A Tax Advisory Resource

What Does Tax Advisory Actually Look Like in a Tax Practice?

By Phuc Ly, EA - Founder, Level Up Quest

Knowing tax is only part of becoming an advisor. You also need to know what to listen for, how to evaluate the opportunities, how to explain them clearly, and how to make sure the work actually gets done.

Home Resources What Does Tax Advisory Actually Look Like in a Tax Practice?

The Short Answer

Advisory Is a Process, Not a Pile of Strategies

Tax advisory isn't simply knowing more tax strategies. It starts with listening for what is happening or changing in a client's life or business. Then the advisor evaluates which opportunities actually fit, advises the client in language they understand, and delivers the work through implementation, documentation, and verification.

I developed the LEAD Framework from my experience working with clients and training employees in tax practice. It is how we organize the advisory process at Level Up Quest: Listen → Evaluate → Advise → Deliver.

Let's make it concrete by walking through one realistic client situation and seeing what happens at each stage.

The LEAD Framework

Listen→Evaluate→Advise→Deliver

Inside each stage: Listen means ask, discover, identify. Evaluate means qualify, calculate, compare, prioritize. Advise means explain, recommend, decide. Deliver means implement, document, verify.

A Realistic Example

The Profitable S Corporation Client

Consider a common scenario: an owner who runs a profitable S corporation, works full time in the business, and is about to hand you another year of clean books. Nothing is broken. The return will be fine. The client below is a realistic hypothetical, not a real client.

The preparation mindset asks:

What happened, and how do we report it correctly?

That is an honest, professional question. It gets the return right. But it stops at the facts as they are.

The advisory mindset starts asking different questions:

What is changing in the business this year?
What does the owner expect income to look like?
Does the owner's compensation need attention?
Are business expenses being reimbursed properly?
Should retirement-plan options be evaluated?
Are family members working in the business?
Does the business use the owner's home?

Notice what is happening. You are not recommending anything yet. You are reading the client's facts the way an advisor reads them: as a source of questions.

Opportunities this kind of client often raises

From those questions, a handful of opportunities might deserve a closer look:

Reasonable compensation. The IRS requires an S corporation to pay reasonable compensation to a shareholder-employee for services before non-wage distributions are made, and it can reclassify distributions as wages subject to employment taxes. So the owner's pay level is always worth reviewing.
Accountable plan. If the owner pays business expenses out of pocket, an accountable plan may let the corporation reimburse those expenses without treating the payments as wages. That only works if the plan meets the requirements: a business connection for the expenses, substantiation within a reasonable time, and return of any excess amounts.
Retirement planning. A profitable owner often has room for retirement contributions the business has never explored. The options depend on the facts: income level, employees, age, cash flow.
Employing children, where appropriate. If the owner's children genuinely work in the business, their wages may be deductible. One guardrail: wages a corporation pays a child are subject to income tax withholding, Social Security, Medicare, and unemployment taxes regardless of the child's age, which is different from how a sole proprietorship is treated.
The Augusta Rule, where applicable. If the owner rents the personal residence to the business for legitimate business use, the exclusion in IRC 280A(g) may apply: rent the home for fewer than 15 days in the year and none of that rental income is reportable. "Where applicable" is doing heavy lifting in that sentence.
Other relevant S corporation planning opportunities. Every client brings their own facts, which bring their own possibilities.

The goal isn't to recommend every strategy. The goal is to identify which opportunities deserve further analysis. Each one above is a question to investigate, not a recommendation. That distinction is the whole difference between advisory and a list of ideas.

So you have identified a few candidates by listening. Finding an idea is not yet advisory. Now those candidates have to be evaluated.

The Operating Process

What Happens at Each Stage

Each stage turns the previous one into something the client can actually use. Each stage has a different job in moving the client from an opportunity to a result.

Listen

Ask → Discover → Identify

I explain the difference this way. Tax return preparation is like looking in the rearview mirror. You're looking at what already happened. Tax planning is looking forward through the windshield. You need to know where the client is today and where they're going next.

One question I started asking clients is: "What do you think is going to change relating to your income or taxes in the next 6 to 10 months?" That one question looks through the windshield instead of the mirror.

A tax-return meeting shouldn't consist only of "Do you have this tax form?" and "Do you have that tax form?" Those questions may be necessary for preparation. But advisory also requires asking about what is changing or may change.

Clients rarely walk in and announce, "I need tax advisory." They say things like: "I'm thinking about starting a business in a couple months." "I'm thinking about buying a rental." "We're expecting a baby." "I just joined a startup." Those are planning triggers. Sometimes the trigger comes from what you already know: the client has children, owns a business or side business, joined a startup and may hold stock options or other equity compensation, or owns or is looking at rental property.

