In this episode of the CFO project podcast, we discuss how to go from tax prep to tax Advisor and increase your earnings.

Welcome to the CFO project podcast. Today we're talking all about how to go from being a tax preparer to transitioning to a tax advisor and have a way to increase your earnings. To help move the discussion, I've invited David Perez. He's the CEO of Tax Plan expert advisors to the show. David, welcome. Amen. How are you? Thank you for having me.

Yeah, I'm really excited. Because I think what what's really excited about you, especially related to the CFO project, is that you sort of do the same thing that we do, but just doing it a different way. You help accountants and bookkeepers escape what we call the accountants trap. You do it through helping them become tax advisors, whereas we help them do it.

Do it through becoming business advisors, CFOs. So I'm excited about this episode. So before we dive in, tell us a little bit about yourself and why you got into tax. Teaching accountants to do tax advisory work. Well. Well, I've actually been an industry veteran. I kind of call myself a recovering tax professional, a tax prep. I've been in the industry for 16 years.

Primarily. I was in tax preparation. I started my first office in 2008. It was a great time to be in the business. It was a booming industry at the time. A lot of this was still done. You know, face to face in person. So I opened an office in a small city in deep South Texas and, you know, I had great success.

I really enjoyed the industry. I wasn't a formal accountant. I didn't have a background in taxation. But I got into the business, and, when I got in, I really enjoyed it. I enjoyed the customer interaction. I love learning about people's unique situations. I like to learn how people made money and how they spent that money. And and then of course, then the taxable the way that the tax code applied to each individual.

I grew my business pretty quickly. I opened multiple offices. I saw somebody else doing it. I thought I could do it, too. And over the next seven years, I grew a large operation and tax preparation. So by 2015, I had, 15 offices operating in South Texas, and we were doing thousands of tax preps every single day.

Tax returns, helping clients zero, you know, all different income levels. I mean, primarily honestly, it was it was probably a lower middle class, group of people. So it was more like people who didn't have big I mean, big tax liabilities. It wasn't complex returns. It was more simple ten 40s. And I did that pretty quickly. And in 2015, I started to see a shift in the industry, which was it was harder to grab a new customer, harder to keep customers.

Around that time, I feel like, well, actually, what I witnessed was there was this expansion of online, and so we had TurboTax and entering into the world and all these other players that really were competing against us. And, you know, at first glance, you know, I thought, man, well, let them take a little market share. But I mean, they started to take a lot of market share.

And so I had to find ways to, to compete. And so I added multiple services to my business, from insurance to bookkeeping and payroll and accounting services. And we did that over the next five years. And it was a really good business, because now I had a lot more stickiness and it was easier to retain customers. It was still hard to get, but it was easier to retain in 2020 when the world kind of got flipped upside down.

My business was doing pretty good, but I had to change the way I did business because the majority of my clients at the time were in person, and so I had to flip this and go to a completely virtual business in a very short amount of time. And we had at that point, about 4 to 5000 clients.

And so it was it was in between there. So just depending on I don't even know what we would have ended out because the season was interesting. But but anyways, we get into that that year and I decided, well, we're going to go virtual. So I started to market differently. So I went online and I did more virtual marketing, which I had never really done before.

And in that moment I started to see different types of clients. And these weren't clients that were just geographically in my area anymore. These were clients that were reaching out to us from all over the country because we were just running marketing campaigns. And these guys were, you know, uniquely different than our current customers because our current customers were, hey, just follow our taxes.

Hey, when's my refund coming in? And these were people that actually had real income, like 200, 300,000, 400,000. And I had never really seen that other, you know, other than just myself or some of our partners and things. I just hadn't seen that. And so as soon as I saw this kind of group, I said, what am I going to do?

So I started helping people. Father returns, and then they would ask me different questions about different things, especially when it came to like SBA, because that was a hot topic. And then they were asking me about tax savings. And I, you know, I didn't know a lot about like, this world of advisory. All I knew is I, I knew what I knew from doing it for myself.

Like, I knew I could go from a schedule C to an S Corp. I knew that I could buy real estate as a tax strategy, but I didn't know the intricacies of things. I just said, you know what? I'll figure this out. And so people started asking me deeper questions, and I started to research and learn deeper solutions.

And people started to pay me more money than I ever seen before. And so at that point, you know, for the next 6 to 8 months, I was building a very successful business. In fact, in 12 months, I made a million bucks doing this thing called I called it consulting, because I didn't really know what I was doing.

I made seven figures doing this, and it took me, you know, five years to make seven figures in tax prep. And in this kind of environment. I made it in less than 12 months. I was like, wow, this is incredible. So I had to make a decision at the end of 2021 or mid 21. It's like, do I want to keep on this tax prep world, or do I want to work with this type of client?

