What Should CPA Firms Do After Tax Season Ends?
For the months leading up to the deadline, you often feel like you are on some sort of adrenaline rush – there are deadlines coming up, calls from clients, and you blur weekends into weekdays. However, once the tax deadline actually arrives, everything comes to a screeching halt; your inboxes finally calm down (somewhat) and you have a little bit of time to slow down and catch your breath.
Believe it or not, the end of tax season isn't necessarily the finish line for everyone; it can also mean a turning point for many businesses in the accounting industry.
Typically, how an accounting firm decides to use that time in between the end of the tax season and the following year will be instrumental in determining how much they grow, their profitability levels, and how well they maintain their relationships with clients. So if your firm is using time in between tax seasons as a way to just take a break, then this can be very detrimental. On the flip side, if your firm is gearing themselves to be proactive – you will likely outperform any local competition you have, retain your existing clients, and build systems that you can scale in order to accommodate future growth.
So what should your firm do after the end of tax season? Let's look at how to best use that time.
1. Conduct Post-Season Review for Taxes (Honest One)
The post-season review is important; it gives you an idea of the past tax seasons and shows you ways to improve during future tax seasons.
- Every tax season leaves data behind (if you take the time to look at it and analyze it). This is part of the process of asking the hard questions. Such as:
- Where did the bottlenecks occur?
- Which clients took the most time?
- Which services were profitable, and which were not?
- Were deadlines kept under control or chaotic?
- How did your team do during stressful situations?
Don't sugarcoat things. You won't grow unless you're honest about the past.
More importantly, many companies will skip the review meeting, or rush through it, which is a mistake. If you have even a few structured internal review meetings or structured meetings with key clients, you will gain insight that will allow you to transform the way you do business next year.
You can also put together a structure to create your improvement blueprint by documenting:
Time it takes to complete jobs
- Number of errors made
- Staff workload distribution
- Client communication errors
2. Reassess the Client Base
The unequal nature of clients has never been clearer than during tax season. Clients exhibit such a range of behaviours: some are incredibly organised, responsive and value your professional expertise while others send you documents at the last moment, question every one of your invoices and drain your team's resources.
The time is now to contemplate:
- Which are the ideal clients for your firm?
- Which clients will you retain, adjust their fees or be released from your firm?
This isn't about impulsively getting rid of a client. This is about being strategic in your decision-making process.
You can:
- Reassess your pricing for clients requiring a high level of effort to service
- Implement stricter deadlines and policies
- Transition lower-value clients to automated service solutions
By proactively managing your client base, firms can improve profitability without increasing the workload on the practice.
3. Build Client Relationships (Beyond Compliance)
The majority of transactions take place between clients and tax professionals during tax season; thus, tax professionals have a unique opportunity to create a more valuable and meaningful relationship with clients within the post-tax season period.
Make contact with your clients after the April tax deadline and do not conduct the interaction to seek tax information from your clients, but to provide a service to them.
This service could be:
- A summary of events that occurred after filing
- Tax-saving ideas and strategies that can be implemented in the upcoming year
- A discussion of the client's overall business performance
- Methods to improve the performance of the client during the planning process
In doing this, you are positioning yourself not just as a compliance provider, but also as an advisor and strategic partner.
A follow-up conversation could lead to:
- Advisory Services
- Bookkeeping Services
- CFO Services
In addition to being less stressful for your clients, when they have passed the deadline for tax filings, they will be receptive to having a more open discussion with you.
4. Transitioning to Advisory Services
This is the time for your practice to evolve away from compliance.
We have seen time and again that compliance work is:
- Cyclical, by its very nature
- Capacity-constrained
In contrast, advisory work is:
- Higher margin work
- Recurred revenue source
- Provided via a relational basis between the service provider and the client
Begin to identify the value in your current clientele and then start to extract that value with:
- Cash flow planning
- Budgeting & Forecasting
- Profitability analysis
- Tax planning for next year
There’s no need to start from scratch here, most of the time you already have the data that can be transformed into insight that your clients will pay for.
Today's fastest-growing firms are those that have moved away from “providing tax filings” to “advising based on tax returns.
5. Investing In Technology (That Is Truly Needed)
Most firms suffer through outdated systems and inefficiencies after tax season.
Those inefficiencies are usually a result of:
- Manual Entry of Data
- Poor Integration Between Various Tools
- Time-Consuming Document Collection Process
- Inability to Track Workflow
This is the opportunity to make improvements.
However, beware of simply adopting technology just to have it. Rather, you should focus on adopting tools that resolve the issues you are experiencing. Example tools include:
- Workflow Management Systems
- Document Automation Tools
- Artificial Intelligence (AI) to Assist With Extracting Data
- Client Communication Software
The goal is simple: eliminate manual tasks and improve your accuracy.
6. Review Your Team and Reduce Burnout
Tax time is hard work for everybody, with long hours and high stress, but it is even harder for your best teams. If you do not address this now, you're taking a chance.