The pattern is: recognize the client situation, know which questions to ask, identify potential opportunities, then investigate which ones actually fit. You don't need 100 strategies memorized. You need to know a manageable group of common client situations well enough to hear the trigger when it comes up.

For the S corporation client, listening is what produced those candidate opportunities. Not conclusions. Just questions worth investigating, written down before any judging begins.

Evaluate

Qualify → Calculate → Compare → Prioritize

Determine which identified opportunities actually apply. Qualify each one against the relevant tax rules. Calculate the potential tax effect. Check how the strategies interact with each other. Then compare, honestly:

Potential tax savings
Initial investment required
Ongoing cost
Implementation difficulty and administrative burden
Risk and trade-offs
Feasibility and client readiness: will this client actually follow through?

A strategy isn't valuable just because it can save taxes. It has to make sense for the client's actual situation. Some candidates die here. That is the stage working as designed.

When I evaluate a client, I often end up with five to eight legitimate opportunities. One of the worst things an advisor can do is present all eight in one sitting. I usually narrow it to the top three. The decision isn't based solely on which strategy produces the largest theoretical tax savings. An easier strategy that produces worthwhile savings and actually gets implemented is often better than the biggest theoretical number, because the biggest strategies usually require more money, more time, more effort, more complexity, and more implementation work.

I often start with the low-hanging fruit when it creates meaningful value. Get some practical wins first. Let the client experience how planning and implementation work. Then, when the timing is right, move into the bigger and more complex opportunities. Finding eight opportunities does not mean the client needs to hear all eight. Prioritization is part of advisory.

Advise

Explain → Recommend → Decide

When I first took over the firm in 2005, I shadowed the previous owner in client meetings. He knew tax very well. But his explanations were highly technical. Lots of jargon, lots of detail, sometimes off on tangents. I could see clients' eyes glaze over.

During one meeting, a client asked about a 1031 exchange. The previous owner gave a detailed technical explanation. The client eventually ended the discussion with, "Okay, I'll just do whatever you tell me to do."

Later that evening, the same client called the office. I happened to answer. He told me he'd been in the meeting earlier but hadn't really understood, and asked me to explain it again. I explained it in plain language, assuming he didn't know tax terminology at all. His reaction was basically, "Oh, I get it." He understood the position he was in and the decision he needed to make.

Technical knowledge is not enough if the client cannot understand the decision in front of them. I later saw the same pattern with employees in my own firm. They knew the tax rules. They knew how to prepare the return. But their client explanations were too technical.

Part of the reason is how tax professionals are trained. Tax education and CPE appropriately teach technical material to other tax professionals using forms, schedules, terminology, rules, exceptions, and calculations. When you learn information technically, the natural tendency is to explain it the same way. Advisory requires another skill: translation. You have to translate technical knowledge into language the client understands well enough to make a decision and take action.

Sometimes we also overexplain because we want to be thorough and cover the exceptions, so no one can later say, "You didn't tell me that." The unintended result is that the client understands less.

In practice, the client's version sounds something like this: "Here's what you're doing today. Here's another option. Here's approximately what the difference could be. Here are the trade-offs. And here's what you would have to do for this to work."

The goal isn't to prove how much tax you know. The goal is for the client to understand the decision in front of them well enough to act.

Explaining leads to a recommendation. The recommendation comes from the facts, the calculations, the trade-offs, the feasibility, and the risk, all taken together. This is the advisor's judgment, stated plainly: here is what I think you should do, and why. If carrying out the recommendation requires more advisory work, this is also where scope and responsibilities get clear: who is doing what, by when, and what counts as done. And the client's part is real too. They need to understand the decision well enough to actually decide.

Deliver

Implement → Document → Verify

Advisory does not end when the client says yes. A recommendation that never gets implemented doesn't produce the intended result. This is where advisory turns into actual client work, and it takes real project management:

Who is responsible for each step?
What documents need to be created or signed?
Are any elections required, and by what deadline?
Does payroll need to change?
Does another professional need to be involved, like an attorney or a plan administrator?
What deadlines apply, and who is following up on the client's responsibilities?
What documentation should the client collect and maintain?

Implementation is where the value happens.

Then close the loop. After the work is supposed to be done, confirm that it actually was: was payroll actually changed? Was the plan actually established? Were reimbursements handled correctly? Was the required documentation completed? And does the eventual tax return properly reflect what was implemented?

