# SavingsMax — A/B/C Strategic Recommendation **Author:** Rex (Tax Strategist) **Date:** 2026-05-23 **Recipient:** Jimmie **Parent docs:** - Ledger 2026-05-05 — SavingsMax planning scope (parent) - Rex 2026-05-23 — Phase II prep addendum (credentials locked PTIN+AFSP+CTP) - Riv 2026-05-23 — Aiwyn eval (no-go) - Riv 2026-05-23 — ProConnect eval (no API; CCH Axcess emerged as engine answer) --- ## Recommendation: **Option A now, B/C later** **Pick Option A (planning only) for the next 12 months. Sequence to B (or C, if the moat math holds) in mid-to-late 2027 once two specific gates clear.** This is not a "play it safe" answer — it's the answer that **respects the capacity constraint nobody's modeled yet** and lets J2 monetize the differentiated layer first while building the runway for prep. --- ## §1 — The constraint that decides this (read first) Every prior doc has treated the engine choice as the central question. It isn't. **The central question is your signing capacity**, and the math on it is brutal. You are locked at PTIN + AFSP + CTP, single signer. That means **every return J2 prepares carries your personal signature**. Remote bookkeepers can do prep work; only you can sign and submit. ### The math | Item | Estimate | |------|----------| | Clients in book | 40 | | Returns per client (entity + owner 1040, sometimes both spouses, sometimes related entities) | ~2.0–2.5 | | Total returns per season | **80–100** | | Time per return — preparer touches (remote bookkeeper) | 4–8 hrs avg for SMB pass-through, 2–4 hrs for 1040 | | Time per return — **your signer/review touches** | 0.75–1.5 hrs avg (entity), 0.5–1.0 hrs (1040), more on complex | | **Total signer/review hours, peak season (Feb 1 – Apr 15)** | **~75–125 hours of your personal time** | | Available peak-season weekday hours | ~10 weeks × 40 = 400 hrs, less practice ops (~50%) = 200 hrs | **At face the math fits — barely.** But this assumes: 1. You've stopped doing your normal CFO/practice work for 10 weeks (you haven't) 2. No return takes longer than the average (some always do) 3. No client emergencies, no IRS notices, no estimates that need recalc mid-season 4. Your personal-side tax situation is resolved before season (it isn't, per your earlier note) 5. The remote bookkeepers ramp up cleanly on tax-prep work (they're bookkeepers, not preparers — there's a curve) 6. You aren't simultaneously doing SavingsMax planning engagements (the planning side has its own deliverable cadence) **Realistic read:** at 40 clients, you're at or over your signer capacity in TY2026 season (filing Jan–Apr 2027) **before** layering in any custom-software build. Adding Option C's engineering supervision burden on top of this season pushes the math into red. ### What this means The capacity ceiling **dominates the engine choice**, because no engine — Aiwyn, ProConnect, CCH, Drake — saves you signer time. They save preparer time. **The bottleneck is your signature, not the prep workload.** This is fixable, but the fix is a hire or a partnership (an EA or CPA as co-signer or signer-of-record), **not a software stack**. And that fix has a timeline: hiring + onboarding + trust-build = 6–12 months minimum. So the strategic frame is: - **Near term (next 12 months):** capacity is constrained. Build the layer that doesn't depend on signer capacity. - **Mid term (12–18 months out):** clear the capacity constraint (EA hire / partner CPA / your own EA path post-personal-resolution), THEN layer in prep. --- ## §2 — Option A: Planning only ### Capacity fit **Zero return signing required.** Strategy memos hand off to the client's existing CPA. Your name doesn't go on any 1040 or 1120-S. Capacity ceiling is irrelevant. ### Pricing model Ledger's 12%-of-savings model, applied per strategy. At J2's client mix: | Client tier | Identified savings per year (typical) | Per-strategy fee at 12% | |-------------|---------------------------------------|--------------------------| | Small SMB S-Corp ($150K-300K rev) | $4K–$15K | $480–$1,800 | | Mid SMB S-Corp ($500K-$1.5M rev) | $15K–$50K | $1,800–$6,000 | | HNW / multi-entity | $50K–$200K+ | $6K–$24K+ | Typical engagement: 3–5 strategies accepted per client per year. **Average revenue per client per year on planning: $3K–$15K depending on tier.** At 40 clients with a mid-tier mix: **$120K–$400K incremental annual revenue** on top of bookkeeping retainers. ### Positioning advantage Planning is **where J2's competitive differentiation is most defensible.** Most small CPA firms do prep and call it tax service. **Very few do systematic, quantified, ongoing strategy work.** The CTP credential — which you're already pursuing — anchors that positioning. The 12%-of-savings model is itself a marketing weapon ("we only charge if we find you something"). This is the highest-margin, most-differentiated revenue line in the entire J2 service portfolio. ### Strategic accumulation value Every strategy engagement in TY2026 builds: - Case studies for marketing (anonymous "we saved this client $X" stories) - Refined per-client strategy libraries (auto-populating in future years) - Trust with referral partners (CPAs you hand prep to become referral sources back) - Internal IP in the SavingsMax software itself - Your own CTP credential progress and reputation as a strategy expert ### What you give up - The "we own the whole stack" pitch is incomplete (clients have to deal with their CPA on prep) - No prep revenue (the bookkeeping bundle stays at current pricing) - You depend on the client's CPA to actually execute the strategies you recommend ### Honest read on the dependency risk **This is overstated as a risk.