And it was painful because at the same time, even though I was making money, it was like, I've been doing this for so long. It was easy to me and it became what I knew. So it was either make a decision to go back to what I was comfortable with, or stay there, or make a decision to pursue something that I saw.

There was an opportunity, and so I did that. I made the decision. It was tough, but I said, I'm going to pursue this. I sold my tax preparation practice. I primarily focused on what I called consulting, but which kind of morphed to my mind once I really understood the industry was advisory and I morphed into this business. And in 2022, we launched our new brand tax Plan experts, and we went deep into advisory.

I became more of an advisor to clients. I started to seek out more strategy to apply to different types of income levels that were coming to me. And I just I just grew this business. Now in 23, late 2023, I'm I'm flooded with business. And I didn't realize that there was this big demand. Like, I did not know that.

Like I actually thought just people filed taxes, but there's this huge demand. And so in 2023, late 23, I really saw a demand. So great that I could not serve. I just can't serve everyone. It's hard. Like it's you all. I mean, everybody who's in the in the accounting bracket, there's only so many people you can take on.

And if you want to continue to take on people, you've just got to grow a massive practice. And so I just didn't want to do that. I don't have ambitions to have, you know, 30 tax advisors and have all these CPAs and accountant. I didn't want all that. So I started to ask, you know, how can I help people at a different level?

And I knew so many people from the tax business for so long. People were reaching out to me asking me, how can I help? And so that kind of pivoted and I said, you know what? We can't help people. We can show them what we've done. We can show them how I did it, how they could do it too, and give them the tools, the training and tactics to be able to go out and build a very successful advisory business and so today, that's that's what I do.

I still have a very successful tax advisory practice, very successful. And today I'm also helping advisors who want to do the same thing that we've done, do it for their clients and new clients too. Oh, that's so fascinating. So let's can you walk us through a typical tax advisory engagement so that, so that those listening can sort of visualize.

All right. So I think most accountants who done done tax prep they they understand what's involved in a lot of enrollment agents or whatnot. But they may not understand what's involved in advisory and they may not know the difference between the two. So could you sort of help us visualize what a typical tax advisory engagement looks like? This is really that's a really good question because I actually believe that they do know, but they just don't they can't articulate it.

So a lot of tax professionals today are doing things beyond the scope of what a tax professional normally would do. For an example, if a client comes in and wants to file their taxes and while they're preparing to return, they ask a set of questions. And those questions would help them prepare the return better. Right? Like things like, hey, did you you know, did you buy any equipment this year?

Did you, do you have you know, any assets that I don't know about? Like these are common questions that you ask, but you know depreciation is this good example. Like there's normal depreciation and there's accelerated depreciation that that's not a standard like you know standard give everybody accelerate or accelerated depreciation. That's actually a strategy. It does not necessarily always get applied.

So that in itself is already a tax strategy. When you when you meet a client and they're asking you a question like, hey, I heard this thing S-corp, I was thinking about opening an S Corp. And then you go look at their schedule C, and you realize that they're making significant income and they're paying a large portion of it to self-employment tax.

You're already giving consulting, you're already doing advisory work. You may already be doing this in. A typical engagement for us is just articulating that differently. Because at the at this point, most tax professionals are doing a lot of this work completely free or including it in a tax preparation fee that is nominal, that is just nominal. And what I, what I like to think about is imagine if you showed a client what their return would look like if you didn't ask those type of questions and let them see the balance at the bottom of the return.

And let's say it's let's say it's 50,000 or 20,000, I mean, depending on the client. Right. Let's say it's usually 20,000. And with you just asking a set of questions, hey, did you buy any large assets or looking at them and saying, hey, maybe you need to be a schedule C, you can cut that bill in half and you can then show it to them, hey, I saved you ten grand.

How much more valuable do you become to that client and in the current environment that we're in with tax professionals, I don't feel like that's set enough. It's just a standard that is included in their service, which, because of that, they're overworked, underpaid and not liking what they're doing anymore. They're like, there's got to be a better way.

And that's that's what advisory is. The better way. Everybody listening? If you haven't already, sign up for our five minute weekly email with practical tips for accountants and bookkeepers to escape the accountants trap, go to the CFO project.com/newsletter. Do you advocate for an accountant who does tax prep to completely abandoned tax prep and only focus on advisory or offer both services?

Can you even offer advisory without the prep? I first, first and foremost, we don't actually advocate that you stop offering any service, whatever you like offering, such as, let's say, CFO services in this case, Prep, in this case, bookkeeping, whatever they want to offer. Those are services I genuinely believe are needed and are in demand. So I would wouldn't want you to say, you know what, I'm not going to do this stuff again.

