Group. Together, using insights and their own personal experiences, they discuss accounting firm mental health, business health, and future health.

By the end of this white paper, you should be able to go into the next tax season and beyond with a strategy on how to run and maintain a successful, healthy firm.  

Firm mental health: The importance of taking care of yourself and your team

Your mental health, as a firm owner, is important. It is imperative, especially during tax season, that you’re still focusing on the health of yourself and your team. So, the first question going into tax season is to ask yourself: what can you do differently this year to take care of your mental health?

Chris notes that the first step to better mental health is to create boundaries with your clients.

Chris Papin is the owner of Papin CPA, located in Edmond, Oklahoma. Along with accounting services, he has a law practice and an insurance practice all under the same roof. They’ve found a niche creating long-term relationships while working with service-based businesses, sitting at the board of directors table, and trying to make an educated guess about what tomorrow’s future might hold. And by making those guesses, and planning in advance with both staff and clients, he found it helps him keep ahead of the stress that comes with last minute emergencies.

“I’m trying to remind my team that a client created emergency is not in scope,” notes Chris. “You do not have to drop everything and respond to their urgency just because they forgot. Encourage clients to get on your online calendar early. True emergencies happen, but I think it is important to get those boundaries in place because as we saw in 2020, we never know when things are going to be turned upside down.”

Making work practices like this a norm will help you and your staff stay as fresh as possible during tax season from a work-life balance perspective.  At Ali Williams’ firm, they also try to make up for those longer tax season hours when it’s not tax season.

Ali purchased a firm in Yakima, Washington and immediately made some changes as she took over. The previous firm she describes as “old school”, not focused on technology and doing a lot of 1040’s. Ali changed the way she works with clients, and now focuses on small businesses.

“May through December, we have a really flexible work schedule,” says Ali. “Everyone in the office only works four days a week and we rotate what those days are. It really helps when you’re in tax season and you’re doing what you must to get through it, you know soon your schedule will change. This is just temporary. That really helps us and our staff. We’re all parents in our office. Having the option to be flexible is really important.”

Ali also suggests a recent change she made for herself: disconnect from email when you’re not in the office. Avoid pulling out your phone when enjoying your nights and weekends.

“That’s a really great suggestion and theme,” adds Heather Walker, who in her 18 years at Thomson Reuters has grown passionate about supporting small firms on their journeys. “I’ve done research in the past, and it’s almost like you’re conditioning your team to set some expectations about when you can and can’t be reached. It’s hard to do, especially cold turkey, but I definitely agree.”

Business health: Big picture strategy and trajectory

Tax season is a good time to pay attention to how your operations are holding up against the storm. From a business perspective, what metrics are you using to measure your firm’s success?

 “A lot of people will say revenue, and it is a great indicator, but it is not a tell-all,” says Chris. “There is something that must get translated within that recognizing efficiencies.  So, to me, I’m not going to say pure profit, but are these measurables meeting your value goals? Your goals may be moral, dollar, or time value. But is the engagement sufficient for both firm and client’s needs? If something is off, you’ve got to revisit that.

“Paired with that is client, team, and leadership accountability—and educating people through not just ‘right and ‘wrong’, but the ‘why’ that is inside of there. And the last measure of success is a personal perceived success. Perception can be different, but you can help your clients understand. What story are you telling about where you are, what you had to overcome, and what’s new in your firm?”

Chris breaks his key performance indictors down to three at any given time. One is a financial metric, measuring this year to the prior. Another is project-based: looking at how many returns you have left before the deadline. The third is external feedback. Chris seeks it from anybody who will give it, even if it’s bad.

“We call clients all the time and ask how their experience went, good or bad,” notes Chris. “Remember that perception matters with clients, and make sure you’re asking on the right day of the week. We had a client that just got a big tax bill, and he was very grumpy.”

Ali notes that her biggest business challenge has been with timelines. With new tax law and things happening when they’re busy working on tax returns, it’s a lot to handle while being on a deadline.

“Accountants like to get things done,” says Ali. “We don’t like to take longer than we did last year on a return. We’ve had to communicate to clients that we’ve had to stop working on tax returns because we need to figure out PPP loans. It’s been interesting and challenging to switch gears to what’s going on right now, because our clients need to know this information and we need to be the first people to communicate it. It’s been hard to pivot and realize that, but we will get it done. Right now, we just need to switch gears.”

“Hopefully we’re not working with the type of clients that can’t recognize that information has changed,” adds Chris. “In this business cycle, we have to stop what pays our bills to do what is otherwise non-billable work so we can figure out how to do more billable work we didn’t plan for. I don’t think you should be afraid to tell your clients that, because the bread and butter is compliance work, and if you’re not doing that, what are you doing? Well, we’re trying to figure out all these things you’re asking us to figure out for you. This takes an immense amount of communication.”

