Nick Hodges CPA/PFS, MBA, CFP, CGMA

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How to Turn Your Tax Practice into a

Money

‐

Making

Powerhouse

Nick Hodges

CPA/PFS, MBA, CFP, CGMA

August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 1

How to Turn Your Tax Practice into a

Money‐Making Powerhouse

To ensure compliance with Internal Revenue Circular 230, we inform you that any U.S.

Federal tax advice contained in this communication is not intended to be used or

written for use, and cannot be used for the purposes of (a) avoiding penalties under Here’s the fine print:

Tax

Advice

Disclosure

Tax

Advice

Disclosure

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This session compiles and demonstrates proven tax‐season best practices,

showing you how to break out of legacy thinking so you can take better care

of your clients and set the scene for increased profitability.

Dedicated

to

YOUR

Experience

Dedicated

to

YOUR

Experience

8

AUG

•• IntroductionPractical information (1 Minute) (68 Minutes)

• Closing (1 Minute)

OUR MAIN OFFICE LOCATION:

NCH Tax & Wealth Advisors 1661 E. Chapman Ave. #2A Fullerton, CA 92831 (714) 870‐4542 info@nchwealth.com www.nchwealth.com

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NCH TAX & WEALTH ADVISORS’ SPECIALTIES

• U.S.

Tax

(Americans Stateside and Abroad)

• Financial

Advice

• Bookkeeping

&

Business

Consulting

• Outsourcing

• Expat

Tax

&

Wealth

Management

• Family

Office

Services

OUR TEAM

•

5 CPA

Wealth

Advisors

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MY CREDENTIALS

• Over

30 Years

Experience

• CPA

1981

• MBA

1984

• CFP

1997

• PFS

1998

• Author:

Expat Taxes Made

Easy

• International

Speaker

Why

did

the

railroads

not

get

into

the

business

of

airplanes

or

trucks?

HINT: They were in the railroad business instead of

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What

business

are

we

in?

We

are

in

the

business

of

managing

relationships

and

helping

our

clients

make

smart

decisions

with

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Life is like an ever‐changing river:

“You cannot step twice into the same river.” Heraclitus

• Success

Requires

–

We

understand

the

context

–

We

identify

the

trends

And why you are destined to lead a much poorer life

if you try to follow in my footsteps.

Discussion

The success of my 35‐year career.

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The

Past

35 Years

How we prepared tax returns in the OLD days

How we did bookkeeping

when I first started

Tax

Returns

and

Bookkeeping

Tax

Returns

and

Bookkeeping

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Historical

Model

for

Accounting

Firms

Historical

Model

for

Accounting

Firms

1/3: Paid to Worker

1/3: Paid for Overhead 1/3: Paid to Partners

Profit

Workers Overhead Partners

• Divide $50k by Annual Hours 2,080 Hours • Multiply Hourly Rate by 3.5 or 4 $24.00/Hour • Firm Billing Rate for Worker $72‐$96/hour

Billing Rate Calculation for Worker to Earn $50,000/Year

Hourly

Rates

Calculations

Hourly

Rates

Calculations

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Years Average Tax

Return Average Bookkeeping Investment Fees 1987 $500 $750 3% ‐8% 2013 Adjusted for Inflation $1,038 $1,558 ‐‐ What are YOUR average fees? ??? ??? 1% ‐5% 2.85% Annual Inflation (1987‐2013)

Comparison

of

Pricing

Against

Inflation

Comparison

of

Pricing

Against

Inflation

These

old

pricing

models

may

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August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 19 • In the falling market

–Technology increased efficiency

–Efficiency protected profitability

• We have maximized profitability.

There is not enough room left in efficiency

to provide profit in a falling market. Future success depends on delivering VALUE.

Technology

and

Efficiency

Technology

and

Efficiency

What

do

we

need

more

than

anything

else

to

grow?

What

do

we

need

more

than

anything

else

to

grow?

More Money More Team Members New Clients But… Greater Intellectual Capital Firm Wide

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What

is

Intellectual

Capital?

The

knowledge

to

produce

exceptional

value

for

your

clients

Intellectual

Capital

Intellectual

Capital

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August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 23 • Creating wealth for our business clients

• Improving the financial lives of our individual clients

What

business

SHOULD

we

be

in?

What

business

SHOULD

we

be

in?

• It depends.

• It should be based on the

value the CLIENT thinks

we have provided them.

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The

tax

professional

business

has

many

profitable

opportunities,

but

NONE

with

better

margins

than

Financial

Planning.

Most

Tax

Professionals

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2005 Metrics

Know

Your

Client

ABCs

Know

Your

Client

ABCs

Client

Class

# Of

Clients Annual Revenue

Total Annual Revenue % of Total Revenue A 5 Over $20,000 $ 166,526 29.4% B 6 Over $10,000 $ 75,020 13.2% C 10 Over $5,000 $ 72,662 12.8% D 23 Over $2,500 $ 79,073 13.9% E 37 Over $1,000 $ 59,374 10.5% F 77 Over $500 $ 51,356 9.1% G 264 Below $500 $ 63,022 11.1% 422 Total Revenue = $ 567,033

• Dropping 62.6% of tax clients

• Equals loss of only 11.1% of annual revenues

• Reduces tax season 4.4 weeks

What does this mean?

Know

Your

Tax

Practice

Know

Your

Tax

Practice

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158 A ‐ F Clients = 88.9% of Revenues $504,011

2.6 Weeks of Tax Season!

21 ABC Clients = 54% of Revenues $314,208

2.1 DAYS of Tax Season!

Nick

has

to

decide

which

clients

to

keep.

Would you like to go home early?

Your best Taxand Businessclients

and

Your best Financial Planningclients

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August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 31 Tax Season MUST‐DOs to Increase Efficiency

Set

Up

Tax

Season

for

Success

Set

Up

Tax

Season

for

Success

• Base appointments on last year’s actual appointment

schedule

–Early or late in season

–Day of week

–Time of day

Pre‐Schedule All Appointments

Pre

‐

Season

Preparation

Pre

‐

Season

Preparation

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August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 33 • Set a daily ‘last appointment’ time – and KEEP IT.

• Leave openings for lunch

• Schedule time off

Set Up Your Total Tax Season

Pre

‐

Season

Preparation

Pre

‐

Season

Preparation

• Review completedorganizer with client

• Enter tax return data in less than 10 minutes

Conduct a 60‐Minute Tax Appointment

Tax

Appointments

Tax

Appointments

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August 2014 Nick Hodges, CPA/PFS, MBA, CFP, CGMA 35 • Their ‘problems’ are your ‘big money’ opportunities

• Discuss meeting again in off‐season

• REMEMBER to follow up:

–Remember the problem

–Prepare the solution

–Contact the client

What about their problems?

Tax

Appointments

Tax

Appointments

• When to complete them

–When an appointment

doesn’t show up

–4‐5 mail ins in an hour

• The NUMBER ONE thing

to do for a mail‐in client

–(Hint‐hint) Pick up the phone!

Handling Mail‐In Clients

Tax

Preparation

Tax

Preparation

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THANK YOU!

If you have questions regarding this presentation

or want to know more

about adding financial services to your tax practice,

please contact:

James Moss RFC®, CEP

Nick Hodges Michael Roby

NCH Tax & Wealth Advisors Money Concepts

(714) 870‐4542 (317) 841‐0370