Why I Don't Do Tax Returns
I had my first tax season in 1994. That means I had about 25 tax seasons under my belt when we started Breakaway (give or take a couple years when I was in industry). For the most part, I actually enjoyed tax work. I got a chance to interact with my clients in a way that they valued (as long as I was giving them good news and ways to save money). I got to feel a sense of accomplishment when I could deliver a finished product on time to a client.
But there were some obvious downsides to being in the tax world.
Filing a tax return doesn’t build relationships
Sure everyone needs a tax return done, so that creates a forced touch point every year with our clients to complete that work. For a lot of clients this is the only time they talk to their accountant. My best client relationships happened because we talked about things other than taxes. What are their goals? What keeps them up at night? What answers do they need to make decisions for their business? If the only time I’m talking to my client is during tax season when I’m under the most pressure and stress, they are not getting someone who can really help them move the needle the rest of the year.
Tax compliance and accounting for small business are different skill sets
I found I got the most satisfaction out of working with small business clients when I got to set up an accounting system that worked for them. To give them access to data essentially in real-time, rather than up to a year after the fact when a tax return is filed. In our research for building Breakaway, we found that the advisors who are best suited to help these clients are generally not tax accountants. That’s a good thing, because you also want a tax accountant who is focused on keeping up with the complexities of the tax laws (TCJA anyone?). If you have up to date accounting information, your tax accountant can do solid tax planning and strategy. Breakaway Advisors work closely with our clients’ CPAs (or we can refer you to one of our trusted partners) to make sure the clients are getting the best of both worlds.
Checks and Balances
It’s always good to have a second set of eyes on any situation. Given that we are in our clients’ books continually, we enjoy the fresh perspective that comes when we hand over the accounting data to the CPA at tax time. For example, the CPA may be able to see if the client qualifies for the Research and Development (R&D) tax credit. They can help us set up the appropriate categories to maximize the credit. Alternatively, a Breakaway Advisor does not just look at accounting from a tax perspective, so those adjusting entries that the tax preparer makes are not always necessary for a client’s internal books (booking tax depreciation for example).
Joyful Accountants
Is this an oxymoron? It doesn’t have to be. Traditionally tax deadlines have been joy-killers for the preparers. First, the deadlines. With some rare exceptions there are hard deadlines imposed by the federal and state tax authorities for when returns need to be filed. Usually, this meant that we had to ensure clients’ information was solid enough to prepare a return that I could sign. However with the passage of the Tax Cuts and Jobs Act of 2017 (TCJA), and the related changes to the forms, there was a lot of uncertainty surrounding how we prepared returns for the 2019 tax season. Some estimates were that tax returns were taking 50% more time than in previous years due to the legislation and the uncertainty surrounding some of the new rules (there was a price to pay for that 20% QBI deduction, folks!).
Because of these strict deadlines, most tax accountants are working more than 50 hours per week, some closer to 80, as the deadline draws nearer. This starts in February and goes through April 15 (or whatever day the deadline is that year). Then there is the “second busy season” for all the returns that were extended, so usually in mid-August the hours crank up again until after October 15. Which, if you ask anyone in the tax world is a much tougher and more stressful deadline because there is no extension available after that date. During these busy seasons, accountants have little to no time for family life, exercise, and personal care.
If you have followed the Breakaway story, you have seen that our main core value is JOY. And we have a big mission to bring joy to accounting. Not just for us but for the whole industry. We think we can achieve this by providing our clients with pristine accounting records so that their CPAs can focus on preparing accurate returns, and also be able to provide the much-needed tax planning and strategies that provide real value to clients. If CPAs don’t need to do 12 months of accounting in the busiest three months of the year, we are hoping they can get some more family time and rest to bring their best selves to serve our mutual clients.
It wasn’t easy for me to make the decision to stop preparing returns. I had to let go of some client relationships I had cultivated over the last 15 years (however I made sure I had very good referrals for them!) In my soul searching I had to come to terms that I couldn’t fully serve my clients by trying to be the best tax accountant and the best business advisor. I’m happy to say my clients have been incredibly kind and supportive of the new venture and I definitely have more joy in my life. Now to plan what I’m going to do with all those free Saturdays this year...
Kristen Keats
Founder + CEO