Tax Practice Management: More Than Just Words

By Scott M. Cheslowitz, CPA, and Amy M. Vega, CPA

Co-Editors: Steven F. Holub, CPA, MBA, and T. Charles Parr III, CPA, CGMA

Any CPA reading this column knows that tax practice management is either put in place by a firm or is thrust upon it as issues arise. Most would likely agree that it is better to be proactive rather than reactive when it comes to managing a tax practice.

Competent practitioners should already know what it takes to have a successful accounting firm or to be a part of one. Financial capital, strong client relationships, and technical know-how are all key; however, other aspects must be consistently considered. This column provides a sampling of those areas and ideas.

1. Getting Out There

Even before a practice opens its doors, management has been hard at work. Several behind-the-scenes decisions must be made before a practitioner can hang a shingle. These include choice of entity, location, computer hardware and software, office furniture, staffing, insurance, and office policies, among other things. Fortunately, most often, CPAs do not just wake up one day and decide to open a firm specializing in taxes. Some may be lucky enough to have had a family member pave the way for them; others may have worked for firms with established connections in their chosen niche. Typically, some sort of foundation is in place moving forward.

CPAs should envision what their brand will be and what they want the firm to look like. This works to practitioners' benefit as they build a practice they can and will be proud of down the road. This vision should guide the firm as it grows and establishes itself in its marketplace.

2. Operationally Speaking

To build a successful practice, it is essential—from Day One—to have proper policies and procedures in place and, further, to build upon them every day—whether the practice is just starting out or has been in business for many years.

What may seem simple on the surface—e.g., the CPA's mindset toward hiring or establishing a culture—will be essential to success. Careful thought needs to be given to every aspect of the business. The practice must hire individuals who properly represent the firm's mission and how it wants to present itself to the community at large. Hiring the right people and properly training them is critical to the firm's survival in a competitive market. Hiring smart individuals is vitally important, as is hiring individuals of good character. Firms should look for employees who will be loyal to the firm and its clients. They should have professional demeanors and—quite simply—care about the work they do and the clients they serve.

3. Creating and Fostering the Right Culture

Every tax practice develops a unique culture. Developing and maintaining a tax practice requires a firm to consider what kind of culture it wants to build. Several aspects contribute to building a firm's culture. First and foremost are its leaders. Then come the people, the efforts to attract new business, the efforts to organically grow the business at hand, the client relationships, the learning environment, and the career trajectory, to name only a few.

Creating—and actively fostering—a positive environment is not only critical to the firm's success for the sake of its people, but it is also critical to the firm for the sake of client relationships.

4. Ask Questions

Whether a practitioner is just getting started or has been in practice for years, the question "Do I really want this client?" is always a truth-revealing one. An annual evaluation of the client list is a must for any firm. This review ensures that the firm is focusing its efforts and resources where they will do the most good. With this review the firm should be able to appropriately service its current clients with the necessary time and effort and make room for growth of the business with potential clients.

With existing clients, typically, the questions are then answered vis-à-vis the firm's interactions with those clients throughout the year. However, with prospective clients, the questions can be much more laborious and difficult.

For prospective clients, it is imperative to ask why they chose to leave their prior accountant and the length of that relationship. Most of the time, a practitioner will find that the prospect's answers are benign and justified. That said, it is important to ensure that the potential client will be the right fit for the practice. Certainly, no one would choose to have clients who will diminish a brand or enthusiasm for the profession—so it is important to question this early on with any prospective client.

Depending on the engagement, a CPA may be able to tell a great deal about a client, based on whether the client gives the firm a hard time when it tries to negotiate its engagement with the client. For example, if an upfront retainer is an issue or there is a contentious fee negotiation process, this could well be a sign of trouble down the road. Also, with prospective clients, a protracted conversation can be telling. Most people are honest and will share noteworthy information. This information should be gathered in the initial meetings and conversations with the prospect. This is necessary not only for business reasons but also for quality-of-life reasons.

5. Communicating With Clients

Communications may be either oral or written, but CPAs must primarily be communicators. Everything CPAs do seems to culminate in some form of communication. This includes meeting with clients, sending out annual tax organizers, or delivering tax returns. CPAs are constantly engaging with others.

In today's market, where so much relies on media and breaking into and staying in a market, it is critical to have a communication game plan for reaching out to current and prospective clients. CPAs want to demonstrate the value they can provide to their clients' financial team. By reaching out to clients—other than on March 15 and April 15 of each year—CPAs will find many opportunities to demonstrate their value and create and foster new business opportunities.

