Are You Moving Your Tax Practice Upstream?

An increasing number of low service tax providers are offering tax and accounting services to small business owners. While most of these companies are primarily competing for the do-it-yourself tax preparer, their service offering is disrupting the marketplace for many CPA firms. Low service tax providers challenge the price point for services and their value, creating even stronger pressures on pricing. In addition, these emerging providers are not technology averse. In fact, their eager adoption of technology allows them to streamline operations and provide basic compliance services to small business owners, not just individuals. There is a valuable lesson to be learned here. To remain profitable in your tax practice, you need to take a serious look at your requirements for new tax clients and start moving upstream with the types of clients you serve and the services you provide.

When I speak with CPA firms, most of them will tell me that they prefer and enjoy working on more complex and sophisticated tax work, especially the tax planning and consulting component. However, there is often a disparity between the tax work CPAs want to do and the tax work they actually do.

Most CPAs serve clients that don’t have a ton of complexity. When asked why this is, most will give a long list of exceptions; the most common being that they think these non-complex clients could eventually turn into ideal clients. The problem is that in most cases, these clients don’t turn into ideal clients and instead wind up occupying valuable space on the client roster. Furthermore, these types of clients often end up being high maintenance and slow to pay.

It is time to abandon the practices that divert your firm from profit. Here are a few ways to get moving in the right direction:

  1. Increase the price point for tax returns to help weed out people that don’t value the service. Sticking to this minimum is a great place to start.
  2. Be more selective with your new client criteria. The CPA profession is supposed to be a low-volume, high-price point business model. However, I think that over the years many firms have unintentionally gotten away from this. Firms need to move back to this model and set selective and enforceable criteria for becoming a new client of the firm.
  3. Offer more non-compliance driven services. Consulting and tax planning are key services that most clients are looking for yet don’t often receive. For sophisticated firms, I believe this will become a differentiator from lower service tax providers.
  4. Streamline your tax preparation workflow. For tax services, you can offer more value for the money if you are free to spend your time on the things that matter, not just filling out tax forms and plugging numbers into your tax software.


Moving upstream will not only enable you to be a lot more profitable, but it will likely mitigate common staffing challenges like overwhelming workloads and employee engagement. If you would like to discuss a plan for moving your practice upstream, contact our team of consultants today.





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