Another tax season is upon us and although I have been out of public practice for a few years, I will never forget exactly how busy it gets!
Take a few moments as you are knee-deep in your clients’ tax returns to examine their data for future business—the payoff is well worth it. Here are a few things to look out for— jot them down and refer to them after busy season:
1. Does the client have a current will in place?
Although we are not attorneys, clients will appreciate our interest. We can take this opportunity to discuss estate and gift planning, education funding, and tax benefits. Clients need to be educated about the relatively new portability provisions.
2. Does the client’s portfolio need some attention?
As you are reviewing broker statements, pay attention to the market gains and losses in their portfolios. Even if your firm doesn’t have a wealth management division or you don’t have wealth management credentials, their portfolio is a topic you can raise with your clients. Are they diversified enough? Should they harvest gains and/or losses during 2014? What about consolidating their accounts if they have multiple brokers?
3. Has the client maximized their retirement plan contributions?
Regardless of the answer, perhaps the client would be interested in cash flow projections. Are they getting close to required minimum distributions? Perhaps converting to a Roth IRA makes sense. Does your client have any idea how much they will receive in Social Security benefits?
4. What about your client’s compensation?
Do they have stock options and do they know the tax ramifications of exercising those options? ? Is the client’s compensation from their S Corporation enough? (The IRS has been cracking down on S Corporations who do not pay their employee-shareholders enough compensation.
5. Does it make sense to restructure any of the client’s businesses?
If clients are operating as LLC’s, would an S Corporation election make more sense to minimize self-employment tax? Although S Corporations should pay adequate compensation to their employee-shareholders, they don’t necessarily have to pay self-employment tax on 100% of the business profit.
6. Is the client adequately insured?
What about Long-Term Care Insurance? Again, this is not a typical service CPAs provide, but in my experience, just raising some of these questions shows clients you are concerned about their whole financial picture, not just their tax return. It also can provide a great opportunity to make referrals to your network of business advisors. Referrals out bring referrals in!
If you make note of these potential opportunities, the list you make will give you a good starting point for client lunches after busy season. Revenue generated after busy season is great, and client goodwill is priceless!
Linda Harding is the Director of Tax Services at CPAmerica International. She has more than 30 years of Big 4 tax experience and was a tax shareholder with a large local firm. Harding manages the technical tax resources, tax practice matters and reviews tax publications for CPAmerica. Follow her on Twitter @LHardingLin.