Verification is the quiet part nobody talks about, and it is the one that protects the client.

The Central Teaching Point

Notice What Didn't Happen

The advisor did not memorize 100 tax strategies. A manageable group of well-understood opportunities, matched to real client facts, is more useful than a long list of strategies you only understand at the surface.

The advisor did not throw every possible strategy at the client. If you identify eight opportunities, that doesn't mean the client needs to hear all eight at once. Deciding what matters most right now is part of the advisor's job.

The advisor did not assume the biggest tax savings automatically meant the best recommendation. Savings are one input. Feasibility, cost, risk, and whether the client will actually follow through all count.

The advisor did not buy software and let the software make the recommendation. Tools support the analysis. They don't replace the advisor's judgment.

The advisor did not confuse a technical explanation with good advice. Knowing the answer means little if the client can't understand the decision well enough to act on it.

The advisor did not give the client an idea and call the work finished. An idea with no implementation and no verification changed nothing for the client.

The advisor did not assume implementation happened without verifying it. "We agreed to do it" is not the same as "it got done."

The work was the process: Listen → Evaluate → Advise → Deliver. That is what tax advisory actually looks like in a tax practice.

A Quick Distinction

Where Preparation Ends and Advisory Begins

Noticing a planning opportunity while preparing a return is good practice. It is not the same thing as doing advisory work on that opportunity.

Spotting that the owner's compensation looks low is a moment of awareness. Analyzing it, calculating the impact, explaining the options, making a recommendation, changing the payroll, and confirming it happened is a separate body of work. That body of work does not automatically live inside a tax-return engagement.

This page won't try to draw the full boundary line. That deserves its own treatment. For now, the useful distinction is simple: recognition is part of good preparation. Working the process - Listen, Evaluate, Advise, Deliver - is advisory.

A Common Question

Do You Need Special Tax-Planning Software to Provide Advisory?

Short answer: no. Longer answer: it depends what you need the tool to do for you.

Software can support the work. It can help with analysis, run projections, keep the engagement organized, and store documentation. Practitioners do this work with a mix of tools: the tax software they already own, projection features built into it, spreadsheets they built themselves, and specialized planning software. All of those are legitimate.

What software cannot do is the part that makes it advisory. It does not exercise professional judgment. It does not analyze a client's specific situation the way you do. It does not prioritize what matters most, have the conversation, manage the implementation, or verify the work got done. A tool that flags an opportunity has helped with listening and part of evaluating. The rest of the process is yours.

So buy software for what it actually gives you: speed, organization, and better math. Don't buy it expecting it to turn you into an advisor. That part is a skill, not a subscription.

Building the Skill

Can You Learn Tax Advisory From a Course?

Tax knowledge matters. You cannot advise on what you don't understand. But knowing the rules and advising clients are two different skills, and the second one does not come from watching more hours of video.

When I trained employees who wanted to grow into advisory, I had them join me in client meetings. They watched me ask questions, identify pain points, recognize planning opportunities, explain tax concepts, and guide the client toward decisions. Eventually, they started leading meetings themselves.

After those meetings, I had them reflect on how it went. I would ask: "On a scale from 1 to 5, with 5 being a really great meeting, how would you rate how that meeting went?" Then, "Why did you rate it that way?" And, "What could have made the rating go up?" We had already defined what a 1-star, 2-star, 3-star, and higher-quality meeting looked like, so they had a standard to measure themselves against.

The progression was: observe, lead, reflect, improve, repeat. That is the same progression behind Level Up Quest's model: Learn → Practice → Apply. Technical knowledge matters. But advisory judgment also requires seeing advisory modeled, practicing realistic situations, leading conversations, getting feedback, reflecting, and doing it again.

To be clear: no course, including ours, automatically makes someone competent to advise. Competence comes from doing the work, getting feedback, and doing it again. Training can give you a place to learn the process, see it modeled, practice realistic scenarios, get feedback, and then apply what you learned with real clients.

Start with a manageable set

One more thing the process teaches: you do not need to master every possible tax strategy to start advising. Trying to learn hundreds of strategies before talking to a client is how people stay stuck in preparation forever.

A more practical approach: get genuinely good with a manageable group of common client situations and strategies. Run the full LEAD process on those until it feels natural. Then expand. Depth on a few beats surface knowledge of a hundred.

Level Up Quest

Practice Advisory, Don't Just Study It

Level Up Quest provides tax advisory training and mentorship built around practical application: realistic scenarios, client conversations, implementation, and practice. The goal is simple. Walk out able to run the process with a real client.

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