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Top 5 Ways to Keep Yourself Essential to Today’s Consumer By: Taxware
August 5, 2020

These coronavirus times find us rearranging our schedules, working in different places at different times, and changing the way we interact with our family, our friends and our clients. Just as important and vital to the success of our business is the need to retain and improve our relevancy in this highly competitive market.

The immediate crisis aside, a recurring problem for tax professionals is the increasing choice by consumers to use Do-It-Yourself (DIY) software products to prepare their taxes. Tax professionals offer significant and valuable benefits, but if your clients do not see the value of those benefits, they will likely go elsewhere, including online services.

Before entering the world of the tax professional and recently acquiring my CTEC, I spent over 25 years as the director of marketing for an independent insurance agency. During that time, they grew to be one of the largest in the Inland Empire of Southern California. Insurance agents and tax professionals have many things in common, and many businesses choose to combine these two services to provide valuable benefits to their clients year-round.

One commonality is that both industries are threatened by online companies with appealing mascots and catchy jingles to entice their clients into thinking that they can acquire their insurance or complete their tax return on their own, without competent and experienced advice that the licensed professional provides. In my opinion, THIS is the real concern that tax professionals need to address to keep their services in demand by today’s consumer.

As a licensed insurance agent, I have witnessed the increase over time in DIY internet insurance quotes and policy purchases. This continues to have a serious impact on insurance agents, reducing their market share every year. Insurance agents call it “The GEICO® Effect.”

Tax professionals also experience that challenge. It’s called “The Turbo Tax® Effect.”

How does it happen? Advertising on all mediums convince people that they can simply click a few buttons, share their personal information in cyberspace and prepare and submit their return with accuracy…. And, what happens? As more people believe this is a better option for them, fewer and fewer clients will be seeking our professional services.

The data already shows it:

DIY Data 2019:

a bump for DIY

This graph shared from AccountingToday.com shows that even during the 2019 filing season when the complex nature of the Tax Cuts and Jobs Act should have driven more clients to professional preparers, the number of returns self-prepared through DIY software rose by 4.2% over the previous year.

Graph Credit: AccountingToday.com

2020 filing

The information above was published May 15, 2020, by the IRS.

This should be a concern for everyone in this industry.

“You should not be as worried about working remotely but rather keeping yourself RELEVANT.”

Our task, as tax professionals, is to help our clients understand our value and appreciate the services we provide.

Have you ever thought about it? Who are your biggest competitors?

Your biggest competitors are the companies who not only sell software to tax professionals, but also sell online programs to DIY consumers. Take a look at these tax software programs and their parent companies:

graph

Each of these companies advertise DIY software to your clients. Every year, their DIY programs begin to take center stage as the focus of their development and serve to cut you right out of the picture.

Unlike other tax software companies, Taxware Systems intentionally does not provide an online do-it-yourself program. We recognize and support the value and service you bring to our communities. We believe strongly in being loyal to the tax professional, most especially family- owned and -operated small business tax professionals.

You will likely never be able to compete with their marketing budgets. You will likely never have all the technology and tools that these companies have at their disposal.

But don’t despair! — As this crisis has proven, YOU ARE ESSENTIAL!

Now, what can you do to make sure your clients know you are essential?

The following top 5 ways are just the beginning, but a great place to start:

1. Show your Expertise

Now more than ever sharing your experience with others is both vital and relatively simple.

In times past, a professional press release created at great expense with the hopes that one news media might pick up your story, was your only option to share your knowledge. Now you have the ability to publish your own articles, opinions and expertise in short articles that can be shared in emails to your clients, in a blog on your website or on LinkedIn or Facebook. This type of content helps people get to know you and get to know the value of your knowledge and experience.

Write these articles and share them in a customer newsletter that can be emailed, but we recommend printing and mailing them at least twice per year, 3-4 times if possible.

2. Show you Empathize

“No one cares how much you know until they know how much you care.”

We have all heard this before and we know it is true. Reach out to your clients at important times, whether it is a crisis or a birthday. Your clients want to know that you are invested in their well-being.

There are technologies that can help you do this on a larger scale so that you can reach many, if not all of your clients, at the same time. One example we love is Textellent. Our Wintax 1040 software is seamlessly integrated with their services to help make communication and appointment setting easy and efficient. The ability to text your clients can be a genuine communication they will appreciate as long as you do it with care and sincerity.

