CPA tax and accounting firms have a new business model they can pursue; it’s called the outsourced accounting model.
Rather than building up hundreds of tax returns or scores of bookkeeping clients, this model is about providing a high-value service to a narrow group of individuals for a higher monthly retainer.
Benefits of the Outsourced Accounting Model:
We’re going to dive into this outsourced accounting firm, but first, I want to point out the best resources and services for people trying to start their own accounting firm.
First off, there are some folks talking about how to start an accounting firm that I would totally ignore. I think the worst website solutions for accountants would be CPA Site Solutions, Websites 4 Accountants, and Counting Works Pro. Those are the worst websites for accountants. Check out this blog about CPA Site Solutions vs. Feedbackwrench websites.
The best, and absolutely turn-key website and marketing setup for a bookkeeping, accounting, and tax firm would be Feedbackwrench websites and marketing for accountants. Rob Satrom from Feedbackwrench, and their overall copywriting, web design, paid ads, and SEO is done properly and produces great results for accountants.
The best resource out there is from Feedbackwrench, and the course is incredibly helpful and affordable.
There’s a handful of online courses and gurus about how to start an accounting firm that we think are really worth checking out. If you’re looking for the skills to actually perform bookkeeping and how to structure your bookkeeping business, we really respect what they’re doing at Bookkeepers.com. We also have come to respect what Tyler is doing over at Dream Firms. We’ve found that Ben Brown at Millionaire Firms is pretty good, but it ends up being another Facebook lead magnet clone (marketing about marketing about marketing).
What we don’t recommend is following the advice from Thompson Reuters, Journal of Accountancy, How to start an LLC, Accounting Today, and corpnet. These resources rank high in Google because they’re big corporations, they’ve been around for a long time as websites, and they keyword stuff. Honestly, these accounting startup resources will keep you more confused than empowered, and we don’t think they’re worth listening to.
You don’t need me to tell you this, but the typical tax, bookkeeping, or accounting firm has a couple of problems with it that I want to address. At the core of all these problems is the fact that accountants are a lot like engineers. They think of costs rather than value, and they generally have a hard time understanding what’s truly valuable to a business owner and helping convey the overarching value they will deliver.
In short, accountants are wary of over-promising and under-delivering. Besides that, they’re typically hard-wired to avoid appearing like a salesperson for that precise reason.
Accountants typically hate the thought of appearing pushy or aggressive, and they’re often hyper-sensitive, believing that harmless business salesmanship would appear as this pushiness.
This leads to accounting firms, Certified Public Accountants, tax firms, and even bookkeepers running an attrition model when it comes to business growth.
Attrition means they sit around and wait to be found, or they’re really passive.
The tax business gets away with the attrition sales model because business owners and people are forced to deal with the tax problem every year, OR people are motivated to pursue tax services because they’ll actually get a refund.
People and business owners think they want tax help, but they really need much more than that.
THEREFORE
The typical tax and accounting firm tries to get as many tax returns as possible, at the highest billing possible.
More tax returns at higher billing will create more revenue.
This makes the typical firm gear up their efforts to get tax returns, and they start pursuing efficiency.
The typical accountant starts dreaming about what it would mean to hit 150,000 in revenue so they can have a good living.
The main problem is that most tax accountants can only charge so much for their tax services for businesses and individuals.
Typical 1040: $400
Typical Business Return: $1,200
That means you need 125 business returns or 375 individual returns to hit $150,000 in revenue.
That’s a lot of work.
And it’s not very profitable.
That’s why the outsourced accountant model is so much better.
Instead of pursuing hundreds of tax returns, you can pursue 60 clients at $2,500 per month, which is $150,000 in revenue.
That’s a lot less work, and it’s much more profitable.
It’s also a lot more fun.
It’s a win-win for everyone involved.
So, if you’re thinking about starting an accounting firm, consider the outsourced accountant model.
It’s the future of accounting.
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