An intentionally small firm that wins

A lot of small firm owners assume outsourcing is the only affordable way to add capacity during tax season. What made you decide to hire a local in-office data input specialist instead, and what advantages did that bring beyond just cost savings?

The way I think about it is, where are the pain points in our practice? Data input is not a pain point for us as we can find qualified people to do this work, and it is not at a high pay rate relative to the cost of a tax return. Also, we can utilize a qualified input person to handle other tasks as needed in the office, such as answering the phones, meeting people when they come in and running errands if needed. Given these reasons, I do not see any need to outsource this work.  

The real expense and difficulty are hiring senior tax professionals who have the knowledge and expertise to review tax returns. They are in short supply in our area, and the risk of hiring them is high. I believe if you want to scale, it is worth looking at outsourcing for this type of position. I did not want to do that at this time, so we have stopped taking on clients and have decided not to scale yet. It is something I stay informed about, though, and think about for the future.

For firms that feel stuck between doing everything themselves and making a major senior hire, what are some smaller operational or staffing changes that can buy back time and reduce bottlenecks during tax season?

I think you have to realize you can’t be everything to everyone.  We decided to be focused on tax and be very seasonal. We do not do any ancillary services such as bookkeeping and payroll as we feel that [it] detracts from our core business. We usually have three seasonal employees and three full-time employees, so this makes tax season very efficient and focused. We work hard from December to April. I want downtime in the summer for our staff so that they do not burn out.  

This is not the right fit for everyone, but I do think you have to decide what kind of practice you want and build it around that. If you want more of a year-round flow and take on a lot of extensions, then go for it. I think you just have to make sure you decide the kind of workflow you want. What I have seen, though, is that some practices do not decide what type of practice they want to be, and they end up saying yes to every service and every type of client.  

This often makes for a very hectic practice and a very hectic life. I did some of this early on, and I realized I needed to become more focused and organized so that we can meet clients’ demands in a timely manner. It was not fun feeling behind all the time.

Looking back on this past tax season, what staffing lesson or mindset shift do you think other small firm owners could benefit from adopting before the next busy season arrives?

I think you have to decide if you want to scale or not. If you want to scale, you need to move the business away from relying too much on the owner or partners. It needs to be able to run without you there. We have chosen to do this slowly. If you want to do it fast, I do believe you might need to outsource and you should be ready for an incredible amount of work for a few years. I think some people get caught between scaling and a small practice and can’t decide which one is the best fit for them.

(Image courtesy Seth Anderson)

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