It is important to be authentic. Don’t let technology take over your personal voice. If it is evident that a service provider is preparing all of your content and communication, then your efforts can have the opposite effect. Don’t ever completely detach from the communication your business, and your brand, is putting out.

3. Be Evident

Be where they are. Better yet, be where they are looking.

Local community involvement - If your customers come primarily from the neighborhood surrounding your office, it is important to get out and be seen. Networking events and local chamber meetings can play a key role in gaining trust, awareness and referrals of your services.

Website - It is important to be found in local search on the internet. Having even a basic website gives you a “store front” online where your potential clients can read and learn about your services. There are many affordable resources for even the smallest offices to have an internet presence.

Social media - Engage on Facebook and other social media platforms that your customers may be involved with. Again, be authentic as you communicate and consider using media advertising as an economical way to reach your specific targeted audience.

4. Exceed Expectations

Go the extra mile, give the extra effort to exceed your client’s expectations.

There is nothing more noticeable than to add a personal touch to any interaction with your client. For example, you may want to make it part of your business process to always send a follow-up thank you note after the season. These and other personalized communications will go a long way in strengthening your relationships, improving client retention and increasing referrals.

Speaking of referrals, do you have a “Referral Thank You Program” implemented in your office? These types of programs are fun in that you can choose to reward the client directly, or based on local laws, you can determine to contribute to a specific charity on their behalf. There are so many great ways this program can be created.

Focus on the small things: An in-office visit? Yes, I am sure they will be happening again in the near future. Do the simple things, like provide water and snacks for your clients, to make them feel instantly comfortable.

And don’t forget the ever-popular birthday card and other personalized notes.

These efforts are worth their weight in gold to retain your current clients and secure referral business each year.

5. Hire an Expert

Running a business is time consuming. No one knows this more than tax pros in the heat of the season!

No, you don’t have to hire a big budget marketing firm for your local tax practice, but there are still reasonable and affordable ways to help you get your business pointed in the right direction and get the extra help you need.

I’ll tell you a little secret—26 years ago I was a licensed insurance agent with a knack for marketing that I didn’t really know I had. Back in the day, advertising was mostly done through a large yellow-page telephone directory and newspaper ads. I was expecting my first child and the agency owner saw the wisdom in allowing me to work remotely on a very part-time basis to handle the marketing and advertising. It was a blessing for both the agency and myself.

You may already know someone who has a knack for social media, good communication skills, and willing to learn more about income tax and your business. They may be very interested in a part-time gig. You can also advertise for help or look for a small marketing firm to help guide you with the personalized service that you need at a reasonable cost.


Not only in times of crises, but every day, it is those who STEP UP that stand out. Experienced tax preparers like you are essential!

Want to learn more about how to keep yourself essential? Register for Taxware’s free webinar.

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Revisiting the small employer health insurance creditBy: National Association of Tax Professionals
July 20, 2020

As businesses of all sizes grapple with the difficulties caused by the COVID-19 pandemic, budgets are being scrutinized, staffing levels are being assessed and fringe benefits are being reviewed. At the same time, employees are more concerned with their health insurance coverage than ever. While various government stimulus programs have been passed to help businesses remain afloat, businesses are and will continue to be looking for ways to manage reduced cash flow expectations. In many cases, benefit reductions are a more attractive and practical option than other alternatives, such as staff reductions.

Medical benefits are very costly and with cash tight due to government mandated shutdowns, the potential for a recession, phased re-openings, and great uncertainty in the near future, re-examining a client’s situation can produce new avenues for tax savings that can help your client stay in business and retain employees. One such opportunity could be the small business health care tax credit reported on Form 8941, Credit for Small Employer Health Insurance Premiums.

In order to qualify for the small business health insurance premium tax credit (§45R) the business must meet the following eligible small employer (ESE) criteria:

  • Fewer than 25 full-time equivalent (FTE) employees
  • Average annual wages of less than $55,200 per FTE (2020)
  • Paid uniform percentage of at least 50% of the adjusted cost of the employer-sponsored health care coverage through their state’s marketplace’s Small Business Health Options Program (SHOP)

For clients who were previously borderline, the reduced operations may adjust their situation, so they now qualify. Let’s walk through an example.

Hobert Manufacturing is a specialty automotive parts company that supplies aftermarket accessories to high-performance vehicles. As a non-essential business, the state mandated it shut down for 14 weeks during 2020. Prior to the shutdown, Hobert had 28 FTE employees. Additionally, when it re-opened, product demand was low, and the business was forced to reduce staff by five employees given uncertainty of future demand for at least the moderate term. Now that Hobert has fewer than 25 FTE employees, they may qualify for the credit.

