My name is David Smith. My firm, Business Brokerage,
Inc. specializes in selling accounting and tax practices
throughout California. Since 1978 we have sold over 1,400
practices worth over $210,000,000. During these eventful
years, we have been involved with thousands of accountants
and tax consultants. Most have a typical practice and
make an average amount of money. But, as in every profession
or trade, we occasionally come upon some truly great ideas
and clever people. The owners of these practices experience
an above average income and/or lifestyle.
Here are just some of the ideas we would like to pass
on to you...
TIP #1 Audit Insurance. Would you
like to add the equivalent of $130,000 gross to your
practice by spending 1 or 2 minutes with each of your
clients? Last year a tax practitioner I know offered
each of his clients audit insurance for $45. Thus, if
the the client was audited, the tax practitioner would
handle the audit at no extra charge. Of his 1,680 clients,
755 took him up on it. That translates into $34,000.
Since this owner nets about 25% (he has 10 tax preparers
working for him) he would have to gross $130K to net
$34K. Fact is, he used to handle the audits for free
anyway.
TIP #2 Bill Tax Clients 4 Times per Year.
A CPA I know left a Big-8 firm and started up his own
tax practice. As with most tax practices, almost all
of the work and money came in the first 4 months of
the year. It was a killer. So the CPA offered all of
his clients a deal as follows: the CPA would bill the
client 4 times a year, the CPA would visit the client
4 times a year to review the books of the client's in-house
bookkeeper and then the CPA and client would go to lunch.
At lunch, the client could ask any questions of the
CPA that he wanted at no charge. If the client needed
an interim financial report, there would be no extra
charge (the CPA would take the clients data disk on
Quicken back to his office). The result: a CPA practice
that grossed $200,000 with an even monthly cash flow
of about $13K to $17K all year long. All of the CPA's
clients bought into the plan and love it. Effective
billing rate has no meaning in this practice, the CPA
never counts the hours: he just wants the steady income
and a good living.
TIP #3 Add Tax Tip of the Month to Outgoing
Faxes. Rather than having some corny picture
on your outgoing faxes, why not place a "Tax Tip
of the Month". Since these faxes will generally
be going to business clients, you could offer handy
tips about getting greater deductions, pension plans,
etc.
TIP #4 Charge Fees on Retainer and Value Bill.
The most profitable practices that I ever see are those
that have established retainer fees (i.e., clients are
charged the same amount each month unless there are
additional services provided). I once listed and sold
a $460,000 CPA practice that claimed a 75+% net profit.
I doubted it, but when the buyer's performed their due
diligence, they confirmed the high net. If you set the
fees high and get more and more efficient, the net will
go up. Incidentally, many of this practitioner's clients
were chiropractors (5th highest average income in U.S.).
TIP #5 Do Payrolls and Pay Yourself First.
Most accountants refer payrolls out to one of the major
payroll services. A few years ago, I listed a $200K+
CPA practice that had several major restaurants as clients.
He did the payroll for the clients and at the same time
he wrote a check for his fee. Not only did he eliminate
many of A/R's, but a bi-weekly payment to the accountant
is a lot easier for a client to accept.
TIP #6 Do Your Own Data Inputting and Be "Client
- Wise". A couple of years ago, I listed
and sold a $500K+ CPA practice where the owner performed
about 65% of the data input. He told me a story about
when he was a junior accountant working for a sizeable
CPA firm. The owner and the junior were asked to sit
in on a board of directors meeting for one of their
major clients. The president asked the CPA what he thought
of the $50,000 capital expenditure they made last month.
The CPA was dumbfounded. Luckily, the junior was able
to speak up on the matter since he had performed the
data entry of the client. Now that the junior owns his
own practice, he still does data entry. He can recall
almost all of the major transactions of his clients
and can tell you how they are doing.
TIP #7 How to Profit from a New Homeowner List.
Many tax consultants have tried to build their practice
by sending out letters to new homeowners. This tip comes
from a CPA that added a twist and made it work! He offered
a 2 for 1 special, i.e., he would prepare the 1st years
tax return for his regular fee and next year's would
be free. After spending $3,000 for postcards, the list
of names and the postage, he picked up 75 clients for
a gross of $18,000. After importing the clients names
into the system, the 2nd year's return is a breeze.
TIP #8 Build Your Practice Based on QuickBooks.
