Using a Boutique Tax Accounting Firm

The use of a “Boutique” firm as opposed to a large regional CPA or “Big 4” firm has a number of distinct advantages:

Specialization

Most tax boutique firms have been established by former “Big 4” tax professionals.  These highly experienced individuals have worked with Fortune 100 companies as well as a middle market corporate members.  They bring a strong tax focus and their intellectual experience that a "Big 4" firm can provide.  This high level of specialization benefits the client in reduced research time and better advice.

Cost and Continuity

Frequently, specialized boutique firms are more competitive on overall fees because they have a lower overhead and a broader knowledge base.  In addition, smaller firms have less turnover than the “Big 4” and as a result, tax preparation time tends to be lower.  Because “Big 4” firms are highly leveraged, less experienced staff tend to prepare returns than at a boutique firm, and greater turnover is the norm.  Undergraduates tend to want to work in the “Big 4” environment for two to four years before moving into industry.  The result is the "Big 4" middle market client is continually subject to personnel changes as the staff gains experience and moves on to more important clients or leaves the firm.  In addition, partner involvement tends to be lower at the "Big 4" firm than at a boutique firm.

Fee Management

The boutique partner can play a major role if the services of a larger firm or law firm are required.  Many middle market companies do not have a tax manager on staff.  Frequently, the middle market firm relies on its auditing firm to provide tax advice.  This has the effect of making the tax advice captive of the audit.  Using a boutique firm does not mean that services cannot be provided by a larger firm.  The client is in a better bargaining position in obtaining these services from the marketplace.  An international tax issue requires the services of an international accounting firm.  The boutique firm partner can be the client’s advocate in this regard, acting as the in-house tax manager.  The boutique firm partner can provide fee management activities that are frequently lacking when the work is directly placed with the larger firm.  Such activities as defining the issues, identifying the best recourses, identifying the most economical resources, focusing the service provider on the issues and negotiating fees are some of the activities the boutique provider can provide to minimize fees.

In addition, it is not uncommon for the "Big 4" and other firms to approach the client regarding tax planning ideas and strategies.  Typically, these marketing teams present their ideas to targets with which they may not have an audit relationship.  And frequently, these ideas are high value and have significant fees.  The boutique partner knows how these marketing strategies work and the fees involved.  He serves as a check on the fee ambitions of the "Big 4".  In addition, he can help negotiate fair fees.

In summary, many CFOs and controllers recognize the benefits of obtaining tax services from tax specialists.  Not only is the advice generally better, but also costs are more closely constrained in the process of developing the advice.  All in all, such relationships provide better economies than other relationships.