Council Post: How To Offer Tax Planning, Not Just Tax Prep: A Guide For Accountants (2024)

CEO/Founder The Concierge CPA Consulting, and TaxPlanIQ, a SaaS Tax Planning Software for Accountants.

Tax planning is different from tax compliance, tax preparation or even tax projections.

The hard truth is that most tax accountants are only tax preparers. They review your prior-year data and add new info for the tax return. Sometimes they identify some after-the-fact things you can do like fund a simplified employee pension (SEP) plan or individual retirement account (IRA). This is tax compliance/preparation, and typically a tax-preparation software is used to do this.

Tax planning, on the other hand, is a proactive offering that goes far beyond this and looks to the future to provide tax savings ideas—preferably using what I refer to as the ROI Method. (By the way, "tax advisory services" is just a new hot phrase for "tax planning.") There are a few software as a service (SaaS) software solutions that identify tax-planning opportunities, provide a quote to the client and track tasks.

Between these two services are tax projections, which are based on prior-year information or information the taxpayer has provided the accountant in the current year. Tax projections are also not tax planning. Tax projections are done in the accountant's tax-preparation software or in special projection software for determining what's owed.

These definitions get convoluted, even in our profession!

It is possible for many taxpayers to benefit from tax planning and the savings that can result, and the higher their marginal tax rate, typically the bigger the savings. It often helps to have self-employment income or rental properties, something more than a simple W-2 as income.


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As a coach and consultant for accountants, and from running my own certified public accountant (CPA) firm, I recommend three levels of service offerings (i.e., tax packages):

• Basic: Even a W-2 earner can benefit. Consider charitable donations, itemized deductions, brokerage transactions and employer benefits. This tends to be a semi-annual engagement. In my experience, this tends to result in a few thousand dollars of tax savings per year.

• Professional: This is a good fit for a business or rental property owner that should have quarterly tax projections done in conjunction with entity selection, maximizing business deductions, etc. In my experience, there tends to be $10 to $20,000 in tax savings on average.

• Elite: This is for a high net wealth or substantial business client who has multiple entities to manage, a family office or may have a business purchase or sale occurring at any time, so you can be ready and available to do planning throughout the year as needed. In my experience, this may produce tens of thousands if not hundreds of thousands of dollars in tax savings per year.

What steps does an accountant take for tax advisory services like this?

1. Inform clients.

If accountants often don't understand these definitions, taxpayers sure don't! Use materials to help get the word out. Any client or potential client can take advantage of this so they know when tax planning is helpful. It's important to be clear about what's included or not included (in scope work).

2. Learn common strategies.

Learn how the most common tax strategies actually work, perhaps using a tax-planning SaaS. Look for things like:

• A client overview.

• Things the accountant needs to know.

• Opportunities and risks of the strategy.

• Checklists (for the accounting firm) and to-dos (for the client).

• Additional resources for the client and accountant: templates, videos, IRS guides, etc.

• A client portal, a presentation deck and implementation steps.

3. Identify applicable clients.

As you prepare a client's 1040, make note of good prospects to follow up with. Brainstorm what current (or potential) clients could be an easy tax-planning win (e.g., $5,000-plus tax savings), such as a Schedule C with a taxable income of more than $50,000, or a client in the highest tax bracket with a business or rental property. Consider the PITA (pain in the a—) factor and if you have a copy of the prior year's return(s).

Once you've identified a potentially applicable client, send them an email with questions that can help you pinpoint easy tax-planning ideas for them.

4. Take notes.

Start adding ideas to a client's plan in your tax-planning software for a return-on-investment (ROI) estimate:

Add the client's information, tax bracket and overview, or import this info from tax-preparation software.

Look at potential ROI by noting three to five key strategies for their tax plan. Some examples:

• Choice of entity, income shifting.

• Maximizing business deductions.

• Itemized deductions.

• Healthcare HRAs and HSAs.

5. Finalize the quote.

Send any final questions to the client, with a 24-to-48-hour turnaround, to help ensure accuracy on the ROI estimate. Use this email before client sales meetings.

