Virtual tax preparation

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#1
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I belong to a second bulletin board, it seems that on that board a large percentage of the members have set up purely virtual businesses. They discuss the fact that they never meet face to face with clients, everything is done electronically. I'm curious how much that is the case here.

In a lot of ways I guess I'm stuck in some old fashioned ways of doing things, but I think that a purely virtual approach makes it difficult to actually know a client, and with all the due diligence requirements it seems it would make that a lot harder to stay on top of all of that. I do actually know most of the kids that my clients are getting child tax credits for, I see them about town, I know what they are doing in school, their parents sit down with me and we talk story about what has happened during the year. I even know what pets they have and what's happened during the year with their pets. It just seems to be an important part of my business and one I wouldn't want to lose. In the end, I've been to a few funerals, too, that I wouldn't have attended if all of this was purely virtual, and the families have welcomed me and thanked me for helping their parent. I know it's a changing world, but are virtual practices truly for the better?
 

#2
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There are some advantages to virtual-only practices, particularly if you are very specialized. I find there to be value in having a more than virtual relationship, although I have a virtual-only relationship with some clients. I think it's highly dependent on the practitioner's USP.
 

#3
smtcpa  
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I just posted about how to make this happen on a FB group. @actionbsbs, if you don't mind sharing, which group is this?

I am very interested in growing this section of clients as I would like to have the ability to move and be location independent. I am looking for pointers on how to do this. My thought is a niche specialty is critical to attracting new clients. If anyone has other ideas, I am all ears.
 

#4
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I am about 90% virtual in all I do. The remaining 10% could easily be virtualized. My goal is 100% virtual so I can be anywhere in the world and still have an income stream.

The only thing I am not virtual in is I always meet new clients face-to-face. This could still be achieved with FaceTime or conferencing software. Not one client has posed any objections, though I have a 8-13 year relationship with most of them that started out entirely face-to-face. Overall, my experience is clients are open to it because it eases their burdens. They can do things on their own time, and do not have to interrupt their schedules for meetings or to stop by to pay me a visit.
 

#5
novacpa  
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My favorite client is one I meet every 5-10 years, who sends me images (not originals) and signs the 8879s with their fingernail, and pays - promptly by PayPal. They know I'm available to meet or represent them before the IRS or State, if need be - they like that and most insist upon it - the ability to meet and talk.
I see several tax-pros in the DC area (mostly attorneys) who want to "source" high paying City clients - but do not want to pay the downtown rent - they set-up "virtual offices" with a downtown street address (they get 10-hours of use monthly and a mail service) they live hundreds of miles away (at the beach) and want to practice - remotely.
They have mixed results - because so many clients say - "I'm down the block can I drop in and see you"?
 

#6
FLAcct  
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Actionbsns - I have had a practice similar to yours for 24 years. I think we're a dying breed, but I have about 6 more years before I fully retire and I'm not going to change. I like knowing and having personal interaction with my clients and I think they appreciate that as well.
 

#7
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smtcpa wrote:I am very interested in growing this section of clients as I would like to have the ability to move and be location independent. I am looking for pointers on how to do this. My thought is a niche specialty is critical to attracting new clients. If anyone has other ideas, I am all ears.


Big picture: why would these hypothetical new clients select you instead of any other professional in the world? I'm not saying this to downplay you as a professional or your current practice. Your clients come to you because you're good at what you do, but there's no reason for a random yokel from Wisconsin to use you, right? (In the same way, my clients come to me because I'm good, but there's no reason for a random person from Colorado to find me.)

A virtual firm by its nature requires you to be able to pull in new clients without the innate advantage of being close to them. You've got to develop a reason for someone in Wisconsin to use you. So, as you said, developing a real niche is a way to set yourself apart from the other 46,000 CPA firms in this country. I can't think of any other way to have a growing virtual-only practice unless you want to compete on price.

