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I started my career in the auditing division of a Big Four firm. I could tell right away which partners were the rainmakers who brought in all the money. There may have been other partners more technically proficient, but the rainmakers were great at developing relationships with people. They always seemed to know which services our clients needed and how our firm was uniquely positioned to help them with their challenges.

Whether you’re at a Big Four firm, a regional firm or a sole practitioner, you have the potential to be a rainmaker. A common trait I see among successful CPAs, regardless of firm size, is they know how to anticipate client needs--and deliver solutions--before the client has to ask. By the way, I’ve seen just as many introverts as extroverts possess this valuable trait.

Sure, it’s tough to think like a rainmaker when you’re under multiple deadlines. You’ve got federal, personal and business deadlines weighing on you, especially in April, September, October and December. But successful CPAs have figured out how to keep their day-to-day operations running while shifting into a more consultative role with the right kinds of clients.

Thanks to the Tax Cut and Jobs Act there have never been more opportunities for CPAs to play a truly consultative role with clients. As the tidal wave of Boomers shifts into retirement mode, record numbers of business owners will be trying to exit the enterprises they’ve worked so hard to build. For most owners, there’s no one they trust with their finances more than their CPA. Yet many CPAs are reluctant to help their business owner clients make a smooth, tax-advantaged exit from their enterprises. That’s a huge opportunity lost and it keeps you on the hourly, tax-deadline treadmill.

Don't lose a client when an owner exits

The No.1 mistake I see with business exits, whether immediate or decades away, is the lack of planning. I recently sat down with two successful business owners who were approaching an exit. In these situations, I typically start the conversation by asking: “What kind of tax planning have you done around this transaction?” Their responses were typical: “I’m going to owe X in taxes and I’m going to have a net of Y.” That’s when I reply: “It sounds like your accountant has developed a tax estimate. But it doesn’t sound like any planning was done.”

Look at your role now. What are you doing for your clients? Are you simply preparing tax returns and preparing ad hoc advice as needed? Or are you stepping into the role of a consultative advisor—someone who can take an overarching view of their entire financial situation and show them how a business exit fits into the complete picture?

In my new book, Liquidity and You: A Personal Guide for Tech and Business Entrepreneurs Approaching an Exit, I share some of the advantages of being a Personal CFO to your clients, especially for those who have a lot of financial complexity in their lives. There’s no reason more CPAs can’t be in that role. They have the smarts. They have their clients’ trust. So why don’t more CPAs pursue the role of Personal CFO?

As mentioned earlier, when you’re consumed by must-complete tax deadlines and related tasks, it’s hard to step away and figure out how to map out the revenue side of being a Personal CFO. But, nearly every entrepreneur I know is willing to pay more money on a project-based fee to have their CPA step in and act as a true consultant who gives them an overarching view of their total situation. That’s certainly not something that can be automated by technology.

Enter Qualified Opportunity Zones

Congress created the Opportunity Zones program as part of the TCJA. The rationale was to encourage long-term private sector investments in low-income urban and rural communities nationwide. The program is gaining traction because it enables investors who are facing capital gains taxes from the sale of business assets, artwork, their primary residence, etc., to receive generous tax credits in exchange for investing their gains in qualified Opportunity Zone Funds. The Opportunity Funds make equity investments in businesses and real estate in the Opportunity Zones designated by each state. Even better, investors can shift their gains to any fund they wish — they’re not limited to funds in their hometown or home state. They just have to reinvest their gain amount within 180 days from the date of disposition of the assets they sold.

Most clients who experienced a financial windfall aren’t going to say, “Hey, can you get me into an Opportunity Zone Fund?” They’re looking for ways to minimize their tax hit. And, that’s where you come in — knowing your client well enough to suggest a solution that most tax preparers and other advisors wouldn’t have considered.

Suppose your client sold some stock for $1.1 million recently. Let’s say the stock cost only $100,000 when she purchased it 10 years ago. Normally she’d be on the hook for a $1 million capital gain, However, if you help your client take that $1 million gain and invest it in a Qualified Opportunity Zone fund within 180 days of triggering that gain, she can defer taxes on the profits for many years.

There are three key benefits for your client who invested their $1 million gain into the fund:

1. No capital gains taxes are due on that money until 2026.

2. In 2026, the long-deferred capital gains taxes are reduced by 15 percent.

3. If the fund holds the building or other asset for at least 10 years before selling, then your client owes no capital gains taxes at all once that asset is sold.

What I like about this program is that it allows clients to put the government’s tax dollars to work by directly helping other entrepreneurs and job creators. Incidentally, Opportunity Zones are not necessary low-income areas. Booming areas like New York City’s Hell’s Kitchen and the LA Arts District are also considered Qualified Opportunity Zones. It all depends on how each state wants to divvy up the opportunities for resources and development.

There are myriad ways an Opportunity Fund can make qualified investments. The fund could purchase real estate and do heavy rehab on it, or it could purchase a parcel of land and build a commercial building there. It could also start a bakery, dry cleaner or any other local business that’s needed in a community, to name just a few. The key is there are two primary ways to go about investing in an Opportunity Zone Fund, and here’s where you can create great value for your clients and high margin revenue streams for your practice:

1. Invest in an established Qualified Opportunity Zone Fund. This is the most common way. Before your client pulls the trigger, you should do your due diligence on the fund. This protects your client’s interests and should generate a project-based fee for you. Evaluating the feasibility of investing in such a fund could also provide a project-based fee for you, not to mention performing ongoing review and due diligence of the fund.

CPAs can also lend a great deal of value by looking at each fund’s compliance and structure. You also want to look at the general partners who are running the fund and who is doing the audit. You’ll want to make sure the auditor is a firm with “bench strength” and a long-standing history of auditing funds. You don’t want your client to become “Madoffed.”

2. If it’s a large enough transaction and dollar amount, the investor (i.e., your client) can form their own fund. That’s going to involve high-powered lawyers and other professionals whose efforts you coordinate on your clients’ behalf.

If you have a client with appreciated assets, this should trigger a discussion between the two of you even if they haven’t yet contemplated a sale of those assets. Being proactive, rather than reactive, is one of the best ways to distinguish yourself from the pack (and from the robots). Getting up to speed on Opportunity Funds is a great way to cement your relationship with successful clients and unlock multiple revenue opportunities for you and your team.

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Tax reform Investment funds Client strategies Tax planning Financial planning