$3,000 Success

I’ve said it before, and I’ll say it again until I’m blue in the face. If you’re not participating in our weekly Member Call-In, you’re missing one of the biggest benefits of TaxCoach membership. Yesterday’s call was no exception — we had a great time debriefing on the just-concluded tax season and sharing stories.

There were a lot of successes. Pam Schoelles had so many new clients she couldn’t keep up with the work. Joseph Conrad told us business was up 35%. We all thought that was impressive until Kym Mahler told us her revenue was up 60%.

Of course, it wasn’t all fun and games. Several members told us how new ACA rules and staffing issues complicated things. One member, who we’ll choose not to name, told us clients suck and staff suck. (Lest there was any doubt, later on, he told us that partners suck, too.) There’s always room for improvement.

Here’s one story that’s worth sharing in more detail because it’s such a great illustration of communicating your value to charge higher fees:

“I did a partnership return which I normally would have charged $750 for. It was a husband wife 50/50 split. The husband also had a W-2 job. The partnership is profitable so I recommended changing the ownership percentage to 75-25 husband to save on SE tax. Plus I wanted to pay him guaranteed payments to lower what goes to the wife. I ran the #s and determined they would save at least 10K a year. In the past, I never would have charged extra for this. But for the heck of it, I decided to bill them $3,000 for this analysis. They didn’t blink twice and couldn’t thank me enough. So I thank you Ed.”
Pete Marciano, CPA CTC
Toms River, NJ

Let’s take a closer look at Pete’s story for some specific lessons that you can put to work yourself:

  • He started out with a proactive eye. Accountants have a reputation for driving through the rear-view mirror, recording a client’s financial history then just calling it a day. But clients love it when you come to them and say “Here’s an idea I think will save you money.” (Try it… it’s fun!) We have no idea how long Pete’s been working with this particular client. But we know he didn’t just sit down to record history. He took a good look at the client’s circumstances, hoping to spot an opportunity to be a hero. That’s where it all starts.

  • He quantified his value. He played with the ownership split to reduce the wife’s SE tax, threw in some guaranteed payments to the husband to bring it down even further, then ran the numbers to come up with that $10,000 value. He didn’t need an elaborate spreadsheet or projections. But he did say “here’s my idea, andhere’s how much it’s worth.”

  • He didn’t give it away. Okay, he admits that in the past he would have given it away. But now he recognizes the value of his planning work as a separate engagement, distinct from mere tax prep. So he assigned a price to that work, and held his head up high as he billed the client for it.

  • His clients loved it. They didn’t blink twice and couldn’t thank him enough. Clients — at least the ones you want to work with — are happy to pay for the value you deliver, so long as you quantify and communicate that value. They’re especially happy to pay when you surprise them with $10,000 per year in tax savings!

There you have it. A step-by-step system for turning tax-prep into tax planning, getting paid for it, and delighting the client.

Pete didn’t tell us if he asked the client for a referral, but I won’t be surprised if he gets some without even asking. (Having said that, Pete… you really should pick up the phone, remind them what you did, and ask them who else wants those same sorts of savings.)

What about you? What opportunities did you spot this season to turn prep into planning? Don’t let them go! Take advantage of the post-season lull to go out and save somebody some money — and make sure part of those savings wind up in your pocket!