Even though most of us don't have virtual firms, even the old school firms operate virtually at least in part. If a client moves, we're still happy to work with them; they just mail/fax/e-mail/portal their information. The late Doctor Watson virtualized his practice later by force, but he was also looking to pare down his firm at that point.
 

#8
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Let's not overlook referrals, which I know is our predominant source of new business. Referrals occur even with virtual services. And you still have to build relationships to get the work, but that is separate from performing services virtually.

I may not see most my clients on a regular basis, but I do know them and stay in contact. When done properly, a virtual CPA firm is not just a random internet company hiding behind a website and technology.
 

#9
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I guess it becomes a question of strategy. As you take your firm to a 100% virtual one, are you just expecting to live off of the residual goodwill of clients gained before it was 100% virtual, or are you hoping to add new clients outside of your existing ecosystem?

If it's the latter, what are you offering to potential new clients that thousands of other CPA firms (like mine) don't offer?
 

#10
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I have a virtual practice but I specialize in Sales and Use taxes. I have a handful of FIT clients and I am constantly turning away new clients due to lack of time. I agree with Conerstone in that referrals is the key component. The question for me is how would you start from scratch with a virtual practice... that would be hard.
 

#11
makbo  
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usmctaxguy wrote:The question for me is how would you start from scratch with a virtual practice... that would be hard.

If you want to go this way, you are best served by starting with all virtual clients. An initial in-person meeting is reasonable, but don't encourage any clients who crave more than this. It's much easier to just select your client base from the start, than to take all comers and try to sort them out and dis-engage a few years later. But you have to know what you want, and it is hard to know at the start. You also need to be able to cover your expenses.

Referrals will probably be your best source of new clients. Network with local tax professionals, and financial planners. Maybe mortgage brokers, etc.

To encourage virtual clients, you should:

  • 0) have a basic web site, (try TheSiteFactory.com), with your bio, a photo, and maybe a range or subset of your typical fees. SEO for the web site is probably a good idea, but will cost.
  • 1) start with e-signing for engagement letter
  • 2) establish a secure portal for document exchange
  • 3a) ensure you are responsive to emails (or texts, but I personally won't use it with tax clients). Be prepare to respond, and eventually archive, lengthy email chains.
  • 3b) establish a solid document filing system, such as Name/TaxYear folders for each client, and meticulously store and archive all your workpapers in digital form. Get Adobe Acrobat Professional or whatever software that lets you easily annotate PDFs.
  • 3c) get some good tools, like SnagIt, and MoffSoft FreeCalc.
  • 4) invoice and solicit payment online - IMPORTANT!! (Quickbooks can serve as CRM/billing system, Intuit Quickbooks Payments is only $1 for ACH transfers)
  • 5) offer e-sign for the tax returns
  • 6) send Form 9235 acks via email (automated)
  • 7) send occasional bulk emails during off season to prepare clients for next tax filing - use a service that is mobile friendly, and which will hopefully avoid spam blockers
 

#12
zl28  
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Good info by Makbo...most important i think is rapid response to their emails; it sends clients a message that this 'virtual'
relationship is going to work.

Most of my clients are 40-50; they're lives are extremely busy and they don't want to meet with me.

But they do want me to respond promptly with good info and good advice.

I send them a packet to put all their tax papers into and mail back to me; others opt to upload and send their info to me through (Intuit Link).

I do think the initial meeting face by face is important....but not required....though if roles were reversed i'd like to meet up face to face at least once with someone.
 

#13
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makbo wrote:
usmctaxguy wrote:The question for me is how would you start from scratch with a virtual practice... that would be hard.

If you want to go this way, you are best served by starting with all virtual clients.


Wholeheartedly disagree based on experience. As I said earlier, all of my clients started out with face-to-face relationships. Over the years, we still maintain plenty of contact, but virtually. I see a few of them around at business networking events, but as far as actual services, nearly everything is virtual. My largest client has just four employees, a Board that is scattered across the country, and I basically never see any of them even though I live on the same island as the employees work.

