[IMGCAP(1)]For many preparers, checklists have replaced the cumbersome organizers, which most clients never completed anyway. But as we draw closer to year’s end, many preparers should be thinking about the things they need to pay attention to before filing season begins.

Chuck McCabe, founder and president of Peoples Income Tax and The Income Tax School, suggests a number of areas that the tax preparation business owner should address.

Developing a detailed practice and procedure manual is very important for tax firms that employ more than a couple of people, and is essential for operating more than one office effectively, according to McCabe.

“As more employees are added, communication and management become more complex. Tax preparers and other tax office employees can no longer turn to the tax business owner whenever they have a question, yet they want things to be done their way. Employees need standard answers to scores of questions.”

The employment agreement should be updated before interviewing, hiring or rehiring tax preparers, McCabe suggested. “Developing an independent tax practice while employed as a tax preparer is a conflict of interest and should not be allowed,” he said. “If an experienced preparer applies and has a number of long-term personal clients, buying the clients might be an option. An alternative might be to exclude existing clients by contract addendum from the non-compete provision in the agreement.”

Now is the time to consider a change in preparer compensation if one is contemplated, according to McCabe. “And the schedule of charges or hourly rates should also be reviewed and any changes made prior to training tax preparers,” he said. The prices of local competitors might be determined through “competitive espionage,” or compared with survey results from national professional associations.

Training tax preparers by operating a tax school is a best practice used by every national tax firm since it was developed by H&R Block over 40 years ago, according to McCabe. “There is no obligation for students to work for the tax firm and no commitment for the firm to hire graduates,” he said. ”The teacher has the opportunity to observe students during the tax course and determine which ones would make good employees.”

McCabe recommends early ordering of tax season equipment and supplies. “When purchasing is put off until the last minute, the result is often inferior quality, higher costs and late delivery,” he noted. “Estimates for each item should be obtained from several suppliers and purchase decisions should be based on value for the quality desired.”

Tax office setup should be complete before the start of tax season. “This includes cleaning of exterior signage and windows, as well as all interior fix-up and cleaning. And in addition to a tax law update, preparers should be trained in tax office policies and procedures and client service,” McCabe said. “Training in tax software should also be provided, including tips and shortcuts to increase efficiency in tax preparation.”

A marketing plan should be determined in the months prior to the start of filing season. “This will allow time for refinement as tax season approaches,” McCabe said. “And client retention should be addressed. Year-round communication with clients is essential. Tax organizers or checklists should be mailed or emailed by mid-December to clients with more complex returns. A January client newsletter should be produced with tax tips, as well as information about services offered.”

“Clients with more complex returns could be invited to come in for a year-end tax planning session,” he added. “This meeting provides another ‘touch point’ opportunity to ensure client retention.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access