Quickbooks, TurboTax (and other software) are here to
stay. So, how are you going to combat these new "user-friendly"
bookkeeping and tax packages. Here's what one savvy
CPA recommends: Call all of your clients and ask them
if they have been considering putting their books on
Quicken or QuickBooks. Most likely they have. Suggest
to them that you will do it for them on your computer.
This way it will get set up right. Then suggest to them
that they can have the program and data moved over to
their computer when ever they want it. Some will want
you to keep it on your computer. Some will try it for
a while and give it back to you. Lastly, some will like
processing their own books and you would have probably
lost them anyway. However, you should be able to keep
them as clients to consult with on Quicken and as a
tax client.
TIP #9. Prepare Your Client during the Tax
Interview for a Fee Increase. This accountant
would make mention of the clients increase in wages/earnings
as he went through the interview. He would also mention
the increases in the cost of living, i.e. how the client's
expenses have been going up. Thus, when the interview
was over, the accountant would say that he would have
to raise his fee a little too, due to the fact that
inflation was affecting him as well.
TIP #10. Have a fee schedule form that "high-balls"
the fee and gives everyone a discount. This
is a story of a tax consultant that built his business
to 10,000 returns using this method! He had several
interviewers working for him. As soon as the interviewer
finished, he would take the file and place it in the
owner's wall file on the front door of his office (just
like a doctor). The owner would call in the client and
review the return. Then he would go over the fee schedule
that was attached to the file. His form had a subtotal
line followed by a discount line and then the final
fee charged. Well, everyone got a discount. If you were
a client for several years, you got a 20% old client
discount. If you were a new client, then you got the
15% new client discount. As I thought about this technique,
I realized the tremendous impact it had on the clientele.
The clients think that all tax preparers charge about
the same fee for similar services (like a dentist).
Thus, these clients "know" they really got
a deal and would certainly come back next year.
TIP #11. Place your clients' company and/or
product brochures in frames around the office.
Uses "jump-on-the-bandwagon" persuasion. Most
practitioners have their certificates, diplomas and
awards plastered all over their offices. I know of a
million dollar firm that does just the opposite - they
have their clients brochures, corporate profiles, etc.
on the walls. Not only does this please the individual
clients but it offers the persuasion technique known
as "jump-on-the-bandwagon". If so and so is
a client, surely they know what they are doing, so I
better become a client too!
TIP #12. Prepare tax returns interactively.
You won't have any A/R's and clients really won't complain.
Most tax practitioners don't prepare the tax return
and give it to the client right away. They are afraid
that if the client saw that the return was prepared
in 45 minutes, they will balk at the fee. Question:
Do you balk at a doctor's fee when he charges you $200
for 10 minutes work? As one practitioner told me, anyone
can stick a knife into your body, but the doctor knows
where to put it! Anyway, I know of a CPA that has been
practicing for over 20 years that started giving the
client his return just after the interview. He has no
A/R's and has had very few complaints. By the way, he
does over 300 tax returns.
TIP #13. Preschedule appointments - 95% will
keep the appointment. Many practitioners are
now pre-scheduling appointments and maintaining an extremely
high retention rate. As one practitioner pointed out
to me as he showed me his log, "I know exactly
how much money I will make each day of the week next
year." He did over 500 returns and didn't have
the April 1-14 crunch like most tax consultants do.
TIP #14. Pre-invoice the tax clients in December.
A practitioner in Santa Barbara taught me this clever
trick. He sends an invoice to all of his clients in
December. He points out that if they pay in advance
they get the deduction in the year they pay and also
it guarantees no increase in the fee schedule. This
$121,000 practice had consistently received $20,000
in December!
TIP #15. How to combat Quicken, Quickbooks,
and other do-it-yourself bookkeeping systems.
When you are asked by a client if he should use Quicken
you should determine who will have access to the computer
and program. Remember, one of the functions of an accountant
is to set up systems to prevent theft, embezzlement,
etc. One of the drawbacks of having a simple, in-house
bookkeeping system is the lack of checks and balances
to keep the employees honest. Only a professional accountant
has the skill and knowledge to set up the correct "failsafe"
systems to protect a client from unscrupulous employees.
TIP #16. Offer to "incorporate" your
business clients. Some accountants now offer
to incorporate their clients providing all of the paperwork
at a fee substantially lower than the fees charged by
an attorney. All you have to do is hook-up with one
of the attorney services that the attorneys use to prepare
all of the documents, the seal and handle the state
requirements. Most accountants that do this make $500
to $1,000 per incorporation.