Strategy is important, yes. And yes, you need to test the waters if you have an existing client based used to in-person meetings and services. I slowly transitioned them and they all welcomed the new ease of dealing with things they frankly hate dealing with.

Despite doing the work virtually, I respond to e-mails and answer phone calls as they arrive or ASAP. Even if I cannot provide what they need at the moment, I still respond to let them know I know they contacted me and I will follow up shortly.
 

#14
makbo  
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CornerstoneCPA wrote:Wholeheartedly disagree based on experience.

So you are saying it is better to start with clients who want to do everything in person, and then convert them to remote/virtual?

Well, to each his own, but by the time I went solo, after seven years as an employee, I knew what I wanted, and it sure was easier for me to just appeal directly to virtual-ready clients from the start.
 

#15
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CornerstoneCPA wrote:I am about 90% virtual in all I do. The remaining 10% could easily be virtualized. My goal is 100% virtual so I can be anywhere in the world and still have an income stream.

The only thing I am not virtual in is I always meet new clients face-to-face. This could still be achieved with FaceTime or conferencing software. Not one client has posed any objections, though I have a 8-13 year relationship with most of them that started out entirely face-to-face. Overall, my experience is clients are open to it because it eases their burdens. They can do things on their own time, and do not have to interrupt their schedules for meetings or to stop by to pay me a visit.


Weren't you the guy who inherited all of his clients from his father's practice?

I feel like the biggest issue here is originating the clients, because it's difficult to initially communicate your value, virtually. Having a built-in client base and THEN going purely virtual is an entirely different issue altogether.
 

#16
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actionbsns wrote:I belong to a second bulletin board, it seems that on that board a large percentage of the members have set up purely virtual businesses. They discuss the fact that they never meet face to face with clients, everything is done electronically. I'm curious how much that is the case here.

In a lot of ways I guess I'm stuck in some old fashioned ways of doing things, but I think that a purely virtual approach makes it difficult to actually know a client, and with all the due diligence requirements it seems it would make that a lot harder to stay on top of all of that. I do actually know most of the kids that my clients are getting child tax credits for, I see them about town, I know what they are doing in school, their parents sit down with me and we talk story about what has happened during the year. I even know what pets they have and what's happened during the year with their pets. It just seems to be an important part of my business and one I wouldn't want to lose. In the end, I've been to a few funerals, too, that I wouldn't have attended if all of this was purely virtual, and the families have welcomed me and thanked me for helping their parent. I know it's a changing world, but are virtual practices truly for the better?


What is the name of the second bulletin board?
 

#17
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quietAccountant1 wrote:
Weren't you the guy who inherited all of his clients from his father's practice?


Some. I worked with him and a nearly all of his clients, went to work as full-time employee for a client after he died, and a nice number of former clients then returned after I went out on my own. Trying to figure out what that has to do with anything, I could have bought a practice to arrive at same point. They were not handed to me on a silver platter, if that is your implication.

makbo wrote:So you are saying it is better to start with clients who want to do everything in person, and then convert them to remote/virtual?


It worked for me, and I know it works for others, but you are adding words to what I said. Keep in mind my clients did not originally have the virtual option because the technology just did not exist like it does today, so yes, it was originally ingrained in them that in-person was the only way to work with CPAs. Even as recently as 5-8 years ago, the technology was clunky, cumbersome, and unreliable...at least everything I use today for virtualization actually works, and WELL. Clients are not closed-minded; they just need to be shown that what they have grown used to will not be negatively changed by leveraging technology. I live in a wealthy retirement area; many of them still work with their lawyers, CPAs, financial advisors, etc., from where they originally lived. Others decide to switch to someone local, and they are already used to the virtual ways.

I still believe in the value of meeting new clients and staying in regular contact, but it cannot be denied that there is a shift occurring within the industry because of client expectations and needs. I have gained new clients that while I met them through networking, all of the work will be virtual.

