How to add a new specialty to your practice: practitioners can expand their offerings and help clients by taking up the challenge of developing competence in new areas.

• Author: Crisler, Michael W.

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Many CPAs operate in their practice comfort zone. They rely on the knowledge they've acquired combined with routine CPE and rarely stray from the tax areas they know well. What happens when a CPA is faced with a client whose situation involves an area of the Code outside this zone of experience?

One option is to refer the client to another practitioner known to specialize in the topic of concern. A more adventurous choice may be to take on the challenge of using this opportunity to gain new skills and expand the scope of the practice. This latter choice may offer fiscal advantages down the road, but it needs to be carefully considered and planned with supportive resources. Here are steps to get started.

Background for this column: Several years ago, the author was approached by one of his clients, a real estate broker, who represented a number of overseas investors. This broker wanted help with preparing nonresident individual and foreign corporate tax returns for about a dozen clients. As a sole practitioner with little experience in preparing such tax returns and little knowledge of the tax law regarding taxation of investments in U.S. property by nonresidents, the author evaluated the potential for a favorable outcome and chose to go forward with developing the required expertise. Eventually employing all the resources covered here, he leveraged his new knowledge and skills in expanding a specialty area that would eventually make up 10% of his practice revenue.

Decide Whether to Accept the Engagement

First, the CPA must determine whether he or she has or can obtain the competence to accept the proposed engagement. The time required to develop competence and the accompanying costs must be compared with any potential revenue from this specialty. Is the initial engagement sufficient in scope to justify the time to become proficient in this area? Are more situations that will draw on the CPA's new expertise likely to arise, either through this same source or other referrals?

An analysis of some requests may result in a decision not to pursue the engagement based on negative potential. For example, if a client is selling a business and needs specific expertise in the tax law applicable to mergers and acquisitions, the CPA may find it more advisable to refer this work to a specialist rather than learn this complicated area with little chance of repeat work. Also, the CPA may not want to accept work requiring extra study...