Accounting
Art of Accounting: Planning for 2025’s tax season
Tax season is about providing superior , high-value services to clients. That means doing everything necessary to make the experience of working with you pleasant. It also means considering everything you do from the vantage point of the client.
It’s about the client. That means user-friendly engagement, processes, communication and availability. It’s also a matter of exceeding expectations, treating deadlines as promises, keeping your promises, avoiding unnecessary extensions, never bad mouthing or blaming the client, and looking to add value at every opportunity.
It’s about your internal processes. Your processes should be established to facilitate your work and what your staff does. This includes major initiatives on error avoidance, sequential work scheduling and checklists. That’s all good, but the focus needs to be on how what you are doing will affect client services and deliverables. For instance, are the instructions clear? Can they be downloaded effortlessly by the client? Are the deliverables carefully labeled and identified? If paper documents are to be returned or forwarded, are clear instructions and envelopes provided? If there is a rush, were stamps put on envelopes, or a courier envelope provided (using the client’s account number)? Was your invoice presented with clear payment instructions? The point is that what you do is your business, but what the client receives from you is also your business. Do not sacrifice user-friendly client processes for internal expediency.
It’s about your staffing and training. Staff longevity with your firm is important, but it is also important to your clients. Revolving door staffing is upsetting, disconcerting and wasteful for you, but also for the clients who work with those staff people. Turnover is inevitable, but slowing down turnover can be very helpful on your internal processes as well as with client service. Clients have deep relationships with the partners but develop comfortable working relationships with the staff they regularly see and who they know do the bulk of the work. They open their books, share their concerns and in many cases look forward to their visit, be it in person or virtually. For that reason, reducing turnover is important. However, do not keep underperforming, undergrowing and underachieving staff for these reasons. Clients know who the dead heads are, but as long as they know there is a pipeline from that staff person to the partner, they overlook the staff person’s inadequacies. For that reason, you need to train your staff to let you know everything the client says to them and what is going on with the client. Everything! Staff who do not do that should not be permitted to continue working for you. Staff that do, regardless of their deficiencies, have a value to you. You need to manage this segment of the relationship because it is important.
It’s about making more money. This means pricing your services appropriately. You need to communicate the need for additional services before you perform them, explaining the reason and need for the added work, value or benefit to the client. It’s about the value. Provide value and you will make more money. Morphing into a commodity service practice will work great for you if that is what you want. Hey, H&R Block does quite well with that. However, if you want to be above the commodity level and be the true professional service provider you studied and trained to be, then you need to look at adding value at every interaction with the client. Also, bill promptly and if a special bill is necessary explain it to the client before you perform the services, so the client becomes empowered with making the decision. Doing the work because the client needs it, and charging for it afterward, does not work, is not a good best practice and will not have you get paid for the value you conferred to the client. One more thing (for now — there are a million more things, but not for now) is to call for payment as soon as the invoice becomes past due. My definition of past due is 10 days after the invoice was provided to the client. Make the call. It’s your money. Also, clients find comfort knowing you approach your practice as a business and also by knowing they are current with you. Yes! Comfort!
It’s about your culture. Your culture permeates everything you do and everyone you interact with and every minute anything is done in your practice. Your culture should include keeping every due date, responding promptly to every text, email or call from a client, and making the call when there is something unpleasant to tell the client or when something is on the client’s mind, and you know it is the kind of thing they will call you about. If you don’t know what’s on their mind, then you need to be in better touch with your client, so work at this. Also train your staff to understand how to anticipate questions about what is on your clients’ minds. They are part of your team.
It’s about having fun. What we do is work, but it also should be fun. Fun is contagious. If you are not having fun, the clients will sense that, and it will cause a fissure in the relationship. All fissures start small until they burst. Communicate that fun, and so should your staff. That way, your clients will look forward to your calls, not dread them.
Make your plans for tax season now based upon happy, pleasant and fun relationships with your clients while figuring out how to add value to every interaction with them. This works. I know this for sure!
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The Internal Revenue Service may be facing steep cuts in its budget with the win on Tuesday night of President-elect Donald Trump.
Funding for the IRS has become a political issue, with Republicans successfully pushing to cut the extra $80 billion funding from the Inflation Reduction Act of 2022 already during battles over the debt limit.
“I think IRS funding is at significant risk right now, both the annual appropriation funding as well as the remaining IRA funding,” said Washington National Tax Office principal Rochelle Hodes at the Top 25 Firm Crowe LLP.
