Guest posts are always difficult. Too often the material that crosses my desk is of very low quality or thinly disguised ads, usually both. I pass faster than a speeding bullet. 

Then there are people I know that I would love to have write a guest post. They are articulate and care about the reader. Unfortunately, they are also busy. However!!! Through good fortune I was able to convince one of these people to to write down her wisdom for you, kind readers.

Debbie Todd has followed this blog for a long time and is a recommended tax pro on the Find a Local Tax Pro page of this blog. Seeing Debbie work with clients on social media has left no doubt in my mind of her level of knowledge, experience and willingness to serve her clients at the highest level possible. 

This post started over a discussion on Facebook. Debbie left a comment and I said I would love to hear all the details about it, preferably as a guest post. It was a lot of work, but she complied. As a result, you get to pull back the curtain and see how things run in a smooth operating tax office that serves clients like royalty and how you can get the same results with your tax pro. I wish I always lived up to those high levels.

Be sure to read to the end. I will copy Debbie’s contact information from the Finding a Local Tax pro page to the end of this post, along with a link to a worksheet you can download. You want that worksheet!

Thank you for the post, Debbie. It will help readers and me alike.

 

Guest post: Debbie Todd of iCompass Compliance Solutions, LLC

 

SECRET INSIDER Bean-Counter Chat Alert – Earlier this year, the Wealthy Accountant and I chatted online about what CPAs and Enrolled Agents like to talk about — innovative ways to serve, educate — and yes, sometimes even boot our clients in their business behind — while keeping our sanity and a semblance of family balance.

I promised to share a couple of strategic tips and a tool I developed that transformed not only my own business, but also generated amazing results for my firm’s clients. Then unexpectedly, LIFE got in the way of delivering on that promise — until now.

I lost two long-term step-parents within 3 months and then both my brothers had major cardiac events. Experiencing sudden and profound change, loss and grief sure puts things in perspective. Not an excuse — but I hope you can relate. Life throws unexpected curve balls which get in the way of best laid plans for your business, your personal life and even your legacy. Decisions matter! Adjust, breathe and take the next step. And the next…

Just as Summer gave way to Fall — and now as our lungs are filled with the brisk air of Winter — know that Spring 2020 is just around the corner. A new season, a new decade and untapped new opportunities await.

Read on to learn how…

 

David or Goliath – What Mattered Most?

The log in the fire is crackling, casting a rosy glow of warmth on the stockings, the twinkling tree and the ribbon-wrapped presents… 

As happens so often during the holiday season, I spend time reflecting on what worked well (and didn’t) with my beloved clients. I muse on the opportunities and challenges they faced in growing their business this year, adapting to new tax rules, employee issues, as well as several experiencing traumatic family events, which suddenly altered some of their best-laid plans.

What tips and tools could I share to allow them to be more successful in 2020 and beyond? I’m their CPA, their trusted financial coach and I take that privilege seriously. So do most of my amazing bean-counter friends.

Whether you are a large international company, a locally owned small business entrepreneur or a trendy global digital nomad, having rock-solid business goals and smart financial processes behind you is critical for your success. It’s not your size — it’s your heart, purpose and willingness to take action. Like David. . . 

Let’s face it, you’re toast without it… and often sooner rather than later.

 

Seizing a New Decade of Opportunities

As I gaze thoughtfully into the log’s dancing flames and scratch our aging Labrador’s graying ears, I realize that in just a matter of days, we will usher in a brand new decade…and brand new opportunities.

With last year’s tax law changes, a plethora of retirement planning opportunities (the SECURE Act, for example), combined with continuing economic growth, this reflection seems more weighty, more impactful and infinitely more exciting than prior years.

So, as a seasoned tax and financial strategy practitioner, I regularly share updates on these opportunities with my clients via email and during our quarterly meetings — but, how do we address (get to know) new businesses who want to join our cherished client family?

 

Communications and our Beloved NCO Triage

Like the log’s embers keep the fire going, providing both light and warmth, having a foundation of trust, clearly stated goals and objectives fueled by open communication, regular review and adjustments — translates to success on both sides of our client relationships.

Think about when you go to the doctor or the emergency room. You want the professionals taking care of you to listen and understand what is going on with you so you can get the correct diagnosis and treatment, right? Well the same holds true for your business or family financial health.

