Breaking down a scheduled tax season

My last column received a surprising amount of feedback from CPAs and other professional service providers. Many CPAs liked the idea of a more spread-out (and scheduled) tax season — non-CPAs wondered why the industry wasn’t already doing this.

While almost everyone agreed with me that it would be better for the busy season to be more manageable, the next comment was usually “OK. How do we actually do this? How can we implement a nine-month tax season and get buy-in from clients and their staff?”  

Today, we will discuss what a sample calendar could look like for you if you moved to a scheduled tax season. Keep in mind there is no single “right” way to implement a scheduled tax season. There is only what’s right for your firm. The key is to become proactive rather than reactive about scheduling your clients, so you’re not racing around with your hair on fire every February through April. Here’s how a quarterly approach might look for your scheduled tax season: 

Q1 (Feb. 1 – April 15): This is the traditional tax season that kicks off in February because nobody has anything ready in January (more on what you do in January in a minute). This is when you give highest priority to your A-List clients and other well-organized clients who want their returns completed early. It’s probably not as many as you think. 

Q3 (Aug. 1 – Oct. 15): This is for our business owners and clients who always have lots of complexity in their lives. Also, we all have clients who we know could file on time but are running behind. Great. If there’s capacity in your Q3 block, they can file it here as well.

Q2 (May 1 – July 31): No, I didn’t forget about Q2. This block is reserved for the “leftovers” who haven’t been slotted into higher priority times in Q1 and Q3.  

Q4 (November – January): This is when you do year-end planning for your best clients and work on improvements to your firm’s processes and procedures. Interns or younger staffers could be building out document request lists for clients and reviewing systems and processes that need to be updated. It’s also when you’re working out the kinks from last tax season to hit the ground running in February.

Progress over perfection

To paraphrase Winston Churchill, “Don’t let perfection be the enemy of progress.” Rest assured, there will be bumps the first year you move to year-round tax planning. It will take some time to review your client list and determine which ones you want to meet with, and when. But once you get everyone sorted out, a scheduled tax season gets much easier because clients will be assigned to the same quarter year after year. That way, everyone knows when it’s time to start getting their documents in order — “My CPA always does my tax stuff sometime in June,” for instance. As a result, the only people being scheduled ad hoc are the new clients you’ve brought in during the year.

Again, you don’t need to schedule 33% of your returns evenly between Q1, Q2 and Q3. Some firms might want to take longer breaks in the summer and get 50% of returns done in Q1 and work less in Q2 and Q3 and. Others might have large annual projects they do every May and June. They might want to do 50% in Q1 and 50% in Q3. With a proactive service model, you get to decide when the returns will be done to have better control of your resources and the busy season narrative. By spreading out your tax season, you have more capacity. And when you have more capacity, you’re better able to handle emergencies and take on more of the right kinds of clients. Suppose a high-value prospect calls you at the last minute needing to get a complex return done by April 15. If they’re willing to pay you a premium, you now have the bandwidth to take on that new business and get the return done on time. But if you’re operating under the old compressed 10-week busy season, you’d probably have to turn away that potentially lucrative client. Another advantage of the managed tax season is if you wind up with extra capacity during Q1, you can move some of your Q2 and Q3 clients up and get their returns done ahead of time. Now you’ve exceeded expectations and look like a hero.

Do we have to wait to get paid?

Another concern accountants have about the managed tax season is whether all the client extensions will require them to wait until the end of the calendar year to get paid. No! Filing a client’s return should not affect when you get paid. As a professional who didn’t grow up in the accounting profession, the idea of receivables has always been a strange concept to me. So, there are clients who just haven’t paid you? Keep it simple next time: Either bill them 100% upfront in January or put them on a monthly billing cycle. No more “Here’s your return, and here’s your bill” (I hope they pay us).

There is no single right way to implement a proactive, scheduled tax season. The observations above are just suggestions. I want you to think about ways you can gain control during tax season, instead of the IRS and clients being in control of you. You’ll have to experiment and adjust your process (that’s what Q4 is for). But once you get started down the road to a scheduled tax season, you’ll never want to go back to the old way. 

What are you doing to make the next busy season less stressful and more efficient? I’d love to hear from you.