Does your accounting firm offer advisory services to your clients?
Small businesses often need assistance in making finance and tax decisions. Many business owners are unaware of the fact that their company operates in an unfavorable tax position. The majority of small businesses are eligible for S corporation status, which redirects income taxes from the corporate level to individual shareholders. You can help your clients become S corporations, and use S corp advisory as a jumping-off point for offering more advisory services.
Gusto, along with our partners at CPA Academy, presented an informative webinar all about S corporations and how you can shift into an advisory role for your clients. We released the webinar titled, “How to Increase Advisory Opportunities Through S Corp (Form 2553) Conversions,” featuring the advising and accounting expertise of Will Lopez. Will founded AdvisorFi and is the head of Gusto’s accountant community. You can watch the entire webinar here.
In this article, we cover valuable highlights from Will’s presentation. You’ll learn all about finding advisory opportunities, bundling consulting services, and establishing a people-based approach when assisting your small business clients.
Finding advisory opportunities by supporting S corporations
Helping small businesses gain S corp status is a great way to shift into offering advisory services. You can assist your small business clients through the S corp process and help them succeed as an S corp:
“Now that you’ve set this S corp foundation, let’s bundle it. … I’m going to remove the barriers to success in S corp status. I’m going to communicate the required work to take advantage of [the status]. We’re going to promote business success as the highest aim.”– Will Lopez
There are four steps you can take to ensure your client’s success as an S corporation.
#1. Help your client understand the advantages and disadvantages of S corp status. You need to unpack S corp status so that your clients can make educated decisions in determining whether the tax status is suitable for their company.
#2. Help your client through the election process. Your clients need to apply to become S corps, but it can be challenging to gain S corp status quickly because of annual election deadlines. That means you need to help your clients understand the tax election deadlines and assist them so they can attain S corp status during their desired fiscal year.
“[Businesses] don’t realize that when they’re late, there’s a little bit more of a complication to it … for you to elect it correctly and get it for the year in which you want it. Many business owners want to elect S corp status the moment you unpack the [benefits], but almost none know when they’re on time or late.”– Will Lopez
#3. Help your client find the proper approach in operating as an S corp. After your client becomes an S corporation, you need to continue assisting them with their business:
“The proper approach to S corp success is not only electing the S corp, but working with a transformational advisor such as yourself to guide them in the entire journey of business life. They will not need anybody else other than you if you bundle all the advisory [services] necessary to get them there.”– Will Lopez
You can bundle your advisory services when assisting your clients through the S corp election process so you can continue helping them with their business processes.
#4. Help your client manage S corp status. After your clients gain S corp status, you need to help them maintain that status and avoid reclassification from the IRS. S corp status comes with owner and shareholder restrictions, so you need to help your clients maintain their tax position by staying in line with the IRS’s requirements.
Bundling your advisory services
When advising your clients to become successful as S corporations, it’s also critical that you help them through tax planning and general advisory:
“We could say [to the client], ‘You’re an S corp now. … You want to learn how to accentuate your S corp tax savings? Let’s talk about HSAs. Let’s talk about high deductible health insurance plans. Let’s talk about FSAs. Let’s talk about solo 401ks. Let’s talk about simple SEPs.’ And we would bundle these concepts into tax planning.”– Will Lopez
You can continue advising your clients on how to operate a successful business after you’ve helped them obtain their S corp status. You can offer tax planning services and help them make important decisions that will determine the direction of their business:
“This is getting yourself into heightened levels of advisory work that is … almost future-looking and very supportive in nature. And what you’re trying to ultimately do is give them the information they need to be successful in their business because that’s what business owners struggle with.”– Will Lopez
Your small business clients may not always take your advice, but you can still offer proactive guidance based on your areas of expertise. You can also use your knowledge to help your clients overcome certain disadvantages of S corp status, such as ownership restrictions:
“You bundle in that proactive advisory work into your packages with them. … You start accentuating the status by all of these other areas of advisory work that you can get yourself into according to your skillset [and] according to your expertise. … This is how I sold it [to my clients:] … ‘I’m going to mitigate all those disadvantages, and I’m going to bundle in the advisory work necessary to curb those disadvantages.'”– Will Lopez
Some of the advisory services you can offer your clients that can mitigate S corps disadvantages include bookkeeping assistance, compliance work, and people support. Your bundled advisory services will largely depend on your areas of expertise, but regardless of your specific services, you can communicate with your small business clients that you will help them maintain their S corp status and grow their businesses by offering proactive advisory services.
Establishing a people-platform approach to S corporations
As you continue offering your advisory services to your clients into the future, you can take a people-based approach to help them succeed as S corporations. When you take a people-based approach to advising, you can help your clients scale up their businesses while also supporting their employees and creating a positive work environment:
“Once you’re really refining it, how do you support them as an individual and their teams as they scale up? … That gets you into more … heightened advisory work. … As transformational advisors, your goal when you’re talking to clients is to help them create a world where their business empowers a better life. … You’re going to transform their business into a community where people feel connected, valued, [and] energized.”– Will Lopez
When you work as an advisor to your clients, you can empower them and their employees to create a better work environment as they scale up their businesses. When your firm works with Gusto, you can offer your clients automated tools for improving their work environments:
“The way Gusto’s people platform works is we surround the business owner with all the tools necessary to manage people. … As the business grows, you’re going to have to start surrounding them with all the tools necessary for their people to grow. … You go from payroll and [make] sure that everything flows, … [including] onboarding, job engagement letters, … and compliance work. … [You’re] automating this whole process that really distracts you as a doer.”– Will Lopez
When your accounting firm partners with Gusto, you gain access to automation tools that can improve your workflow as you advise your clients. Gusto keeps track of employee benefits, such as health insurance and 401ks, and we even provide HR tools. Gusto also offers a helpful People Advisory Certification program that you can use to develop your ability to advise clients on payroll and benefits.
Learn more about advising S corps
Assisting your small business clients in S corp election is a great way to begin offering advisory services. You can bundle your advisory services to proactively help your clients in tax planning and upscaling their businesses. Additionally, you can offer people-based advisory services by partnering with Gusto and support your clients with automated payroll and benefits.
We’re incredibly grateful to Will Lopez for hosting this informative webinar. If you’re ready to learn more about S corps and advising your small business clients, read Part One and Part Two of this webinar articles series. You can also watch the full webinar here.
If you want to learn more about advising your clients with people-based processes, such as payroll, benefits, and HR, become a Gusto partner! With Gusto’s People Advisory Certification program, you’ll learn invaluable tools for advising your clients and empowering their employees as they continue upscaling their businesses. With Gusto, your firm will also gain access to integrated softwares and automated services that will improve your firm’s efficiency so you can focus on serving your clients.