8 Lucrative SUT Advisory Add-Ons Your Accounting Practice Can Offer Clients
One of the great things about running an accounting practice is you have nearly endless ways to expand and evolve your service offering. This is especially true in today’s post-Wayfair world, where businesses face much higher levels of sales and use tax complexity. With complexity comes uncertainty, which for you, presents opportunity.
Quick Refresher: Post-Wayfair World
South Dakota v. Wayfair is the June 21, 2018, Supreme Court ruling that deemed the physical presence rule “unsound & incorrect.” The ruling, which enables economic nexus, affects all remote sellers. Physical presence also still applies, further complicating compliance. Add in today’s work-from-anywhere world, and it’s no wonder business owners are seeking out guidance.
As an accounting practice that wants to scale and build a sustainable business model, you need to future-proof your firm. Most of your clients need help learning why and how economic nexus impacts their business. They also need support when issues come up along the way. With these things at play, you have lots of room for growth if you get creative with your service add-ons.
First Things First: Time for Some Risk Analysis
Before expanding your service offering, it's best to do some legwork to identify your best potential growth opportunities. How? If you're already a LumaTax user, use our tool to quickly and easily run nexus surveys on all your clients and let LumaTax score them based on their estimated risk.
We call this the LumaTax Compliance Score. If a client has a low score, upload their historical transaction data. LumaTax will generate an in-depth nexus analysis report in minutes and give you a state-by-state deliverable revealing physical and economic exposure dates, amounts, and additional details. Not a LumaTax user yet? Request a free demo.
Performing a nexus study opens up a menu of add-on services you can proactively offer to your clients as they navigate their sales tax obligations. Let's talk through each one.
8 SUT Advisory Service Add-On Opportunities
- State Tax Registration Services
Nexus analysis results will show you states where your clients have triggered nexus but haven’t yet registered to start collecting and remitting tax. Providing a state tax registration service is an easy way for you to bring additional value to clients without taking on a significant amount of extra work. Many business owners will be happy to pay to get this chore off their plate.
- Voluntary Disclosure Agreement Support
Some states allow what’s called a Voluntary Disclosure Agreement, or VDA. This tool allows eligible taxpayers who owe back taxes and haven't filed related returns to avoid monetary penalties and possible criminal charges. When available, this can be an excellent tool for CPAs, as it allows you to anonymously approach a state on your client’s behalf to negotiate a settlement of past tax liabilities and secure penalty waivers.
Explaining the benefits of voluntary disclosure agreements to your clients and helping them fill out paperwork (or filling it out on their behalf) in states where it’s relevant is another great add-on your practice can provide. A word of caution, though; each state has different VDA program requirements and nuances, so it’s important to become familiar with those before you file on behalf of a client. Also, prioritize preserving your client's anonymity until an agreement is reached between the state(s) and your client.
- Product Taxability Guidance
You're no stranger to the complexity of sales and use tax legislation, but many of your clients are. That being the case, your knowledge is valuable and can be monetized. Consider providing consulting services where you offer business owners guidance on how different types of products and services are taxed as a SUT advisory add-on at your practice. You can provide details on which states do or don't tax a particular product or service, offer lookup resources, explain nuanced legislation related to a particular product, and answer any questions that come up along the way.
- Tax Technology Consulting
Business owners can invest in so many different software options to run their business operations. The tricky part is that it's hard to decide which platform is best when they all look very similar at surface level - especially for clients who aren't entirely sure what they need. Many look up a couple of reviews and make a relatively blind choice, resulting in implementing a less than ideal system to support their business.
Offering tax technology consulting as an add-on service can be a great way to provide additional value while boosting profits. Your team can gather details on what clients want to achieve, then provide an expert opinion on which tools will best meet their specific needs. If you already have a handful of favorite tools, you may even be able to set up a referral agreement with those companies, allowing you to collect a referral fee or pass along a discount for bringing new clients to the platform.
- Tax Compliance Management
This option goes back to the risk assessment process we talked about earlier. Once you run an initial nexus study, it’s easy to repeat this analysis to see where clients are at for the year in relation to meeting nexus thresholds in various states. Run a monthly or quarterly report refresh, and charge a fee to provide this service.
- Audit Defense Services
Having a security blanket built into your overall service offering provides a way to increase your average bill while helping your clients feel more secure in your practice’s capable hands. Audit defense services achieve this by guaranteeing a business will have support if they ever get audited by the state. Generally, this includes responding to audit notices on your client’s behalf, providing access to audit representatives, defending returns in audit hearings, and helping clients resolve tax debt. You can charge a one-time annual fee for this service or can include this add-on in your monthly bill.
- Reverse Audit Analysis
Underpayment of taxes is common, but when business owners deal with highly complex legislative regulations, overpayments can also occur. Offering reverse audit services allows your firm to analyze all tax payments and identify any areas of opportunity to recoup overpaid funds. You can offer this service monthly, quarterly, or annually.
- Ongoing Issue Management and Reconciliation
With constant legislation changes, your clients are bound to run into tax compliance hurdles from time to time. To alleviate any fears, consider offering a 'piece of mind' security plan. The idea is that your firm dedicates a certain number of guaranteed hours per month to troubleshooting and resolving any issues that may come up for your client.
After you decide which add-ons you want to offer, you have an opportunity to make services even more specialized by industry. After performing nexus studies on your clients, you can aggregate the data to identify which industries are in the most danger of audits and penalties.
Once you’ve surfaced your largest areas of opportunity, you can develop educational content and services specific to those industries. At LumaTax, we’ve seen a lot of opportunities among e-commerce sellers, marketplaces facilitators, and SaaS companies.
Proactively Protect Clients and Boost Profits
Based on the insights derived from economic nexus data with a physical presence overlay, there's a trend forming. Time and time again, we’ve seen that there's enormous value in being proactive and staying on top of economic nexus issues.
With this in mind, tracking your client's economic thresholds on a monthly or quarterly basis is prudent. Building your practice around the rich transactional data you use allows for many monetizable future offerings, giving your client significantly better protection while helping increase your annual revenue. Not already using LumaTax to simplify the process? Request a free demo today.