As the end of the year approaches many CPAs are helping clients take stock of their business operations. It is also an ideal time for CPA firms to turn that same spotlight on themselves. Here are 10 best practice tips — in no particular lineup — to get your practice in order for 2010:
- Check professional licenses. It may sound obvious, but your license is your livelihood. And too many instances exist of service professionals ignoring licensing requirements. Perform a self-audit to make certain that everyone’s license is active or otherwise up to date. Similarly, if you or your colleagues are subject to year-end continuing education requirements, make sure individuals are in compliance.
- Check client files. Review client files and make sure they are complete and inventory client documents in your firm’s custody. Should anything be returned to the client? Consider whether any old files can be retired, destroyed or transferred to electronic storage. This will save space, reduce costs and simplify document management. And make sure the firm has a copy of the engagement letter for each client. If one does not exist, now may be a good time to document the relationship.
- Communicate any change in fees. Clients do not like surprises, particularly those involving fees. If you are increasing your rates in 2010, let clients know well in advance. If you are holding the line on rates, let clients know that as well. Use it as part of your marketing strategy. And if 2010 fees need to be renegotiated, start the process well before 2010.
- Communicate some more. Client communication is important enough to get mentioned twice. Lack of communication is often cited as a contributing factor to malpractice claims, so take advantage of any opportunity to communicate. But don’t just communicate fee issues. The end of the year is a good time to also communicate with clients regarding your work to date. Review the status of any pending engagements or projects; use it as an opportunity to highlight accomplishments made during the prior year and to discuss expectations and goals in the coming year.
- Tend to HR issues. Check employee files; make sure they are up to date with current employee information, employment applications, tax forms and related documents. Also, if you don’t do so already, consider using the year-end to formally evaluate and review employees. Written evaluations should be included in personnel files and poor performance or misconduct in particular should be documented. Assess any hiring needs as well, so that your firm is well-positioned to take advantage of the current labor force.
- Review company benefits. Take the time to review benefits. Docket any health insurance renewals for the coming year. Make sure renewals are known well in advance so the company has time to consider renewal options, including less expensive rates. Look at 401(k) plans and other defined-benefit plans to make sure they are being properly administered. Are you considering other benefits such as a cash-balance plan? Many plans can be funded in 2010 as long as they are set up by the end of 2009. In reviewing benefits, also consider whether your firm remains competitive in the marketplace from this standpoint.
- Check other organizational requirements. If your firm is a limited liability partnership, make sure it is properly registered or that any renewals are complete. If your firm is incorporated, make sure corporate filings are up to date. The same goes for other business structures — are any filings or fees required? Failure to comply could expose CPAs to exposure they might not otherwise face; for example, if the firm’s limited liability partnership (LLP) status lapses, partners may be generally responsible for certain liabilities.
- Review insurance policies. Conduct a review of the firm’s insurance. Do you have the right coverage in place for professional liability, business interruption, employment claims and other potential losses? Are the policy limits sufficient? Similarly, if a claims-reporting period is tied to the year-end, survey the firm as to whether anything needs to be reported to an insurance company. For example, with many professional liability policies, any potential claim reported during the policy period may be subsequently covered if it results in an actual lawsuit.
- Review contracts. Take stock of other contracts. If you lease office space, when is the lease terminating and is there an earlier termination option that must be considered? Are vendor contracts up for renewal? Consider whether any other contract can or should be renegotiated. Flagging these issues now will allow the firm to be better prepared to renegotiate contracts as they expire.
- Survey issues for 2010. Identify the challenges your firm faces in 2010. Start discussing these issues now. Is cash-flow enough? Do any accounts receivable deserve special focus? Are staffing levels sufficient? Communicate with your colleagues and get a sense of what lies ahead.
This planning list for 2010 is by no means exhaustive. But preparation is key. Get your business in gear now and you will be better equipped to deal with the challenges and opportunities ahead.
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Jason M. Rosenthal is a partner with Schopf & Weiss LLP, a national business litigation firm based in Chicago. He serves on the firm’s Executive Committee and is regularly involved in the firm’s strategic planning. For more information, please contact Mr. Rosenthal at 312.701.9300 or firstname.lastname@example.org, or visit sw.com.