** In practice, clients pick the planning advisor and then drag their existing CPA along. If a CPA repeatedly fails to execute on quantified strategies that the client has paid for, the client switches CPAs — and that switch is the warm referral to whoever J2 partners with. You're not losing leverage; you're gaining a referral network. --- ## §3 — Option B: Planning + commodity prep stack (TaxDome + Drake/UltraTax) ### Capacity fit **You are the signer on 80–100 returns.** Capacity math: red. The commodity stack (TaxDome workflow + Drake or UltraTax engine) doesn't change this. Drake is a well-built desktop/cloud prep package; TaxDome is competent practice-management. Together they save prep time, not signer time. You're still bottlenecked. ### Pricing model - Bundle entity return into bookkeeping retainer: $200–500/mo bump = **+$2,400–$6,000/yr per client** - Flat fee on owner 1040: **$800–$1,500 per return** - At 40 clients (assume 30 take the bundle, all 40 get 1040s): **+$72K–$180K bookkeeping bundle revenue + $32K–$60K personal returns = $104K–$240K incremental.** - Net of TaxDome (~$50/user/mo) + Drake (~$1,800/yr): essentially all revenue net. ### Positioning "Bookkeeping + planning + prep" bundled service like a normal small CPA firm. It's a real and viable model — most multi-service small firms do exactly this. The product looks like every other small CPA firm with a tax niche. ### What you give up - The differentiation thesis weakens. You become "another small firm that does books + tax." - The continuous-books-to-prep moat doesn't get exploited (the commodity stack can't auto-populate returns from monthly close — that requires the custom workflow in Option C) - You're paying the capacity-ceiling cost (cramming 80+ returns through your signature in 6 weeks) without getting the differentiated moat to justify it ### Honest read Option B is "what a normal small CPA firm does." If you went to a tax-only CPA shop with 40 clients, this is what they'd run. It works. It's not what gets a sophisticated client base talking about J2. --- ## §4 — Option C: Planning + custom workflow on CCH Axcess engine ### Capacity fit **Same signing capacity ceiling as B.** The custom workflow saves preparer time (auto-populating from monthly close) and shortens review time per return (you're reviewing a pre-vetted draft, not blank slate), but doesn't eliminate your signature. Optimistic estimate of signer time savings from the continuous-loop workflow: **20–30%** vs. cold-start prep. That brings the 75–125 hr peak-season budget to maybe 55–95 hrs. Better but still tight, and that's IF the workflow works as designed in season 1 (which it won't — custom builds always have season-1 friction). ### Pricing model Same revenue model as Option B. The custom workflow doesn't itself raise client fees (you're not going to charge $300/mo extra because the prep is software-automated; clients don't see that). **Where Option C makes money is on the margin side, not the revenue side:** - Lower per-return prep cost (auto-population) - Higher throughput potential (if/when capacity ceiling is addressed) - Speed-to-draft (Feb 15 instead of March 30) — a real client experience win - Better strategy execution monitoring (the planning layer sees the prep layer's actuals, closing the loop) ### Cost side - CCH Axcess Tax Essentials: ~$2,759/yr base - Integration Vendor Program: unknown cost (Riv flagged it as a sales-call question) - Custom workflow build: Atlas + Riv eng time, est. 3–6 months elapsed - Ongoing maintenance: ongoing Atlas/Riv cycles to keep the integration working across CCH API changes, Wolters Kluwer pricing changes, annual tax law updates ### Honest read on the moat **The continuous-books-to-prep moat is real but smaller than the framing suggested.** Any bookkeeping firm motivated to do so could build a similar integration if CCH or Drake exposed the right API surface. J2 wouldn't be alone on this island for long — 5 years out, multiple small firms will have this. The first-mover advantage is real but not permanent. **More importantly:** the moat doesn't matter if the capacity ceiling stops you from servicing more clients. You can't grow into the moat if every new client requires your signature on 2 more returns. So Option C is a **bet** that: 1. The signing capacity gets unblocked (hire or partnership) within 12-18 months 2. J2 then grows past 40 clients toward 60-100 clients 3. The custom workflow's per-return margin advantage pays back the engineering cost across that growth **That bet might be right.** But it requires the capacity unblock to happen for the engineering investment to pay off. If you build Option C and stay at 40 clients with one signer, the workflow saves preparer hours that you're already paying remote bookkeepers cheaply for — the ROI math is weak. --- ## §5 — Competitive moat reality check (the hard look) Riv flagged this and I want to confirm it: **the moat is shifting from "we have unique software" to "we have a unique service design."