5 Disastrous Mistakes Tax Pros Make

Identifying problem areas is an essential part of improving a business, and running a tax practice is no different. Whether thinking about developing an effective advertising campaign or streamlining workflow, knowing how to spot common pitfalls can make developing a successful strategy much easier. So GruntWorx surveyed 365 tax return preparers to learn what they believed were the biggest mistakes in five key areas: customer service, workflow, security, planning, and marketing.

But first, let’s take a look at the methodology and demographic data before diving into the results.

Methodology

Tax professionals were sent an email containing a link to an 11-question survey. The first five questions gathered demographic data from respondents, the next five asked respondents to rank the available choices in each category, and the final question was a write-in response.

Demographics

Respondents were from 43 states, and tax professionals in the following five states most likely to participate: California (7%), Texas (6%), Florida (5%), Maryland (5%), and Illinois (4%). On the other end of the spectrum, New Mexico, Wyoming, Delaware, Alaska, and Nevada each accounted for less than 0.5% of the total responses. And while participants were predominantly in suburban (33%) and urban markets (32%), a little over one third worked in either a multi-site (20%) or rural practice (15%).

When it came to professional designations, CPAs provided the most responses (50%), while EAs and preparers without a professional certification were the second (25%) and third (24%) largest groups, respectively. Rounding out the bottom are CFPs (2%) and attorneys (1%).

Results

53% of respondents chose “being slow to respond to clients” as the biggest mistake tax professionals can make in customer service. After all, no one likes waiting around, and radio silence from a tax professional might encourage a would-be client to look at other tax practices.

The two options most likely to be chosen were “not developing internal deadlines” (38%) and “having a cluttered or disorganized work space” (37%). Not having clearly established internal deadlines

leaves employees rudderless and keeps you from being able to provide clients a realistic timeframe for services rendered. On the other hand, having a desk that remind clients of a post-tornado office supply store probably doesn’t help convince them that you’re going to dot every “i” and cross every “t” when preparing their return. It’s not a good idea to make either mistake, but you’d better make sure to have a clearly detailed workflow strategy in place.

Data security has been a hot topic in the tax industry at least since the establishment of the IRS Security Summit in 2015, but there has never been a time that having a haphazard approach to securing digital information was a good idea. Given guidance coming from the Security Summit and industry luminaries, it’s not surprising that “not having a backup server for your private data” (27%), “not developing a data security strategy for your office” (26%), and “using the same password for all online accounts” (24%) were the top three choices in this category.

When it comes to planning, respondents believed that always saying “yes” to clients was the biggest mistake a tax professional could make (32%). This is one that every professional—regardless of industry—can identify with, because in the moment, saying “yes” feels like the right decision: you’re going to prove your value by showing that you can get anything done. Unfortunately, doing that means taking substantial bites into a very finite number of work hours.

When talking to tax professionals, we have found that marketing their practice can be a thorny subject. Preparers either tend to feel like they have a firm grasp on connecting with clients or are completely mystified, so it was interesting to learn that not having a website was considered the biggest marketing mistake (29%). Not hiring professional front-office staff was the second most frequently chosen option (27%), while combining not having a website and not keeping a website up to date made up 42% of all responses.

Conclusion

Mistakes like forgetting to develop a data security plan and taking too long to respond to clients can damage your business’ reputation, but there are products and services designed to help you sidestep these problems. Tax professionals in particular have a number of services at their disposal, like secure client-facing portals and tax automation products.

Sending private client data in an email is a risky proposition. Even tax professionals who have a rigorous data security plan in place will receive unsolicited PDFs of a client’s W-2 in email from time to time, but there are more convenient ways of getting client source files than requesting a flash drive. Some client-facing portals offer SMS functionality as well as facilitate secure file transfer, meaning you can quickly and easily respond to customer questions and get the documents you need to prepare a return.

Once you’re ready to get to work on the tax return, you don’t have to worry about manual data entry and document organization. Tax automation software-as-a-service products can streamline office workflow and free up time to better help clients by eliminating those tedious tasks.

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