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Financial Health

7 Ways to Balance Firm Revenue Throughout the Year

Keep your firm revenue steady and reduce reliance on tax-prep revenue to be more fiscally stable and grow more profitable with these 7 steps

Many small business owners and individuals have the stereotype of accountants and CPAs as being tax professionals. And while that’s an excellent impression to make, if that’s the only thing these clients (or potential clients) think when your profession comes to mind, you’re definitely missing out. That being said, this impression is often well-founded because many small and midsized accounting firms specialize in tax services, almost to a fault. That is, the tax compliance business of their firms may not only be the largest revenue driver, but it may also account for well over 50 or 60 percent.

Relying too much on a single service offering is dangerous for any business, and in the case of serving tax needs, it can lead to imbalances in firm operations throughout the year. For accounting firms, the focus on tax services shows during March and the first half of April, when staff and partners may be putting in 12 hour days, or even longer, at the expense of their personal lives. From a business perspective, it can cause an influx of cashflow during these busy months, with it slowing to a trickle during the rest of the year.

The key to balancing firm revenue is to have a range of services your clients will pay for throughout the year. As an accounting professional, you have a wealth of expertise and experience to offer beyond tax and your firm’s service offerings should reflect those diverse skills.

Tax Planning

Tax planning engagements can be one of the easiest “additional services” to get a client to sign on for, and they are an excellent way to strengthen existing relationships with tax clients. Here is where the value of a savvy tax professional really shines, in allowing him or her to develop proactive strategies that can save the clients demonstrable money. Unless they like paying more than they legally have to, of course. Tax planning engagements are most often scheduled for the September through October time-frame, giving the client time to put the tax-saving strategies in place. These appointments are generally based on a one-time consulting/engagement fee.

Virtual CFO/Controller Services

This is the new bookkeeping. When the small business client and the firm are both using modern cloud technologies, the Virtual CFO paradigm allows the professional (or other staff at the firm) to actively participate in the business’ daily bookkeeping and business management activities. Instead of letting them go it alone and make guesses at which account to post expenses or receipts to, providing this service helps keep the books clean for a fraction of the time it would take to clean them up — gives the client peace of mind.

Virtual CFO/controller services are an ongoing service that firms generally charge a recurring monthly fee for. Many firms offer varying levels of service, or packages, depending on the amount of time and engagement the firm will provide them. The rates, however, are not based directly on time, but on the principle of value billing.

Payroll Services

Almost every business has payroll needs, and if you can provide those services for about the same price as they would pay, while also making a profit, then it’s a no-brainer. Professional payroll systems are typically affordable and also really easy to use.

Once a client is initially set up, the web-based programs automate virtually everything, calculating all withholding and third-party payments, processing all of those payments electronically (Direct Deposit, to payroll cards, or the option to print checks), and even preparing quarterly and annual wage reporting filings. The staff simply enters a few bits of data, such as hours for hourly workers, tips, bonuses, and any vacation time used, and then reviews the payroll reports prior to approving the payroll run.

For accountancy firms that ramp up with seasonal or part-time staff during the tax season and who are considering adding payroll services for the first time, transitioning one or more of those temps might be a good way to manage the admin and clerical work associated with the payroll processing. This way, your firm’s more seasoned staff can work on higher-value engagements.

Payroll services are an ongoing service that strengthens client relationships by increasing their awareness of your firm, while also providing ongoing revenue. The more client payrolls you process, the more your firm earns, with no additional expenses.

Sales and Local Taxes (SALT)

A surprising number of firms don’t provide sales and local tax services to their clients, instead recommending other firms that specialize in this area. Sales and use taxes, in particular, can be a valued service. For very small, mostly brick and mortar retailers, the sales tax reporting process is usually very simple and businesses may not need much assistance. But as a business grows even just a little, starts offering delivery or online sales, the complexities can increase significantly, as they now have to deal with taxability and nexus rules that differ in every state. Add to this the recent changes from the Wayfair ruling and constant reporting requirements, this speciality can be a solid revenue stream for firms.

Bundled Business Services

As firms move to a value-based billing model instead of time-based engagements, they are often combining their services into bundles. Just as consumers routinely bundle their internet, cable and mobile phones, or purchase combo meals, firms offer options for business clients that include some combination of tax prep and planning, virtual CFO/bookkeeping, payroll, and tax compliance services.

From the firm perspective, this keeps client activity in-progress and ensures revenue comes in throughout the year since clients are billed a consistent monthly rate as a part of an annual agreement. Even better, the clients can be set up with automatic debit/EFT of their engagement fees, so invoicing automatically recurs and aging receivables are kept to a minimum.

Business Consulting

Most firms that focus primarily on taxes have primarily individual taxpayer clients, whereas firms that have a broader service offering have more business clients. In addition to providing periodic accounting support, such as write-up and reconciliations, or ongoing bookkeeping support in the case of virtual CFO type engagements, firms can provide a broader, more consultative approach to help their business clients plan growth, adjust business models, and find greater profitability.

Since firms with several clients in a particular niche grow more familiar with those industries, the firm can also be more appealing to new clients in that space, providing assistance in creating business plans, offering valuation services, or helping businesses find government grants or other benefits, such as the recent PPP. Some businesses may seek these services only once, while others may need this consulting relationship to be ongoing.

Forensic Accounting and Litigation Support

Do you have a little Sherlock Holmes in your blood? While few forensic accountants carry a badge, they often play a critical role in investigating and prosecuting financial crimes and assisting in civil lawsuits. For complex fraud or embezzlement cases, law enforcement agencies often look for assistance in auditing records, while lawsuits between business partners can often require close examination of business financials that can expose missing or misappropriated funds. Civil litigation accounting is also common when family-held businesses are impacted by divorce, family disputes or estate actions. Not all cases involve bad guys, though, as forensic accounting skills can also simply identify accounting errors that are causing distress to a business. Good people skills are especially valuable when providing these services, as the accountant will need to explain their findings to courts or non-financial individuals.


Keeping firm revenue steady throughout the year, or at least reducing reliance on tax-prep revenue, can help firms be more fiscally stable and grow into more profitable areas of client service.

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