It seems that every single time I go on social media, I am inundated with ads promising me I can get accounting clients who will pay me $10k a year. Some will talk about additional services I should add for year-round income, while others say I should become a financial planner. To learn all of these secrets, I am directed to a website where I can schedule a free consultation and (I’m guessing) later pay them a ton of money.
I’m incredibly skeptical. First of all, if they figured it all out, why would they want competition? Why aren’t they just doing those services? Why share this with me and waste time?
People who specialize in taxes make 60 percent of their money during tax season. We are taught that we are in a cyclical business and are the only businesses that are like that.
However, if you have ever worked with businesses, you will learn real quickly that every business is cyclical. A perfect example is real estate agents. They sell more homes in the summer than any other time of year. The reason is simple: Most people who buy homes are families with kids. Typically, they don’t want to uproot their children in the middle of a school year and move them to a new school. And up north, construction is cyclical. They make their money in summer when the weather is better and everything has thawed. In Orlando, the tourist capital of the world, those in the tourist industry make their money during the summer, when kids are on vacation. These are just obvious examples, but the list goes on and on.
To have money in the off-season, most of the owners of these businesses will take odd jobs. The AICPA has branded accountants as a “trusted advisor,” and there is a lot of truth to that. For example, we are the only professionals most of our clients know. They have to deal with us at least once a year. I get asked legal and insurance questions. Pretty much question that requires a professional, I get asked.
Trust is a very important thing. For example, I minored in economics. I manage my own retirement account and my other investments. I know how to read a prospectus and have a working knowledge of how the different investment products work. A lot of accountants are becoming financial advisors. I mean, if I recommend a retirement plan, why refer my client? I can do it myself and collect a fee. The fact of the matter is, I don’t analyze stocks all day, every day. It’s a hobby, but if I offer it as a service, charge for it and mess up. I’m on the hook, and the trust my client had in me goes away.
I was very blessed. When I went into practice 26 years ago, I had an excellent mentor. When I became licensed, they taught me the ins and outs of representation, tax planning and tax consulting. I was a sponge, and my mentor was more than patient with me. It took years for me to get a full understanding of these services and how to do them right.
But according to these social media ads, I can learn all of this within weeks. From my experience, that couldn’t be further from the truth.
For starters, representation, either administratively or through collections, is completely different than filing a tax return. There are different rules you have to follow, a Taxpayer Bill of Rights, deadlines that cannot be extended and different rules the IRS has to follow. If they don’t follow them, you have to know what to do to get them to follow them. Point is, you can’t learn that in a week-long course.
Further, if you try and don’t know what you’re doing, you are just stealing money. However, you are told that the average tax resolution client will pay you $5,000. Hope you have really good malpractice insurance.
The new thing is tax planning. Most professionals just entering this field think to themselves, “How hard can it be?” They believe tax planning is reducing a client’s tax liability by any means possible. I mean you prepare tax returns, you know the laws. The ad you saw said clients will pay $5,000 for this service. So you buy a tax planning program, and you are off. You don’t examine the company’s entity or tax structure; you have a basic knowledge of tax credits, usually none of which pertain to your business client.
If you see an ad on social media about boosting income through offering things you have no complete understanding of, either learn the ins and outs of the services, or don’t bother.
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as...