Build to Enough

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Keila Hill-Trawick: Hello. You're listening to Build to Enough, a podcast for entrepreneurs who want to scale at their own pace. I'm your host, Keila Hill-Trawick, and I'll be your chief storyteller and cheerleader in a world that glorifies endless expansion, we're tuning out the noise and discussing the beauty of enough. Each episode will dive into inspiring stories, practical insights, and strategies to cultivate sustainable success on your [00:00:30] own terms. So whether you're a solopreneur, small business owner, or aspiring entrepreneur, get ready for a refreshing take on the entrepreneurial journey. This is Build to Enough.

Keila Hill-Trawick: Hello and welcome back to Build to Enough. So if you heard the last episode, we talked about fractional CFO in your firm, how to build it, how to offer it to clients and where it can benefit you. And today I wanted to talk about the other side of advisory, which is the tax side. Now everyone is talking advisory and everybody shouldn't [00:01:00] be doing this. But if you are offering some kind of tax service in your firm, we want to talk today about how you might be able to enhance that offering for your firm and your clients. So I specialize in very small firms. So at Little Fish, we focus on tiny professional service providers with one owner and small teams usually of less than ten. And my focus overall with this podcast and everything that I do is to help firms grow to small. So you don't [00:01:30] need a lot of team, you don't need a lot of clients, but you're still able to maximize maximize your impact, your revenue and your profitability.

Keila Hill-Trawick: We don't want to make less just because we're staying small. So part of the reason that I even want to talk about tax today is because I think that it takes our firms beyond just compliance, instead of us just saying, I will check this box for you. There are advisory and planning services that we can offer to help clients to get better at understanding it. At Little Fish, we offer Tax Prep suite, which was a [00:02:00] year round tax service offering. And part of the reason that we did that is because we realized that there were a lot of clients where we would offer them their tax return. We would tell them what they should be thinking about during the year. But like, you know, like, we know there's a lot to think about. And when that would get forgotten, it would cause not a great tax experience for the next year. So today, as we dig into tax services, we're going to talk about the role and importance of advisory services, the direct benefits that it provides to not just accounting [00:02:30] firms but also small businesses. Um, and then practical steps for us to integrate those services into the firm, because I know that we have a bright future ahead of us, but it is a changing landscape for all firm owners. And like, how can we get ahead of that curve to make sure that we're serving our firms and our clients in the best ways? All right, so before we jump into all of this, why does this even matter? Depending on the side of the fence that you're [00:03:00] on, it matters for different reasons.

Keila Hill-Trawick: So if you're accounting firm, it helps you to differentiate yourself? No longer are you just a tax preparer, you can actually offer additional benefits to your clients that help carry and educate them throughout the year. And if you're a small business owner, you get the peace of mind and financial benefits of going beyond just getting a tax return. You understand why you have to do the other financial aspects of your business, like bookkeeping and quarterly estimates, and it helps you to optimize your financial outcomes so that you're looking at your financials, [00:03:30] not just from a strategic operational standpoint, but also from a strategic tax standpoint. How does what I'm doing throughout the year affect my taxes when I go to file them in March or April? All right. So I would like to include some definitions. So tax preparation is what it sounds like right. We are preparing the tax return. We're asking for all of the information. We're preparing your return. We're delivering it to the client. The client reviews signs off on it and makes payment [00:04:00] or accepts their refund. Now when we talk about advisory and tax planning, much like everything in the accounting space, it can be defined differently.

Keila Hill-Trawick: But the way that I kind of look at advisory is to give support around tax functions. This can include things like reviewing a letter to tell a client what it means and what they need to do next. Um, looking at estimates to say, hey, should you be using the safe harbor method versus [00:04:30] last year as a compliance method? Not necessarily. Which is better or worse, but more so how does this affect your business doing one or the other? This can also be things like bookkeeping. Looking at the books to make sure there isn't anything that stands out as obvious, need to be updated or changed in order to make sure that the tax return is accurate. Now, planning to me is the strategy. Planning says, hey, you could contribute more to your 401 (K) or maybe you need to change your business [00:05:00] entity type. It also means looking at things like your estimates to see where that's going to land you when you actually go to file your return. So this can be kind of in one bucket. They can mean two different lanes for an accountant. But I really want you to think about what is most helpful for you. Do you need to know, hey, how do I best stay in compliance? Or how do I best save on taxes? And small businesses need this at various points in their business phases, right? In the earlier points, you probably don't need tax planning the same way, [00:05:30] because you're just trying to make sure that you're doing what you're supposed to to follow the rules.

Keila Hill-Trawick: Tax planning is really more beneficial when you have money, when you have extra, when you can say, hey, how could I spend more to save on taxes, on things that would be most beneficial for my business? Now you've got some strategic tax planning. So this is maximizing deductions, future planning, working with the financial advisor to make sure that you're using your funds to the most efficient, in [00:06:00] the most efficient ways possible for your business. And then if we talk about advisory as like compliance and risk management, how do we avoid penalties? How do we make sure that we're not paying interest? How are we filing our extensions and making sure that we are then filing the return in a timely manner, and not waiting until the last minute? Is there audit support if you're under audit? Is the accounting firm going to take care of that, or are they going to direct you to somebody else? This is also things like tax resolution. [00:06:30] Do you owe a lot. And maybe you're prepared is just advising you to get a better expert to walk you through all of your options. So what if you're an accounting firm, how can you implement tax advisory services? I would say like with everything. Surprise, surprise. Start small. You already offer tax prep.

