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Tax Prep Software

Tax preparation is an important service to offer your clients. While advisory services can bring you greater margin and profits, your clients will always need someone to do their tax return too. While some firms prefer to do all tax prep manually, many firms use tax prep software to make their process easier. Ultimately, however, your goal should be to move from tax preparation to proactive tax planning.

Tax Prep Software Doesn’t Help Minimize Taxes

Professional Tax Preparation Software Doesn’t Help Minimize Taxes

The purpose of tax preparation is to review an individual’s or business’s activity during any taxable year, complete the requisite tax forms, and file them with the appropriate tax authority. The goal of tax preparation is not to reduce taxes, but rather to make sure that you accurately complete the return so that based on the entity’s existing fact pattern, your client isn’t overpaying on taxes in the current year. For this reason, tax prep software does not take into consideration future taxes or maximize possible savings.

Traditional Tax Prep Falls Short

Many people brag to their friends about how great their accountant is, but most tax preparers barely spend enough time to cover even the most basic of tax planning strategies to reduce their client’s tax liability. The majority of accountants who prepare returns simply copy and paste from the year before, adding in the data from the books, and do nothing to ensure their clients are paying the absolute minimum in taxes. The best solution to this problem is to offer proactive tax planning in addition to tax preparation.

Traditional Tax Prep Falls Short
Is Tax Prep Software Flawed?

Is Tax Prep Software Flawed?

While there is nothing inherently wrong with tax preparation or using tax preparation software, the problem for many firms is that they lack a profitable strategy for offering tax preparation service to begin with. You can use the best tax prep software in the world, but if you only prepare a tax return looking at what your client did in the previous year, documenting that activity in the tax return, and submitting that to the IRS on behalf of the individual, then you aren’t saving your clients any money.

No Professional Tax Preparation Software Helps
Answer the Question:

What can I do to change this client’s life and business, to take advantage of regulatory changes to pay the least amount of taxes?
What can I do to change this client’s life and business, to take advantage of regulatory changes to pay the least amount of taxes?

Use Tax Prep as an Upsell

Start with tax planning and upsell clients into tax preparation.

It is entirely possible to build a business earning upwards of $10 million in annual revenue doing solely tax planning. Any services you decide to add on the back end, such as tax preparation, will most likely double the business.

You can expect approximately 80% of clients who buy a tax plan to also buy tax preparation services from you if you choose to offer them.

Use Tax Prep as an Upsell
Get Higher Tax Preparation Fees

Get Higher Tax Preparation Fees

Once you have helped an individual save $10,000 or more on taxes, it is much easier to negotiate a higher tax preparation fee than your client would otherwise pay, since even with the higher fee, they will still save money working with you. This allows you to earn much better margins on the tax preparation work than you would if you only offered tax preparation.

Tax Preparation Software Doesn’t Solve Scaling Issues

In the case of traditional accounting firms delivering tax preparation, the problem with growth and scaling is not only the significant amount of time spent on service delivery, but that time is packed into a very finite period Using professional tax prep software cannot fully solve these two issues, and this severely limits how many clients can be onboarded. However, tax planning businesses do not face this issue.

The beauty of tax planning is while the fees are five to seven times higher compared to tax preparation, the value to the client is exponentially higher. This is one reason why the fastest scaling firms in the nation are primarily doing tax planning first, with tax preparation as a secondary upsell.

Tax Prep Software Doesn’t Solve Scaling Issues
Your Tax Firm’s Blueprint

Your Tax Firm’s Blueprint

With tax planning you can generate an incredible client base for tax preparation services. The most effective path to growing your firm and providing the highest value and satisfaction to clients is to offer tax planning followed by tax preparation. This does not mean you have to prepare the tax returns yourself. Your options include hiring a tax manager or subcontractor to prepare the tax returns, or otherwise outsourcing the work. Tax preparation software can also help speed your processes up, but the main ingredient for success is to primarily concentrate on tax planning first, tax preparation second.

Create Tax Plans for Your Clients
With Ease and Confidence With
Corvee Tax Planning Software

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Corvee has been recognized by Inc. magazine’s annual Inc. 5000 list as one of the nation’s fastest-growing private companies.