Over the last several years, I have developed what we call our NCO Triage, or New Client Onboarding Triage. It has blossomed to over 7 pages – and NO, this is NOT like your tax organizer. It’s a strategic financial life goals framework that helps me help you turn your dreams from vision into reality.

Yes, it asks questions about your business like what kind it is, what state(s) you operate in, your revenues, status of tax filings, who does what in the finance functions, etc, but also covers key details like a SWOT analysis (strengths, weaknesses, opportunities and threats).

Next, we learn about your life goals… not just for your business, but how your business fuels your life’s passions and dreams. 1, 3, 5, 10 and even 20 years. After all, that IS why you are working, right? Finally, we discuss your communication styles and preferences so we are both comfortable with how we will play together going forward. Ninety-five percent of preventable challenges stem from miscommunication.

So, WHY is this Important?

Keeping an eye on the fire is important. Left unattended, the fire eventually dies out and the cold will seep in. A few strategically placed money tips will keep your financial fireplace warm and toasty.

As stated earlier and without sounding too cheeky (okay maybe just a little) — your cash flows, financial foundations and habits are the lifeblood of your business. Your goals and vision sets the heartbeat and pace with which you operate. Slow and steady wins the race.

Wanna know something cool? Meeting with your CPA or EA can actually be FUN! Seriously…

I just wrapped up Q4-2019 meetings with many of my clients. Most calls start out something like this… ”Hey Deb, I’d like to meet with you for an hour this time. Let’s talk about our financials and the tax items for the first 30 minutes or so. Then I have a couple of ideas I want to run by you, so put on your counselor hat for the rest of the call, OK??” What an honor to help them explore possibilities that will improve their lives. After all, wouldn’t you rather be helping transform your client’s future with smart financial tips and tools as opposed to simply fixing and filing their historical transactions? Seriously, I get just as jazzed up as they do — and LOVE to see their dreams become reality.

 

Key Takeaways and Next Steps for Caring Pros and Smart Clients

Mylie, our Lab, is looking at me with that “Mom, it’s time for bed” look. I get up, turn the Christmas tree lights off and add an all-nighter log to the fire — so it will have energy to burn, keeping our house toasty warm while we sleep and dream.

Fellow Tax and Financial Pros — Key Thoughts AND A GIFT

  1. Proactive Planning with Forward Focus: Understand that your best value as a passionate and knowledgeable financial professional lies in proactively helping your clients achieve their dreams and life goals. Right, wrong or sideways, you can only fix and file past transactions. Instead, help your clients avoid those mistakes in the first place while providing tools to make their future dreams a reality. (Hint: Start on page 4 of the NCO!) Leverage this mindset into your practice’s core values and I believe you’ll both be happier as a result. 
  2. It’s NOT about the Money: This is a lesson I learned the hard way. Don’t compete strictly on price – EVER. Not everyone needs to be your client. Read that again. It took you YEARS of training, countless exams and ongoing research every single year to do what you do and do it well. It’s about VALUE: The amount of money I save clients each year far supersedes their invoice amount. Don’t sell yourself short – your knowledge is worth it.
  3. Equip Your Clients: Many clients are NOT money gurus – they are great artisans in their own field, but need your financial expertise so their business can thrive and grow. Offering monthly or quarterly meetings, a Q4 tuneup and emails of key tips are simple ways you can help your clients go to the next level. Plus, it provides a reasonable revenue stream outside of tax season!
  4. The GIFT: You can download a copy of my NCO and adapt it for your firm’s use. The fun part starts on page 4! Understand, I am NOT giving tax or legal advice and this document does not replace your well-crafted Engagement Letter or professional due diligence procedures. Use the following link:

2019 NCO – New Client Onboarding Triage Initial Questionnaire Template

Smart Clients Wanting to Up their Game (It’s OK if you read the Tax pros list above too)