Keila Hill-Trawick: You probably already offer some advising services. What are you already giving people that you're not calling advising? Do you give them a video or a call to walk through their return [00:07:00] and what it means? Do you give them advice on next steps? Hey, to avoid paying so much next year, you'll want to make quarterly estimates or make sure that you're keeping up with your bookkeeping. Do you look over their books before you do their return to call out things that might stand out? Hey, you don't have any employees and you shouldn't really be paying yourself. But there's a salary line here. What are the things that you're already telling clients to help them make better decisions around their tax return that you're just not calling advisory. Then [00:07:30] second, do you have the team to be able to support this? Nobody wants to implement a new service and have to just take on more work for themselves. So think about whether you can hire or upskill the talents of people who are already working with you to make sure that you, as the firm owner, are not the only one delivering this. And then, as every single time, I will probably tell you, leverage technology. There is so much software that can help you with tax planning, that can help to calculate these estimates for you, that [00:08:00] give you some things for you and your clients to think about, so that you can use that as a starting place to then get with your client about how you can interpret that for them and give them personalized, customized attention on how this affects their business.

Keila Hill-Trawick: Also, use this as an opportunity to educate clients. If you're a small business owner that's figuring out taxes for the first time, one of the first people that you're going to go to is your tax preparer. Is your accountant, the person that is taking care of these finances for you. And so as firms, we can start introducing [00:08:30] this service to clients to say, hey, here's how I can be more valuable to you. Some of the questions that you were asking in between services before were out of scope, but I've created a package that can really help support that because I know you're going to have these questions. You can educate clients not only on why it's valuable for them, but why you should be the one that provides it to them, and then figure out what model works best for your service. Is this going to be a retainer that clients pay for throughout the year? Do you find that small businesses [00:09:00] find it easier or better to, like, take on that in monthly chunks? Or do you want to do a year round price or quarterly price where people pay for specific services at specific times. So one of the ways that Little fish implemented this was that we did like a lot of accountants. We started with tax prep.

Keila Hill-Trawick: And then we would like add a call and add quarterly calls. And if you wanted this, um, estimate service, we would add that what I found was [00:09:30] that a fixed fee, um, that moves a bit based on what a client might need. But starting with that fixed fee really helped us to say we are most valuable when we do all of these things for you. So instead of saying, if you want this, we will provide it for you. What we said is for the, uh, small businesses that we serve, we already know that you need these five things. We are going to include it, and we want you to be the ideal client who takes advantage of all of these. If what you really need or what you feel like you need is just [00:10:00] tax preparation and one call, we're not going to be the best fit for you and we're happy to refer you out. But it helped us not to create a buffet of services by which small businesses could choose from. For small businesses, this was really helpful because they don't know what they don't know, and having someone who says, hey, when it comes to income taxes, we're going to take all of that off your plate, help to reduce the mental fatigue that they had with trying to figure out from a list of products what they might be most interested in. All right. So if you are [00:10:30] a firm owner, the essential role of tax advisory services is going to be really important if you already have tax preparation.

Keila Hill-Trawick: Now this isn't for everyone. If you want to just stick with the nuts and bolts and not go into advisory, do not create more work for yourself than you want to do. But if you're willing to expose your clients to strategic client strategic planning, compliance, and risk management offerings, you have an opportunity to expand your revenue as well as educating your [00:11:00] clients to something that's going to be most helpful for them. So if you're a firm, you get to differentiate yourself in a really crowded market for tax preparers. And at Little Fish, we really focus on going deeper versus wider. This is an opportunity for us to deepen those relationships while creating new revenue streams. And if you're a small business owner, you get the opportunity to work with somebody year round so you can maximize deductions and reduce tax liability during the year. Remember, by the time we do your tax return, the [00:11:30] year end has already passed and there are limited options that we have to make it easier for you. We can also make sure that you're in compliance as these tax laws are changing instead of figuring it out after the fact. And we can take the opportunity to walk through how you can optimize cash flow, especially since the money that you get throughout the year, some of that needs to go to taxes, and you can be prepared for that before it starts.

Keila Hill-Trawick: So if you're a small business, set yourself up for long term success by hiring somebody who goes beyond tax [00:12:00] preparation really into the tax advisory space to give you more support throughout the year. And if you're a firm owner, start looking at your current service offerings, see whether or not there's some expansion that can already be built into what you do, and introduce your current clients into a more robust offering from you. Tax planning. Tax advisory is a service that I think almost all small businesses could use, and accountants, we can be at the forefront of providing that to the clients who already know and trust us to [00:12:30] give a deeper relationship. Thank you so much for listening today. Check out our YouTube channel where you can see this video in full, and all of the other podcast episodes that we've recorded. If you'd rather watch and take notes at the same time as listening. Otherwise, I look forward to talking to you next time about building to enough.

Keila Hill-Trawick: Thank you for tuning in to another episode of Build to Enough. If you enjoyed today's episode, don't forget to subscribe, rate and share the love with your fellow entrepreneur friends, and make sure to sign up for the Build to Enough [00:13:00] newsletter. The link is in the show notes. Stay tuned for more episodes as we continue to redefine success one intentional step at a time.