Practice Management Thoughts

Part Three: The Mature Practice

James Southward, EA and Elizabeth Huff, EA

You are now sitting in your office chair. You have a full-time office manager who handles all the day-to-day running of your office. They preschedule your appointments. (A side note: Prescheduling increases client retention by well over 10 percent, because people are generally too lazy to seek other tax help. We preschedule them on the same day of the week, at the same time of day as their previous year’s appointment. Although some clients will call to reschedule or even cancel, we find making that first contact each season to be quite valuable.)

Now you and another Enrolled Agent are working long hours, seeing clients and preparing tax returns. You are paying your staff a little more than others pay for the same type of work. You are generous with their paid time off. Your policy is “family comes first.” Perhaps you’re even paying for all the continuing education for your staff. You and your staff are getting along well, working together to improve your office. Your clients extol your virtues as a tax expert, and their friends and neighbors are breaking down your door to get an appointment with your firm.
You need to add another Enrolled Agent. What’s the best way to go about this, you wonder. I have had great success using the resources of my local Chapter, state Society, and National Association of Enrolled Agents. You will find some ads by colleagues who are looking for employment. If you have been active in these organizations, you will be familiar with many EAs in various stages of their careers. Many of them may be open to discussion of the merits of associating with your practice. For example, some are great practitioners but do not want the trials and tribulations of managing a practice. They may want to perform preparation and/or review of tax returns. Others may want to work on mail-in returns without face-to-face client contact. The right EA to add to your practice is out there. Look hard. Engage someone who has the skills you need, the personality you need, the ethics you demand, the dedication you need, and the personality fit for your office.

In my office, our EAs work all year round - as many hours as they want during tax season, and a minimum of Tuesday, Wednesday, Thursday from 9 a.m. to 3 p.m. the balance of the year. They are paid a third of the fees collected on the work they bill. This is apportioned over 12 months so there are no lean months. Another third of revenue is allocated to overhead and other office expenses including rent, heat, lights and power, equipment, supplies, insurance, payroll taxes, computer programs, education, support staff, postage, and the like. I inevitably overspend that allocation. Whatever’s left is a draw for me.  

I endeavor to get the best I can for the best price, but I never let price be my only guide. Both good tools and good staff make my job easier. I don’t have as much time to “do taxes” as do my employee EAs, but I do like to keep my hand in when I can.

When adding an EA, I try to seed their client list with some of mine. I want them to be successful. I pay a salary in excess of the one third in my plan for the first few years. This hurts my pocketbook, but in the long run, my practice is better for it. And it is better for me. I do not make short-range decisions. I always try to think three, five, or even ten years out. I am willing to work harder today, keeping an eye on an easier time down the road.

Coming next - Part IV: Planning your EXIT

James Southward, EA has over 37 years of tax experience and is the owner of Southward and Associates in San Carlos, CA.  He is a Past President of the California Society of Enrolled Agents and is currently serving on the CSEA Board of Directors from the Golden Gate Society of Enrolled Agents.  

Elizabeth Huff, EA has over 12 years of tax experience and holds the position of Senior Tax at Norman M. Golden, EA in San Mateo, CA.  She is currently serving on the Golden Gate Society of Enrolled Agents Board of Directors.