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  • Writer's pictureSamantha Hind

[Series] The Business Lifecycle: Optimising your Clients Tax Efficiency

Updated: Aug 21, 2023

Your client’s business lifecycle is fundamental to their tax efficiency 💯

And if you achieve higher tax efficiency for your clients, then they increase their savings as a business and personally as business owners.

As businesses progress through their business lifecycle, there are different options for Tax Advice to consider to ensure that businesses and their owners are paying the most efficient amount of tax.

There are five key stages of a business’s lifecycle, which are shown in the below image.



For the purpose of this blog, we will cover the early stages of the business lifecycle, stages 1 and 2. And remember, depending on the stage at which a business is currently at within its lifecycle, it will directly impact the options of Tax Advice available.

The content of this blog will focus on what is included within each Tax Review for stages 1 and 2 of the business lifecycle, with more of an emphasis on Tax Review 2 in terms of the benefits to your client (company and business owner), the benefits to you, the accountant, as well as how you can overcome any potential Tax Review barriers.

📌 This blog is the first of a series and we will notify you when the next one is live, but we plan to get the second post live by early June.

Before we get started, the image below provides a summary of the Tax Reviews for stages 1 and 2 of the business lifecycle.



Tax Review 1

From the business lifecycle image, a business in the Start-Up stage qualifies for Tax Review 1: Starter Planning. This is the most basic Tax Review and for the majority of accountants, this is something you will be likely used to dealing with for your clients. And your clients will most likely understand that a Tax Review 1 covers:

  • Tax Compliance – ensuring that they are paying the right amount of tax that is due

  • Salaries/Dividend split – ensuring that this is sorted for them each year for the business owner, their employed family members such as spouse/civil partner, and their employees

  • Support in ad-hox Tax Advice depending on the client's needs such as funding via SEIS/EIS

So, depending on their business’ lifecycle stage, your clients could qualify for further Tax Reviews and value-add services. If your client is in the Stable Business stage of the business lifecycle, they qualify for Tax Review 2: Maximising Extracting Value.


Tax Review 2

I hear you. What is it and how does a Tax Review 2 work?

As their accountant, you will explore the different ways to tax efficiently put things through the business or take value out of the business for the benefit of the business owner, their employed family members, and their employees.

You can do this through our ‘1,2,3... Deliver’ process.

First up, get a Discovery Form completed by your client or complete it using the information you have on file. You will then have all the information you need in front of you about the client and their goals.

Secondly, you are now going to log in to the Diagnostax portal and complete a tax diagnostic for your client using the information that has been provided.

Thirdly, prepare the impact meeting with the client using our handy guides in the portal. You will review the proposed suggestions, prioritise them based on your knowledge of the client and quantify the savings.

Finally, you will deliver the tax review findings to an impact meeting. You will then agree on actions off the back of it. These actions are for you, your client, and/or where specialist advice is needed.

🙋 If you want to know more about our 1,2,3, Deliver process, log in, go to the Tax Diagnostics menu, and visit ‘How to Deliver a Tax Diagnostic Review'.

As an example, I did a Tax Review 2 on myself. Now I did skip the discovery form stage, but this wasn’t needed given the fact I was completing the review on myself. Through completing the Tax Review 2 I was able to identify ways to tax efficiently extract value for myself, my co-directors, and the wider team.


Which I discuss in more detail in this blog post.


But to summarise, I was able to extract value through:

  • Household income

  • Pension contributions

  • Company loans

  • Maximising business expenses paid for personally

  • Employee benefits

Tax Review 2: The Benefits

So how is Tax Review 2 beneficial for my client?

Well, as a business owner yourself, you know how important your own motivation is to achieve your business's goals before we even consider your team's motivation. It’s fundamental, right? But with motivation, drive, and dedication to achieve the goals, there also comes stress and time commitments. By completing a Tax Review 2 you will help the business owner get the rewards they deserve in a tax-efficient way, alleviating some of that stress 🤝

I know what you’re thinking. How is completing a Tax Review 2 for my clients beneficial to me?

Well, you spend a lot of time helping your client with their tax affairs such as filing their returns for them, advising on tax deductibility of expenditure, not to mention those other pesky tax questions you get that your client thinks you will answer them for free as “they are only quick”…

So naturally, you value your Tax Advice services and subsequently charge a fee for these services. Which as you’re a business, puts money in your back pocket! 😀 We’d recommend £500-£1,000 is charged for this service. However, we know some DTX’ers have set up the tax review pricing based on % of savings identified for the client or given money-back guarantee on the tax review fee if the client doesn’t obtain X level of savings from the review.

Not only this, but through your Tax Advice services you will increase savings and improve your clients cashflow health, which will positively impact client retention. Additionally, by expanding and/or demonstrating the different levels of tax efficiency that you can provide for businesses, it will help with new client acquisition.

👉 We know from speaking to you DTX’ers, client retention and acquisition are two of your main goals as an accountancy business owner.

You can provide a Tax Review 2 based on your client's business lifecycle stage as a recommendation to your client and they are the ones that need to accept this add-on service. But ultimately, they are the ones who benefit from extracting maximum value from being a business owner. Plus, the savings that are made through undergoing a Tax Review 2 for your client will be greater than the fee you charge; it’s a win-win 💪


Tax Review 2: Your Barriers

So, what’s stopping you from proceeding with a Tax Review 2 for your clients?

It could be because of these reasons:

  • You have limited tax knowledge to consult on the Tax Advice a client needs

  • You don’t have a system in place to implement this service across all clients

  • You fear that you won’t be valued or paid for your Tax Advice work

Sometimes, you can overcome these barriers by:

  • Attending accountancy events

  • Attending CPD seminars/webinars

  • Researching the tax area online

  • Studying for a tax qualification

  • Asking in accountancy forums

  • Refer to ACCA / CIMA / ICAEW resources to help find a solution

These all take time. Which as an accountant and business owner, we know your time is fully optimised through your day-to-day activities which includes meeting with clients, managing reporting, ensuring KPIs are met etc etc – the list goes on.

Or you could overcome the barriers you are facing through using Tax Diagnostics.

For Diagnostax subscribers, you can achieve this using your Diagnostax portal using our 1,2,3... Deliver methodology covered above.


Tax Reviews = Tax Efficiency

It’s important to put emphasis on that depending on your client’s business lifecycle, will impact the Tax Review that they qualify for. So, to be super clear, if your client is in a Start-Up business then they will only qualify for a Tax Review 1 and aren’t eligible for a Tax Review 2.

As a business owner, whether you are a sole practitioner or manage a team of client managers, being able to upsell value-add services to your client(s) is a business goal; as this will generate more revenue for your accountancy practice. Not to mention the positive influence from creating client successes on client retention and acquisition through increased savings and improved cashflow health; which are fundamental to your business's success 🙌

Don’t be afraid of Tax Advisory services. Equipped with the right tools you can make the process run as efficiently as possible to the benefit of your clients and your own business.

To carry on with this series, check out our second blog post:

In the meantime, let us know in the comment section if you have completed a recent Tax Diagnostic on your clients 👇

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