How Our Firm Stayed Super Organized During Tax Season

The tax season that just ended was unlike any other season, mostly due to the Tax Cuts and Jobs Act. However, staying organized during season isn’t about regimented work hours or daily staff meetings. There’s a better way to approach keeping your firm organized during the busiest time of the year – and all year long.

You Can’t Manage What You Don’t Measure

Not-for-profits use their operating budgets as a tool to carefully consider all financial decisions throughout the year. However, from my experience, many for-profit companies never even take the time to create a budget, let alone use it to guide them to manage their companies. CPA firms? I have yet to network with a single firm that speaks about the success of their firm in the same sentence as their operating budget.

Meet Compere Robinette CPAs (CRC). At CRC, we have perfected our budget for five years and believe it’s a tool that is multi-faceted for us and helps us stay organized. If we are privileged enough to be credited with success, we will credit it to our budgeting, but not only through profit. Instead, we credit our budget for many of our firm’s intangible successes, including work culture, employee retention, client relations and partner accountability. At our firm, we refer to it as a “reverse budget,” where we focus on what it takes to first pay our salaries, then work backward to solve our target revenues for the year.

Because our budgeting efforts quantify our target revenues, we know how much work we must sell to balance our budget. A great majority of our clients are small business owners, entrepreneurs and self-employed professionals enrolled in our monthly service plans that bundle a customized scope of work into monthly flat-rate pricing. No more timesheets and billable hours – just a focus on tremendous client service! This pricing strategy is more and more common across the profession, and bundled service plans are a crucial part of achieving our target revenues for the year. However, they don’t realize the target revenue goal alone; we are still a participant in tax season to fill the gap

Know Your Capacity

I think we all know the definition of insanity: Doing the same thing and expecting different results. As I have networked around our CPA profession, we all have one thing in common. Tax season is stressful. So, the follow up should be – why?

Do firms truly know their capacity? It isn’t just a topic for manufacturing processes and assembly lines. For CPA firms, we have control over the insane stress levels during tax season by knowing our capacity.

At CRC, we started this journey of defining our capacity five years ago. It was certainly more of an art than a science back then, and we continually improve our approach each year.

Here is a snip of our journey. As accountants, we began by looking at data (shocker). We compared data from previous tax seasons. We looked at the number of returns completed (output) and hours worked by our team (input). After each season, we immediately took a retreat as a team to collaborate and gain perspective. Most of the time, the collaboration was mostly a gut check of how the season felt to everyone. We compared this perspective from the group to our output number for the current season and compared to previous seasons. Slowly, over time, we gained insight into what our capacity should be without overworking our team.

See what I mean? More of an art than a science in those early years. But remember, perfection impedes progress.

Now, we take a slightly different approach. As I mentioned earlier, we have perfected our annual budget more and more each year. Instead of using a quantity output as our capacity goal, we are now pivoting to a revenue output goal for tax season. Since most of our budget is fulfilled by our monthly service plans with business owners and the self-employed, we have quantified how much of our revenue budget needs to be filled from the compressed work done during tax season to fill the gap.

Set a Pace

You must start somewhere. By putting a stake in the ground and quantifying our best guess for our capacity goal in those early years, we could set a pace for the season. As accountants, the math was simple: total capacity goal divided by number of work days in the season resulted in a “pace goal.”

In a rapid-paced tax season, filled with never-ending to-do lists, it’s very easy to lose sight of the end goal. To make this goal visual and achievable for our team, we hang a gigantic pace board near the break room in the highest trafficked area of our office. The pace board is the size of a large map on the wall. It serves as daily inspiration to our team!

I’m sure we have all suffered from ending a work day during tax season and feeling crushed by an endless audible loop in our minds echoing, “What did I even do today?” The disruptions of email, chat and team members standing in our doorway with questions seem to never stop coming. Without our pace board, it would be very easy for me to slip into doom-and-gloom moods of feeling like we are losing the fight against time. But, with the board hung where everyone can see, it’s liberating to see your team making achievement toward the capacity goal. Now, you can leave work feeling like you are winning, instead of feeling like you are losing to zero inbox. It’s not rocket science; just a simple psychological shift in your team’s culture – and it’s great for morale.

Fight the Urge to Be a Yes Man or Woman

Over my 13-year career as a CPA, I’ve had the privilege of networking with many CPAs across the country. Through attendance at many of the premier national conferences, participation in dedicated networking groups, and most recently graduating from the AICPA’s Leadership Academy class, I have met a lot of you. As a core group, we possess many similar characteristics of being the nicest, caring individuals possible, unless it’s tax season where we can get a little cantankerous.

As a result, I believe CPAs are the most radical people pleasers of any stereotypical profiled group. If there’s a problem to be solved and it involves numbers to be crunched, we become yes men and women, always saying yes to help someone out. When many of you are asked about your “why,” generally the response tilts around helping others. After all, it feels good to help others. So, the more people you help, the better it should feel, right?

Enter tax season. If you don’t know your capacity, there will be many problems that need number crunching. If you aren’t careful, these things that look like opportunities will be ready to disrupt your perfectly designed plan to an organized or at least less-stressful season. Armed with a capacity goal, you can confidently respond to these nicely dressed opportunities by respectfully notifying them you have reached your capacity for the season – and confidently educate them about my favorite tax form, Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.

Closing Thoughts

Takeaways? I hope I have introduced new vocabulary to you as you begin strategic planning for tax season 2020 with two keywords to keep your firm organized: capacity and pace.

How did our firm stay organized during tax season? We know our capacity. We set our pace. We fight the urge to be yes men and women.

If you are interested more in our vision of reverse budgeting, please contact me. I have seen the impact on our culture and I strongly believe in its ability to transform other firms.