Best way to hand off tax prep business?

Software. Marketing. Training. Running your business.
#1
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
Hi,

I am about to takeover a small tax preparation business from my mother-in-law, who is retiring this year, i.e. not doing another tax season.

I would really appreciate advice about the best way to announce retirement/facilitate transfer of ownership from her to me.

I have been working with her for the past 5-6 tax seasons, so a lot of the clients are familiar with me, but not all of them. Also, we have recently added my name to the business name, but haven't announced that either.

I am wondering about:

should we announce her retirement? or just announce the name change? or just say she will be "cutting back"? and what should the timing be (relative to tax season)?

Thanks! :?
 

#2
CathysTaxes  
Moderator
Posts:
3557
Joined:
21-Apr-2014 9:41am
Location:
Suburb of Chicago
I would announce a name change and your mother in law could probably be in the background. Let her send out the notice that you are part of the practice and that she is preparing for retirement.
Cathy
CathysTaxes
 

#3
Posts:
1174
Joined:
21-Apr-2014 7:09pm
Location:
NC
CathysTaxes wrote:I would announce a name change and your mother in law could probably be in the background. Let her send out the notice that you are part of the practice and that she is preparing for retirement.


I agree and I might add some language that she is available for "my consultation with your tax needs should any arise".

BUT... I believe we worry about this too much. I have had 3 (Dentist, MD, dermatologist) Dr's retire/leave the business in last 10 years. They don't seem to fret about us and we simply make a choice to stay with the "new guy" or not.

In all cases, I stayed with new guy/gal.
 

#4
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
telaxman wrote:Hi,

I am about to takeover a small tax preparation business from my mother-in-law, who is retiring this year, i.e. not doing another tax season.

I would really appreciate advice about the best way to announce retirement/facilitate transfer of ownership from her to me.

I have been working with her for the past 5-6 tax seasons, so a lot of the clients are familiar with me, but not all of them. Also, we have recently added my name to the business name, but haven't announced that either.

I am wondering about:

should we announce her retirement? or just announce the name change? or just say she will be "cutting back"? and what should the timing be (relative to tax season)?Thanks! :?


Congratulations. I have gone through a similar process early in my career. It all depends on what type of operation, client type the prior owner had. In my case it was a small operation with predominantly 1040 returns. No Corp or partnerships. It was very informal and family oriented. Most of the customers were friends or family members or referrals.

The best way to handle that was a joint letter informing the retirement and assuring that the prior owner would still be available to "help/supervise" the transition and not make drastic changes (pricing or interaction) the first tax season. I actually honored the prior pricing structure the first tax season and then started making changes slowly. Also a handful of clients were contacted by phone by the prior owner. I guess there was a special relationship.

Even after more than 15 years, I still have 20/30 or so of the original clients with me. A lot of them were not profitable in my new operation so they were weeded out slowly.
 

#5
Miami88  
Posts:
91
Joined:
4-Jun-2021 8:02am
Location:
Ohio
I just went through this with my dad.

Based on timing of the decision, we sent out a letter with our year-end organizer. Basically it said I had been working with him for several years doing more & more each year as he transitioned to retirement. This year we decided I would take over doing most of the work with him still helping out and assisting and with that we would be changing the name. Same office/phone number. I can send you the letter if you'd like.
 

#6
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
Miami88 wrote:I just went through this with my dad.

Based on timing of the decision, we sent out a letter with our year-end organizer. Basically it said I had been working with him for several years doing more & more each year as he transitioned to retirement. This year we decided I would take over doing most of the work with him still helping out and assisting and with that we would be changing the name. Same office/phone number. I can send you the letter if you'd like.


Thanks for the advice, actually, I would love to see the letter!
 

#7
Posts:
2611
Joined:
24-Jan-2019 2:16pm
Location:
North Shore, Oahu
Just my humble opinions based on experience...

