Accounting Firms Need to Stop Doing Personal Tax Returns
I’ve said this so many times…accounting firms need to stop doing personal tax returns. That’s the reason why I’m shooting the video today. I just got off the phone with my outsourcing provider. This is a great outsourcing provider that I use for my accounting firm clients and guess what, they just announced that they aren’t doing personal tax returns anymore. What does this mean for us?
There’s been a big push lately in the accounting industry for everyone to move to outsourcing. If you follow me at all, you know I’ve always said that if you’re doing outsourcing as your first step in creating value, as a way of crushing your prices so that you can compete on price, then you’re dead. It’s a brutal model and you’re going to suffer.
Fix your pricing model first by shifting to the Accountant Success Formula model where you can get higher prices per client with a smoother cash flow. That’s the model you do first and only then can go to outsourcing. Don’t do outsourcing first! It’s not that I’m against outsourcing but you don’t want to do that first.
No More Personal Taxes By The Outsourcing Company
Here’s what’s the interesting part that I took from my conversation. This outsourcing company used to do compilations, year-end financial statements, tax returns, and personal taxes – T1’s specifically in Canada. They just called me today they said that they’ve found that they just can’t make T1’s work in their model. It’s just not profitable for them. Think about that for a second…really let that set in for a minute. They pay outsourcing wages to non-North American countries at a much lower, super low price and they can’t make T1s work. So if an ultra-thin company cannot make T1’s work then why do professional accounting firms seem to think that they can? It’s just not a sustainable model.
I’ve been saying this for a long time. You’ve got outsourcing, artificial intelligence, and other industries coming into the profession, like banks that are offering personal tax services. All sorts of other providers or persons are providing personal tax services. It’s a losing battle.
So here’s the thing if you are sick and tired of the grind and the personal tax season, it’s not your fault. It’s because the model you’re using is wrong. If you’re just doing T1’s only and the client only comes in when you’re doing their T1’s, then it is a losing battle. Not only for accounting firms but even the outsourcing companies are now starting to get out of it.
It’s Time To Change Your Model
It’s time to stop using this outdated and archaic pricing model. Move over to a value-based subscription model for your corporate-only clients. You want to serve them the way that I show accountants how to do in the Accountant Success Formula and you’ll actually start serving your accounting clients the way you were professionally trained. Do what you were trained to do and focus on advising the clients while working in a model that works for you.
I can’t believe an outsourcing company is moving away from doing T1’s. The reality is that it’s because the model just doesn’t work for them. It’s not profitable enough and it’s too messy and busy. If it’s too busy and too messy for an outsourcing company, then think about it the impact it has on your own accounting firm.
That’s the end of my rant for this week. I’m Erik Solbakken, reminding you that when you take back control of your business model, you can take back control of your life. Stay tuned for more success tips to come.