Maximize your client tax savings with effective tax advisory services
Why tax advisory services are crucial for business growth
Tax advisory services have emerged as a powerful vehicle for driving profitable growth in accounting firms. By helping clients navigate the complex tax landscape and identify opportunities for savings, these services not only provide immense value to businesses but also position accounting firms as strategic partners in their clients' success.
The importance of tax advisory services lies in their ability to address two critical challenges faced by businesses and accounting firms alike. First, many people overpay taxes due to inaccurate returns that fail to reflect their unique situations. Second, firms are often so consumed by compliance work that they lack the time and resources to develop and implement effective tax strategies for their clients.
Tax advisory services bridge this gap by proactively identifying permitted governmental tax positions that clients can leverage to minimize their tax liabilities. By doing so, these services help businesses keep more of their hard-earned money while enabling accounting firms to differentiate themselves in a crowded market and drive sustainable, profitable growth.
The impact of tax advisory services is evident in the success stories of firms that have embraced this approach. For example, Minal Babaria's firm crossed the $20 million mark in tax savings for clients, while Peter Holtz achieved a 55% 4-year CAGR and is on track to generate over $10 million in revenue this year. Similarly, Udai Hoshi and Natalia Zacharin have experienced remarkable growth and profitability by focusing on delivering high-value tax advisory services.
As businesses increasingly recognize the importance of proactive tax planning, the demand for tax advisory services is poised to grow exponentially. Accounting firms that can effectively deliver these services will not only help their clients thrive but also position themselves for long-term success in an increasingly competitive landscape.
Key strategies for delivering high-value tax advisory services
To deliver high-value tax advisory services, accounting firms must adopt a systematic approach that encompasses the entire client lifecycle. This approach should be designed to maximize tax savings for clients while ensuring a seamless and efficient experience. Here are the key strategies for delivering effective tax advisory services:
1. Conduct comprehensive strategy sessions
The first step in delivering high-value tax advisory services is to conduct comprehensive strategy sessions with clients. These sessions, typically lasting 45 minutes, are designed to assess the client's tax position and identify potential opportunities for savings. During the session, engage the client in a Q&A dialogue to gather important information about their tax situation. The goal is to determine whether you can save the client money and, if so, to outline the specific strategies that can be implemented.
2. Streamline client onboarding
Once a client has agreed to engage your tax advisory services, it's crucial to streamline the onboarding process. This involves sending out a clear and concise request list for the necessary tax documents, ideally 3-5 days prior to the kickoff call. Be sure to review the documents with the client and explain why each item is necessary for the tax planning process. Avoid sending lengthy questionnaires with complex tax jargon, as this can overwhelm and confuse clients.
3. Host effective kickoff calls
The kickoff call is an opportunity to build confidence and trust with the client, set appropriate expectations, and introduce them to your process and technology tools. During the call, work with the client to gather any outstanding information needed to complete their tax plan. This proactive approach eliminates the excuse of waiting for clients to provide information and keeps the process moving forward.
4. Focus on high-impact strategies
When developing tax plans for clients, it's tempting to try to examine every possible strategy. However, it's more effective to focus on the strategies that will have the largest impact on the client's tax savings. The "workhorse strategies," such as entity optimization, compensation optimization, the Augusta strategy, home office deductions, meal and travel expenses, and hiring children, have proven to generate significant savings for clients. By prioritizing these strategies, you can deliver substantial value without getting bogged down in the minutiae of the tax code.
5. Deliver tax plans effectively
The tax plan delivery meeting is crucial for establishing the strategies you will implement with the client. Begin with the more straightforward strategies before discussing more advanced opportunities. Avoid simply sending the tax plan as a PDF without explanation; instead, schedule a meeting to walk the client through the plan and discuss the proposed strategies in detail.
6. Implement strategies proactively
The implementation process involves ongoing documentation to support the chosen strategies. Create a living document that both staff and clients can access to document the necessary information for substantiating tax strategies. This proactive approach helps to view tax planning and preparation as an annual, ongoing process rather than a one-time event.
7. Conduct regular quarterly meetings
Quarterly meetings serve as working sessions with clients to ensure the necessary work is being done to realize savings. These meetings should follow a consistent format, covering topics such as the TAS quarterly process, strategy overview, substantiation, business financials, estimated payments, and action items for the next meeting. Ensure that your staff is well-trained and prepared to lead these meetings effectively.
8. Manage the renewal process
The renewal process is an opportunity to review the work completed throughout the year, highlight the savings achieved, and discuss opportunities for additional savings in the upcoming year. Begin these discussions well in advance of the annual contract end date to ensure a smooth transition and continued engagement.
By implementing these strategies, accounting firms can deliver high-value tax advisory services that help clients minimize their tax liabilities, boost profitability, and achieve their financial goals. As the demand for these services continues to grow, firms that can effectively navigate the tax landscape and provide proactive, strategic guidance will be well-positioned for long-term success.
Leveraging AI to enhance tax advisory services
Artificial intelligence (AI) has emerged as a powerful tool for enhancing the delivery of tax advisory services. By leveraging AI technologies, accounting firms can streamline processes, identify new opportunities for savings, and provide more accurate and comprehensive guidance to their clients. Here are some key ways in which AI can be used to enhance tax advisory services:
1. Identifying eligible tax credits and deductions
AI-powered systems can analyze vast amounts of data to identify potential tax credits and deductions that clients may be eligible for. For example, AI can help identify opportunities for R&D tax credits, depreciation, the Augusta rule, home office deductions, and more. By automating this process, firms can save time and ensure that no potential savings opportunities are overlooked.
