Using Software for Your Accounting Practice Makes Tax Planning Possible During Tax Season

8 minute read

Did you know that busy season is actually the best time to begin the tax planning process? Tax season seems to always get crazy with long hours and stress, and that is primarily why so many firms don’t even consider doing tax planning during these pivotal months leading up to April 15. Adding another advisory service to an already packed schedule doesn’t seem logical. After all, why should you begin tax planning when you already have a mountain of 1040s on your plate? But for savvy tax and accounting firms who know better, tax season is absolutely the most sensible time to begin tax planning, especially if you have the right accounting practice management software.

Tax Season is Hard Without Accounting Practice Management Software

Let’s start with the notion that tax season should be set aside as a time of just doing compliance. This has been the prevailing thought amongst most firms since creating a tax plan has traditionally been really time intensive. This is exactly why, until recently, proactive tax planning simply took too much time to realistically tackle during tax season. 

We’re all familiar with the struggles that tax season already brings for many firms:

  • Massive delays in sending and receiving signed engagement letters (If one is even sent)
  • Delays in processing payment on engagements (and sometimes starting work before payment)
  • No structured onboarding process 
  • Files and requests are being sent back and forth via email (unsecured)
  • Clients are local and submitting files in person
  • No reporting on the outstanding requests per client 
  • Waiting until the last minute tax deadline for all files causing spikes in workload
  • Sales and onboarding process takes up 50% of billable hours 

Even the best run firms can struggle with keeping their processes optimized, especially during tax season. While having accounting practice management software can do wonders in having engagement letters, questionnaires, file requests and payments all in one secure place, many firms that have their tax preparation process nailed down are reluctant to add more to their plate during tax season. 

It’s true, taking on an additional advisory service such as tax planning is a big step. It requires accountants to make a large shift in the way they work with their clients, one that takes them from being mainly reactive, past-looking tax preparers into proactive, forward-looking advisors. Typically, tax preparers who make the shift to proactive and strategic tax planning find it a challenge even during normal times, and tax season is anything but normal. So, why do it?

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Reasons to Tax Plan 

When adding tax planning to your offerings, you will begin to see extra revenue opportunities. Tax preparation is generally considered compliance, process-focused, low-priced and past-oriented. This drives down what you can charge clients because it’s viewed as a commodity. You’re seen as a form-filler. On the other hand, tax planning is considered advisory, outcome-focused, future-oriented with a high ROI—which drives high prices and greater profitability. If a client is able to pay $1,200 for the preparation of a business return, would they be willing to pay $2,000 per quarter if you could perform proactive tax planning and save them $22,000? The answer is absolutely yes, at least about 65% of the time.

But why would a tax professional want to take this on during tax season, the busiest time of their year? Offering tax planning during tax season presents a unique upsell opportunity to existing clients who are already thinking about how much money they are going to pay to the IRS. Their tax returns are at the top of their mind. Firms can easily repackage these tax prep services by adding components such as tax planning as a one-time or quarterly recurring service. 

In addition, firms that only stick with traditional tax prep leading up to the April 15th deadline are missing out on giving their clients optimum value. In many cases, you’ll find you can save clients tens to hundreds of thousands in taxes if you do tax planning. As long as they are saving more money than what they’re paying you, you are literally giving them back money.

And with a Biden presidency and the blue wave, we will could see the greatest increase in taxes in decades.

Is Tax Planning Realistic During Busy Season?

All this begs the question, is tax planning during tax season actually doable? With technology advancing, the whole tax planning process is accelerating, allowing firms to do things like automatically calculate over 60 tax planning strategies across multiple entities instantly

At Corvee, we’ve created client questionnaires for business and individual returns with hundreds of questions each. As a client completes the questionnaire, many of the questions that aren’t relevant become automatically eliminated due to conditional formatting, which means your clients don’t have to waste time answering irrelevant questions. These tax preparation questionnaires are incredibly powerful as the inputs flow right into a tax planning engine that gives you the clients estimated savings in current and future years. 

It’s extremely rare for a software for your accounting practice to do something like this, and practically speaking, what this means is you can create tax planning proposals for clients that determine prior year estimated overpayment, plus current and future year savings, all with a few clicks of a button. 

With powerful tax preparation questionnaires and tax planning software available, the “I don’t have time” excuse during tax season no longer completely makes sense. Ultimately, firms now have the option to hit two birds with one stone, creating more productivity by making tax plans in conjunction with tax preparation. This is your dream accounting practice management software and tax planning software in one platform!

Of course, this doesn’t mean you have to finalize tax plans before April 15th. By using tax preparation questionnaires that feed into tax planning, you could have tax plans 80% done for 90% of your clients by mid-April, and finish the remainder of each tax plan after tax season is done. The point is, it’s viable now to begin the process of tax planning even during tax season—if you have the right accounting practice management software to do it with.

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