While compliance is certainly a necessity for tax preparation, the real value for accounting firms lies in the way in which they apply the tax code to their clients individual circumstances. No longer is simply filing a tax return enough for today’s clients; they want someone to help them plan their taxes, understand their goals for the future, identify and anticipate risks, and provide them with valuable insights that are strategic.

Reactive tax planning models are outdated now, and if your firm hasn’t yet embraced an advisory model or even offshore bookkeeping, you could soon start falling behind your competitors in profitability, as well as in relevance.

Here are some current tax planning trends that all accounting firms should be aware of if they’re to remain relevant and successful:

Automation

This has become an integral element of tax preparation today, and more and more accounting firms are using tax planning software powered by AI, as well as cloud-based solutions, to enhance accuracy, make their processes more streamlined, and give clients results that are better and quicker.

Cryptocurrency

Now treated like property by the IRS, digital assets mean that every transaction carried out could result in an event that’s taxable, making understanding and navigating cryptocurrency, essential for accountants.  

Sustainability initiatives

Having an increasing influence on tax strategies, sustainability initiatives invested in by businesses can often lead to favorable tax credits and deductions. By helping your clients leverage tax incentives for sustainability goals, you could save them money and enhance their reputation.  

What about updates and changes to regulations and compliance?

There have been some significant changes to federal tax brackets, standard deduction increases, and important taxes such as the Child Tax Credit in recent years, as well as a number of incentives related to energy efficiency that all have a crucial role to play in modern tax planning strategies.

It’s also essential that your accounting firm gets to grip with the complexities of international tax laws if it wants to work with global clients whose operations take place cross-borders, or in other countries.  

Here are some best practices for accounting firms seeking to update their tax planning services:

Tax efficiency

While the majority of clients may want to simply reduce their tax liability as much as possible, some may be looking to play the long game, and by paying more in taxes now, they may actually gain a lot more further down the line. As their tax professional, it’s your job to help them understand and achieve their goals.

Tax strategies that are proactive

No longer an exercise in reactivity, tax planning is all about being proactive with strategies like maximizing retirement contributions, harvesting tax-loss, making the most of charitable giving, and so on. Discuss proactive tax strategies with your clients periodically to help them minimize their tax liability and put them in a strong position financially in advance of tax season.

Educating clients and communicating with them often

By keeping clients up-to-date with changes to tax regulations, informing them of advantageous or tailored tax planning moves, and even inviting them to attend relevant webinars, you can forge healthy and positive relationships with them.

It’s also important that you make the most of technology to unlock future-focused tax strategies for clients. If you have hired outsourced bookkeeping services, it’s highly likely that they are already using the latest technology to help you offer the best tax planning services to your clients, but if not, you should be looking at using platforms like Drake Tax, which can reduce errors, and elevate your role as a tax preparer, to one of a strategic tax partner.  

Evolving at a pace never seen before, tax planning is still an essential service, but if your accounting firm hasn’t updated its model, you could soon see your client list dwindling and demand for your services, take a nosedive.