5 ways to prepare for tax season success
If your practice is like mine, your work this past tax season was focused more on implementing the changes from the Tax Cuts and Jobs Act than planning for the future. With tax year 2018 behind us, it’s time to prepare for the next tax season and make it your best one yet. Here are five ways to set yourself up for success.
1. Revisit your processes. As you go through your tax season, you may realize that some of your processes need changing. Maybe it’s as simple as how you deliver the tax return to your clients, or as significant as moving to a fully virtual tax process. This is a good time to talk with your tax team to see what needs changing. Think back through your regular and extended tax seasons and identify areas that were bottlenecks in the process, or ways to re-engineer or reorder the processes that fit better to serve your clients. Are the right people involved in your projects or the right systems in place to execute your processes without issues?
Generally, when we run into time crunches during tax season, it’s due to processes not working. Taking time for your team to do a deep dive into your processes will allow you to see what needs to change, as well as getting everyone on the same page.
2. Revisit your clients. You may have had that client who came with their tax documents on Oct. 15 and expected you to turn around their return right away. Or you had that partnership show up with bank statements and receipts on Sept. 15. As you prepare for next year, do you want those same clients to show up at the deadline, or is it time to cut ties? Figure out which clients cause your tax team issues and grief, and let those clients know that you are no longer going to prepare their returns.
This has two benefits: First, you will get rid of the clients that routinely break your processes. Second, it will open up capacity to serve your good clients. Review your client list with your tax team, identify which clients need to exit your firm, and send them letters notifying them that your firm will no longer be preparing their tax returns.
3. Identify your capacity. For most firms, working crazy hours seems to be the norm. As we know, however, this leads to burnout and turnover. Instead of accepting the crazy hours, determine what additional staffing you need now and work to build your capacity. Determine how many hours your tax team worked (on average) on a weekly basis and divide by 40 to determine how much staff you’ll need. In addition, determine if you need to hire support staff for your tax process.
One person we are looking to hire for our tax team is a “sherpa” — someone solely responsible for interacting with clients and making sure tax returns are moving through the tax process in a timely way. The sherpa would ensure we have all tax documents before our staff starts preparing returns, as well as work with the clients if the staff has any questions. Getting the right capacity and staffing in your firm will allow for a better tax season.
4. Get started earlier. We all know the time crunch that exists during busy season, but we can begin making changes now in order to reduce our burden. Some of what we do is to prep all of our engagement letters now, so they all get sent at the same time in January. We also take this time to set up all of our systems we are using for next year to ensure the technology works and our clients’ experience is not fraught with issues. We will also make sure we have everything we need for 1099s and get W-9s in early so there isn’t a scramble at the end of January. Taking time now to do the little things allows us to be proactive and not feel the time pressure come tax time.
5. Plan out your busy season. At this point in the year, we have a good sense of how many returns we are going to prepare. The amount of work needed is not a surprise, yet it's easy for firms to feel as if their season is out of control. One way we combat this is by scheduling when we plan to do those tax returns based on what we know about the client. This helps ensure we don't oversell our capacity and allows us to proactively communicate with clients when we expect to start their return and when it will be finished. It also helps pace out how many returns need to be done per day, starting in late January, and makes sure returns are done at least a week prior to the deadline. This is contingent on clients providing data on time; however, we let them know the timeframe when their return is expected to start, and if they can’t meet the deadline, returns will get extended and started on once the other returns are complete. This gives an incentive to meet the deadline or go on extension.
Find your sweet spot
This is the perfect time of year to work on your upcoming tax season and design it the way you want it to be. There’s no need to have a tax season where clients come in last minute or one where you work crazy hours; it's in your control to dictate how your season works. This results in a better work environment and a less stressful time period by making these changes to set up your season for success.