  1. Identify Your Goals and Vision: As 2020 begins, what do you want to accomplish in the next year or the next decade? Seriously, a little dreaming and planning can make a HUGE difference! Feel free to download the last four pages of the NCO, dream and jot down your thoughts (crackling fire and aging Labrador optional, but highly recommended)!
  2. Plan With Your Tax/Money Pro: If you are not planning with your tax pro outside of annually filing your taxes, you are missing out on a golden opportunity to make small (or even large), consistent improvements to your financial bottom line throughout the entire year. Yes, you should pay them for these meetings too – unless they are already on retainer.
  3. Execute, Review, Adjust, Repeat: Dreams and vision are great, but it’s ACTION that wins the race…100% of the time. I’d rather see imperfect action (within legal bounds of course) than a perfectly procrastinated idea. As part of your meetings, you can set timelines, deliverables, checkpoints and get objective feedback and insights to adjust course, as needed. Then repeat!

I, for one, am truly excited about spending quality time with loved ones and enjoying Christmas – celebrating Jesus and all the wonders we have been blessed with – and those opportunities which await. [Editor’s note: Debbie delivered this to me December 23rd. Your lazy editor didn’t get to it until after the 1st of the year.]

Wishing each of you a joyous, happy and safe Christmas and New Year – AND a next decade that blesses your family and business beyond measure!

Debbie Todd

Your Friend in Financial Wellness, Debbie

 

 

 

 

 

 

 

Contact Information

iCompass Compliance Solutions, LLC, dba 1 Hour Impact Firm #5917

Locations we prefer to serve: SW WA or Portland, OR Area. WBE certified in both OR and WA

Contact: Easiest to reach me via email or https://www.facebook.com/TheSpunkyCPA/

Email: deborah.todd.cpa@gmail.com

Areas of practice: Federal and state personal and small biz taxes, Non-Profit – 990s, IRS compliance and remediation, divorce and estates, also small biz startup strategy. Niche expertise in small business interactions with State and Federal Government Contracting.

In person or fully digital capabilities.

Areas of practice you don’t handle: Ex-Pat, valuation disputes, M&A.

Bio: You can learn more here, including govt background- http://1hourimpact.com/about-us/

Interesting tidbit: Special passion for teaching smart early childhood financial literacy using engaging, interactive theater.

 

More Wealth Building Resources

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here. 

What are the benefits and pitfalls of outsourcing tax returns? Here is the one reason you never want to outsource your tax work.There is a growing problem in the tax accounting industry. Attend a continuing education program for tax professionals and the problem is impossible to miss: the silver in the crowd is worse than Sunday morning church service.

The tax profession is aging. Attracting new people to the profession is difficult because it lacks the glamour of other professions. But sit in any public forum and mention you are a tax professional and you will be inundated with tax questions and offers to take them on as new clients. The tax profession is a good field with ample opportunity to do good, but few even consider accounting or tax as a career option.

Those of us still practicing know the qualified tax professional shortage is bad and getting worse. Hiring a qualified tax professional is as hard as finding a unicorn.

Demand for our services grows while the number of people available to service this demand shrinks. Tax professionals have taken extraordinary steps to fix the problem with automation, reducing client lists and outsourcing. Each action has its unique set of benefits and pitfalls which we will explore.

 

Getting Work Done Correctly and in a Timely Fashion

For several years now I’ve experimented in my office with a variety of methods to deal with the workflow and demands of regular clients and those seeking to be clients. 

These issues are of interest to the client and other tax professionals alike. Each new method instituted (or merely tested) in my office had its benefits and pitfalls. Clients need to understand the difficulty tax professionals have keeping their head about the paper waterline and tax professionals will continue to explore extraordinary means of managing growing demand with a smaller workforce.

The easiest—and most logical—way to solve the problem of too much demand is to cut your client list to a manageable size and decline taking on new clients. While this solution works, it lacks a satisfying outcome. There is an uncomfortable feeling knowing you can help someone and passing anyway. 

If no other options exist then a reduced client list is the only choice. If you are nearing the later stages of your career this might be a good way to transition certain types of clients to new tax professionals. For everyone else in the crowd we need better options that both serve your client and allow you to retain your sanity.

I will review 3 solid options with special emphasis on outsourcing tax work.

 

1: Maximizing the value of experienced staff

Experienced tax professionals probably remember the days when they did all the work alone. They would meet with the client when the return was dropped off, they would prepare all aspects of the return, have support staff print the return and call the client, and finally, meet with the client at pickup to review the results and answer any questions the client has.

