A Checklist for Potential Tax Advisors

people looking over financials

Advisory is the hottest area these days for firms who want to move into higher value, higher-paying work, but they don’t always have the skills to get there.

One of the challenges with moving into advisory work is that college accounting courses and continuing education don’t necessarily teach what accountants need to know to move into higher-level services. That means firms have to pick up the slack.

Sometimes a firm needs to help new staffers connect the dots between what they see on a client’s tax return or in their books to additional service offerings that could help that client.

A Checklist Approach

Back when I started work at a CPA firm, every tax return file included copies of two checklists: one from the AICPA with questions to make sure we weren’t overlooking something obvious and another that had a list of additional services to suggest to our clients. These additional services included things like retirement planning, estate planning, business valuations and bookkeeping services.

But as a brand new graduate of a Masters of Accounting program, I didn’t yet have the experience that would have helped me connect what I saw in the clients’ files and that list of additional services. If someone had just told me what to look for on a return and how that translated into gaps in a client’s financial house, we could have helped many of our clients beyond just getting them a tax return.

Remember, many clients are unaware of the variety of services an accounting firm offers beyond tax returns, bookkeeping and financial statements. It’s also much easier to grow your firm by cross-selling additional services to an existing client than it is to bring a new client onboard.

With that in mind, here’s a supplement to that checklist that would have helped me connect the dots between what I saw on a return to additional services or conversations that would have helped our firm help our clients more. Since I started out as an engineering student, I’ve put these in the form of if-then statements.

If the return has this:

• Low (or no) investment income

Check these boxes:

• Discuss benefits of saving for a rainy day/emergency fund. Include demonstration of compounding interest.

• Suggest meeting with investment advisor.

If the return has this:

• Self-employment income and no evidence of retirement plan

• W2 from any employer that does not indicate participation in company retirement plan

• No current year IRA contribution

Check these boxes:

• Discuss options for retirement plans for small businesses

• Suggest meeting with investment advisor to discuss retirement plan options.

• Demonstrate power of compounding interest

If the return has this:

• Dependent children or grandchildren (any age)

Check these boxes:

• Discuss options for saving for college

• If children are appropriate age, offer to assist with completing their FAFSA

• Discuss plans for education or ask for update on prior year’s discussion

• Discuss possible benefits of hiring children to work in a family business

If the return has this:

• Self-employment income from any source

Check these boxes:

• Discuss long-term plans for business (five-year horizon, ten-year horizon)

• Explain the basic principles of business valuation

• Consider whether current business entity type is appropriate.

• Discuss benefits of quarterly/monthly meetings to discuss business performance, progress toward long term goals, and business coaching options

• Discuss succession plan for business (even if owner is under the age of 25)

If the return has this:

• Substantial gambling income

Check these boxes:

• Discuss whether gambling activity rises to level of business for reporting on Schedule C

• Inquire whether gambling is becoming problem

If client’s file does not contain these:

• Name of investment advisor

• Name of attorney

• Any mention of estate plan or business succession plan

Check these boxes:

• Referral to attorney and/or investment advisor partners

• Discuss benefits of estate planning even if very young

• Discuss long-term plans for business (five-year horizon, ten-year horizon)

If the return has this:

• Schedule C or other source of income that has generated losses more than three years out of previous five (five out of seven for horse business)

Check these boxes:

• Discuss hobby loss rules and risk of IRS audit

• Discuss ways to reduce costs and increase revenues

If the return has this:

• Schedule C, Schedule E or other business income and bookkeeping is of shoebox and spreadsheet variety

Check these boxes:

• Discuss benefits of keeping accurate books

• Discuss options for helping client with bookkeeping

If the return has this:

• Substantial tax liability and no evidence of estimated tax payments or limited resources for payment

Check these boxes:

• Discuss importance of setting aside funds for tax payments

• Recommend client read Profit First by Mike Michalowicz

If the return has this:

• S-corporation with distributions exceeding salary or no salary

Check this box:

• Discuss reasonable compensation

If the return has this:

• Substantial self-employment income (the firm should define this) and no S-corp election

Check these boxes:

• Consider whether current business entity type is appropriate.

• Discuss tax benefits of filing tax return as an S-corporation

If the return has this:

• Employees

Check this box:

• Discuss options for outsourcing payroll


This list should serve as a starting point for conversations with clients to help them grow their businesses and their wealth. While clients aren’t always aware of the broad array of services that an accounting firm offers. 

Many clients expect that when they hire an expert, that expert will have their financial back. And isn’t that what advisory services is supposed to provide our clients?

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About Liz Farr

Liz Farr

Liz Farr, CPA, spent 15 years in tax and accounting at small firms in Albuquerque, NM. Besides tax returns of all flavors, she worked on audits of governmental entities and not-for-profits, business valuations, and litigation support. Now she's a full-time freelance writer specializing in content marketing for accountants and bookkeepers around the world. 


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