Throughout my career, I have worked in and with CPA firms of all sizes. For the most part, they all have similar business models that are heavily dependent on their client relationships. The CPA firms and the individual CPA’s within the firms need to continually prove their value in the relationship by exceeding client expectations, which guarantees the relationship and related revenue remain secure. One of the ways a CPA can exceed expectations is by offering solutions to unidentified client risks and problems.
A common unidentified risk for many businesses is sales tax, which is arguably one of the most misunderstood tax obligations. Because sales tax is considered a pass-through tax, it is often overlooked. However, with tax rates approaching 10% and potential penalties and interest under audit, a business could be exposed by 20% or more of their total revenue. We see this risk primarily in small and medium-sized companies that are in the early stages of the maturity cycle. This is because they are fast-paced, reactive in establishing infrastructure and overwhelmed by other forms of regulation and compliance. This risk presents a great opportunity for a CPA firm to establish their value.
CPA firms that can identify and solve sales and use tax issues including sales tax nexus have an advantage over many of their competitors. Identifying the sales tax risk and helping a client resolve that risk will establish an additional connection or “hook” into the client that will help further secure the client relationship. The ability to identify and solve sales and use tax issues takes many forms, but what is needed first is awareness. The CPA firm as a whole – all partners and staff – must be able to identify sales tax risk for their clients. Once the risk is identified, the CPA firm has the opportunity to generate revenue, add value to their client and establish another hook to secure the relationship.
Stay tuned for future blogs where I will discuss how a CPA firm can identify and solve sales and use tax issues.