Many tax practitioners focus on improving their efficiency during tax season, but there are plenty of things they can do in advance to ensure success from January to April, according to 2020 Group chairman and CEO Chris Frederiksen.
Chris Frederiksen
Speaking at Accounting Today’s 3rd Annual Growth & Profitability Conference, Frederiksen laid out a number of tips, best practices and strategies that tax practitioners can start putting in place now, including:
- Make sure you have good scanners. He recommends the Fujitsu 6130, which scans 50 pages a minute, duplex, and offers despeckling and decrumpling, among other features. “You’re going to scan at the front end,” he said. “The days of having people with lots of stuff to key off, those days are over with. We scan everything at the front end.”
- Get multiple monitors. “Go home tomorrow and buy another monitor. It’s ridiculous to have just one monitor. You’ve got to have at least two,” he said, noting that at his office, staff have three, and they’re contemplating moving to four, while a McKinsey study says that knowledge workers are most productive when they have six. He also described a portable monitor that can hook into the USB port on most laptops.
- Software: scan, organize, populate. Make sure you’re using tools that do these things. “Clients bring in their stuff -- that’s the polite word for it -- and normally this ‘stuff’ would go to a tax preparer and they’d sort it and move it around and copy it and put yellow stickies on it and highlight it,” Frederiksen said. “No more -- now it goes to the administrative person who does the scanning. He counts the number of sheets, runs them through the scanner and makes sure the scanner sees the same number of pages. Then we upload it to [a service like 1040 Scan or GruntWorx]. They put all the documents in the correct order so they follow the organizer.” When the file is returned approximately 10 minutes later, the practitioner takes care of the miscellaneous items that the system can’t recognize. The system also takes the numbers from the source documents and populates them in the tax return. “We find it populates approximately 60 percent of the return,” he said. The services are generally priced per return.
- Send direct mail to homeowners. Frederiksen said that he gets most of his clients from direct mail. He buys lists of all the new homeowners in his area; a number of companies provide them, but his firm uses Homeowners Marketing Services. He generally sends as many as five letters -- an introductory letter, a letter on December 1 offering a free half-hour consultation, a letter on February 1 offering a 10 percent discount if they come in before February 15, a similar letter on March 1, and a final postcard on April 1. “It’s the best two weeks in the year to get new clients,” he said.
- Thank-you letters. These should be sent out within five days of completing a client’s return, and ask for referrals. The trick is to write them out now, before January, so they’re ready to mail during tax season, and also to include at least two business cards for the client to give out to friends and family: “You’ve got to make it easy for people to refer business to you,” he said.
- Tax organizers. “We are big believers in tax organizers as a marketing device,” Frederiksen said. His firm sends full electronic organizers from the tax prep software, but it has also created a condensed, four-page organizer, which often helps drive referrals. Among other things, they printed up 5,000 and had them inserted in a local paper on February 1. “It wasn’t a stampede of new clients, but it certainly paid for itself, and it helped in terms of our branding,” he said.
- Create an audit prepayments and correspondence program. As an add-on at 10 percent of your fee, or $100, offer to cover any audit, and to deal with nuisance mail. Very few clients will get audited, so it’s worth the risk. He also recommends offering new clients a guarantee on all prior returns for $350. “What are my odds that they’re going to get audited?” he asked.
- Preschedule mail-ins. Tell clients to send information in by February 25, even if they don’t have everything ready.
- Preschedule appointments. “You can spend a huge amount of time during tax season messing around with appointments. You end up with all of this phone tag going back and forth,” he said. Clients should be prescheduled, with a postcard that includes a map of your location. “They want to know how to find you, and what to do with their car when they get there,” Frederiksen said. You should have someone on your staff follow up the week before and the day before.
- Expand your capacity. Because of the shortage of skilled preparers, Frederiksen said that there will only about a third of the tax preparers available that the industry needs, so practitioners may want to start exploring outsourcing returns to India and locally through firms like Xpitax and SurePrep.
13 Comments
For those of you who don't kniow who Chris Fredrickson is, do a google search and also, go back a few years and check Accounting Todays list of the 100 most influential people in the accounting profession. You will finf his name on that list. I've been in his lectures several times. He's tops when it comes to practice management
Posted by: joeltaxpro | November 17, 2012 12:13 PM
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Who exactly is Chris Frederiksen? I don't see any tax credentials listed after his name.
Could this be why his suggestions seem more geared for running a cheap burger joint rather than a professional tax practice?
And for JasonCPA78 who is splitting hairs, outsourcing "work" to India has the same impact as outsourcing "jobs" to India - denying work for Americans.
And I, for one, do not expose the Social Security numbers of my clients and their children to potential terrorists.
Also, those of us who truly represent before the IRS would NEVER offer to defend some unknown preparer's poor tax work for any price. This smells like a CEO looking to make a fast buck in a profession he does not fully comprehend or appreciate. Where does Mr Frederiksen get HIS taxes done?
