A few months ago, Acuity started a tax practice, and in our 14 years of existence, this was something we never thought we’d do. Since inception, we had been an outsourced accounting practice, starting with CFO services, and adding controller and bookkeeping practices along the way. While we had always preferred to let traditional CPA firms manage our clients’ tax filings in order for us to focus on internal accounting, we began noticing problems with our clients’ tax relationships. In many cases, they actually brought issues directly to our team to ask for help.
Repeatedly, we saw our small business clients experiencing two specific issues with their tax providers. First, and most troubling, was that they had virtually no relationship with the person doing their taxes, only hearing from their firm once a year to request financials to file the return. If clients heard from their tax preparer more frequently, it was usually through an occasional email newsletter containing technical IRS regulations written in confusing accounting jargon.
Second, our clients complained about the inefficiencies of exchanging financial information with their CPAs. Clients routinely received tax folders in the mail with requests to print or make copies of documents to be returned via snail mail. Our team at Acuity assured these tax CPAs that we put all of our clients on cloud-based accounting systems and could give them direct, secure access to their clients’ books. Nonetheless, the CPAs would respond that they did not use cloud software and preferred to have us or the client go through the manual process of printing out and mailing the reports. However, because Acuity modernizes our clients’ accounting function by using QuickBooks® Online Accountant, the situation made their tax CPAs’ antiquated processes and systems that much more frustrating to deal with.
As a result, the decision to launch our own tax practice was driven by our clients’ need for a better tax experience. Because we already maintain their accounting records, we can directly access almost all of the information needed to file their returns without having to drag them through time-consuming information requests. Acuity was one of the early adopters of a 100 percent cloud-based bookkeeping practice, so we saw the opportunity to do the same with tax and knew that Intuit® ProConnect™ Tax Online could serve as the foundation for launching a truly modern cloud-based tax practice.
We also believe that adding tax services to our firm will attract new clients who might not have previously considered the benefits of our outsourced accounting services. Most small businesses actively reach out to accounting professionals for help with their taxes out of fear of making a mistake that could potentially land them in trouble with the IRS. However, many of these same small businesses still try to do their own bookkeeping without realizing how much more efficient they could be if they outsourced it to a professional. We believe very few of these businesses have seen the impact a higher-level accounting professional a controller or CFO can have. Therefore, when a business owner initially comes to us for tax help, we see it as a great opportunity to introduce them to our other valuable service lines.
Compliance is another key area of consideration. Regulation-oriented services such as tax benefit from having strict timing deadlines. The regularity creates very clear engagement cycles and communication touch points with clients throughout the year. For firms with significant advisory or consultative practices focused more on project-based work, the specific rhythms of tax services should create better client retention and more consistent revenues.
For us to be successful in launching this practice, we’ll certainly look at traditional metrics such as the number of tax returns filed for clients, average number or returns processed per tax staff person and percent of returns filed on time versus extended. However, two metrics will be particularly important to measure our success. First, were we able to be 100 percent paperless, not just in filing tax returns but in the full tax engagement lifecycle? This will signal whether we’ve been able to create a modern practice instead of falling back into the inefficient habits of most traditional tax practices. Second, will there be specific Net Promoter Score survey data from our tax clients that will help us improve our processes and meet our clients’ goals?
Ultimately, our clients’ feedback regarding whether we were able to make their tax filing experience better is the only metric that truly matters.