Typical Pitch we see Targeted at CPAs and Accountants Online – But is this smart?
Are there good online incorporation services for CPAs and accountants?
Is it a good idea for CPAs to use automated incorporation services?
What is the upside of these services?
What is the downside of these services?
Are there risks?
Here is a Typical Pitch we see Targeted at CPAs and Accountants Online
What should you do when you have a client that needs to incorporate their business?
Should you manage the process and the paperwork yourself or should you refer your clients to an attorney?
If you’re currently offering incorporation services, you know there’s quite a bit of your time involved in the process. You have to check for name availability, reserve the name with the Secretary of State, prepare and file the Articles of Incorporation, write a check for the filing fee, and on and on.
You also need to educate the client on their responsibilities with regard to maintaining the corporation and setting up a corporate minute’s record book, buying a corporate seal, and issuing stock certificates.
Then you need to set up a registered agent, complete the SS4 application, and file for a sub-chapter ‘S’ election… not to mention a range of other minor administrative tasks.
This convoluted process might make you wonder if it is really cost-efficient for you to do it. Of course, you do have the resulting benefit that you will probably save your client tax dollars and also boost your fees for filing the more complex tax return.
If you are referring your clients to an attorney, then they have to pay around $2,000+ to incorporate their small businesses. That might make you worry that the cost might make your clients hesitate to incorporate at all.
Then the Offer…
Just go online and use our low-cost incorporation service, an automated service that streamlines the process and facilitates the paperwork. You can effortlessly save your client a lot of money and make an extra $400 in the process for yourself.
“Automated Online Incorporation Service” Now There’s an Oxymoron!
In the same way, a scalpel is not a surgeon, an automated incorporation service is not good legal advice and is unlikely to result in a robust corporation.
When an experienced small business attorney provides an “Incorporation Service”, it is a consultative process where the paperwork elements are just the tools used to get the job done. The real work is in making sure the client is set up with the right type of business entity for their business and the paperwork is completed in a way that strengthens the corporate veil.
Also, the owners understand their responsibilities, what they should do to maintain their corporation. Also, their corporate records are actively managed as their business grows.
We Commonly See Three Accountant Personality Types
- Lawyering is not my business
- Some accountants will say to a client, “lawyering is not my business, I don’t do it, you need to find someone else”.
- Prefer to refer to an expert
- Some accountants will say to a client, “you really need to have this stuff done, maybe I could refer you to somebody?”
- They see the positive benefits to the client, for having someone in a proper entity formation service advise the client.
- Not my problem, so it’s okay if you take a shortcut
- Some accountants will say to a client, “yeah you need to be an ‘S’ Corp, for $100 you can go online and do it yourself”.
Our incorporation services for CPAs are probably most appropriate for the last two groups B & C.
Savvier Accountants
The savvier accountants understand that it is really not in their best interest to be practicing accounting work and practicing law at the same time. Although sometimes tasks appear to be simple, they know they shouldn’t do it.
Your Doctor, Your Hygienist, a Metaphor for the Specialist
A good metaphor might be; if I had a broken arm, I might be able to go online onto Google and figure out how to set my arm. However, it would probably be better if I went to a doctor. A doctor would x-ray it, check for infection, put a plaster cast around it to protect it only after making sure it is set properly.
If I had a bad cut, I suppose I could get a needle and thread and sew up my arm. However, it would be far better if I went to somebody who does that for a living and had it properly sewed up.
I could go and clean my teeth myself. I could run down to the dental supply store and I could buy some of the instruments that my hygienist uses to clean my teeth, but I don’t.
Instead, I go to my dental hygienist. Someone who has been trained to do hygienist work. Someone who is more likely to get the job done properly.
If there are any subtle issues in there that I might not have noticed myself, she will bring it to the attention of the dentist.
I could clean my teeth myself but I don’t. I have my hygienist do it.
Sometimes Lawyers Are Funny – Big Complex Jobs Only Please
Sometimes lawyers are funny, sometimes they only want to do work that is of a complex legal analysis and argument type — where they are going to need to argue a fine point before the United States Supreme Court.
The reality is that a lot of the time legal work can be like ministerial work, clerical work that has a lot of legalities involved in it.
It may be a common process; it may seem like a simple process; but if you mess it up, if you do not do it just right the consequences can be severe to the business owner.
Easy to Get It Wrong and Suffer the Consequences
We Consider Ourselves Part of the Accountant’s Team
Sometimes inexperienced people think, “Oh gee wiz, this seems so easy I can fill out three forms, I can go online to LegalZoom and do it, there’s no consequence behind it because it appears to be simple to do”. Ease of completion of the work does not mean, a lack of consequence.
In our example of accountant personality types, one group just knows to send it out, another group recognizes that it should be sent out, but is also interested in sending it out to someone they know who can do the work but will not take the client from them. Someone they consider to be part of their team. Someone who will do a good job for the client.
Preserving the Accountant’s Relationship with the Client
At Incorporation Attorney it is important to us to preserve the referrers relationship with the client.
We Consider Ourselves Part of their Team
Sometimes accountants are afraid that if they send their clients to an attorney, the attorney will then refer them to another CPA that they normally do business with. Therefore, instead of gaining work, they may lose a client.
The last group knows it needs to be done, however, they are inclined to do it themselves because they do not see the consequences. Our goal is to give those accountants a competitive, quality, and perhaps an inexpensive alternative to just doing it themselves.
Managing Risk
Sometimes CPAs and Accountants are inclined to do it online themselves because they perceive it as the fastest most hassle-free way to get it done. That’s why we go out of our way to offer an efficient hassle-free alternative.
Bottom line, why would you take on the risk of doing this for a client when someone else can do it for you. Especially as by definition if the CPA does it there will not be much money in it for them, only risk. The few hundred dollars they make by doing it is really not worth the risk that they assume.
