4 ways to deal with unprepared or late tax clients

One of the hardest things for anyone doing tax work is figuring out how to serve clients who aren’t prepared. You know the ones I’m talking about: those without books, those who don’t have their documents ready, or those who don’t follow your processes and don’t work with you to get your return filed on time.

I’m breaking down some ways that can help you, as the tax preparer, deal with tricky or unprepared clients. Here are a few ideas to get you thinking about what steps you can take to make tax time a little shorter and less stressful.

1. Perform a client audit

Alyssa Dillon on the Diaries of a Tax Practice Owner podcast initially turned me on to this idea. Turns out, most of the high performing practice owners I know also do this at least once a year.

If you keep growing your client base without focusing it over time, you’ll end up burning out. There will always be clients in your growing client list who aren’t prepared and cause headaches.

The basic idea of the client audit is to look at your entire list of clients and judge whether it’s worth dropping a few of them. To do that, you need to evaluate a few things:

• How valuable is this client? This could be annual revenue, potential revenue, or even the potential for the client to refer others.
• How much effort are they? Unprepared clients cost you more to serve.
• Do they value your time and advice?
• Are they inside your area of expertise or niche?

If the effort it takes to serve them greatly outweighs the value they have for you, maybe it’s time to release those clients. If you want to break your relationship, be honest with the client why you aren’t the best person to serve them. The #1 piece of advice I’ve heard successful tax practice owners give is to focus their client list as soon as they can. You will end up burning out from unprepared and ill-fit clients if you take everyone on.

2. Start-of-season tax explainer video

Nicole Davis explained this idea at the last Digital CPA Conference in Denver. Every tax season she sends each of her clients a short video explaining how her firm works, what the client needs to do, and next steps. It breaks down how her portal works, how to sign the engagement letter, what the general deadlines are, fees, common mistakes clients make, and how to get prepared for taxes.

Emailing instructions is step one, sure, but following up with an explainer video dramatically dropped the time her firm spent on walking clients through their processes. She used an animator and video editor on Upwork to produce the video so it looks professional, after having given just a script.

And if you really want to make sure clients are prepared this season, send them an FAQ page and add it to your website. Link it in your email signature. Give thorough answers to all your most frequently asked questions. If clients ever ask one of them, instead of replying directly, just forward them your FAQ page. 

3. Use technology

We all know how powerful tech can be to help you in your practice. Having systems in place to automate some of the work can really help you deal with unprepared clients, especially with AI.

For example, in an article about ChatGPT by Blake Oliver on the Tax Pro Center, Blake breaks down how you can deal with clients who have a lot of questions about AI. Workflow automation tools such as  Canopy can help you with gaining the right documents from clients using automations. My company’s software, CleanUpBuddy, can help with your shoebox clients who don’t have clean books needed for their Schedule C by getting clean financials from their bank and credit card statements in seconds using AI.

4. Upsell more services

You might be able to upsell unprepared clients into higher-value services such as advisory or year-round bookkeeping, since they clearly need the help.

Make sure to explain how their current pricing tier doesn’t include the things they need and how your additional services can help them stay on top of taxes throughout the year. It’s helpful to show the concrete value you’ve brought to other clients in similar situations.

Finally, make sure you know when you’re OVER-serving clients. Scope creep is a massive problem that a lot of preparers deal with. If a client asks for something additional that is outside what was initially outlined, be clear on why they need it, how you can help them, and why it will cost extra. 

Baby steps

Making small changes now can pay off handsomely over the course of each tax season. You’ve got this! Please share your own tips and techniques in the comments below.

Editor’s note: This article was originally published by the CPA Practice Advisor.