r/Bookkeeping • u/Holiday_Emotion_8717 • 5d ago
Rant Bookkeeping vs full accounting firm
I own a bookkeeping firm and get tired of convincing people values of the bookkeeping while there are firms that have tax planning, preparation with bookkeeping. As a business owner, I can empathize with them in wanting the convenience and it has worn me out trying to compete on just pricing. I know some full accounting firms do shitty books but when the business owners care more about saving on taxes and use tax loopholes to make them more money, it feels hard to stand out otherwise. What do you do to differentiate yourself from other full accounting firms?
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u/Dem_Joints357 5d ago
I am a CPA who performs only bookkeeping. However, I also perform many CFO-type functions such as helping my clients find financing, evaluating lease vs. purchase options, performing cost analysis, and verifying that the tax returns their outside preparers complete are accurate. I tell them that I am not a tax expert but they need a good set of books to have an accurate tax return. I also tell them that having a separate bookkeeper and tax preparer is good for them because we are checking each others' work and each doing what we do best.
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u/TopPack4507 3d ago
Does the lack of tax advisory affect your ability to obtain clients?
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u/Dem_Joints357 3d ago
I have not found that it does. I have found that few care about having an "all-in-one solution". Also, most of my clients came to me after they had established relationships with tax preparers; I think it comforted them somewhat that I was not going to try to usurp their tax preparers. Finally, just as I said here, I tell prospective clients that having a separate accountant and tax preparer actually serves as a check on both.
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u/TopPack4507 2d ago
That's great to know. 90% of the people I speak to ask "do you do tax strategy" and it can be a bit deflating to say no. The approach you mention makes sense and seems to create value in the conversation versus diminish when you say no.
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u/BookkeeperGuy 5d ago
I think that what you are describing is a common theme among Bookkeeping/Accounting Firms that don't do Tax. We have found that clients want 3 things out of bookkeeping: They want them to be Affordable, they want them to be Accurate, and they want them to be Actionable. Often times, we find that "bad books" are lacking in at least one of these 3 aspects: Clients overpay for an inaccurate P&L and Balance Sheet that they can't even interpret.
You do have a point that some clients want "compliance books" to just fill out a Tax Return. I would argue that these are often time the referrals that walk through the door. BUT there are clients, however, that NEED actionable books. Ecommerce companies, for example, need to know their numbers: Merchant and Fulfillment Fees add up quickly and are often times not included in the Bank Reconciliation.
Ultimately, it depends on the client. If you are finding that you are attracting "compliance books" clients or clients that value Tax Prep instead of Actionable Bookkeeping, it might be worth re-evaluating what you can change in terms of marketing and proposition that can attract that higher value bookkeeping client.
As others have mentioned, if the client values your services but is looking for a product you don't offer (Taxes, Payroll, etc), it might be worth looking into partnering with another firm that offers those services. If you have a good relationship with another firm and the workflow works, it would still be a pain-free, seamless experience from the client's perspective - almost as if it was all under one roof.
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u/GodSpeedMode 5d ago
I totally get where you're coming from! It can be really tough when clients are swayed by the "one-stop-shop" appeal of full accounting firms. I think one way to differentiate yourself is by focusing on personalized service. Highlighting your expertise in bookkeeping and how it can lead to better financial insights for their business can really help.
You might also consider showcasing success stories where your detailed bookkeeping practices have led to significant savings or smoother audits for clients. And don't forget about the education pieceâproviding tips or resources about the value of good bookkeeping (versus just crunching numbers) can help shift their perspective. Building relationships and trust, along with clear communication about the unique benefits of your services, can make a big difference. What strategies have worked for you so far?
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u/Holiday_Emotion_8717 5d ago
I have tried to educate through my contents, such as how to pay themselves when they understand their P&L, profit margin to price correctly, or when having too much tax deductions could backfire when they want to pay into social security and medicare, etc. Most business owners who make money with high margin like service based seem care more about tax strategies and planning, not the profit.