The method of obtaining new clients is not changing--referrals, or gaining their trust through in-person encounters. I have no desire, nor should any other CPA, to compete with the dirt cheap virtual companies providing bookkeeping and tax services (many of which are based in or outsource to India). The value of a CPA can still be readily communicated, but you are focusing on your ability to be accessible regardless of where anyone is currently located, and not be inconvenienced by working around standard business hours since e-mail, video/phone conferencing, work itself, and file exchange can be done any time.

I know most of the local CPAs and their habits. It is not typically the clients that need to learn to embrace change--it is the CPAs. Very few firms in my area are making much effort to move toward virtualization, and it has little or nothing to do with client opposition.
 

#18
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CornerstoneCPA wrote:Strategy is important, yes. And yes, you need to test the waters if you have an existing client based used to in-person meetings and services. I slowly transitioned them and they all welcomed the new ease of dealing with things they frankly hate dealing with.


I still believe in the value of meeting new clients and staying in regular contact, but it cannot be denied that there is a shift occurring within the industry because of client expectations and needs. I have gained new clients that while I met them through networking, all of the work will be virtual.


I think my disconnect is that I wouldn't consider a firm relying on traditional in-person networking to be a fully virtual firm, even if the work is being done 100% virtually. Maybe I'm wrong about it. I fully agree that many clients hate the traditional model and that any firm unwilling to handle virtual-only clients will start to see declines in growth or even clientele.

You mentioned that very few firms in your area are making much effort toward virtualization -- what do you mean by that? Are these firms outright refusing to work virtually, or they only grudgingly working virtually with clients (such as only for clients who move away), or do they offer virtual services but haven't implemented tools like electronic signature?

In my practice, I have some fully virtual clients, some entirely non-virtual, some in between. For better or for worse, I have the freedom as a sole practitioner not to be bogged down by strict firm processes and can serve clients how they want to be served (within reasonable limits, of course). That said, this thread has reminded me that I should let my clients know about their options.
 

#19
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I love this discussion and I'm so glad so many have joined in. The other bulletin board I belong to is one from FB. It's called Tax Professionals of America. My sense is that the average age is possibly younger than on this one - not that we are old, it's just the responses that are there make me feel that they are from a younger group of people. Case in point is the virtual practice. They also discuss a lot more of the various services available via apps and a broader use of a variety of websites. It's an interesting comparison. For those of you who remember, Tom O'connor and Fred Stein are members, and I believe Kevin is too, although Kevin rarely joins a discussion, Fred and Tom do occassionally.

For those of you who are working virtually, what equipment are you using? I had my first Face Time appointment with a client who moved north of me an inconvenient distance. It worked well, I was able to meet with both H and W at the same time, but I was using my phone and it became very hot and that doesn't seem good. I suggested to another client who is very busy all of the time and lives in the same area so it's difficult getting together, that we set up a Face Time appointment to review the tax planning that I had done. So far no response from her. I'm considering buying a tablet for this purpose, but I'm not sure it will actually be a useful tool in the end.
 

#20
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missingdonut wrote:
You mentioned that very few firms in your area are making much effort toward virtualization -- what do you mean by that? Are these firms outright refusing to work virtually, or they only grudgingly working virtually with clients (such as only for clients who move away), or do they offer virtual services but haven't implemented tools like electronic signature?


They are taking few steps to move toward virtualization. Begrudgingly serving clients that move away is a good way of putting it; they have the most basic technology in place to still be able to serve them, but they are not proactively using it to make the firms more efficient, profitable, and open to new regions without having to open new offices.

I am not certain CPA firms, based on the level of services they can and do render, will ever be 100% virtual. I view it as more of a hybrid approach, where the services are performed virtually but you still grow the business through more traditional methods. Like I said before, I am not willing to even attempt to price myself using the same structure as 100% virtual bookkeeping and tax prep companies.
 

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