Communication can be done at segmented points during the year. It could be continuous, or, alternatively, seasonal or time-driven. In today's social media environment, continuous communication with clients or prospects might be disseminated across a variety of media platforms. Perhaps sending a monthly newsletter via regular mail is sufficient for part of a client base, while the remainder might prefer to receive the same via electronic means. Social media opens another world of communication. Countless topical touch points allow practitioners to communicate with their clients and contacts (see Caplan, "Staying in Touch: A Year of Client Communication," The Tax Adviser (June 2014)). Most important is that a practitioner know his or her clients well enough to determine how best to communicate with them.

6. Professional Development and Training

Staff must be trained to deliver the appropriate level of service to clients and prospects. Staff members must be knowledgeable and not just mechanical. They should be well-versed in tax law. Rightly so, clients and their financial team will be seeking the CPA's insight from a tax perspective, where clients might not be so fluent. Clients need help navigating the myriad complexities of tax law. Clients should feel that they can grow with the CPA and that the CPA is capable of helping them achieve that growth. Empowering staff to learn as much as they can, from any available sources, is great for the practice's morale, as well as for making others more confident communicators.

7. Capitalize on Ways to Demonstrate Value

CPAs are the trusted advisers to their client's financial team. As such, they must consistently demonstrate their value.

One straightforward way to demonstrate value to a client can be done after the current tax return is filed. Comparing that return to a financial planning checklist could reveal other tax planning opportunities to present to the client. Having this conversation with a client after the return is filed would be an apropos time to get the conversation started for the current tax year.

The competition from other professionals is fierce. Attorneys, non-CPA financial advisers, and other CPAs are seeking the same business. A firm must consistently fine-tune its message to clients, so that they know to seek out the firm as their trusted adviser.

8. Consistent Assessment of Software

Thankfully, the days of manual entry have passed for time and billing, tax return preparation, or any other aspect of the operation of a practice. This has been replaced with the concern for monitoring software and staying abreast of the rapid changes in technology. It is critical to assess the practice's software at least annually.

To minimize errors and avoid professional liability issues, practices should ensure that staff members are appropriately tutored in the use of the tax return software (see Rood, "Professional Liability Spotlight: Tax Software: Ethical, Legal, and Professional Liability Risks," Journal of Accountancy (September 2014), which explained considerations of using tax preparation software). The Tax Adviser also publishes an annual tax software survey that could serve as the starting point for assessing a firm's tax software. (For the most recent survey, see Bonner, "2014 Tax Software Survey," The Tax Adviser (August 2014).) Other software, such as for time and billing, should also be assessed regularly.

9. Other Topics to Remain Focused On

CPAs should remain aware and focused on countless other relevant areas. These involve security for firm and client data, mechanisms for time entry and billing, tax department organization, engagement management, and succession planning, to name a few. Many resources are available to support the firm in these areas. The AICPA website ( is a great place to start.

10. Using AICPA Materials and Resources

CPAs should be aware of vast resources on the AICPA website that provide in-depth analysis on topics related to managing a tax practice. They include charts, summaries, toolkits, checklists, articles, and webcasts.

As a best practice, consider setting aside a few moments each week or so to review the AICPA website and its offerings. Doing so could make a positive difference in any tax practice.

Managing a tax practice will entail many challenges; however, the rewards from building a successful practice can be among the most satisfying experiences in life. Success in developing your practice is important not only to yourself, but to those who work with you and those you serve. This column provides a good framework to ensure the success of your practice.


Steven Holub is a National Director in the Professional Practice Department of Cherry Bekaert LLP in Tampa, Fla., and is a former chairman of the AICPA Tax Division Tax Practice Management Committee. Charles Parr is the managing shareholder of Parr & Associates in San Antonio. Scott Cheslowitz is a partner with Rothenberg & Peters PLLC in Great Neck, N.Y. Amy Vega has 20 years' experience serving high-net-worth individuals and their family groups. She recently relocated from New York City to the Northeast Pennsylvania market and is exploring tax opportunities in her new hometown. Mr. Parr is chairman and Mr. Cheslowitz and Ms. Vega are members of the AICPA Tax Practice Management Committee. For more information about this column, please contact Mr. Cheslowitz at or Ms. Vega at


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