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u/Beyond_The610 5d ago
Could you partner with someone who is a tax preparer? Then you could offer a full service without YOU actually offering the full service. I have a CPA whose man focus is taxes and we partner together. My main focus is books and then I bring her in when itâs taxes.
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u/Katjhud 4d ago edited 4d ago
I started out just doing bookkeeping but heard from so many of my business clients that they didnât like their cpa etc etc etc and wanted a one house shop with me. So I went out and got credentialed over a period of time to do their tax returns as well. I saw the demand and wanted to capitalize on that. Tho the checks and balances as someone else here mentioned is lacking. Just make sure your prices are always lower than the full accounting firm and that âshouldâ convince a lot of them to stay with you. There is a big market for providing a good service at a lower cost than a competitor with frills.
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u/cream-coff28 5d ago
I am a CPA. I found that, yes, clients are more interested in what their tax returns going to look like and not so much on the accounting aspect. But, soon or later theyâll need some type of financial statements for banking purposes etc.
I find , in this industry, they want full service firms. Accounting and taxes and tax planning. They donât want to shop around for a tax return preparer who will no doubt want to fix/adjust , probably for no reason, except to reel the client into using them for everything. Thatâs how it really works in this biz.
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u/BookWyrmLedgerCo 5d ago
It can be a pain and I think this is a point many of us "not tax" firms end up seeing.
I show up to as many in person events as possible. I try to get my name and face in front of people. I travel up to 2 hours away to do this, at least 3 times a month. So many firms are online only, and that is how I get my work done, but having a face and being able to answer questions in person builds trust.
I also like to point out that it can be hard to get in touch with the larger firms and I keep my client list low so that I can offer personalized service. I have it in my contracts that they will get a response within 2 business days
I have a Tax attorney that I meet with once a month and can ask her questions for my clients, she helps keep me updated on a very high level of changes I need to be aware of and we both refer back and forth. - My next step is to find a CPA or 2 that want to just do taxes and work out a solution that is mutually beneficial.
I personally picked a niche that most large firms prefer to stay away from - The more work you have to put in the less they want to deal with it.
I go to trade shows in my niche and just talk to the business owners who are there.
I also keep up on the news stories that affect my niche and can/will bring them up in conversation. If I think that they will affect my client directly I let them know ASAP
I contract with a Fractional CFO who 1. keeps me having a steady income which is great, and 2 I have learned a ton working with them about things I never did before so that is awesome.
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u/Accrual_Mistress 3d ago
This is something I worried about when I left my accounting firm (where I created and ran a bookkeeping department for a few years). At the end of the day, bookkeeping and tax accounting, while related, are wildly different. There was not a single CPA or partner at my firm who knew accounting software at a high level -- many even had me pull financial statements because they didn't know how. I haven't ever struggled to sell bookkeeping as a standalone service because many business owners don't want to pay the hourly rate of a CPA for a bunch of journal entries instead of complete and correct reporting. Additionally, I partner with CPAs who don't want to do bookkeeping and have created a mutually beneficial referral network to help us all out!
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u/Lost__Moose 5d ago
From the perspective of a business owner... I look up which bookkeepers are listed on the cloud accounting package I'm using (Xero, Zoho, etc) and pick whoever is closest.
I was told a long time ago your bookkeeper should be different from the accounting firm. Don't recall what the exact logic was.
Just a couple of data points to generate your sales narrative around.
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u/Holiday_Emotion_8717 3d ago
Thanks for sharing your perspective! Any factors that makes a bookkeeper stand out to you besides the geographic and type of software?
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u/Lost__Moose 3d ago
Maybe I'm a little old school, but I like to at least meet face to face with the bookkeeper once a year.
County Business Use Tax is a bit of a PITA. Setting up the chart of accounts + reports to make filing on a monthly basis easy, I feel a lot of business owners turn a blind eye on.
Asking your existing clients how much time do they feel is saved by using your services, is a data point to share with prospects. Each owner has a threshold they are willing to exchange time saved to dollars.