Like, that's that's not that's not the right thing to do. What you really want to do is pivot and lead with the thing that gives you the best results in revenue and value. So if advisor in this case, which I believe is you lead with advisory. For an example, if I met a client, I wouldn't say, oh, I could file your taxes or I could be your CFO or I could be your bookkeeper, because these in some regards, I mean, other than CFO services are probably low hanging fruit and they probably have their, their in some respects, like tax prep and bookkeeping, for an example.

Or commodities in, in the marketplace today. And because they're commoditized, you know, people are just shopping on price in most cases. And so if you lead with something that's a commodity, for an example, let's just do your taxes. Well, you're already devalued yourself. And so now when you go to the client you're like, hey, I have this thing called advisor, I'd love to help you.

They're like, dude, you just charge me 300 bucks. Now you want to get me to 3000 or 5000? How did that work? Like, psychologically, it does not work. Yeah. So so what I say is you meet with advisory and you say, hey, I help people save on their taxes when they come to you, you then would work with them.

And we call this an assessment process. We review what they're currently at like their prior year tax returns. We review their current year financials. We look at any investments or things that they're doing currently, maybe their family, their size of their family like children, because there's strategies that apply to all this. And then we drive them through a journey of saving on taxes.

And along the way we identify other areas. Right? We can say, hey, while you're now, you're an advisory client, let's talk about those CFO services. Let's let's now talk about the bookkeeping service that you may need. Now, I don't need to offer those things, but if I'm already offering them and they're a perfect fit, yeah, it's easy to go down than it is to go up.

And most. Yeah, most accountants, most accountants want to go down and then go up. And that's not going to work. It doesn't work for the for the high value client. I almost imagine that it's, it's easier also to lead to to to have your messaging be one of I can help you save on taxes rather than I could just do your taxes.

Correct. It's just a way more interesting message to a prospect because they want to save on time. Who doesn't want to save on tax yet? It it is. I like to say that we're such we're in such a great industry because we're talking about a very, very strong pain point. Yeah. That if you really think about it, I love to use the analogy of the dentist because, I mean, I can ask anybody, you know, should you clean your teeth twice a year?

Yes. How many people actually do that? Right. And like schedule it out and do it. It's it's a very rare thing because I mean, unless you've got a lot of time on your hands, if you're a busy professional, you're like, I'll get to it, I'll get to it, and you kick the can down the road, maybe once a year, maybe once every eight months or whatever happens.

But the moment that you bite on something and you feel a pain and the pain is strong, immediately you call your dentist and like, how can I get there tomorrow? Today, this afternoon, the fastest you can get to solve the pain. Well, we're in the same business tax payments. When when somebody writes an estimated check of $20,000 to the IRS.

That is extreme freaking pain. It's just as painful as a toothache. And they're looking for someone to solve it. And this is why it's so easy for us. I say this, all of us in the accounting industry to find clients because they'll literally raise their hand and say, I have a big freaking toothache. Please solve this problem. You can say that about bookkeeping, but think about it like bookkeeping.

If they've been operating with bad bookkeeping, they're like, come on now. If they if they don't have accurate financials, they're not going to be unless they're going bankrupt, they're not going to call you. They don't unless they're being unless they're being audited. Like like I like to even use it. Another analogy would be like tax raises a lot of people like this tax raise world.

I mean, I love that there's an opportunity there. The flat tax resolution. Yeah. Tax resolution I love that there's an opportunity there. However, the majority of the people that are coming to you with a tax resolution problem are people who are not organized, who don't have things together. And and what's happening is they're only coming to you because the pain is so strong that they got levied.

They got notices that they're having, you know, they're being summoned to court. Like that's the only time they come to you. They don't come like the moment they don't pay their bill. That's not the truth. So you have to know when the iron is hot, which is September 15th, when they make their estimated payments, right. Or September or October 15th when they make the remaining balance payment for their 2023 tax returns.

These are like hot days, you see what I'm saying? So it's easy for us to articulate this is what I'm getting at. Yeah. No, it totally makes sense. And we have this very similar messaging with CFO services because, you know, if you think about it, bookkeeping and accounting or tax services are, you know, most people can't tell the difference.

Being a good bookkeeper, a bad bookkeeper, a good accountant, bad back, you know, accountant. But they don't also at the same time, they don't really care. Like, like I've met so many business owners whose spouse does the books or her daughter dies, or some office employee does the books, and it's just they don't really care because that's not their focus.

But there's no pain. You can come to them with this message of, you know, I'll help you save on taxes and prevent you writing this big fat check to the government. That is what you know, what matters. And I would I would say that advisory is a great lead in to CFO. Like I really believe that because if you're if you're dealing with somebody who is has a liability greater than $50,000, they're making decent money.

