Brandon Hall: Firms Try to Make Too Much on Tax Prep

Try for a 10-15% margin.

The Disruptors
With Liz Farr

Brandon Hall says that the reason accountants have such long and grueling busy seasons is that “firms try to make way too much money at tax prep.” Firms don’t have enough capacity to deliver on services, so everyone – including the partners – ends up working a ton of hours. 

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Because partner pay isn’t included in payroll, the margin on tax prep is likely much worse than the 30-35% that shows up on the income statement. Hall’s target for the 2024 filing season is just 10-15% margin on tax prep. 

To eliminate tax season, firms should overhire, “set a lower margin target for tax prep,” and “create a flywheel of services and businesses that our tax preparation clients can utilize. And we’ll make our money there.”