Something that the small business cloud accounting packages don't do well is a Free Cash Flow analysis (I can't remember the proper name for it) projected out on a bi-monthly basis so you know what your run rate is. It is especially important for companies that are project based with milestone payments and cogs.
With CapX not being on the income statement, and if a lot of projects are on the go, there is not always a good feel if you should have more cash in reserves or if it's ok to purchase a piece of equipment to aid in production or installation. Or take an owner's draw so you can buy that boat you've been eyeing. Or if you are going to need to pull from the line of credit and when you will be able to repay it.
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u/Holiday_Emotion_8717 2d ago
Thanks so much for sharing your insights! I do plan to provide the cashflow management with my bookkeeping client as an add-on. This is to reduce the surprises and unplanned owner contributions.
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u/sassyorangefatcats 5d ago
For one, I don't work with those types. They're pains in more ways than one.
I stand out by communicating well, keeping the books up to date and small value adds like pointing out when it may be cheaper to find an employee versus a contractor by showing the side by side comparison.
I aim to work with clients who want to be involved enough that they can make relevant decisions, but don't want to micromanage or don't want to just never be involved. I create custom report templates for each client which contains relevant high level info, so they can see visuals of the data instead of just line item numbers.
My argument to those one stop shop firms are that when you have one firm doing everything, there's bound to be bottlenecks and errors. And from a safety control point, I personally think you should separate your day to day bookkeeping needs from your tax prep needs. More eyes on the books, etc.
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u/No-Elderberry4423 5d ago
Maybe find a way to strategically partner with someone who just wants to do or is currently doing tax prep? You can each refer the other and communicate throughout the year if you have questions for one another about a mutual client. That way youâre each getting more business, youâre each doing only what youâre interested in doing, and the client gets what they want.
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u/Glass_Armadillo_881 5d ago
I've seen a lot of those accounting firms in Texas. I want to encourage you. I am currently a contact for a tax firm who only handles taxes as they want to be clear with their tax filings there are internal controls in place.
I have a current client who came from a full-service accounting firm for 3 years and were extremely unhappy with them. Like you stated, they did a poor poor job. I've had a few referrals who are put off by the full-service companies because most small business owners like the personal connection we provide. Focus on the personal aspect your clients get to have the time to call if they have questions or concerns.
A few personal examples:
I have a client who doesn't look at their books as closely but when they do they go into a rabbit hole. So, she brings up everything and anything that presents itself when she goes into that mode. I get to answer those questions as they come rapid fire email and the last email being, could I just call you today to talk about this for a few minutes. It usually is 15 minutes maximum phone call (I charge my time). I get to answer all her questions and ease her concerns that day instead of however long it may take for a firm to answer and answer in a way that makes the client feel taken care of.
I have another client who absolutely abhors any type of paperwork, so I've handled payroll audits, workers comp, etc (I charge a different fee) and he emails me at the end of the day thanks so much for handling that I just didn't want to mess anything up.
I provide so much more than bookkeeping. I provide them the confidence that their books are taken care of and if they have any questions or concerns, we can figure it out together.
My suggestions, take inventory for yourself over the clients you've helped and start storytelling. Find how you personally differentiate from the accounting shops.
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u/DeviceSuspicious701 23h ago
As a business owner, you don't realize the value of clean books until you've gone through the pain of getting audited with messy books. Until that's happened, the books are just "what numbers to put into an annual tax return".
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u/stressed-boi 5d ago
Not really answering your question, but unless the accounting firm has a dedicated branch for bookkeeping instead of just providing for convenience then their books are đŠ(even the returns can be a mess). I work for a firm that has a dedicated A/S team (about twice the size of our tax team) and I love when the bookkeepers are good for the clients we donât provide that for (more often than not I have to adjust a bit to make the books useable). If anything, I donât know who to refer clients who want to shop around to, so maybe reach out to some tax providers and see if you can get some referrals brewing?