Let’s take this a step further and assume in 2019, Hobert’s average annual wages were $60,000 (exceeding the 2019 adjusted amount of $54,200). Assuming no changes to Form 8941 instructions will be made for 2020, the 14 weeks Hobert was closed would reduce the employee hours of service by 560 hours (14 x 40). This is approximately a 27% reduction in hours for the typical year (2080 hours). If Hobert averaged $60,000 in average annual wages in 2019, the reduction in hours would reduce wages to $44,400.

This credit can be as much as 50% of the premiums paid, which during difficult times like these can be a real lifeline to small businesses like Hobert Manufacturing.

As tax professionals, your primary duty is to inform clients of the tax consequences of their situations and help them determine tax strategies that are in their best interest. To truly meet this goal, we have to look comprehensively at the client’s unique situation. As that situation evolves, sometimes you will need to review items the client may not have qualified for previously.

As you work with your clients to help them adjust and re-tool for the current storm, helping them review the various aspects of their benefits packages, and the ramifications and tax savings opportunities (like the small business health care tax credit), your client is likely to have additional questions like should they change from an HSA to an HRA or QSEHRA? Ensuring you are up to date on these plans, their qualifying criteria, advantages and limitations is crucial to be prepared for your clients’ questions.

If you’re interested in learning more about this topic, we have an upcoming opportunity to review these employer health insurance topics and more during our upcoming webinar Navigating Employer Provided Health Insurance July, 21 and 22.

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2020 tax season recap and highlightsBy: National Association of Tax Professionals
July 15, 2020

The 2020 tax season brought a lot of change, anxiety, headaches and research. You worked through a pandemic, learned new tax law and how to apply it to your clients’ returns, and acted as a financial sounding board, all while meeting deadlines and taking care of your clients. To say it’s been tough would be an understatement, but here we are, at the official end of the 2020 tax season (minus extensions).

Let’s recap the highlights of the 2020 tax season:

CARES Act implementation

The Coronavirus Aid, Relief, And Economic Security Act was signed into law on March 27, 2020. The $2 trillion package included a lot of provisions to provide economic assistance for American workers, families and small businesses through stimulus payments, business loans and payments to state and local governments.

The CARES act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan to skip those RMDs this year. This includes anyone who turned age 70-1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

The CARES act also made a technical correction to the class life to QIP property retroactive to 2018, which allows for bonus depreciation. Other provisions of the CARES act include NOL limitations suspended until 2021 and NOLs from years 2018-2020 have a five-year carryback period.

There were a number of other provisions included in the CARES act. Your clients likely had lots of questions about this act and its impact. If you’re still looking for guidance on this topic, we have education that covers a variety of topics related to the coronavirus and its tax impacts.

Secure Act

While this act was technically passed before the 2020 tax season began, its implementation applied to this tax season. The Setting Every Community Up for Retirement Enhancement Act pushes back the age a retirement plan participant needs to take required minimum distributions (RMDs) and allows traditional IRA owners to keep making contributions indefinitely. Under this act, small business owners may find it easier to set up safe harbor retirement plans that are less expensive and easier to administer. Our 1040 workshop this fall covers this act and more.

Tax Day was pushed back

Partly as a result of the coronavirus’s economic effects on you and your clients, and also health and safety measures, Tax Day 2020 was moved from April 15 to July 15 without any official extension needed. At this time, extensions are still due Oct. 15.

First and second quarterly estimated tax payment pushed back

Also due to the economic and health impact of the coronavirus, the deadline for the first quarterly estimated tax payment for businesses was pushed to July 15. In 2020, both the first and second quarter tax payments are due July 15.

PPP loan

To maintain America’s workforce and prevent an economic catastrophe, Congress passed a small business loan called the Paycheck Protection Plan loan as a part of the CARES Act. Small businesses that were having trouble with payroll could apply for this low-interest private loan to help with payroll and certain other costs. The original application deadline was June 30, 2020, but was extended to Aug. 8, 2020.

Standard deduction inflation adjustment

For the 2020 tax year, the standard deduction amount is increased to $12,400 from $12,200 for singles in 2019. Additionally, the standard deduction for clients who are married filing jointly was increased to $24,800 from $24,400 in 2019. The additional standard deduction for older taxpayers and those who are blind is still available in 2020.

