For some tax and accounting firms, the high volume of clients from January to April represents the majority of their business for the year. But that appears to be changing.
According to the most recent State of Tax Professionals Report, many accounting firms are reassessing their business models and taking decisive action this year to take advantage of new business opportunities.
A majority of respondents in this year’s survey said their accounting firms reported a 24% increase in revenue over the past 12 months, and many were expecting that their revenues would continue to rise at a rate of more than 20% over the next 12 to 24 months.
This is exciting news—and proves the increasing importance of creating revenue stability beyond tax season.
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How technology can support revenue stability
Why revenue stability is important for small and mid-sized tax and accounting firms
7 revenue stability strategies and tactics
Consulting beyond tax season for better revenue stability
Are you ready to build year-round income?
How technology can support revenue stability
There is no doubt that AI-powered tax technology is transforming how accounting firms operate, unlocking capabilities that enhance accuracy, efficiency, and client service. With the ability to automate routine tasks, today’s accountants are free to focus on higher-value, higher-margin activities.
As such, many firms are capitalizing on the opportunity to provide personalized advisory services to their clients. This shift is supported by the significant time savings and vast insights that advanced technologies like AI and automation can provide.
By shifting from billable hours to a value pricing model, you can strengthen your accounting firm’s value proposition and open the door to year-round revenue (instead of just once-a-year tax return preparation).
In fact, accounting firms who’ve made this shift estimate:
A 25% increase in overall annual revenue within the first 12 months
An 80% increase in the number of clients on recurring billings
In much the same way AI-enabled tax technology can streamline tax prep workflow and fast-track tax research, it can also open data-driven insights, assisted decision-making capabilities, predictive analytics, and much more. These capabilities take your firm beyond the tax return and into the world of becoming a year-round strategic partner to the clients you serve.
Why revenue stability is important for small and mid-sized tax and accounting firms
Beyond the clear bottom-line benefits of revenue sustainability, there are other reasons to focus on building year-round revenue opportunities. Tax professionals who have stable receivables throughout the year can:
Attract high-quality employees. If you spend a lot of time hiring temporary employees just to help with tax season, you could be missing out on a lot of potential talent—those employees who are looking for long-term positions. Having a steady flow of business throughout the year means you can keep great employees on staff. Not to mention the ability to work strategically with clients.
Stay top-of-mind with tax and accounting clients all year. Companies that only offer tax services have to start over each year building a brand through marketing and advertising. By offering services that last throughout the year, you can keep your business at the forefront of customers’ minds even when they don’t need tax preparation.
Avoid cash flow fluctuations. Tax accountants who only earn an income part of the year have to figure out how to stretch that income through the lean months. Finding new revenue streams helps you balance out cash flow for smoother business operations.
Want to learn more about how advisory services can help to stabilize your firm’s revenue or connect with professionals who have successfully transitioned to an advisory-centric practice?
Join us for a virtual Advisory Bootcamp or an in-person Partner Summit where you’ll learn the steps you need to take to redefine your business model and distinguish between value-added advisory services and compliance services.
7 revenue stability strategies and tactics
To realize the benefits of an accounting business that does more than taxes, you have to diversify the services you offer to clients. These options can help you shift to an advisory business model and create sustainable revenue throughout the year.
1. Payroll
Small businesses often have very limited staff, which means the owner or one of the employees is in charge of payroll. That can be a challenge for a business owner who has little or no experience in accounting and payroll. Getting it wrong can be costly, especially for a small business. If you aren’t sure whether you can handle payroll management services during tax season in addition to your other work, approach businesses that have their own seasonal employment cycles in the summer and fall (such as landscapers).
2. Bookkeeping
Bookkeeping is another service many small businesses can use, especially those with a small staff or without anyone on staff who has experience managing daily finances and transactions. If you’re not familiar with bookkeeping services, you can take courses online, and you do not need an accounting degree to perform bookkeeping services.
3. Business tax preparation
While individual tax season is at the beginning of the year, businesses have tax obligations throughout the year. That includes:
Some of these services overlap with personal income tax season, so make sure you are ready to take on both if you decide to offer this to your clients.
4. Financial advising
Offering financial advising and other financial products can help you build trust with clients. It also allows you to stay in touch year-round, not just when tax season comes. Millions of individuals and small business owners could use help planning out their financial strategies. A trusted tax accountant who understands the person’s financial situation or business is the perfect person to offer advice and guidance. To become a financial advisor, you will need to get a securities license and pass several exams administered by the Financial Industry Regulatory Authority (FINRA).
5. Insurance sales
Selling insurance is another natural fit for many tax accountants and professionals. You can get a securities license and pass the appropriate exams to sell life insurance and other similar products to clients as an agent on behalf of large insurance agencies. When tax season comes, you can back off the insurance sales for a bit to accommodate the surge in your tax business.
6. Taxpayer representation
It’s not easy to deal with the IRS, but someone with experience in tax and accounting can provide insight and help for clients who are forced to do so. When you prepare someone’s taxes, you can represent them, but if you become an IRS Enrolled Agent (EA), you can represent anyone—even those for whom you did not prepare and sign their taxes. This can open a broader pool of potential clients who need your help and expertise after tax season is over.
7. Freelance or contract tax preparation work
Offer your services to large tax accounting firms as a freelance or contract worker. While many accounting firms hire contract workers during tax season, there may be opportunities to help with other forms and filings throughout the year. Reach out to your contacts to learn about what kind of work might be available.
Consulting beyond tax season for better revenue stability
As the number of clients looking for insights beyond the tax return grows, many accounting firms are discovering the benefits of transitioning from traditional tax compliance to offering consulting and advisory services.
This profitable shift not only opens up new revenue streams but also allows your firm to build deeper, more meaningful relationships with clients.
Are you ready to build year-round income?
With trusted methodology, guidance, and content solutions, Practice Forward can help your firm shift from a compliance-focused model to a lucrative advisory services approach that engages and sustains clients year-round.
Through your Practice Forward implementation, you have access to over 160 tools, including proposal templates, pricing calculators, and checklists, paired with personalized consulting to help you:
Implement and execute a proven sales process
Identify and package your firm’s services
Develop a pricing strategy
Standardize business best practice advisory delivery
Transition existing clients to advisory relationships
Uncover client advisory opportunities