And if the bigger the bill, the more likely they need somebody in their corner for financial guidance and advice, specifically as it relates to the growth of their business or their portfolio. I think it's such a great hand-in-hand tool. I really believe that, hey, they're out of line with the CFO project podcast. Are you an employed accountant or bookkeeper that would like to start an advisory service on the side?

Well, we have a free training for you called Side Hustle CFO. We will show you how to start a business on the side, offering CFO and advisory services to small business owners. We conduct this training every Friday at 3:00 pm eastern and 12:00 pm Pacific. Go to the CFO project. Com and click on Free trainings to register. So, in the remaining time let me let's talk about qualification.

Who is qualified to offer tax advisory services. And let me just leave it on that note that I have a couple of follow up questions. Well, fortunate for everyone here. There is no formal designation that I am aware of that is defined you as they define somebody as an advisor in taxation. Okay. Now obviously if you have credentials like CPA, a or maybe like tax attorney, obviously you may have some more street cred.

But the honest truth is that there is no formal thing. So the real test of someone's credentials is their ability to produce a result. And that's an anything, right? Like any business, you can just say, hey, the person who produces the best results gets the most clients and wins. That's just how it is. And so in tax strategy, the cool thing about it is it's you're using the IRS code.

So anybody can if you know how to read and you understand a little bit of taxation, you can figure this out. It's not that hard. That's why I think a lot of people have reservations, because they believe they have to have some sort of credential or some year of experience. I mean, if you've learned how to prepare a tax return or read a financial statement, you did not have that skill set.

You were not born with that skill set. And the more that obviously you do these skill sets, like, for an example, a CFO, I would imagine wouldn't see a, let's say, a profit and loss statement or a balance sheet, a little more scrutiny than the average guy. But that doesn't mean that the average person couldn't learn that skill set.

It just means that you have more experience. Right? Right. So so it's it's very similar concept. It's I'm just saying if you are any credentials, as long as you have some background in taxation, it could be a tax pro CPA could be a CFO. I believe you can offer advisory. I don't believe there's any credentials or I know there's no credentials, but I don't believe there's any restrictions to this.

So if you're a sort of a bookkeeper listening right now, who who thinks this may be a great way to increase their earnings, they could offer tax advisory services. But what I guess the actual tax prep or the the liabilities involved with all that, how do you what's your advice for them. Great. Great question. So so bookkeeping actually I have a few bookkeepers in in one of our advisory programs.

And what they have done, which is incredible is, is raise and increase their monthly recurring revenue by offering advisory, consultation to their clients. Okay. So they add an annual program, they increase their MRA. Now, what they do for the taxation part is they partner with a CPA, a local tax professional or somebody within our network and they do the work together.

So you don't have to necessarily. But I you don't even have to file a tax return to do tax advisory. You really don't. Because the advisory that you're providing and the guidance that you're using, like what you're doing is not on the tax return. It's how it gets applied to the tax return. Right? It's it's typically most of the strategies that are applied are done in the bookkeeping.

I mean, I mean, if you think about it like an accountable plan is a great strategy to get reimbursements from your company that is done in bookkeeping. If you want to talk about, Agusta, which is very popular for most people to say, I want to rent my house to my business, it's done in Ocala. The Augusta rule or Augusta rule.

Okay. Yeah. So you want to rent your house to your business? You get that in your bookkeeping. You have to notated in your bookkeeping if you want to pay your children. That is also a bookkeeping, function. So all of these strategies are in bookkeeping. They're not on the tax return. It's how they're applied to the tax return that matters.

Got it. All right. Well I mean that makes sense. All right. So David, if somebody who's listening is interested in becoming a or learning more about becoming a tax advisor, where can they go. So you can go to tax planning expert advisors with a Nasscom or you can just follow me on social media, any any channel I am I am David A with an A in the middle peres.com or.com.

I am David de Peres on any social channel you can find me there. I do put a lot of content out. So if you're an advisor right now or aspiring advisor if you want to know about tax strategies, I share them every single day. So if you're wondering what strategies apply to business owners or W-2 earners or real estate investors or doctors or anyone, I talk about this every single day.

I give away a ton of free content because I believe that more advisors or more tax professionals need to become advisors for their clients, and I want to give away as much information as possible. Love it. So I am David, a Peres. Yeah. Okay. Awesome. David, thank you so much for being on the show today. I appreciate you, Adam.

Wishing you much success my man. Thank you so much. And everybody, if you haven't already, sign up for our five minute weekly email with practical tips just for accountants and bookkeepers to escape the accountants trap, go to the CFO project.com/newsletter. See you next time on the CFO project podcast.