The old way of doing things no longer works when there are not enough experienced tax professionals to go around. 

The solution used in my office focuses each task of the tax preparation process to different teams. Clients drop off their material with a receptionist; notes are taken for the tax accountant. Most of the tax return is processed by a team scanning and preparing the return for the CPA or enrolled agent. Data processors, many with no tax knowledge, enter the raw data.

Once the data processors enter as much as they can the file goes to the CPA’s desk. For all intents and purposes the CPA moves straight to review unless there are serious tax issues unresolved by data entry. 

Experienced staff are always working at their highest capacity under this method. Raw data entry doesn’t consume the tax expert’s time. However, many returns have significant tax issues only an experienced team member can handle. While data processors help, the tax pro still spends significant time with each file, but does avoid the mundane part of the preparation process.

At the end we sit with every client to review the return. This is where we discover if we misinterpreted documentation the client provided and to answer questions. 

It’s not a perfect solution, but it allows for the maximum value extraction from each experienced members of the team.

 

2: Automation

Automation has been an integral part of the tax office for decades. We moved from paper to e-filing; from filing cabinets to digital storage; from hand preparation to tax software. 

There are additional automation processes too few tax professionals use. In my office we use Gruntworx, for example. 

Depending on the tax software you use, there are similar programs offering the same service to tax offices. I use Drake Software and Gruntworx is built right into the program.

What Gruntworx and similar programs do is enter the basics from standard forms (W-2, 1099, K-1, etc.). Unfortunately this doesn’t offer more benefits to the skilled CPAs in the office. Gruntworx partially replaces the data processors only.

The biggest advantage of Gruntworx is cost. It is a poor use of time entering W-2s when the computer does it automatically for pennies.

There is one pitfall to consider. These programs reading forms and entering data periodically make mistakes. The reviewer must double-check the entire return! The same issue applies to human data processors. The review process is a redundancy designed to reduce errors.

 

Outsourcing

This is what I really wanted to talk with you about. Outsourcing payroll and bookkeeping is rather easy. Tax returns are another issue.

First we need to define what I mean by outsourcing. Gruntworx is not outsourcing! Outsourcing, as I will refer to it here, is the sending of the entire return to another firm for preparation with only a review required at home office end.

My office has tried several outsourcing models the last few years with the gracious permission of a few clients to allow me the luxury. My results are decidedly mixed so if you ever considered outsourcing tax returns you will want to review my experiences.

 

Domestic Outsourcing

Outsourcing to a domestic (U.S. based) firm requires less disclosure to the client. I recommend always being upfront with the client and disclosing anyway. 

The biggest drawback of domestic outsourcing is cost. I have never been able to find a domestic outsourcing company that was cost effective so I never used one. Therefore, I can’t vouch for the quality of any of these services.

Also be aware that there are several firms claiming to be domestic when they are not! Just because they have a New York office doesn’t absolve you of disclosure rules. My first foray into tax outsourcing was with one of these firms. I outsourced my own return as a test and they crucified the return. At least it didn’t cost me anything.

 

True Tax Outsourcing

After a few false starts and reviewing several outsourcing firms I found one that had it all put together. They had a good portal to transfer documents and a good team domestically and in India (where most outsourced tax returns go). 

Once I was satisfied with their work and security I asked a few clients permission to send their tax file to this firm. (The name of the firm will not be mentioned because they did what they promised. Since I’m pulling the plug at a large loss it would not be fair to them since they did nothing wrong.) This was last summer. The additional test returns came back prepared correctly.

A good outsourcing firm requires money for their service. My firm paid $16,750 for the smallest contract they had. (The low-ball guys are not professional and should be avoided. You want quality first, price second.)

Know the difference between automation and outsourcing. You need to know this information if your tax accountant ever asks to outsource your tax work.The biggest advantages of outsourcing to a quality firm include better quality preparation and less need to find additional in-house staff (qualified tax professionals). 

However, there are serious pitfalls I could not resolve. 

It became painfully obvious early in the tax season this year the outsourcing firm lacked the most important qualification: knowing the client. The time it took to ready materials for the outsourcing firm along with the excessive time needed to review the returns they prepared did NOT save meaningful time of experienced tax accountants in my office! It wasn’t their fault. The issues always revolved around knowing the client and they had no way of knowing the client as I do. And the problem is unsolvable.

