Leader Clarity Practice Management
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How to Take Advantage of Capacity Planning

Dec 18th 2018
Leader Clarity Practice Management
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Clients no longer accept the onus of delivering tax documents in February, but waiting for their returns to be filed in June. They have lots of choices in a commoditized market.

Let’s face it, how many happy client conversations start with: “We aren’t going to make the filing deadline. We need to file an extension for you.” Probably none, ever.

Two characteristics define great client service: high quality work and timely service. High quality work has long been a necessity in the CPA profession, but timely service has not. Timely service means matching the demand for your services to your capacity.

Here are three steps to effective capacity planning for busy season and beyond:

1. Determine how many tax returns must be completed during the next tax season.

Planning based on last tax season is planning to fail. Of course, you must know how many returns you completed last season to forecast the next season. If you can’t get this with a few mouse clicks from your practice management software, you will need new software.

For instance, if you prepared 1,000 tax returns last tax season, and reasonably expect 20 percent growth, you need capacity to prepare 1,200 returns. Planning for 1,000 returns will result in 200 unhappy clients and a bunch of unpleasant Yelp reviews.

2. Determine how many returns you can expect from each of your staff.

We know that newbie preparers can complete about 150 tax returns during tax season. We also know that more experienced preparers can prepare 200 or more. How do we know that? From our practice management software.

Every year, we track returns completed by preparer, reviewer, and in charge staff. If you can’t get this from your practice management software, your software isn’t doing much to help you manage your practice.

3. Determine the mix of full and part-time staff required to complete work.

This determination seems easy at first glance, but gets a bit more complex than you might expect. On a very basic level, if you have 1,200 returns to complete during tax season, you need six full-time preparers at 200 returns per preparer. But what happens after tax season?

In our office, we know that someone who prepares 200 hundred returns during tax season will prepare another 200 returns the rest of the year. If you hire six full time people, that means they have the capacity to prepare 2,400 returns for the whole year.

Do you have 2,400 returns to complete for the year? If you have less than that, you are paying for preparation capacity that you don’t need in the off season. You solve this problem with seasonal staff.

Our seasonal staff typically prepare 50 to 100 returns each. Let’s assume your part-time staff prepare 100 returns each and you have 2,000 returns to complete for the year with 1,200 being prepared during tax season. Solving for the capacity you need is simple once you have the data.

Start with the number of returns being prepared after tax season, 800 in our example. Because we know our full-time staff prepare 200 returns each during tax season and then again after tax season, we know that we need four full time preparers after tax season. That is 800 divided by 200.

That also tells us that they will prepare 800 tax returns during tax season. We know that we are preparing 1,200 returns during tax season, 800 of those will be done by our four full time staff. We also know that 400 must be prepared by seasonal staff. At 100 returns for each seasonal staff member, we need four seasonal staff.

Of course, this is a simple example, we haven’t considered reviewers or admin staff. In our firm, we handle this added complexity with a simple capacity planning spreadsheet.

Our spreadsheet has the names of our staff and their individual capacities, based on data from our practice management system. We complete the spreadsheet in September. You never wait for December, because you may not find available staff to meet your capacity needs.


The days of filing extensions for half of your clients are over. Effective capacity planning makes timely client service a competitive advantage for you.

Matching your demand to your capacity is a simple math problem. Fortunately, as a CPA, you are good at math!

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