Bookkeeping And Tax Preparation Business Success Secrets

The fundamental difference between a bookkeeping service and an accounting service is that book keepers record and maintain records of financial transactions. Conversely, accountants analyze those transactions to prepare the financial statements and tax returns  as per the financial reporting framework and tax laws. As both services are often offered by the same type of small business, here are some quick tips for success.

All businesses face fierce competition. According to U.S. News & World Report, there are more tax preparers in the U.S. (1.2 million) than police and firefighters combined.

Of course, the maxim “You only get what you pay for” actually describes a best case scenario. As in all services, the client may not get what they pay for and rarely get better than paid for. Under-charging may be a great way to get new business, but if it results in not enough time devoted to providing the best service, it may ultimately not be in the bookkeeper/tax preparer’s best interest.

Therefore, other means of obtaining and retaining clients, besides offering the lowest cost, are crucial for success.

Bookkeeping and Tax Preparation Business Tips

Since the competition is very tough and the big players are already highly established in the industry, strategic planning is very important. The following strategies may help:

  1. Target individuals and new businesses who don’t already have an third party bookkeeping system installed.
  2. Always obtain a signed copy of your letter of engagement.  When a client contracts for service, both the client and the firm sign a letter of engagement. This usually brief document includes many of the characteristics of an agreement.  Scope of work has been clearly defined in the letter of engagement along with the responsibilities of both the parties and cost and/or elements of cost.
  3. Design and develop a professional website. Develop a memorable slogan and spread the word using social media and personal referral. Pay special attention to your reputation on Yelp, which can be the source of many referrals.
  4. Keep an eye out for other ways to be of service to your clients, including but not limited to referring other solution providers to your clients. The recipients of those referrals may feel inclined to reciprocate and refer your service. In any case, it never hurts for the client to feel that you are solving additional problems.  Never refer anyone who you would not use yourself.
  5. Establish a clear code of conduct and chain of command within your organization. This will result in better services to your clients and less potential risk to your business.cpa_1
  6. Introduce a management reporting system for each assignment using either job costing or the activity based costing method. Allocate the overhead costs accurately and determine the overall operating cost for running both the bookkeeping and the tax preparation services.
  7. Provide your clients with organizational help, including but not limited to tax organizers and calendar reminders to make everyone’s work more efficient and timely.
  8. Add a standard markup on each of the activities based on the cost of the job in order to determine price for the services offered to clients. While adding markup to the cost for price determination for each service, it is strongly recommended to look at the price for the services offered by the competitors.
  9. Consider asking your most satisfied clients for referrals. People like to help others that they are happy with.  Make sure to choose the moment you ask carefully.Your request is more likely to succeed if it coincides with the successful completion of project the client is happy with.

There are some other well-known professional certifications apart from Certified Public Accountants (CPA) such as the Certified Management Accountants who also have the authority to certify financial statements and provide professional and advisory services.  If possible, consider working toward these higher professional certifications.

When evaluating obtaining a CPA vs CMA, consider that a CPA is the gold standard of accounting certifications. In contrast, the CMA is more specialized in costing and management accounting rather than the bookkeeping and tax preparation. Also, a CPA designation has a very real marketing value that should not be overlooked.

As management guru Tom Peters said, “Today brands are everything and all kinds of products and services from accounting firms to sneaker makers to restaurants are figuring out how to transcend the narrow boundaries of their categories and become a brand surrounded by a Tommy Hilfiger-like buzz.”  By giving excellent service and letting others know about it, in your own small way you can operate your book keeping and tax preparation business as a brand.

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