Our TaxFitness tax planner for March is Ed Gebert, the accounting principal of Success Tax Professionals Woodvale.
How have you built your tax practice?
My practice has been built mainly from client referrals and walk-ins from the street. Many of my clients have been with me for years. A large sizeable portion of my client base are English, New Zealander and South African migrants and those ethnic groups have a built-in trait of referring.
I have not purchased fees, nor have I heavily advertised. My growth has been done the slow cheap way. Referrals are a cheap way of gaining new clients but there is an art to getting referrals. You must give the client a feeling that you are of value and that you appear to know what you are talking about. The client must feel comfortable and totally relaxed when they sit with you. I talk to many of my repeat clients as though they are my friends. At Christmas time, some of my clients send me cards and gifts.
What is your focus and business model?
My focus has been to develop a manageable business with a solid stable sales turnover between $150 K to $180 K per annum. I still have a long way to go to achieve my perfect business model. I don't desire to grow my business any bigger than that because over $180 K per annum, staff would be required, and profitability would drop initially until I could increase sales turnover to about $250 K. At my age and where I am financially, I simply don't want the stress of managing staff.
What are your views on the future of the accounting industry?
In my view, in the future there will be less Tax Agent Professionals in the industry than there are today. This will be due to the eventual abolishing of personal tax deductions and the probable increase to the tax free threshold. The tax practices that have not built up their business and investor client bases will fall by the wayside. Those accountants who do not offer value to business clients with strategies to reduce tax will no longer exist.
As the government continues to reduce tax deductions available for rental property investors, and talk about abolishing negative gearing, I see rental properties as becoming unattractive to investors. The eventual loss of many rental property clients will be devastating to our industry.
Initially, the survivors of a sudden tax policy change will flourish by picking up the clients of tax businesses that close up. The survivors in our industry will be those businesses with a lot of business clients or that have low operating costs and have low amounts of debt.
I see a big opportunity opening up for accountants who can advise investors of crypto currency of the tax treatment of their activities and who can access the tools required to process capital gains tax calculations.
How do you approach tax planning with clients?
When it comes to offering tax planning to clients, I target the businesses that are highly profitable. However, finding business clients who are highly profitable is rare. There aren't that many highly profitable small businesses around these days. The small business community is struggling.
Whenever I find a profitable small business, my initial strategy is to review their operating structure and analyse the possibility of income splitting. I then look at whether all family motor vehicles can be brought into the business. Also, I ascertain whether the client wishes to invest in a negative geared rental property. Then work on other strategies that can be implemented.