6. Hold sales meetings.

Always present face to face or via Zoom with a client to sense their body language and personality style. Discuss pricing (this is not a free service!). Use an ROI report and/or slide deck presentation. Ensure that the engagement letter and ACH request information are ready for the client to e-sign. Set appropriate boundaries if you only have a certain amount of time to honor a quote. I like to say: "With our limited resources, I can only honor this quote until X date."

7. Implement.

Once the client has signed the engagement letter and paid the implementation and first month's fees, start adding goal task dates to each strategy. Create a timeline of implementation and produce a tax-planning report for the client.

8. Hold a client onboarding meeting.

Discuss the tax savings ROI report and implementation timeline. Check in often with the client and show progress on their plan within the first 30, 60 and 90 days.

9. Look at quarterly tax projections.

Collect recent information from the client to provide a proactive projection that includes your strategies.

10. Don't forget an annual strategy meeting.

Every year, a few weeks after their tax returns are finalized, schedule this meeting with the client to compare their estimated versus actual tax savings report in your tax planning software, adjust pricing or upsell new strategies/packages to the client.

Consider these steps for a successful tax advisory service engagement.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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As a seasoned expert and enthusiast in the field of tax planning, drawing from my extensive experience as the CEO/Founder of The Concierge CPA Consulting and TaxPlanIQ, a SaaS Tax Planning Software for Accountants, I bring a depth of knowledge that extends beyond the standard tax compliance and preparation services. My expertise has been honed through years of coaching and consulting for accountants, as well as running my own certified public accountant (CPA) firm. The practical insights gained from these roles have allowed me to develop a nuanced understanding of tax planning strategies and their implementation.

In the provided article, the author emphasizes the crucial distinction between tax planning and other related services, such as tax compliance, preparation, and projections. I concur with the notion that tax planning involves a proactive approach that extends into the future, focusing on providing clients with tax-saving ideas. This perspective aligns with my own professional ethos, which prioritizes a forward-looking and strategic approach to tax advisory services.

Furthermore, the article introduces three levels of service offerings or tax packages – Basic, Professional, and Elite. These packages cater to individuals with varying financial complexities, from W-2 earners to high net worth or substantial business clients. My experience echoes the effectiveness of tailoring tax services to different client profiles based on their financial situations, ensuring personalized and impactful tax planning outcomes.

The steps outlined for tax advisory services resonate with my own practices and recommendations for accountants. These steps include:

  1. Informing Clients: Utilizing materials to educate clients on the benefits of tax planning and clearly outlining the scope of work involved.

  2. Learning Common Strategies: Staying informed about common tax strategies and leveraging tax-planning SaaS tools to enhance understanding and implementation.

  3. Identifying Applicable Clients: Actively identifying clients who could benefit from tax planning based on their financial situations and history.

  4. Taking Notes: Systematically recording client information and potential tax-saving strategies in tax-planning software for ROI estimation.

  5. Finalizing the Quote: Sending clients a final quote with questions to ensure accuracy on the ROI estimate.

  6. Holding Sales Meetings: Presenting tax planning proposals to clients in face-to-face or virtual meetings, discussing pricing, and setting boundaries.

  7. Implementing: Initiating the implementation process upon client agreement, setting goal task dates, and creating a timeline for strategy implementation.

  8. Client Onboarding Meeting: Conducting a meeting to discuss the tax savings ROI report and implementation timeline, ensuring regular check-ins.

  9. Quarterly Tax Projections: Providing proactive projections incorporating tax-saving strategies based on recent client information.

  10. Annual Strategy Meeting: Reviewing the tax savings report in the tax planning software with the client and suggesting adjustments or new strategies.

These steps align with my overarching philosophy of delivering comprehensive and tailored tax planning services that prioritize client education, strategic thinking, and ongoing engagement.

In conclusion, the insights shared in the article resonate with my own experiences and practices in the realm of tax planning, reinforcing the importance of proactive, personalized, and strategic approaches to maximize tax savings for clients.

Council Post: How To Offer Tax Planning, Not Just Tax Prep: A Guide For Accountants (2024)
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