Top Concerns of Small Tax Firms

Top Concerns of Small Tax Firms

Owning a small tax firm can be rewarding on many levels. You have the flexibility to balance your personal and professional life as you choose, you determine the vision of your business and when your business is successful, you (and, in some cases, your partners) reap the rewards—not a CEO you’ve never met.

Unfortunately, like anything else in life (and in business) small tax firms also face unique challenges because of their size. According to a study by the American Institute of CPAs, the three top challenges owners of small tax firms say they grapple with are:

1. Retaining Clients
2. Attracting New Clients
3. Succession Planning

If these concerns sound familiar to you, here is some advice for tackling those concerns:

Retaining Clients

Retaining clients is less rocket science and more The Golden Rule. If you want to keep clients, treat them the way you would like to be treated. Respond quickly to any questions or concerns they have and give them the personal attention they deserve. If you anticipate a problem with a client’s tax return, for example, make sure you are the one to bring it up instead of waiting for them to bring it to your attention. Communicate with clients regularly (even when things are going well and there are no issues). Consider sending out newsletters that contain information they might find helpful. Finally, if a client’s bill is going to be larger than they expected, take the time to call and explain why.

Attracting New Clients

If you want to bring in new clients, it is important to conduct some market research to see what these clients need. Current clients are an excellent source of such information. Speaking of current clients, referrals are the life blood of any small business and tax firms are no different. Ask satisfied clients to spread the good word about your business. If you are in a crowded market, it also is a good idea to consider specializing in an area of tax preparation that other firms do not so that you have a distinct advantage over your competition.

Succession Planning

If you are a small tax firm, chances are you don’t have the time to put a succession plan in place but this is not something you can avoid. If you are a partner in a small tax firm, you need agreements in hand that specify what will happen in the case of a death or retirement. You also need to be on guard for partners retiring within a short time of each other to avoid insurmountable capacity or cash flow issues. When internal succession is not likely, you may have to consider selling your firm or merging it with another. If a merger is likely, you would do well to specify that you want to work for a period of time with the firm you are merging with so that the transition can be eased. In such cases it also is crucial to limit partner retirement benefits.


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