** The latter is sturdier. What J2's competitors (small CPA shops bundling bookkeeping + tax in TX) actually do today: - Bookkeeping on QBO or QBO Online Accountant - Tax prep on Drake, UltraTax, or Lacerte - Client portal via TaxDome or SmartVault or nothing - "Planning" = vague year-end conversation, sometimes with a quantified memo What very few of them do: - Systematic per-client strategy library applied annually - Quantified savings estimates per strategy with confidence rating - Continuous projection refresh from live books - 12%-of-savings pricing model (most charge hourly or flat) - CTP-credentialed advisor as the strategy front - ADHD-aware service workflow (you've designed J2 around this — it's a real differentiator for owner clients) **The moat is the service design, not the prep stack.** Option A leads with the moat. Options B and C try to extract revenue from the prep stack itself, where the moat is weaker. --- ## §6 — Recommended sequence | Period | Move | Why | |--------|------|-----| | **Now → end of 2026** | **Option A — Build SavingsMax planning. Pilot with 5–10 highest-fit clients (Afton, Acadian Roofing, Thomas Garage Door if active, others). Establish 12%-of-savings pricing in market. Ledger continues bookkeeping; you focus on strategy.** | Capacity ceiling makes prep unviable this year. Personal-side timeline blocks EA. Planning has the highest margin and most defensible moat. Build the differentiated layer first. | | **TY2026 season (Jan-Apr 2027)** | Continue Option A. Refer prep out to clients' existing CPAs. **Identify the 5 CPAs you'd most want as a prep partner if J2 expanded into prep later.** Quietly audit which clients' CPAs are pain points. | Builds the prep-partner referral network. Surfaces the clients who'd actively migrate to a J2-internal prep service when it exists. | | **Spring 2027** | **Reassess.** Two gates: (a) personal-side situation resolved AND (b) SavingsMax has demonstrated revenue traction with case studies. If both yes → start the prep buildout. If either no → another year of Option A. | Don't commit to prep build until the constraints are demonstrably gone. The cost of waiting 6–12 months is small; the cost of forcing prep into peak season unprepared is large. | | **If green-light spring 2027** | **Option B or C decision becomes meaningful.** By then we'll know: (1) which prep partner CPAs converted to internal staffing/contract candidates, (2) whether SavingsMax data shows clients valuing the continuous-loop differentiator enough to justify Option C's engineering investment vs. Option B's commodity stack. | The B-vs-C decision is data-informed by then, not theoretical. | --- ## §7 — Why this isn't "kicking the can" I want to address the obvious pushback: *am I just deferring the hard decision?* No. Here's why this is the strategic answer, not the cautious one: **Capacity ceiling is real and won't disappear because we want it to.** You can build the best custom software in the bookkeeping-plus-tax category, and you still can't sign 80 returns alongside everything else you do in Feb-Apr. The capacity problem is the gating issue. Address it first, then layer prep. **Planning is where the margin is.** $120K–$400K incremental from Option A vs. $104K–$240K from B or C — and Option A has a fraction of the supervision cost. The strategy side is the higher-margin business; chase margin while the capacity constraint blocks prep. **Sequencing protects optionality.** If you commit to Option C now and the capacity unblock takes 18 months instead of 12, you've sunk engineering cost into a workflow that's running at 40-client volume — the moat-pays-for-itself math falls apart. If you sequence into Option C in mid-2027 with the capacity unblock already done, you build for scale that's actually within reach. **The personal-side timeline argues for this.** You said personal tax issues block EA right now. Whatever timeline that takes to clear is roughly the same timeline you need to build planning revenue before committing to prep. Use the time you'd be waiting anyway. --- ## §8 — The one blocking question I'm going to give you the recommendation and one question, not a menu. **Recommendation:** Option A now, sequence to B or C in mid-2027 contingent on two gates clearing. **The one blocking question:** > **Are you willing to commit to deferring J2-internal return prep for the next 12 months and refer prep out to clients' existing CPAs (or selected partner CPAs) during that window?** If yes → Option A is the answer; we proceed to scope the pilot (5–10 clients to engage on SavingsMax strategy work this year). If no → we have to talk about how you address the signing capacity ceiling THIS season, because the math doesn't work otherwise. That conversation is mostly Nolan's domain (hiring an EA / part-time CPA) plus Reid's (whether J2 has the cash and operational bandwidth to onboard a new hire mid-year for a season that starts in 8 months). --- **End of recommendation.** Pass to Larry for the next move.