The business model of a fast food restaurant is to ensure that unskilled laborers can deliver a consistent product for a reasonable cost while providing the maximum profit to the corporate structure. Once a product has been created, every detail of its production, whether it is a square hamburger patty or perfectly golden fries, is documented down to the nth degree. This assures that the process is repeatable and that workers with limited education and skills can follow the prescribed processes to produce pretty good tasting food. These repeatable processes are worth a lot of money in the form of a business franchise, as evidenced by the cost of purchasing a successful fast food franchise.
Across industries, entrepreneurs have attempted to recreate the successes of the best fast food chains using the same principles. A well designed process with detailed documentation that can be followed step by step can be turned into a franchise that emphasizes quantity, consistency, and maximizes the profits for the franchise owner and franchisor. Thus evolved the big box stores that can crank out tax returns at a mind numbing pace for a rock bottom price. Employees do not need to have an accounting background or tax prep experience. Proprietary training courses take care of educational needs. Checklists and detailed processes replace the years of college and graduate school required to truly be a tax expert. They produce a consistent return and may even “guarantee” that you get the maximum refund. Take the concept one step further and take people out of the equation all together. Tax software is marketed as being so easy that anybody can do it, and that no deductions will be missed.
Today I’m considering my latest client, a refugee from the do-it-yourself model. This client came to me figuratively waiving an IRS audit letter in one hand and a white flag in the other. Tripped up by the tricky little ACA (Obamacare) changes in 2014, this client received and spent a refund in the thousands of dollars, only to now find out that not only was she not due a refund, she owed taxes and penalties. I’m working with her and the IRS to minimize the damage and she’s already paid more than she would have paid had I prepared her return in the first place. It works both ways. The client before that came to me, also with an IRS audit letter, and upon reviewing her return I found over $8000 in unclaimed deductions! The problem is when you take people or software and mold them to follow the checklist, they lack the education and depth to think out of the box. The result is a product with the nutritional value of fast food.
These clients returns were not only inaccurate, they are paying more than they should be paying to fix the problems generated by the discount solution. Further, There was no tax planning done, or strategies developed and implemented, to reduce taxes in the upcoming year.
I love fast food. The more years I live on this earth, the more evident that becomes. While it fills a specific need for a small percentage of the time, fast food isn’t the go-to solution for my nutrition. Likewise, businesses that are developed with an eye to maximum quantity and consistency at a low cost are not likely to deliver the highest quality product, are they?