Taking Advantage of Technology

Tips on high-tech methods to expand a sole practitioner's opportunities.

  • VIRGINIA SOLE PRACTITIONER John Gill has used technology not only to cut down on the time required for tasks such as tax research but also to open new marketing opportunities.
  • IN TAX RESEARCH, he uses CD-ROMs for primary research, finding them more thorough and convenient than research performed on the Web. To obtain advice and opinions, he has relied on the AICPA Accountants Forum on CompuServe, which recently moved to a new home on the AICPA Web page.
  • PRACTICE DEVELOPMENT is another benefit of the Internet for Gill. He has gained clients overseas and across the country through contacts made on the Web or through advertisements he has posted on existing Web pages.
ANITA DENNIS is a Journal contributing editor. More information on John Gills firm is available in The Virtual Office: Ten Case Studies, published by the AICPA.

Many CPAs know that technology plays a crucial part in their efforts to remain competitive and provide clients with the services they need. Virginia sole practitioner John Gill has reaped numerous benefits in using it to conduct his tax research and to enhance his practice development. His experience demonstrates how small firms can broaden their services by relying on all the tools available to them.

Gill, whose Virginia firm concentrates on traditional services, as well as international and tax problem resolution, has found that technology not only cuts down on the time required for tasks such as tax research but also opens up new business opportunities. When conducting research, he uses one of two approaches.

CD-ROM . Gill uses RIAs Tax Desk as an electronic replacement for the 26-volume printed RIA tax service to which he once subscribed. One of the many values of these CD-ROM services is that they offer unlimited federal and state tax forms. Tax Desk—an abbreviated version of RIAs On Point—doesnt include state research data. For primary tax research, Gill believes CD-ROM services usually are more thorough and convenient than searching the Web for information, at least for now. For example, it is possible to access the federal tax code online ( http://www.law.cornell.edu/uscode/26 ), as well as search the Internal Revenue Service Web page ( http://www.irs.ustreas.gov ) for forms, but some CD-ROMs offer what many practitioners need in one package. In addition, he uses OneDisk from Tax Analysts to research actual court cases. "It replaces having to go to the law library and look up and read the case there." He notes that most CD services dont have the actual text of the case but, instead, offer opinions, commentary and advice as well as IRS regulations. While lack of cases necessitates the use of another source, the services opinions and commentaries are good. One valuable component of CD-ROMs for Gill has been the client planning letters included for many situations. For example, one of Gills clients had a question on Internal Revenue Code section 179 depreciation. When the CPA consulted his tax research disk, he found a sample letter that explained the issue to the client, as well as advice and commentary for practitioners on the subject. "In less than five minutes you can prepare a two-page letter that looks like you spent three hours on it."

New opportunities . Online forums are "one of our biggest research tools," Gill says. Until recently, he used the AICPA Accountants Forum on CompuServe to get advice and feedback from other professionals. (The Institute planned in mid-June to migrate from the Accountants Forum to the AICPA Online Forum, located at the Institutes Web site—http://www.aicpa.org. The new Forum is designed to offer the same benefits to users as the Accountants Forum once did.)

"I used the Accountants Forum if I had done my primary research on a tax question but the issue was really outside my area of expertise," Gill explains. "I could post a note on the Forum, give the facts of the situation, explain what Ive found and ask for opinions. Within two to three hours, I got lots of comments from other professionals." As a result, Gills small firm can tap into expertise it couldnt afford to hire full-time. "Because of relationships Ive made on the Internet Ive been able to take on work that I otherwise would have been unable to do." In addition, as a sole practitioner, Gill can use online colleagues as a valuable sounding board. Theres generally no charge for advice traded online, although Gill has found other professionals whom he has subsequently paid for consulting help—or vice versa. "Mostly, though, the relationships consist of professionals helping other professionals and we all gain from the interaction. I have somebody else look over the work and give me his or her thoughts."

Gill also subscribes to an Internet newsgroup and two Internet mail lists for tax advice. On the moderated tax newsgroup—misc.taxes.moderated—he finds that since questions and answers are filtered through a moderator, it can take as long as eight to nine hours for an answer, a definite drawback. The mail lists, on the other hand, allow users to post questions that are sent within a few minutes to hundreds of other subscribers for feedback, but the interaction is more limited than on a newsgroup. The two mail lists that he recommends are Accounting and Tax List (send subscription requests to listproc@scu.edu.au ; in the message, include the following text: atax-l@scu.edu.au ) and Accounting Technology Discussion Group (send requests to owner-can-acctech@hookup.net ). When practitioners evaluate forums or newsgroups, Gill advises that turnaround speed be an important consideration. "Electronic research is not useful if you have to wait days for an answer."

As a regular user of some online forums, Gill finds other practitioners have come to know him and to seek his advice when they need it. At the same time, Gill has gained clients by responding to online queries and then describing his firm and what else it can offer. This has allowed him entree into an area that often is difficult for small firms to serve: out-of-state and overseas clients.

