It’s become clear that running a practice on tax preparation alone has becoming harder to scale. With automation reducing time spent on routine work, compliance, while still essential, is becoming more standardized, and clients now expect more insights, direction, and ongoing support for their businesses.
That is where more tax planning and overall advisory services can change the game. For tax professionals, offering planning advisory is not just a new service line. It is, at its core, an overall smarter way to deepen relationships, create recurring value, and build a practice that is less seasonal and transactional by nature.
Conventionally, tax professionals were known for offering services such as filing, planning, and compliance. With planning- and advisory-level engagements, you can include a wider array of services, such as financial strategy, business valuation, cash flow management, market analysis, and budgeting.
The rise of advisory in tax
In all honesty, most tax firms do not need more clients, they need more value per client.
One of the major factors for the proliferation of planning- and advisory-level services adoption is digital disruption. Over the past few years, technologies such as artificial intelligence have automated several tax processes, reducing reliance on tax professionals for transactional tasks. Clients, today, want tax preparers to assist with their core financial operations, offer valuable insights, manage risks, and provide growth strategies.
Consequently, tax professionals have been inclined toward transitioning to more strategic roles, which utilize the latest technologies but still require human intellect
4 key benefits of expanding with client advisory services
1. Predictable and constant revenue streams: Compared to traditional tax filing and compliance tasks, client advisory services ensure regular revenue generation. Tax firms capitalize on tax season to generate most of their annual revenues. However, with planning and advisory services, you have year-round opportunities, which minimizes financial volatility and improves cash flow.
2. Enhances relationship with clients: With any level of planning and advisory services, tax professionals have ongoing interactions with clients, not restricted to tax season. It helps them better understand client requirements and build a personal rapport that goes a long way.
From being a professional who helps them with tax-related tasks, they become contributors to a business’s growth. These engagements help tax preparers ensure the retention of clients. Moreover, satisfied clients become promoters of your services, which helps in bringing more business.
3. Establishes a competitive edge: By offering something extra to clients, more than just a transactional relationship, you can almost immediately differentiate yourself. While your competitors still focus primarily on compliance services, you will be providing advisory-level services that demonstrate expertise and a commitment to client success.
4. Increases the profit margins: As these services are by nature more specialized, businesses are willing to pay a higher premium than the typical hourly billing rate. Tax professionals who create a niche for themselves are also more likely to be paid well and retained for longer periods.
Evaluate your current operations
You need to analyze whether your current business operation is capable of taking on the additional workload. Remember that any planning or advisory service involves regular, intentional client communication, which would take up a significant amount of the tax professional’s time.
You should also identify the tools and technologies needed to facilitate these services. Once you have evaluated the basic requirements and workload, it will be easier to get a better understanding of the budget, value proposition, and workforce scheduling.
Start with the existing clients
You must do a soft launch of client advisory services by pitching it to your existing clients. However, you must identify those who are legitimately interested in the services. Start enquiring with clients about their requirements apart from tax filing and compliance. Identify clients that are growth-oriented, have strategic issues, or operational complexities.
Once you have identified the businesses, it is critical to be empathetic to their issues while offering your services. Don’t try to be too salesy and position yourself as the best in the market. Make your pitch personal and try to remind them of the strong partnership they have had over the years. Also, onboarding too many businesses at once could overwhelm you. Try to take on only a select few businesses to gauge the operations.
Decide on the type of services
At the beginning, you should offer a limited number of services to clients to avoid operational overload. Analyze which high-demand services are among clients by taking a quick survey and researching the online platforms. High-demand services, such as budgeting and cash flow forecasting, enable you to create the maximum impact in a shorter time.
For instance, cash flow forecasting enables clients to anticipate shortfalls and make informed decisions about spending and investments. Moreover, budgeting enables them to align financial resources with business goals.
Offer a service package
Tax practice conventionally works on an hourly billing structure. However, creating a pricing structure for niche businesses, like advisory services, requires a more strategic approach. You must create diverse service packages, each clearly defining the type and level of services you offer.
A tiered-package approach enables clients of different sizes the flexibility to choose the right package.
Invest in technology
You must look beyond traditional tax software and identify other tools and technologies you might require to provide exceptional services. For instance, a technology like agentic AI can streamline client communication by providing automated, context-aware responses similar to a human agent.
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They can also help you predict cash flow trends. Moreover, the new-age accounting solution offers features, including predictive analysis and financial forecasting, enabling you to help clients in data-driven decision-making. Another key area where technological tools are highly useful is client collaboration.
Cloud-based platforms offer a unified platform for sharing documents with clients, without the hassles of long email threads. Investing in advanced technologies requires initial capital investment, but in the long run, it proves to be highly profitable.
Focus on training
Planning- and advisory-level services require a completely different set of skills and a transformation in mindset. It requires deep knowledge of financial intricacies and the ability to think critically.
Moreover, the tax professional must be able to handle client issues professionally and make strong connections. Without proper training, tax professionals may find themselves in uncharted territories, resulting in client dissatisfaction.
With the digital transformation bringing automation into the tax process, now is the perfect time to transform your tax practice with client advisory services. Tax professionals must offer more in order to be a part of their clients’ success stories.
It helps them build strong personal connections with clients, leading to higher retention and stable revenues. However, to gain an advantage over your competitors, it is time to start your transition now.
ABOUT THE AUTHOR:
Dr. Sangeeta Chhabra, co-founder and executive director of Ace Cloud Hosting, is a leader and innovative entrepreneur with more than 20 years of experience in the IT sector. She has positioned the company as a leading global provider of IT and managed cloud services, celebrated for its QuickBooks hosting tailored for the accounting sector, managed security services, Desktop as a Service, and public cloud offerings for SMBs and enterprises. Under her leadership, Ace Cloud Hosting was honored as the Best Outsourced Technology Provider at the CPA Practice Advisor Readers’ Choice Awards 2023, among other accolades. Beyond her professional successes, Dr. Chhabra is a passionate advocate for women’s empowerment and is committed to fostering an inclusive environment at Ace Cloud Hosting.
Photo credit: VioletaStoimenova/iStock
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