5 Keys to Establishing a Profitable Tax Planning Division
28 May 2019
- Minimum 10% of practice fees
Within 12 months, we need to achieve tax planning revenue equivalent to 10% of the practice’s revenue. Achieving this benchmark provides us with the revenue, confidence and motivation to continue growing this new service. Over the last five years many accountants have embraced the ‘one stop shop’ concept and added financial planning and finance broking divisions to their practice. Industry data shows that for the ‘average’ suburban practice, financial planning revenues are still only 4% of total practice revenue. Financial planning divisions with such low revenue are unprofitable, and have no future (unless revenues can be substantially increased). This also apples to our tax planning division.
- Invest the time and money
There are no shortcuts to anything in life. If you want to build a new service/revenue for your practice, you are going to have to invest the time and money. To think you will be successful without doing this is delusional.
- Educate the clients
Don’t underestimate the importance of educating clients and/or the amount of time this will take. When introducing a new service or product, the education process can be long. We may all have solar panels on our roofs now, but the industry has been ‘educating’ us for the last 20 years.
- Delegate and automate
Many practice principals, especially in smaller practices, are dreadful delegators. It seems to pain them to delegate ‘basic’ work to an employee so they end up working like graduates themselves. As we discussed above, adding a new tax planning division to your practice will involve an investment in time. As time is finite, something must give. You are going to have to delegate some of your current work to free yourself up, or alternatively delegate the tax planning to an employee(s).
- Review performance.
We need to continually monitor the performance of our tax planning division. The numbers (client inquiries, revenue, tax savings plans prepared, etc.) will tell us a story. We need to interpret the data and make changes as and when required. Every practice and principle is slightly different, so your ‘blueprint’ should be refined and tailored to your circumstances.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2