QuickBooks Self-Employed: Why Does This Group Matter To Your Practice?
Due to the rise of the on-demand economy, self-employed clients will continue to be an important group of taxpayers. According to Intuit’s® 2020 Report, we will continue to see the number of people working on-demand jobs grow from 3.9 million Americans today to 7.7 million by the year 2020, and an impressive 9.2 million by 2021.
However, please don’t assume these clients just need basic help. Quite often, they do not understand that you can offer additional services that can really help them grow their business, such as tax planning, business consulting and retirement planning. In return, they become a lifelong client and an excellent referral source.
Tax planning. Self-employed individuals spend so much time working in their business that they may not assemble their records or call a tax preparer until well after year end. As you know, at this point, it’s too late to suggest tax planning strategies. This situation is especially detrimental to Schedule C filers since they may be in a much higher tax bracket and pay self-employment tax. The next article will discuss how to use QuickBooks Self-Employed (an online application) to help Schedule C Clients get organized for tax season and not face this dilemma in the future. Then, you can provide tax planning services in a timely manner.
Business consulting. The question you must ask yourself is, “Does this client see me as a partner in their business success or a commodity service provider?” If the answer is “commodity service provider,” it’s possible they are not aware of other services you provide and are not aware of how you can help them build a successful business.
Retirement Planning. Self-employed individuals are rarely covered by a retirement plan, so it’s is important to help them understand the need for planning and the tax benefit they can receive from retirement plans. In my experience, these people do not even consider retirement planning until late in life, missing the benefits of starting early, accumulating wealth and feeling more secure in the retirement years.
As an accounting software consultant, I see many clients who only see a tax preparer once a year. Many would benefit from additional services listed above. One example is a client named Sean who has become one of my favorite QuickBooks® clients; he is a pleasure to work with, appreciates my services and always pays his bill timely.
Sean came to me with files and documents that were as used to prepare his Schedule C. He assumed the files had errors since his tax bill was considerably higher than the previous year. He asked me to review the information for additional deductions. After reviewing the documents, I found there were a few errors. However, none of them impacted his tax liability. Unfortunately, I was not able to save him any money on the current year tax liability.
Sean had a successful growing business and I was concerned that he needed more frequent meetings with his accountant. I encouraged him to schedule a meeting with his accountant to discuss next year’s tax liability, tax planning strategies and other services his accountant could provide. I also asked him if he had considered a retirement plan, which would also reduce his tax liability in future years, but he said he was too young and might consider retirement planning in 10 years.
Several weeks later, he called and said that after meeting with his accountant, he was starting a retirement plan, purchasing new equipment in the current year rather than waiting until the next year and scheduling quarterly business planning sessions with his accountant. I had to laugh when he got off the phone; previously, he had referred to this person as a “Tax Guy,” and now he called him an accountant.
I hope you will have the opportunity to work with self-employed individuals and help them achieve success! In my next blog post, I will discuss how to help Schedule C Clients get organized before tax season with QuickBooks Self-Employed, an online application.
Editor’s note: This is the first in a series of four articles by Ilene Eisen on QuickBooks Self-Employed. Be sure to read her other articles in this series: