I knew the first question I would get would be about a referral. Consider this before letting your clients know you're scaling back.  Find someone you trust who is willing to take on your clients. Also - don't say "scaling back" to the clients, but rather tell them you are getting out all together.  Otherwise you will get many requests to handle them "just one more year". I have had a few of these even though I told them I was shutting down completely. I've told them I won't have the software to handle it, so they really need to focus on moving on. But, again  - have a recommendation for someone to pick up where you left off. To soften the blow, I have offered to be available to the client and the new preparer for any transition issues that come up. Coordinate with that person on a transition plan. You can probably even establish a referral fee or commission plan with the new preparer to get a little extra income for the next few years. There are lots of models for this. The plan I have with the new preparer is that she will pay me 1/3 of the income she gets from my referrals over the next 3 years.

As for timing - I held off until last month (October) to inform my clients about the transition. Of course, I already had the transition plan in place with the new preparer ahead of time, so it was just a matter of letting folks know about it. I felt letting them know in Oct was early enough that if they wanted to find their own way and not use the person I'm referring them to, they have plenty of time to find someone else. But also it was close enough to tax time that they might just go with my referral recommendation. After all - there is income for me expected if they do that, so it is something I wanted to encourage.  I think if you can put a plan in place before the end of the year, you could still pull this off with a notice to your clients in December or early January about the transition.

Bottom line - I think the timing is about right to inform clients now that you are backing off of 2021 tax prep work. But I strongly recommend you have a referral or other transition plan in place for them before doing so.