1) Make the letter polite, but VERY(!!!) short and too the point. People just don't want to read about a bunch of things that are very exciting to you, but not to them. They won't read it, in fact.

2) Assure them that you are fully committed and tell them that things will not become more difficult (people are afraid of change):

"I'm serious about taxes, I care, we will not have to reinvent the wheel, and I'll do a great job for you".

3) Do not apologize or create an apologetic tone to your letter. You did nothing wrong and you don't want to alarm them as if you did.

4) Don't feel rejected or poorly if you loose 10, 20, or 30% of the clients. That's just how it goes. You'll "wow" many of the remaining clients and they will refer replacements if you simply ask them to. It's not personal.

Keep us posted on how it goes!
 

#8
JAD  
Posts:
4022
Joined:
21-Apr-2014 8:58am
Location:
California
Include something from mother in law about how it has been her privilege to be able to serve each client in this way, that she is so grateful for the relationships, etc, so that people feel appreciated. Then deal with the upcoming change.
 

#9
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
ItDepends wrote:Just my humble opinions based on experience...

1) Make the letter polite, but VERY(!!!) short and too the point. People just don't want to read about a bunch of things that are very exciting to you, but not to them. They won't read it, in fact.

2) Assure them that you are fully committed and tell them that things will not become more difficult (people are afraid of change):

"I'm serious about taxes, I care, we will not have to reinvent the wheel, and I'll do a great job for you".

3) Do not apologize or create an apologetic tone to your letter. You did nothing wrong and you don't want to alarm them as if you did.

4) Don't feel rejected or poorly if you loose 10, 20, or 30% of the clients. That's just how it goes. You'll "wow" many of the remaining clients and they will refer replacements if you simply ask them to. It's not personal.

Keep us posted on how it goes!


Great advice, thanks!
 

#10
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
JAD wrote:Include something from mother in law about how it has been her privilege to be able to serve each client in this way, that she is so grateful for the relationships, etc, so that people feel appreciated. Then deal with the upcoming change.


Okay, will make sure that happens. Thanks!
 

#11
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
telaxman, I think you are in a better position because, a relative that owned it and you are already used to that working environment and know the client base. I was not that fortunate so i had to adjust to a new client base that was used to working with an accountant that was unique in its own way. The point is you don't want to make drastic moves the first year and scare them BUT you may need to make changes to optimize your operation to fit your business model.

Good luck next tax season.
 

#12
CathysTaxes  
Moderator
Posts:
3557
Joined:
21-Apr-2014 9:41am
Location:
Suburb of Chicago
I took over the business from my hubby. Many clients didn't think that i could know as much as him so i put his name on the returns the first couple of years. He also was literally giving away the tax services and doing free pickup and delivery even in April! I let him do that and i slowly raised the rates, giving them detailed invoices so they could see the huge break they were getting.
Cathy
CathysTaxes
 

#13
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
Many clients didn't think that i could know as much as him so i put his name on the returns the first couple of years.


I am surprised you did not throw them out if they did not respect you :evil:

Over the years when someone tells me that they get their tax advice from their hairdresser or someone else and challenge my position, I tell them to get their tax return prepared by them. Fortunately this does not happen too often :P
 

#14
CathysTaxes  
Moderator
Posts:
3557
Joined:
21-Apr-2014 9:41am
Location:
Suburb of Chicago
ATSMAN wrote:
Many clients didn't think that i could know as much as him so i put his name on the returns the first couple of years.


I am surprised you did not throw them out if they did not respect you :evil:

Over the years when someone tells me that they get their tax advice from their hairdresser or someone else and challenge my position, I tell them to get their tax return prepared by them. Fortunately this does not happen too often :P

I was tempted but there is the respect your elders. I did get fed up with one sole proprietor that we also did payroll and accounting for. He kept complaining to hubby about me and hubby suggested he go elsewhere. He shut up, but not for long
First I dropped him for payroll services because I got tired of getting the hours the evening before payroll (and his complaining that I wasn't answering the phone) and many times the morning of payday by saying I was dropping payroll. I used Covid as an excuse to shut down accounting and bookkeeping to permanently drop him.
Cathy
CathysTaxes
 

#15
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
I was tempted but there is the respect your elders. I did get fed up with one sole proprietor that we also did payroll and accounting for. He kept complaining to hubby about me and hubby suggested he go elsewhere.