Much of this expansion has been a natural extension of his existing practice. For example, about one-third of Gills business is devoted to IRS problem resolution—businesses and individuals who owe taxes and cant pay, clients who have not filed tax returns in multiple years and tax issues in bankruptcy cases. "Thats been a strong niche market here locally," Gill says, "and its a very easy service to get into long distance. Weve found it really doesnt matter where we are in order to perform these engagements." In fact, when dealing with people who have extreme tax problems, Gill believes clients may find it preferable to work with someone out of state. "They dont have to worry about what the neighborhood accountant thinks of their tax delinquency." In such an engagement, Gill takes financial information from the client and then contacts the IRS by phone or fax. He works out a payment arrangement and considers the planning opportunities to help alleviate the clients problems. All of this is done without face-to-face meetings between any of the parties involved; most out-of-state engagements involve retainers and prepaid fees. "I have had to do some domestic travel," Gill says, "but that was only in fewer than 10% of the cases."

In addition, the Internet has allowed the firm to reach overseas for new client opportunities. "Weve built alliances with accounting firms in other countries, mostly England and Germany, developing and cultivating them over the last two years on the Accountants Forum or on the Internet." Those firms in turn have gone out in their communities and billed themselves as U.S. tax experts. The firms market their services and then ship Gills firm the client information, usually via e-mail. "The engagements are mainly U.S. individual tax returns for expatriates and foreign businesses with U.S.-based investments," Gill says. Out-of-country clients now compose about 5% of the practice. "Its a very small niche," he says, "but its the fastest growing segment in our firm." Both out-of-state and abroad, the firms facility with technology has been a competitive advantage.

For example, one of Gills clients is a computer consulting outfit in California that posted a message online looking for a local in-state CPA to help with its accounting. Gill responded with an e-mail note that said his firm was familiar with the consultants accounting package and offered his services, even though he wasnt located in California. "I told the consultants we were as convenient as anyone local because their employees didnt even have to leave the office to work with us. If they had e-mail and a telephone, we could serve them." His firm now handles the consulting companys accounting and maintains its bookkeeping via e-mail.

Firm Profile

Firm name : Gill & Co.
Year founded : 1985.
Location : Newport News, Virginia.
Number of owners : One.
Number of employees : Two full-time; two part-time.
Number of CPAs : One.
Areas of concentration : Tax and accounting services; Internal Revenue Service representation; technology consulting.
Gross fees : Less than $250,000.
Percentage of fees in :

    Accounting : 14%.
    Tax : 52%.
    Consulting and personal financial planning : 34%.

Types of clients : Technology firms; contractors; import/export; temporary services; professionals; foreign-based firms.
Advertising and marketing programs : Internet advertising; direct mail; light telemarketing.
Best thing we did in the last five years : Reengineer our work processes to take advantage of technology and ignore the stereotypes of what a CPA firm should be.
Worst thing we did in the last five years : Stray from the niches that work well for the firm. "When we have tried to be all things to all clients, our quality and profit margins have suffered."
How the practice will change in the near future : Firm will continue its strong internal growth and search for another firm to acquire or to merge into the practice. Plan to establish a Web page and use scanning/imaging technology in the next few months.

As another part of his strategy to use the Web as a practice development tool, Gill has taken out advertisements on Internet Web pages maintained by others. "We target Web sites catering to small businesses or those sites that may attract businesspeople with tax problems." The host charges for ads based on the number of visitors—or "hits"—per day to that site. According to Gill, he pays around $100 a month for an ad on a page that is receiving about 1,000 hits per day. "We have used banner ads on a Web page that gets 30,000 hits by businesspeople per month," Gill says. From this page, his firm has gotten two to four leads per month and one new client with an average fee of $1,000 every six to eight weeks. This can vary: The fee may be less or the work may be ongoing, but most of the firms online work is project related—in Gills case, to solve a specific tax problem.

"Most of the people we work with long distance have regular accountants who handle their basic accounting and tax needs." When a potential client sees and clicks on Gills banner ad on another Web page, information about Gills firm pops up, along with an opportunity to send Gill comments via e-mail. When Gill receives e-mail comments, the system immediately returns to the sender a two-page electronic brochure that describes the firm, what it does and how to make contact. This is called an "autoresponder" file. Gill then automatically receives an e-mail reminder to follow up with the brochure recipient.

Gill launched his Internet ad campaign when he was approached by another accounting firm with a subsidiary that is an Internet service provider. "We set up a trial ad and it pulled fairly well," he says. "There are others I have since started working with and I think our Web advertising will expand as we develop our own Web site later this year, and start swapping ads with other businesses." Gill reports he has contacted some of the big-name search engines, which also seek banner advertisers, but the costs have been much higher—up to $4,000 for four weeks of coverage. "If we could get a new client a day, it would be worth it," he says, but since that is not the case he is satisfied with smaller, more targeted markets.

Turning to technology has offered Gill tangible benefits. By marketing and developing contacts on the Internet, he has been able to expand his business across the country and overseas, take on new types of engagements and receive second opinions. Although subscription costs for CD-ROMs vs. print services are about the same, his investment in CD-ROMs has allowed him to dispose of a bookcase. In the case of this firm, thats important—Gill works about 70% of the time from a "virtual office" in his home with his wife, who is his administrative and marketing manager. He also maintains a "real office" in another companys suite that he shares with a client in the main business district in downtown Newport News, which houses one staff member and a conference table for client meetings. His two office suites are connected by voice and data telephone lines, and the interaction between staff is quite seamless. That arrangement has allowed him to save hundreds of dollars each month on rent. His research on the Internet and using CD-ROMs also saves him time, but he considers the opportunities it opens to be an even greater advantage. As Gills example shows, CPAs should examine all the possibilities that technology offers their firms and begin to reap the benefits.

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