Any time your CPA firm can differentiate itself by offering a specialty niche, you have the opportunity to stand out from your competition while providing extra value to your clients. Some firms have done so by offering R&D tax credit and cost segregation services, both of which can generate a fresh stream of revenue with little or no capital investment. While your firm may easily identify some of your clients that can benefit from one or both of these services, it’s likely that you may be missing opportunities. As you likely know, recent legislative changes make cost segregation and R&D tax credits even more valuable to your clients. The reality is, if you aren’t already offering these services, other firms will.
Recognizing the Opportunity
So, how do you determine what the potential is for offering specialty tax services at your firm? In our experience, CPA firms have been surprised by the number of prospects they have within their own databases. Many firms think only of large companies when they think of those who can qualify for tax credits and incentives, or they focus only on certain industries. The truth is, companies of all sizes and in dozens of industries can and do qualify. All too often, long-term, small and annual or routine clients are overlooked.
As a reminder, the following provides an overview of cost segregation and R&D tax benefits.
Cost Segregation
The latest tax reform has increased the value of cost segregation for CPA firms and their commercial real estate owner and investor clients thanks to changes in bonus depreciation. As you know, bonus depreciation allows individuals and businesses to deduct a percentage of their assets the first year they are placed in service and accelerate depreciation. Recent changes allow 100% depreciation in the first year through 2022 and added used property to assets that can be depreciated. Cost segregation studies can also identify any missed deductions and provide the opportunity to improve cash flow—something many of your clients could use right now. The IRS requires engineers to prepare these studies, so it’s vital that a CPA firm partners with qualified experts.
R&D Tax Credits
R&D tax credits present an opportunity for you to help your clients grow their businesses by minimizing their tax liability. With the passage of the PATH Act, R&D tax credits became a permanent incentive to companies in a wide range of industries to reinvest in their companies. The number of activities that qualify for federal and state R&D credits often surprises CPAs, and especially their clients. From architectural and engineering firms to aerospace to food processors and chemical companies, and dozens of industries in between, companies no longer need to develop products or processes that are new to their industry—only those that are new to their business R&D activities include innovative products, processes, software, techniques and know-how. When you make the decision to partner with an R&D tax credit expert, you’ll want to find a qualified partner that has a team of engineers, CPAs and tax attorneys to conduct engineer-based R&D tax studies. You’ll also want to seek a relationship that allows you to be in control of your client relationships.
Making the Case for CPA Specialty Tax Services
If you are convinced specialty tax services represent a significant source of income for your firm, how do you go about building the case? First, you’ll want to be able to answer the following questions:
- Can you identify a large volume of clients who can benefit from these services?
- Does the income more than make up for the time invested? Provide case studies.
- Do you have the internal expertise to manage the work?
- Can you outsource the bulk of the work while remaining in complete control of the client relationship?
In the coming weeks and months, Engineered Tax Solutions will provide CPA firms with valuable information that will help firm leaders weigh these decisions, including information about how to mine databases for clients who can most benefit from these services.
Engineered Tax Services partners with CPA firms across the U.S. to find new revenue streams through R&D tax credit and cost segregation services for their clients. Through our services, you can diversify your CPA firm, deepen client relationships and attract new clients to your firm.
If you have immediate questions about engineered-based specialty tax services for your CPA firm, please call Engineered Tax Services at (800) 236-6519. You may also visit Cost Segregation Services or R&D Tax Credits.