Kate Harner, EA
Posted by: KATEHARNER | November 15, 2012 4:04 PM
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Peoples Income Tax in Richmond, Virginia, celebrating 25 years in business, provides outsourcing services at rates comparable to those of providers in India. For more information, contact cmccebe@peoplestax.com or visit http://www.peoplestax.com.
Posted by: peoplestax | November 11, 2012 7:10 AM
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Nowhere does it say in Mr. Fredrickson's article that he is outsoucing jobs to India. Scanning tha data is done by an admin level person in your office, which could be an out of work american. The software pre-populates the tax return, so we do not have to input 10 W-2's and our time is better spent. We use XCM to pre-populate as much data as possible. I know I would rather spend my time bringing in new clients than inputing 10 W-2's. Still some bugs to work out with pre-populating, but overall our office does most of what Chris suggests and it works.
Posted by: jasonCPA78 | November 7, 2012 1:11 PM
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A few good suggestions, other are questionable:
Thank you letters are a good idea, but not as a veiled attempt to ask for referrals. The thank you letter alone will serve to promote quality referrals...let the thank you letter speak for itself - that you care enough about your clients to thank them. Asking for referrals and including business cards makes us look like real estate agents.
Outsource to India?? Not good for all the reasons previously mentioned.
Preschedule appointments?? - does anyone really have tax information appointments anymore? Except for new clients, client meetings to review tax information are largely a waste of time. Clients view compliance work as a recurring commodity that should not require meeting time. They want to send in their tax info (electronically preferably) and be done with it....save your appointment time for tax planning season, a service that is more highly valued.
Most clients obtained from "direct mail to homeowners" will be low-end, low-value clients. High quality, valuable client relationships come primarily from word-of-mouth, including social media sources and high quality websites.
Advising clients to mail in incomplete information risks creating peicemeal inefficiencies and fee write offs.
Posted by: PabloEs | November 7, 2012 10:08 AM
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One very important thing that you can do now to have a Great Tax Season....
Offer free tax preparer classes. Use this as an incentive to get more preparers, get people working, help our economy! Our country needs the jobs, why are you outsourcing?
Posted by: shoints | November 7, 2012 7:33 AM
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Lots of good ideas, and a couple of stinkers. Outsourcing? NO WAY. Audit guaranteeing the returns prepared by someone else, whom the client left to come to you? Not smart unless you have already reviewed those returns carefully, as the odds are most of the ones who take the offer are the ones who know that they have hidden landmines in their old returns.
But most of the other ideas are good ones. A few, like pre-scheduling and using Qruntworxs, may only be good for larger practices. But that does not mean that the reader can not get some good ideas even from the ideas they are not ready for yet.
Over all, it's a valuable article for all of us to think about.
Posted by: K C J | November 6, 2012 12:58 PM
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I agree--outsourcing to India when we have almost 10% unemployment in the U.S.?????
Posted by: tmegee | November 6, 2012 8:37 AM
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Large firms have been outsourcing for years to overseas locations, sometimes their own operations or to contracted services. Primarily this was for input from the source documents to the software. Probably a bad idea unless there is knowledgeable and competent supervision. In the end though, the preparer is responsible for the return. And that means review, review, review. For small firms it is a loosing proposition. You can't save any time, but with scan and populate services, you can gain a time savings and during tax season it is all about time. I thought the worst suggestion was the "audit protection" fee. Using a "what are the odds" approach means that you are taking a risk for a fee. What is the worst case scenario? You could end up with an unusual year and find yourself unable to deal with the time requirements. Lay the risk off.
I think the one thing that we fail to do with our clients is to make sure that they understand why the fees have to be at a high level, and who is to blame for the complexity in the laws. One of our handouts should be a list of the elected representatives and their phone and mailing contact information. As passive compliance oriented "preparers" we fail to get our clients, the taxpayers, involved in the system that has gone awry.
Posted by: SullivanAcctg | November 5, 2012 2:07 PM
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Outsourcing tax work to India? thanks but no thanks. How about we outsource your job to India, Chris Frederiksen?
Posted by: taxking | November 3, 2012 10:08 PM
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I am very offended by the advice to send work to India. I would prefer to employ Americans! I also believe this to be a crafty way to get around the upcoming testing laws.
Posted by: LYNN A | November 3, 2012 5:51 PM
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Outsourcing returns to India? And who exactly from India is getting a PTIN number? And how can you trust someone from India to have the incentive to keep up with the intricacies of US tax law? This is probably the most crackpot - and possibly illegal - idea I have heard yet!
Posted by: olivertax | November 3, 2012 4:03 PM
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This is awesome! Thumbs up :)
Posted by: fortunatemove | November 1, 2012 8:10 AM
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