“Staying in communication with clients throughout the year has really helped us in our tax season,” notes Ali. “Even if we have more changes this year, which we will, at least we know, because we stay in contact with our clients, we stay on top of who it will affect. So, I feel good about tax season. I feel like we’ve gotten through the worse years, so that’s helpful.”

Future health: Protecting your firm in the years ahead

Like Ali and Chris, going into this tax season you may feel good about where your firm stands, considering there won’t be any drastic change in process. However, year after year, legislation changes, situations arise to change the rules, and Presidents change office. How do you, as a firm, keep up with those changes?

“I’m leaning into collaboration where possible,” says Chris. “Maybe I have a certain component of the tax law and another firm has another component in the tax law, and we can help each other out in the background or share information back and forth. There are some specialty items inside of new tax law changes that I don’t have any business helping one client with. We need to put them in a place that does a lot of those.

“Once I’m involved in whatever I need to learn, it boils down to a lot of your traditional resources. Using tools like Checkpoint, being part of trade groups, even local chapter tax meetings or Thomson Reuters Practice Forward groups, it’s beneficial to collaborate in a safe place to try to raise the level of the profession.”

“I love the collaborative nature between firms,” adds Heather. “Certainly, that can pay dividends both for any immediate needs, but also into the future. You’re building relationships with partners that can continue helping you as things continue to evolve and situations arise.”

Another key to staying ahead of those situations is technology, not only from a tax regulation perspective, but also a tax workflow perspective.

“We use as much client portals as we can,” says Ali. “One of the blessings of the pandemic is kind of forcing clients to get on their portal and download their tax return or send something to the client center. We try not to let client go backwards as far was technology goes and that’s been really helpful for us.

“Bottomline, don’t be afraid to change your relationships with clients. If you’re not happy with the way you’re doing business with clients or the type of clients you have, don’t be afraid to change it. We’ve changed the way that we bill. We now give clients an upfront price, and we were scared to do that because we thought people wouldn’t like it. But we’ve gotten such good feedback from clients knowing exactly what the cost is going to be before they get the giant bill for their tax return. It also forces us to stay in contact with clients throughout the year, instead of just at tax time. We set the direction with our clients, and if this client is not a good fit for you, don’t be afraid to find someone else for them. It feels really good to fire bad clients, and you will replace the revenue and then some.”

“Get out of your own way while you are operating intentionally,” adds Chris. “As CPAs, we’re technical experts. We like checklists. We want it to be perfect. Life doesn’t work like that. Tax returns do, but life doesn’t. You must define what your business relationship is with the client first. You need to lead the clients to the conclusion. This is what we will do for you, and this is how we will do it.

“I like to tell stories, but when a client calls and says, ‘I have an emergency’, I call back and say, ‘who died’. When they say ‘Chris, nobody died, I just needed your advice on a car’. Now, I don’t hang up on my clients, but I think that illustrates that is not an emergency. Don’t be afraid to call that out. We are so good at being intentional about our profession, but sometimes we don’t communicate it back to the other side. Get out of your own way. It doesn’t have to be perfect. All we can do with all the rain coming down on us and the changes is just walk them through and help them get to the level they want to get to. “

This white paper was based on the webcast “Small firm health check: How to keep your business in top shape.” Watch the full version here.

Ready to ensure that your firm is in the best shape this tax season? Check out these solutions from Thomson Reuters:

Checkpoint Edge

Checkpoint Edge™ is the next generation of our Checkpoint™ research and guidance tool for tax and accounting professionals. It delivers the latest in artificial intelligence, cognitive computing, and machine learning technologies, combined with the tax and accounting expertise of our editorial staff. It enables you to find fast, accurate answers with a more fluid and intuitive user experience. Learn more at tax.tr.com/en/checkpoint/edge.

UltraTax CS

Automate your entire business or professional tax preparation using the powerful, timesaving tools included with Thomson Reuters UltraTax CS professional tax software. You'll access a full line of federal, state, and local tax programs including 1040 individual, 1120 corporate, 1065 partnership, 1041 estates and trusts, and multi-state returns. UltraTax CS seamlessly integrates with other Thomson Reuters solutions, including CS Professional Suite and Onvio cloud software, so you never lose any billable hours to manual processing. Meet all of your tax workflow needs with a customized, end-to-end solution built on cloud computing, advanced data sharing, and paperless processing. https://tax.thomsonreuters.com/us/en/cs-professional-suite/ultratax-cs