It is hard to grasp how powerful and valuable the accountant-client relationship is until you see tax work done without the relationship. 

This one glaring issue caused me to pull the plug with only $2,000 of the contract used. The rest is a loss for my firm. If it weren’t for this blog I wouldn’t try out so many of these things. But with a large number of tax professionals haunting this blog I feel it my duty to try things and share the results so readers can benefit without the extraordinary expense.

Clients of tax firms also get a peak under the hood of how things work when they submit their return for preparation.

There is one additional glaring issue: disclosure.

I sent a modest number of clients a disclosure statement. If they signed I was allowed to send their return to outsourcing. (Only a few select clients were chosen and they were not required to sign.)

Some signed; other, not.

What brought this home for me is when one client signed the form and later read it completely and called begging we don’t send his return to outsourcing. We complied. 

The truth is there is no shortcut. While outsourcing offers the promise of a better back office, anything is further from the truth. Even a good firm with quality preparers can’t give the service required without knowing the client. It’s just too large a hurdle to overcome!

 

My Opinion

It is my informed opinion that all tax offices should tread lightly and slowly if they are considering outsourcing of tax returns. I can’t find a way to provide the quality I demand for my clients from a distant source so outsourcing is starting to look like a rear view mirror issue for me. 

Automation is fine. Gruntworx and similar programs work within the framework of your tax software and is only a data processing system. When it comes to a full outsourcing, total return preparation, there is nothing like handling it in-house where the accountant and client have an intimate relationship built to serve the client; the way it should be.

 

Ongoing Research

Even though my outsourcing days are over I still intend to educate myself on the subject and share the inside information with you. In May I’m attending an outsourcing conference to learn more on a variety of outsourcing options. The conference cost a cool $1,000, plus hotel and travel costs. You will get the important information for simply stopping by this blog in late May or June to read all about it.

Is outsourcing right for your tax office? Discover the risks and why you might want to forego outsourcing even when it can be done expeditiously, accurately, cheaper and securely. Now you know why I have ads on this blog and other forms of monitization. I’m not trying to irritate you. I just need funding to try these experiments so you don’t have to. 

And unlike other blogs, the experiments we conduct here sometimes cost more than a few dollars.

My goal is to reinvigorate this graying industry. We need to spread the message this is a very good career choice. Even your favorite accountant is looking toward his last decade in the field as a full-time practitioner. (If I didn’t shave my head the gray would be showing on me as well.) 

My practice in unlikely to grow much in the future. My job is to teach the next generation and figure out all this new stuff we need to think about.

Thank you for coming along for the ride. If there is something you would like me to test be sure to leave a note in the comments. 

New or old hat, our profession is in high demand. People are in desperate need of our services. 

If we don’t rise to the challenge, only the wealthiest will have access to quality tax help in the future. The middle class and poor can’t afford that. And we have our work cut out for us.

 

 

More Wealth Building Resources

Credit Cards can be a powerful money management tool when used correctly. Use this link to find a listing of the best credit card offers. You can expand your search to maximize cash and travel rewards.

Personal Capital is an incredible tool to manage all your investments in one place. You can watch your net worth grow as you reach toward financial independence and beyond. Did I mention Personal Capital is free?

Side Hustle Selling tradelines yields a high return compared to time invested, as much as $1,000 per hour. The tradeline company I use is Tradeline Supply Company. Let Darren know you are from The Wealthy Accountant. Call 888-844-8910, email Darren@TradelineSupply.com or read my review.

Medi-Share is a low cost way to manage health care costs. As health insurance premiums continue to sky rocket, there is an alternative preserving the wealth of families all over America. Here is my review of Medi-Share and additional resources to bring health care under control in your household.

QuickBooks is a daily part of life in my office. Managing a business requires accurate books without wasting time. QuickBooks is an excellent tool for managing your business, rental properties, side hustle and personal finances.

cost segregation study can reduce taxes $100,000 for income property owners. Here is my review of how cost segregation studies work and how to get one yourself.

Worthy Financial offers a flat 5% on their investment. You can read my review here.