The Intro:
In recent years some must have noticed that tax consulting in India or around the globe for Small tax practitioners has been a game of fire fighting for consultant himself. Many tax practitioners even if practicing tax they are doing it part time or as a secondary source of income. In this article we are going to analyse the tax practice industry as a whole. These are my insights of tax practice in India which I have gained by practicing tax for more than 5 years in India.
Now you know two types of tax practice , I would like to point put the pros and cons of both.
Two Types of Business Models of Tax Consultancy:
To start within India specifically their had been two phases of tax practice basically:
1.Traditional Tax Consultancy:
This practice of tax includes filling tax returns, taking assignments of complying with tax, accounting and book keeping and consulting people on how to manage taxes and money. This is a traditional model where practitioner opens a office hires some staff and caters customers locally in a area or city. The main problem with this practice is that it takes much of time to establish such kind of practice and make a sizable profit from the same. Also expansion is just a myth for such kind of practice as you cannot find high paying clients unless and until you do content marketing and you dont do the same as you don’t get time out of your busy schedule of running your practice, and you dont get time from busy schedule because you are not retaining or hiring experienced personnel and you are not hiring good personnel as you are not earning good profit margins and also peoples mentality to work in small organisations have changed drastically.
Hence in this kind of practice it becomes like a vicious circle to break through and achieve the expansion, automation , SOP goals. Most probably such practitioners remain as self employed and try to find other great source of income.
2. Modern Tax Consultancy:
Even though it is called as modern tax practice it has been followed for years by big accounting firms.Still in modern era where internet is freely available it has become very obvious but not easy to choose this kind of practice.In this practice startups get done everything digitally, they have great websites, mobile applications, marketing is done digitally and customers are served pan country. This practice even though looks lucrative still requires much of patience and quick capital funding to bootstrap and start running. Initial good funding will make the firm a fast runner and can help achieve good client base and earning reasonable profits. If you google for legal ways of registering a company or filling tax returns you will find many companies digitally helping out you and giving a professional service. Most probably this kind of modern tax practitioners are able to automate processes and reach good number of clients technically.
Also Read : Business Model
Other same topic blog : Future of tax consulting
Pros & Cons of both business tax consulting models in India :
Now you know two types of tax practice , I would like to point put the pros and cons of both
A.Traditional Practice Pros:
Tax Practitioners do not require to raise a huge capital to setup their practice or office, many people start freelancing too without any office.
Many times good professional service can be delivered through this model as you can meet person locally and get the work done.
Fees are sometimes high if the person is highly qualified and old in pracitce.
B. Traditional Practice Cons:
Cons for tax practitioner are that he cannot expand the practice as he gets caught in vicious circle.Another con is that people management becomes very hard as no big brand of your practice cannot be created and people don’t want to work with small brands as they progress.Also due to self employment taking strategic decisions and specialization becomes a myth.
C.Modern Practice Pros:
Expansion is possible, no fixed costs and you can opt to pay as you scale.Secondly people management can be achieved if you can flourish your business in 3 to 4 years. Also specialisation and sorting of clients can be possible due to the robust systems you have.
D.Modern Practice Cons:
- Personal touch to clients is not possible hence clients may misunderstand the services
- It can backfire if the business does not take off in 3 to 4 years as investment would be huge.
- A normal tax practitioner will find it hard to go hands in hands with technology.
- As stated above I have stated two kinds of practice, on analysing both wo find a win win situation it is very important that technology mixed with people must be used to cater clients and also find great work life balance for tax practitioners.
Conclusion :
At Consultaxx we are hence marketing at catering people digitally and solving all tax issues manually with expertise, even if modern ways to file the reurns are used but to answer peoples query , remaining available 24*7 to answer queries, helping people choose right tax establishments had been our core. We believe in simplicity in communication and hence use simple tools which are practically usable by clients to reach us and use human experts to solve their problems.
Hope it gives a great insight about tax industry.