Unfortunately we all have to deal with Jer*s from time to time. The nerve of this fellow, to complain to your husband about you. I am glad your husband told him off.

I remember one time I had a young female assistant and one of my "elder" male client refused to deal with her and kept on referring to her as "your girl". I had to sit him down and remind him that this is not the 60s anymore. He had to deal with her when I designate certain tasks to her and she is responsible for them. He was used to dealing with a pretty face as a receptionist :roll:
 

#16
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
ATSMAN wrote:telaxman, I think you are in a better position because, a relative that owned it and you are already used to that working environment and know the client base. I was not that fortunate so i had to adjust to a new client base that was used to working with an accountant that was unique in its own way. The point is you don't want to make drastic moves the first year and scare them BUT you may need to make changes to optimize your operation to fit your business model.

Good luck next tax season.


That is good advice. I really want to change a lot of things, but like you said, I should avoid drastic moves!, at least for the next season.
 

#17
Miami88  
Posts:
91
Joined:
4-Jun-2021 8:02am
Location:
Ohio
telaxman wrote:
Miami88 wrote:I just went through this with my dad.

Based on timing of the decision, we sent out a letter with our year-end organizer. Basically it said I had been working with him for several years doing more & more each year as he transitioned to retirement. This year we decided I would take over doing most of the work with him still helping out and assisting and with that we would be changing the name. Same office/phone number. I can send you the letter if you'd like.


Thanks for the advice, actually, I would love to see the letter!


It's on my home computer, I will find it and send it to you.
 

#18
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
I should have mentioned that you may get some push back if some clients complain to the previous owner if they are still involved during the transition process. You may have to make some adjustments for smooth operation.
In my situation the previous owner had a pickup/delivery option for certain clients that I was not going to carry on and that got severe push back. Right now I have just one client with that option.
 

#19
Posts:
6036
Joined:
22-Apr-2014 3:06pm
Location:
WA State
I think the biggest dynamic here is the support and communication of the prior point person. If they aren't willing to listen to concerns from their former clients and show you support in any changes you make, then you will end up in a very bad spot. Alternatively, if they are willing to support you explicitly, it will go as well as it possibly can. Ideally, the prior point person may share that the changes you are making are changes that would've happened anyway or should've happened earlier, you are just the change agent instead of them.
As has been mentioned, some people are afraid of change, but leaving you for another preparer is also change. The change is inevitable, it's just whether they want to maintain some of the consistency or make a more broad change. In my experience, anyone who leaves probably had other reasons to leave that they aren't sharing.
~Captcook
 

#20
Posts:
300
Joined:
26-Apr-2022 10:00pm
Location:
Los Angeles
CaptCook wrote:I think the biggest dynamic here is the support and communication of the prior point person. If they aren't willing to listen to concerns from their former clients and show you support in any changes you make, then you will end up in a very bad spot. Alternatively, if they are willing to support you explicitly, it will go as well as it possibly can. Ideally, the prior point person may share that the changes you are making are changes that would've happened anyway or should've happened earlier, you are just the change agent instead of them.
As has been mentioned, some people are afraid of change, but leaving you for another preparer is also change. The change is inevitable, it's just whether they want to maintain some of the consistency or make a more broad change. In my experience, anyone who leaves probably had other reasons to leave that they aren't sharing.


Thanks for the response, I appreciate your insight.
 

Next

Return to Business Operations and Development



Who is online

Users browsing this forum: No registered users and 21 guests