New revenue streams for accounting firms: what to add beyond compliance work

Which new revenue streams fit an accounting firm best?

The lines that work are the ones that reuse what the firm already has: monthly ledger access, payroll and systems knowledge, and the owner's trust. That points to advisory services sold outside filing season and, with the right policy, disclosed referral income from introductions the firm is already in a position to make.

The table compares the main options on the factors a managing partner actually budgets for.

The guide to client advisory services examples describes the advisory services in more depth, including how to scope a data asset review.

The margin, capacity and conflict test

Run every candidate line through three questions before it reaches the partner meeting. A clear no on any one is a reason to park it.

• Margin: after training and selling time, will it earn more per hour than the work it displaces?
• Capacity: can it be delivered between filing deadlines, or by people who are not tied to them?
• Conflict: does it create independence, objectivity or disclosure issues with any client, and can a written policy contain them?

Referral income usually scores well on margin and capacity because it consumes little staff time. The conflict question is what decides whether it belongs in your firm at all.

Why referral income needs a written policy first

CPAs face specific professional rules on referral compensation. The AICPA Code covers it in section 1.520 (Commissions and Referral Fees) and covers contingent fees in section 1.510; the full text of the AICPA Code of Professional Conduct shows both, though the AICPA's online version is the authoritative one for current wording. The main restriction concerns clients for whom the firm performs attest work, which the guide to private equity owned CPA firms and advisory growth walks through.

State rules sit on top of the Code. The New Jersey Society of CPAs shows how a state's rules on commissions and contingent fees can differ from, and be stricter than, the AICPA Code. Florida addresses CPA commissions and referral fees in section 473.3205 of its statutes, including written disclosure of commissions; that link shows the 2017 version, so check the current text. On the tax side, referral payments are generally taxable income to whoever receives them, in line with the general rules in IRS Publication 525.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or state board of accountancy before acting.

What a firm referral policy should settle

The policy is mostly a set of choices about money and records. Make each one explicitly rather than letting partners improvise.

Two siblings help with drafting: a policy template for referral compensation and the engagement letter clause for third-party referral compensation.

Where data licensing introductions fit

A data licensing introduction is one specific referral line. The firm introduces a US client that holds years of operational records to SourceX; if the client licenses data through SourceX, the firm earns a share of SourceX's fee. The client keeps ownership of its data, approves scope and price, and is bound by nothing until it signs.

Clients to look at first:

• A headcount that reached 50+ full-time employees at peak (contractors excluded) and an operating history of several years
• Connected systems rather than one tool: mailboxes, team chat, CRM, accounting, help desk, code repositories
• Ownership of the records it wants to license, and an executive willing to sponsor the conversation
• A natural opening on your calendar, such as a migration, a sale process or a cost review

The client list screening worksheet for CAS teams works through a whole book of clients, and for a single company, start with the company fit checker, a preliminary screen that commits no one to anything.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. Rewards are payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. Because the reward comes from SourceX's side of the transaction, it is never deducted from what the client receives, which keeps the disclosure conversation simple.

Illustrative: sequencing two new lines in one year

Illustrative, fictional example. A regional firm with a growing CAS group decides to add one advisory line and one referral line in the same year.

The lesson is sequencing: policy before introductions, pilots before pricing, and no referral income in the budget until a deal has closed and been paid.

When a new revenue stream is the wrong move

• The firm has no capacity outside filing season and no plan to hire.
• Most clients receive attest services, so referral compensation would be off-limits for nearly the whole book.
• The client base is mostly businesses without 50+ full-time employees at peak or years of records.
• Nobody will own disclosure and record keeping once the policy is written.

Next step

Draft the referral policy, then screen ten clients against it. With the policy approved, register as a partner. For more on the role, read referral opportunities for accountants and bookkeeping firms.