Vice President of Product Marketing Karbon
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What You Need to Know About Tax Advisory Services

Feb 9th 2018
Vice President of Product Marketing Karbon
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Automation and technology are increasingly commodifying tax and bookkeeping services, leaving advisory services as a must-seize opportunity for all accounting firms; beginning with tax.

To quote Jason Ackerman, CPA, BNA CPAs & Advisors, “Advisory is the future of accounting: traditional compliance will become completely automated in the next few years. If you aren't positioning your firm for this change, your firm will probably not be around in the future.”

What Has Changed?

With the passing of the December 2017 tax bill, a gift was handed to every US accountant—so much so, that lawmakers pulled back special treatment of the accounting profession for pass-through tax protection. Because of the bill’s sweeping changes across both business and individuals, every person and business in the US is anxious and confused about how it will affect them. 

They are actively asking questions and seeking advice on how to best to position themselves to benefit from the changing rules. The questions practitioners now have are no longer about who to approach, but rather now who to answer.

To recap the recently passed US tax bill, a quick overview of some of the changes are outlined in the chart below:

tax advisory 1

In addition, here are some areas from the tax bill that you might consider leveraging for your advisory services:

  • Pass through businesses: Be sure a client is in the right entity and positioned to take advantage of lower rates (especially personal service business).
  • $10,000 cap on state & local tax deduction: Biggest negative is for those people in high tax states with high long-term mortgages.
  • Lower corporate tax rate: Provides both opportunities & challenges which highlight the importance of entity structure planning.
  • Holistic view: Importance of viewing impact and strategies on a combined basis - owner and business.

The ‘How’ of Advisory Services

So, how can you take full advantage of the opportunities tax advisory present? Tax and CFO advisory services can, and should go hand-in-hand to give clients a full view of their financial picture. 

The requirements of who to target, what you should consider, and how to approach, remain the same between these separate types of advisory services. This table brings it all together:

tax advisory table

In addition, consider these four things when approaching advisory services in response to the new tax bill:

  • Interconnected: Tax and CFO advisor processes are intertwined. Clients are unique. Your process implementation thus will vary as required.
  • End of year: For things like the new pass-through business provision, a company needs to get their taxable income level at the right level. Approach on the heels of their 2017 tax filing.
  • Focus: Customize your services per industry to focus on the right entity structure of the client’s business. Understand and advise across the business’s lifecycle (from startup to exit).
  • Education: Recognizing the importance of taxes to business owners and have that understanding be reflected in your service offerings.

The Advisory Process

When the opportunity arises to engage a prospect or client with client advisory services, the client's perceived value will not only be determined by the advice given, but by also the client's end-to-end experience. This makes the advisory services process critical to your firm's success.

To get you going, the LivePlan advisory service process is provided below.

live plan chart

Lessons From Advisory Experts

“Be selective. The success of our advisory practice is closely linked to the success of our clients. Highly successful clients lead to greater advisory opportunities.” -- John Bovard, Bovard CPA Group, Managing Partner.

With your strategic approach and process decided, it's time for action. Consider these best practices and tips:

  • Be up-to-date: Make sure bookkeeping is always updated so you have accurate numbers for projection.
  • Software: Input your projections into a tax planning software.
  • Set an agenda: Predetermine three discussion points to go over with a client, but always let the client lead with their top-of-mind questions. 
  • ABC: Always Be Closing. Seize the moment in your client meetings.
  • Frame & model the relationship: Don’t “sell” them advisory, just model the experience and outline what they can expect from you.
  • Be consistent: Define your advisory scope of work, and set a range of fixed price choices. Don’t do different work for each client.

Tips and tricks from advisory experts:

  • Use technology: Don't cheap out on technology—make use of planning and processing technology that allows you to spend more time advising.
  • Action: Review clients and be proactive with clients who are negatively impacted.
  • Seize the opportunity: Every business owner is interested in entity structure and reducing tax burden. Capitalize with a service offering.
  • Give to get: Understand the opportunity, provide a sampling of what is possible, be clear on the goals, and apply the effort to close.
  • Strategic planning: Tax planning doesn’t ensure growth. To increase valuation, you must focus on lean, strategic planning. If done right, the tax portion can be worked into the strategic planning done monthly.

More than ever, your clients are looking to you for guidance in every aspect of their business. This extends well beyond compliance and tax to complete business advisory. If you want your firm to flourish in the future, you must capitalize on this evolution by rethinking your firm strategy and looking at the business advisory services that you are (or are not) providing. 

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