Win McNamee/Getty Images
So far, Republicans have mainly called for cuts in the IRS’s enforcement budget. The increase in enforcement is supposed to be used to pay for the cost of the IRA, but the funding increase is also supposed to be used for taxpayer service and technology improvements.
“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” said Hodes.
The Direct File free tax prep program that the IRA funded could also be targeted, even as the IRS makes plans to
“I don’t think that will be in the sight line, but the IRA money is part of what’s being used for that,” said Hodes. “As we’ve seen in appropriations bills, there could be language directed at that, that no money can be spent on that initiative.”
A more important priority will be the extension of the expiring provisions of the Tax Cuts and Jobs Act of 2017. “Getting TCJA resolved is going to be the first priority,” said Hodes. “The second question is, how will the cost of that endeavor be determined. If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with. I think it will be necessary to see how the scoring goes for extending TCJA provisions.”
Trump has also called for exempting various forms of income, such as tip income, Social Security income and overtime from taxes.
“I also am not sure which of the ideas that were put forward on the campaign trail, other than extending TCJA, are provisions that have true champions who will want to pursue those,” said Hodes.
That may depend on who ends up in Congress, with several important races in the House yet to be decided.
“Although the House remains undecided, the Republicans’ control of the Senate makes it much more likely that Republicans will be able to implement many of Trump’s proposed tax policies, such as making parts of the expiring 2017 TCJA provisions permanent,” said John Gimigliano, principal in charge of the Federal Legislative & Regulatory Services group within KPMG’s Washington National Tax practice, in a statement. “The pressing question now is how the Administration and Congress will fund such an ambitious agenda and what additional measures they might introduce, such as eliminating taxes on tips and overtime. These items will only add to the hefty $4+ trillion price tag they face. Until then, taxpayers should continue to stay apprised of developments and scenario plan for the different outcomes to get ahead.”
Over half of accounting and tax firms plan to increase fees across all services in 2025, according to a new survey.
The
Some 57% of the respondents plan to increase fees across all services. With regard to tax preparation specifically, 90% of the survey respondents plan to increase fees for individual tax returns, and 87% plan to increase fees for business tax returns. In addition, 70% plan to increase fees for tax planning and advisory services;. 85% plan to increase fees for bookkeeping and accounting services; and 76% plan to increase fees for CFO and controller services.
“While accounting firm owners are embracing price increases in 2025, the report shows that the majority (around 58%) cite rising business costs as the main motivator,” said Ignition global president Greg Strickland in a statement. “Only 5% are raising prices to increase revenue, which indicates an opportunity for firms to leverage pricing as a strategic tool to unlock revenue growth.”
The report found a shift from hourly billing to fixed-fee and value-based pricing, with 79% of the survey respondents indicating they use fixed-fee or value-based pricing for bookkeeping and accounting services. Over half (54%) use fixed-fee or value-based pricing for tax preparation services, 67% use fixed-fee or value-based pricing for tax planning and advisory services, and 75% use fixed-fee or value-based pricing for CFO and controller services.
The report benchmarked current fees for tax, accounting and advisory services, which varied based on firms’ annual revenue range. The biggest variation in pricing was for tax planning and advisory services in particular. For firms with revenue of as much as $250,000, approximately 23% said they charge less than $500 for these services, while a nearly equal number (around 21%) indicated they charge more than $2000.
Illinois voters approved a nonbinding proposal to add an extra 3% levy on annual incomes of more than $1 million, which could fuel a new effort to raise taxes on the state’s highest earners.
The ballot measure – which was an advisory
“The vote is a gigantic step in the right direction,” said former Governor Pat Quinn, a supporter of the measure.
Daniel Acker/Bloomberg
While the proposal has no legal effect, the vote opens the door to a new debate over ramping up taxes on the rich even as Illinois and Chicago, its biggest city, contend with population declines and a string of departures by major companies and wealthy residents. In 2020, voters rejected a separate measure backed by Governor JB Pritzker to replace the state’s flat tax on incomes with a graduated system that would raise rates on higher-earners.
The Pritzker plan drew staunch opposition from billionaire financier Ken Griffin, who donated about $50 million to help torpedo the initiative. Griffin then left Chicago for Miami in 2022, moving the headquarters of his Citadel empire there as well. Companies from Caterpillar Inc. to Boeing Co. have also departed amid rising concerns over public safety, regulation and taxes.
This year’s referendum asked voters if the Illinois Constitution should be amended to create the additional tax on income over $1 million. It called for using the proceeds to ease the state’s notoriously high property levies.
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