TIP #17. Provide monthly or annual corporate
minutes and resolutions for your incorporated clients.
Most small business clients detest paperwork. They also
don't understand most of the paperwork that has to deal
with corporations. Yet, in an IRS audit, one of the
first places an auditor investigates is the corporate
books. If he can pierce the corporate veil, then he
has free rein over the entire individuals affairs! We
know of some accountants that periodically peruse the
client's general ledger and with information obtained
therein, prepares quarterly or annual minutes, resolutions
and any other paperwork necessary. For this, they charge
from $250 annually to $200 per quarter, whatever the
traffic will bear.
TIP #18. Become a business consultant.
Unfortunately, there are not a lot of million dollar
businesses that don't already have accountant relationships.
Thus, why not go to your $250,000/year clients and help
them grow into $1,000,000 businesses.
TIP #19. Hook up with a "Preferred SBA
Lender" and offer to arrange financing for your
clients in need of $100,000 or more in funds.
Another way to help your clients grow and offer a valuable
service is to arrange financing. Call Keith McLaurin
of CIT at 858-547-0266. He can help you with the SBA
loans.
TIP #20. Develop a Computer Services and Installation
side of your practice. I know of a CPA firm
that has grown quite well with the following process
(particularly with financial institutions): 1. Get in
the door by providing certified audit services; 2. Analyze
the clients business from the data ascertained from
the audit and make suggestions as to how an updated
computer installation would give them the daily reports
necessary to grow their business; 3. Install the new
computer system and constantly be aware of how you can
help the client improve his business and grow his business.
The process here involves 3 very important points: 1.
The client views an audit as "overhead". 2.
Most accountants are primarily concerned with the expense
half of the P & L.; 3. Most clients view computers
and software as "commodities" that are basically
available off the street. The smart CPA in this instance,
concentrates on turning an audit "overhead"
engagement into a revenue enhancing engagement and by
installing the computers and software the client becomes
a captive client. This CPA has a very high retention
rate and is truly providing a service to the client.
TIP #21. Pick up and deliver for taxes.
Sounds crazy doesn't it? I recently listed a practice
in an area where many of the clients are wealthy retirees
and professionals such as doctors and nurses. Also,
it's very difficult to find a parking spot near the
office, lots of tourists. So, the CPA has a delivery
man to for pick up and delivery of tax returns. After
the delivery man picks up the organizer and the CPA's
staff prepares the return, the CPA calls the client
to go over the return and chat a little. When the delivery
man takes out the return, he shows the client where
to sign, which return goes into which envelope, etc.
The clients love it and so does the CPA. His average
1040 fee is $635 and he picks up and delivers about
150 returns.
TIP #22. Develop a tax interview system that
provides for only one meeting and payment in advance.
This is the story of a very successful EA that has created
a super efficient method of interviewing and preparing
tax returns (grosses over $80,000 in cash receipts in
March). Here's how it works: 1. at the interview, the
EA fills in the input sheet; 2. then he uses TaxTools
to run an estimate of the clients taxes; 3. next, the
EA checks off the boxes of schedules that he prepared
and figures the fee according to the price list; 4.
the price list always ends up high, so he gives every
client a discount ("Gosh, you've been a client
for X years, I can't charge you that much. How does
$XXXX sound.); 5. he then discounts the price and writes
the tax liability amount on the bottom of the form;
6. next he turns the form over and has the client sign
the equivalent of an "engagement letter";
7. now he tears apart the 2 part NCR paper in instructs
the client to pay the receptionist on the way out. After
the client leaves, he attaches the fee schedule to the
input sheet and passes the file on to data entry for
processing. After the return is processed, the data
entry person checks the tax liability from the tax program
to the result that the EA wrote on the bottom of the
form (result from Taxtools). If the results are the
same, the finished tax return is sent out to the client.
If the results don't match, then the tax return goes
back to the EA for review. Just think, only one visit
with each client, payment in advance and no account
receivables.
Please call Business Brokerage if you would like to discuss any of the above. We look forward to
meeting with you and we will answer any questions
you may have.
Yours truly,
BUSINESS BROKERAGE, INC.
David C. Smith, Broker
1-(800)-274-4272
P.S. Call for our free reports "How to
Sell Your Accounting or Tax Practice", "How
to Buy an Accounting or Tax Practice",
or our free 8 minute video "How to Sell
Your Practice for Maximum Profit". Both
are excellent reference sources to have on hand.