2. Streamlining documentation and compliance
AI can also be used to streamline the documentation and compliance processes associated with tax advisory services. For example, AI-powered systems can generate late S/C elections, marketing communications, client communications, accountable plans, business reason memos, and employment docs. By automating these tasks, firms can reduce the risk of errors and ensure that all necessary documentation is in place to support chosen tax strategies.
3. Enhancing client communication and engagement
AI-powered chatbots and virtual assistants can be used to enhance client communication and engagement throughout the tax advisory process. These tools can answer common questions, provide updates on the status of tax plans, and even gather necessary information from clients. By providing a more responsive and personalized experience, firms can improve client satisfaction and loyalty.
4. Analyzing data to identify trends and opportunities
AI-powered analytics tools can help firms identify trends and opportunities for additional tax savings. By analyzing data across multiple clients and industries, these tools can uncover patterns and insights that may not be immediately apparent to human analysts. This can help firms stay ahead of the curve and provide proactive guidance to their clients.
5. Improving accuracy and efficiency
AI can help improve the accuracy and efficiency of tax advisory services by automating repetitive tasks, reducing the risk of errors, and enabling staff to focus on higher-value activities. For example, AI-powered systems can automatically populate tax forms with client data, freeing up staff time for more strategic work.
To effectively leverage AI in tax advisory services, firms must invest in the right technologies and training for their staff. This may involve partnering with technology providers, attending industry conferences and workshops, and providing ongoing education and support to ensure that staff are equipped to use AI tools effectively.
By embracing AI and incorporating it into their tax advisory processes, accounting firms can provide more comprehensive, accurate, and valuable services to their clients. As the technology continues to evolve, firms that stay ahead of the curve will be well-positioned to thrive in an increasingly competitive landscape.
Building a high-performance tax advisory team
To deliver high-value tax advisory services, accounting firms must build high-performance teams with the right mix of skills, experience, and expertise. A well-structured team can help ensure that clients receive the highest level of service and support throughout the tax advisory process. Here are some key considerations for building a high-performance tax advisory team:
1. Consider adopting a pod structure
Many successful firms have found that a pod structure is an efficient way to deliver tax advisory services. In this model, each pod consists of a Client Accounting Manager (CAM), an Accounting Tax Specialist (ATS), and an Accounting Specialist (AS), with a Pod Manager overseeing all teams. This structure allows for clear roles and responsibilities, effective communication, and seamless collaboration.
2. Define clear roles and responsibilities
Each member of the tax advisory team should have clearly defined roles and responsibilities. The Pod Manager is responsible for overseeing all pods, ensuring that each team meets deadlines, and conducting one-on-one meetings with team members. The CAM manages all client communication, hosts client impact meetings, and oversees the work of the ATS and AS. The ATS completes all tax preparation and implementation work and manages entries for the Greensheet. The AS handles all bookkeeping-related work and assists in reviewing books for TAS-only clients.
3. Provide ongoing training and support
To ensure that team members are equipped to deliver high-value tax advisory services, firms must provide ongoing training and support. This may include in-house training sessions, external workshops and conferences, and access to online learning resources. By investing in the professional development of their teams, firms can ensure that they have the knowledge and skills needed to stay ahead of the curve.
4. Foster a culture of collaboration and communication
Effective collaboration and communication are essential for delivering high-value tax advisory services. Encourage team members to share knowledge and best practices, and create opportunities for cross-functional collaboration. Regular team meetings, one-on-one check-ins, and virtual communication tools can help ensure that everyone is aligned and working towards common goals.
5. Leverage technology to enhance productivity
Technology can play a key role in enhancing the productivity and efficiency of tax advisory teams. Invest in tools and platforms that streamline processes, automate repetitive tasks, and enable seamless collaboration. For example, cloud-based project management tools can help teams stay organized and on track, while virtual communication platforms can facilitate remote work and client engagement.
6. Continuously evaluate and optimize processes
To ensure that tax advisory teams are operating at peak performance, firms must continuously evaluate and optimize their processes. This may involve soliciting feedback from clients and team members, tracking key performance indicators (KPIs), and identifying areas for improvement. By continuously refining their approach, firms can ensure that they are delivering the highest level of service and value to their clients.
Building a high-performance tax advisory team requires a strategic approach that encompasses the right structure, roles, training, collaboration, technology, and continuous improvement. By investing in their teams and processes, accounting firms can position themselves for long-term success in the rapidly evolving world of tax advisory services.
Embracing the future of tax advisory services
As the demand for tax advisory services continues to grow, accounting firms that can effectively deliver these services will be well-positioned for success in the years ahead. By adopting a proactive, strategic approach that leverages the latest technologies and best practices, firms can help their clients minimize their tax liabilities, boost profitability, and achieve their financial goals.
To thrive in this rapidly evolving landscape, firms must be willing to embrace change and continuously adapt to new challenges and opportunities. This may involve investing in new technologies, building high-performance teams, and developing innovative service offerings that meet the evolving needs of clients.
By staying ahead of the curve and delivering high-value tax advisory services, accounting firms can differentiate themselves in a crowded market, build long-term client relationships, and drive sustainable, profitable growth. The future of tax advisory services is bright, and firms that are willing to embrace it will be well-positioned for success in the years ahead.