HSA

The amount you can save in an HSA if you’re an individual with self-only health coverage increased to $3,550 from $3,500 in 2019. HSA account holders with family plans can save an additional $100, up to $7,100. This increased from $7,000 in 2019.

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NATP urges swift PPP loan forgivenessBy: National Association of Tax Professionals
July 9, 2020

NATP joined other associations in supporting swift PPP loan forgiveness for amounts under $150,000. Specifically, NATP and other trade associations express strong support for S. 4117, The Paycheck Protection Program Small Business Forgiveness Act, sponsored by Senators Kevin Cramer and Kyrsten Sinema.

In order to help our nation’s smallest small businesses, we urge Congress to quickly pass this legislation that would forgive PPP loans of less than $150,000 upon the borrower’s completion of a simple, one-page forgiveness document. PPP loans of $150,000 and under account for 85% of total PPP recipients, but less than 26% of PPP loan dollars. Expediting the loan forgiveness process for many of these hard-hit businesses will save more than $7 billion and hours of paperwork.

NATP submitted a letter of support to Chairman Rubio, Chairwoman Velázquez, and Ranking Members Cardin and Chabot.

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Paycheck Protection Program (PPP) ends this weekBy: Kabbage, Inc.
June 29, 2020

It’s been several weeks since most states have started to re-open their economy, but many small businesses are still struggling to find financial stability. Recognizing these hardships, the Small Business Association (SBA) implemented the Paycheck Protection Program (PPP) back in April to provide payroll assistance, but many are still in need of financial help.

The program officially ends on June 30, 2020, but with over $130 billion still available small businesses still have a window to access this funding. Below is an overview of the program and how small businesses can still apply.

What businesses are eligible?

Whether an LLC, corporation, sole proprietor or independent contractor, any company with fewer than 500 employees and in business before Feb. 15, 2020 is eligible to apply for a PPP loan.

The application process also requires documents to be provided depending on the company’s business structure.

How can small businesses apply?

As the program is winding down, small businesses should ask their local credit union or bank if they’re still accepting applications and the criteria required to apply. Many banks require customers to have existing credit relationships in order to process a PPP loan, but there are plenty of other SBA-approved lenders across the nation.

Kabbage has been deputized by the SBA as a direct lender in the PPP, and we will continue to accept applications until 11:59 p.m. ET on June 28. Any business may apply, whether they’re an existing customer or not. Our technology allows customers to apply and be approved in hours, and we’ve seen great success with CPAs supporting their clients.

Nury Saenz, owner of the accounting firm, IN2Tax and Accounting, turned to Kabbage to access PPP funding. Seanz said that other banks provided her business and clients with “no options” as the crisis forced her to lay off employees, which compounded the difficulty navigating the PPP for her and her clients with a limited staff. “I’ve now successfully helped over 25 clients through Kabbage,” said Saenz.

How are loans calculated?

PPP loans are calculated as 2.5 times the average monthly payroll for a business. The SBA has capped PPP loans at $10 million, but some lenders have set their own limits. For example, Kabbage is processing PPP loans up to $2 million as we’re predominantly serving America’s smallest businesses including rural business and non-employer companies that may need lower amounts of funding.

Once approved, how can the loan be used?

The funds are intended to cover payroll costs and retain staff. At least 60% of the funding must be used to cover payroll to be eligible for forgiveness. Any remaining percentage, up to 40%, must be used on mortgage interest, utilities, lease, or rent costs.
If a business does not spend at least 60% of the loan on payroll, the funds will turn into a five-year loan with a 1% interest rate.

How does forgiveness work?

The SBA continues to issue new guidance for forgiveness, which is routinely updated here. The upside is there is no rush to apply for forgiveness as there was to apply for funding. Businesses have up to 24 weeks to use the funds appropriately to be eligible for forgiveness and will benefit from waiting to apply while the SBA finalizes their guidance. It’s possible businesses that apply for forgiveness early will not have the same outcomes as companies that apply later.

Final tips worth mentioning

The program is set to close on June 30, so there are only a few days left in the program. With billions of dollars still available, this is a unique opportunity for small businesses to access funding that has the opportunity to be completely forgiven.

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Additional Articles

Top 5 Ways to Keep Yourself Essential to Today’s Consumer August 5, 2020
You make the callJuly 30, 2020
NATP annual award winners: Chapter Person of the Year, Chapter of the Year, Tax Professional of the YearJuly 27, 2020
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