Accountants and tax professionals have been helping their small business clients deal with the economic fallout from the COVID-19 pandemic, shifting away from their routine compliance work after the end of the prolonged tax season.
“We’ve been helping our customers for quite a few years make a transition from being purely compliance focused to being more of an advisor to their clients,” said Charlotte Rushton, president of the tax professionals customer market at Thomson Reuters. “We’ve seen that accelerate this year. We’ve had a 50 percent uptick in the seminars we run to help train accountants on tools and techniques to use to make that relationship shift.”
Kaitlyn White is the human resource manager at Cognito Forms.
Maryling Yu ("Mare") is vice president of marketing at CCC Intelligent Solutions, responsible for all aspects of marketing at the company, with a strategic focus on developing and retaining customers across the entire lifecycle and has over 20 years of marketing experience. Previously, she was the chief marketing officer for Backstop Solutions, a Chicago-based financial technology company. During her tenure, she played a key role in the company's growth, helping it double in size from 2016 to 2022 before its successful sale to ION Analytics. Mare specializes in B2B technology marketing and has also held senior level marketing positions at Sungard Availability Services and has consulted for many Silicon Valley-based technology companies.
The trend toward advisory services has been going on long before the pandemic, of course. Accountants have been offering services such as helping clients decide on what type of entity structure to use for their business, acting as a CFO for hire, advising on compensation for owners and shareholders, where to expand locations or close locations, when to expand staff or reduce headcount, along with all manner of tax-planning advice. But the pandemic seems to have accelerated the trend.
“This year the focus has been much more on how do I as a small business stay afloat,” said Rushton. “How do I get the PPP loans that have been offered? What do I do once I get them? How do I apply for forgiveness? Once the tax deadline shifted from April to July, we saw our customers, the accountants, just drop all the tax return business and really focus on how to help their small business clients get the support they need through the government programs to get through this, and then they picked up the compliance programs again as they got past July. A lot of our customers that I’ve spoken to say they’re acting a little bit like a therapist during this time. It’s been very stressful. This pandemic has disproportionately impacted small businesses so the accountant is playing a key role in helping them stay afloat and survive.”
Julie Smith, a practice manager at Harper & Company CPA Plus in Columbus, Ohio, has managed that shift at her firm. “We made a full 180 transition here within the last two years,” she said. “Everyone was strictly doing their compliance work and accounting work and deadline work. Not that we don’t still do that, but we’ve kind of switched our business model to doing advisory. Any client that comes in, they’re coming in under the new model. They’re getting that transfer of knowledge. I think most CPA firms are doing all of the same things that we’re doing. They’re just not charging for it and they haven’t put it into a process-driven model that the whole staff can follow and the client can understand.”
New prospective clients go through an initial meeting with Harper & Company where the accountants explain how the firm works to see if they’re the right fit. The accountants go through questions with clients to determine if they have the right type of business entity, and how their health insurance and payroll are set up.
“We go through a checklist of a whole slew of things and talk with them and explain to them,” said Smith. “Then they’re given a tangible item, a PowerPoint, which is that transfer of knowledge.”
Now, with the pandemic going on, many of the meetings happen through Zoom or over the phone, although the Harper offices have reopened since the start of the pandemic. “We’re very technology driven and very progressive in how the firm is run,” said Smith. “Everything can be done electronically through Zoom, email and the portal, however the transfer of that ‘tangible item’ can be given. We definitely didn’t miss a beat with the whole pandemic when we had to make that complete switch of no one coming into the office. Our office is open now. We allow the client or potential client to make that choice. Which do they prefer? Do they want the Zoom call, the phone call, or the face to face?”
Harper & Company has 13 people, including seven CPAs, on its staff. It specializes in helping professional services firms, as well as dentists and orthodontists. Smith and Glen Harper, the sole proprietor of the firm, attended a Thomson Reuters partner summit several years ago and decided advisory was the wave of the future.
“This is the way we wanted to run the firm and grow the firm,” said Smith. “We’ve seen significant growth in the last couple of years. We’ve probably doubled our revenue, which is crazy to even think about or say out loud. That transfer of knowledge has not only been to the clients, but it’s been to the staff as well. Everyone understands the process and the role, and it’s just become a way to efficiently run the firm.”
Some accountants have been providing advisory services to help their clients get Paycheck Protection Program loans for their small businesses, including an accountant in Dallas who also works with Thomson Reuters. “We got a nice note from him because he helped one of his retail clients get that loan and stay solvent while the business was closed down, saving employees and all that,” said Rushton. “We actually helped them with content like that. The PPP information was coming out from the government. Our editorial teams were working on what does it mean and how to translate it and how to apply it. We were given some really good feedback from the accountants that use those programs to help them jump in. In the beginning the [PPP] money ran out very quickly in the first tranche. Those that got on board got the money. Now it’s shifted to how do I get the forgiveness and also how do I account for it as I prepare the accounts, looking at the liabilities. Is it an asset? Is it revenue? Helping them with that has been critical too.”
Thomson Reuters has also been helping its clients with content on state taxes as more states try to respond to the crisis, which has put a dent in their revenue, while also dealing with the impact of the Supreme Court’s 2018 ruling in the case of South Dakota v. Wayfair on how states can collect sales taxes from out-of-state sellers such as e-commerce sites. Another emerging issue has been how states should deal with employees who are working remotely from home in other states and whether the state tax nexus applies to them as well. Some states have been granting temporary waivers until employees are ready to return to the office.
“My sense is that a number of agencies aren’t sure how they want to proceed with this yet because of this tension between fairness in the midst of a pandemic, and budget shortfalls and the potential of locking themselves into a significant amount of loss in terms of revenue,” said Rebecca Newton-Clarke, senior editor for the Thomson Reuters Checkpoint Catalyst state tax editorial team. “I think that’s why you see these large states hesitating to deviate. In some cases the agencies may not have the authority under existing law to provide a waiver, and they may need legislative action as well in terms of these things.”
Harper & Company has also been advising its clients on how to deal with state taxes and the various delays in the filing deadlines as the IRS and the states gave taxpayers more time during the pandemic this year. “We have state and local here, so all of that is the package, all in one,” said Smith. “We’re not going to just do one without the other, so we’re constantly recognizing what their situation is and being able to advise them on that. We have accountants in charge of certain clients, and they’re all in charge of going through that process with each client in order to make sure there are no surprises come April 15 or [July] 15. Everyone knows where they stand and what needs to be done.”
The firm also helped 66 clients with PPP loans. “Anytime something new like that comes out, we do an advisory for all of the clients,” said Smith. “That is a separate agreement with our clients when we engage in something like that. The TCJA, we did an advisory. The PPP, we did an advisory. What they get with our firm is tax planning and tax projection. We’re constantly in contact with them. We don’t want to be the firm where on April 12 we’ll shove all this information at you. We want to do it throughout the year, having four to six touches. Some of our clients get 12. It just depends on the type of client we’re dealing with in regards to what they’re getting. But we definitely are getting away from that one annual touch per year with the client. It creates a better relationship and value. It sets them up for success and sets us up for success.”
Accountants also learn to hand clients to others in the firm for various advisory services. “Once we have an accountant in charge that’s mastered something, it’s very easy to hand that client off and allow him and empower him to manage and handle that client,” said Smith. “We’re getting away from having to be the only person that’s communicating with the client, the model that was here prior to making this transition, which I think is hard for those owners. It’s hard to part ways with that relationship, but if you want to see the growth and see that next generation flourish, you’ve got to be able to let go of those reins.”