The post-tax season should be a time to:
- Talk to Your Team
- Get Feedback on Workloads & Processes
- Look for Signs of Burnout
- Reward & Recognize Employees
Accounting retention is becoming increasingly difficult due to the fact that talented accountants now have many choices, and they will not work in an environment that they view as completely unproductive.
You may need to consider:
- Providing Flexible Working Hours
- Providing Vacation/Time Off
- Investing in Career Development
- Changing Responsibilities of Employees
Going forward into the next cycle, a strong team that is motivated will be your most valuable resource.
7. Revisit Your Pricing Terms
If the tax season was so much stress without much engagement or income, your price may need to be reviewed.
Many firms greatly under pricing their services, particularly for complex and last-minute requests.
After you have completed the tax season, take a few minutes to evaluate your:
- Time spent on each client
- Profitability for each service provided
- Value provided vs. Price Charged
You might want to:
- Consider using a value pricing method
- Using fixed-price projects
- Using a tiered pricing structure
There is more to pricing than just revenue. The price can also be a way to establish the perceived expertise level of the CPA. Many businesses can price their services too low, making it look like their services are not worth much.
8. Develop Your Systems for Next Year’s Tax Season (Right Now)
The worst time to get ready for tax time is... when taxes are due.
Get started early.
From what you learned during this year’s tax season, now start to establish your systems with the following:
- Standard Workflow
- Simplified Client Onboarding
- Established Document Submission Timeline
- Automated Reminders & Alerts
- Internal Checklists
You can also see that even minor changes will yield great efficiencies.
To put it in another way: Each hour you invest now will save you multiple hours during the peak of tax season.
9. Look at Outsourcing & Capacity Expansion
If your team struggled with workload this year, it’s important to look into different capacity models to help soften workload for the next tax season.
Outsourcing has become a viable option for scaling your accounting firm, not just a cost savings solution.
Ways you may be able to use outsourcing to help cover the workload include:
- Outsourcing administrative operations (data entry, bookkeeping, etc.)
- Extend working hours utilizing global resources
- Accessing specialized employee skill sets without having to hire full-time employees
The key to successfully using outsourcing is to have a plan in place to utilize outsourcing to not only reactively fill capacity but also proactively fill capacity.
Firms that effectively integrate outsourcing will have the ability to service more clients without overstretching the capacity of their existing team.
10. Place Major Focus on Marketing and Brand Positioning
Among possible areas of consideration during tax season, marketing activities tend to take a back seat to other priorities. The time to get them going again is now.
In assessing these priorities, ask yourself the following questions:
How do your potential clients view your firm? What differentiates you from the competition? Are you attracting the proper type of clients?
Consider making these investments:
1. Thought Leadership (blogs, webinars, LinkedIn content)
2. Client Testimonials
3. Niche Specialization (startups, real estate, e-commerce)
It's much more important that you are consistent in your marketing efforts than it is for you to be prolific.
Building a strong brand will minimize your dependency on referrals and through competing on price.
11. Offer a Diversified Approach to Service Offerings
While preparing taxes is a key part of your service offerings, it shouldn't be the only revenue source for your business.
Now is a good time to expand to other areas of service, such as:
1. Bookkeeping and Accounting outsourcing services
2. Outsourced Payroll Services
4. Business Consulting Services
5. Compliance Management in Other Regions
By diversifying your firm’s service offerings, you can stabilize your revenue and lessen seasonal pressure on your business.
12. Create Financial Plans for the Coming Year
As you develop your plans for the upcoming year, take a moment to look internally and evaluate your firm's performance with respect to:
1. Revenue Trends
2. Profit Margins
3. Cost Structure
4. Cash Flow
With this information, you can establish realistic goals for your:
1. Growth
2. Hiring
3. Investment
4. Expansion
Tax season leads to significant recurring annual revenue. Ultimately, how effectively you manage this revenue will directly impact your firm’s long-term viability.
Looking Beyond Just Surviving Tax Season to Strategically Move Forward
The endurance test is what will come after the test of your vision during tax time. The firms that really thrive will be the ones who not only survive through the busy season but have learned lessons through busy season and can now adapt and evolve.
Instead of asking yourself, "How can I recover from tax season?" start asking, "How can I leverage my tax experience?"
Because every deadline that is stressful, every late-night filing and every client issue has created a roadmap for improvement.
At the end of tax season you do find relief: but you should also find clarification.
You now have the following information:
- Real performance data
- New insights about your clients
- A clearer understanding of your strengths and weaknesses
What (a.k.a., utilize)?
You can take action on the above while your memory is still fresh. Even just making small but consistent improvements to your firm right now will help completely change your next tax season and the future growth and success of your firm.
Because in the world of accounting, success does not necessarily come from simply meeting deadlines. It is also about creating a business not reliant upon deadlines.
If you're looking to improve your processes, reduce workload, or scale your firm efficiently, contact us today to explore how the right strategies and support can help you grow beyond tax season.
