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From Tax Preparer to Business Partner: The CPA Comes of Age

James Palinsad June 7, 2013 0

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From tax-return preparer to business partner seems like a leap of faith, but more and more CPAs are happily crossing the divide as the CPA community endeavors to expand its role and services, while adding value for customers – despite compressed tax seasons that affect taxpayers, preparers and CPAs.

Today, the traditional core services—tax preparation, financial statements, and handling for-your-eyes-only financial data—are being performed side-by-side with the functions once the sole purview of a business adviser, if not of a business partner. Over the years, the trust built by CPAs with their clients has laid a solid foundation for the transition to new, more profitable revenue streams, such as an advising business partner.

Here’s some advantages to being a client’s trusted business adviser:

More impactful client relationship. From doing the tax-return preparation for someone to laying out his (or her) roadmap to enhanced profits for the incoming year is a sea change in the quality of the CPA-client relationship. It’s a change that can only lead to a significantly enhanced and more profitable partnership.

Client referrals. Good work begets goodwill. A CPA who does well by his client as the latter’s business adviser will likely be rewarded with referrals. The better the advice work, the more the referrals.

Brand boost. A CPA who has integrated business advice into his practice can easily and in quite a natural way take advantage of his expanded services to promote his brand.

Regular revenue stream. Unlike tax-preparation services which kick in only during the tax season, a business-advice consultancy provides regular work and a constant revenue stream throughout the year for the CPA.

Higher margins. There are higher margins for CPAs who do consulting work. Clients are more inclined to pay for business advice than they are for tax returns.

Satisfaction and fulfillment. Personal satisfaction, as well as professional fulfillment, is the unexpected extra reward for a business advice that results in the client turning a good profit.

However, there’s one potential roadblock to transitioning from the traditional role of a CPA to that of a trusted business advisor (TBA): It’s not easy.

Here are some steps to make the change easier:

Select. You have to choose the most receptive clients from your client base. It’s essential that you select those that are the right fit for your consultancy. Your A-list (and those that can be moved to the A-list) is a good start.

Initiate. Conduct due diligence by initiating research on and consultation with the client. Ask probing questions and listen well.

Offer. Meet the client and offer a pricing arrangement based on the levels of service you can provide. Be prepared to explain your pricing options and articulate your engagement details.

Accept. Accept the business engagement and prepare the final proposal and the engagement letter detailing all agreed-upon conditions.

Implement. Implement the engagement, making sure that you have in effect an action plan that has: a means for client feedback, action points, staff assignments, and reasonable completion dates to regulate your progress and assess your success.

Assess. Upon finishing the engagement, obtain client feedback via a face-to-face meeting. This is your chance not only to assess your results but also to bring out opportunities to continue assisting your client in his business.

While there’s certainly a perennial solid demand for CPAs with solid training in traditional CPA functions (such as the programs provided by cpacampus.com), the value of CPA practice has been enhanced by CPAs taking on the exciting and profitable role of the client’s trusted business advisor.

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