If you run a Texas practice and you are choosing an Austin CPA firm bookkeeping partner, the date that should decide it is the 20th of every month, not April 15. That is the day Texas sales tax returns are due to the Comptroller. A bookkeeping client whose month isn't closed by then will reach your desk sooner or later as a problem. It might be a penalty notice, a reconciliation that doesn't tie, or a February rebuild that eats the hours you meant to spend on returns.
I'm Ricky West, and I run Turnkey CFO, a bookkeeping firm here in Austin. Most of the CPA partners I talk with aren't asking whether to hand off bookkeeping. They've already decided they can't staff it. The pipeline data explains why: according to the AICPA's 2023 Trends report, 47,067 students earned accounting bachelor's degrees in the 2021-22 school year, down 7.8% from the year before. The people who would have run your monthly closes are going to firms that can pay more for tax and audit work.
So the real question is where to send those clients. Below are seven tests. They share one argument: a bookkeeping partner for a Texas firm has to work on the Texas calendar, not just the federal one. Texas has no personal income tax, but it has a monthly sales tax cycle, a May franchise tax report, and a Central Texas client mix of churches, trades, restaurants, and professional services firms, each with its own state filings. A partner who only thinks in terms of January and April will give you clean-looking books that fall apart in May.
1. Does the bookkeeping partner close the month before the Comptroller's 20th?
Texas sales tax returns are due on the 20th of the month after the reporting period. The Comptroller assigns each account a monthly, quarterly, or annual filing frequency based on how much tax it owes. Your restaurant and retail clients are almost always monthly filers. A late return costs a $50 late-filing fee plus a 5% penalty if it's 1-30 days late, rising to 10% after that. Filing on time also earns a 0.5% discount, and a sloppy close gives that up month after month.
The test is simple. Ask the partner what date they close the prior month. If the answer is "by the end of the following month," the sales tax report is being built from unreconciled numbers. That gap will turn into a year-end adjustment someone at your firm has to explain. A partner that fits Texas clients closes early enough that the sales tax report ties to a reconciled bank account and a reconciled POS or invoicing system before the 20th.
In the engagement letter, spell out who files the sales tax return. Either answer can work, but it has to be written down and never assumed.
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2. Can the partner tell you a client's franchise tax revenue before May 15?
The Texas franchise tax report is due May 15. For 2026 reports, the Texas Comptroller sets the no-tax-due threshold at $2.65 million of annualized total revenue. Since 2024, entities at or below that line no longer file a No Tax Due Report, but they still owe a Public Information Report or Ownership Information Report. Many Austin small businesses miss that second part. They hear "no tax due" and assume there's nothing to file, then get a notice of intent to forfeit their right to do business in Texas.
This is a bookkeeping issue because Texas total revenue starts from line items on the federal return. The franchise report is only as good as the revenue, cost of goods sold, and compensation figures in the books behind that return. For a client near $2.65 million, how revenue is classified decides whether a full report is required. Above the threshold, the choice between the cost of goods sold deduction, the compensation deduction, and the other methods is your preparer's call. They can only make it if the books keep those categories clean.
Ask a prospective partner: "For a client at $2.4 million in revenue, what do you flag for us before May?" A good answer covers mapping revenue to the federal return, keeping cost of goods sold separate from operating expenses, and tracking officer compensation apart from wages. A weak answer is "we just do the books; tax is your department." Tax is your department, but the books feed it.
3. Does the partner understand how Texas sales tax treats your contractor clients?
Central Texas is full of trades clients: electricians, HVAC companies, remodelers, and finish-out crews working through the Austin, Round Rock, Georgetown, and Kyle growth corridor. Texas sales tax rules for these businesses depend on facts that only the bookkeeping can capture.
- Residential vs. nonresidential. Texas taxes repair, remodeling, and restoration of nonresidential real property. The same work on a residence is generally not taxable. A contractor doing both needs every job coded by property type.
- Lump-sum vs. separated contracts. Under a lump-sum contract, the contractor pays tax on the materials it buys. Under a separated contract, the materials are listed separately to the customer, and the contractor handles tax differently. The job file has to show which one applies.
- New construction vs. repair. Labor to build a new commercial structure is treated differently from labor to remodel an existing one.
An illustrative example: a residential remodeler takes on tenant finish-out work for a small office in Pflugerville. If the bookkeeper posts that invoice to the same revenue account as the kitchen remodels, the sales tax report comes out wrong, and nobody notices until the Comptroller audits. The fix is job-level coding set up during onboarding. A partner who serves Texas trades clients asks about this in the first week. A partner who doesn't, won't.
How a given contract should be taxed is a question for your firm or the client's tax attorney. The partner's job is to capture the facts so that question can be answered.
4. Can the partner keep a church's books without making work for your preparer?
Churches are a big share of the Central Texas bookkeeping market, and they are where a generalist bookkeeper most often creates year-end cleanup for a CPA firm. Three things to check:
- Fund accounting. Restricted and designated gifts need their own tracking, whether through classes, funds, or a dedicated church system. A single "donations" income line doesn't work.
- Clergy payroll. Ministers are dual-status workers. The church doesn't withhold FICA for them, and housing allowances have to be designated in advance and tracked separately. The bookkeeper records these items and flags them for your team; they don't make the tax determination. See our write-up on church payroll and clergy taxes for what the ledger should capture.
- State exemptions. Texas religious organizations must apply to the Comptroller for franchise and sales tax exemptions. The exemptions are not automatic. A good partner confirms the exemption is on file and that vendors have the exemption certificate. Otherwise the church pays sales tax it doesn't owe and never gets it back.
If your firm prepares the 990-T for a church with unrelated business income, or handles the minister's personal return, clean fund data and clearly flagged clergy payroll items are the difference between a two-hour file and a two-day one.
5. Does the partner handle hospitality's extra Comptroller filings?
Austin's restaurant and bar scene brings filings most bookkeepers outside Texas have never seen. A bar or restaurant with a mixed beverage permit owes a 6.7% mixed beverage gross receipts tax and an 8.25% mixed beverage sales tax. Both go to the Comptroller and are separate from the regular sales tax on food. A short-term rental or boutique hotel client also has state and local hotel occupancy tax, filed separately again.
For your firm, the bookkeeping has to reconcile the POS system, whether Toast, Square, or something else, to every one of those filings, and do it monthly. Reported tips also have to be tracked cleanly, because the FICA tip credit on your preparer's side depends on them. Ask the partner how they split alcohol sales from food sales in the ledger. If they treat it as one revenue line, they haven't done this work before.
6. Who owns the client relationship, and is it in writing?
This is where firms get nervous, and they should. The right structure is simple: your firm keeps the client and every piece of tax work. The bookkeeping partner runs the books. At Turnkey CFO, we never prepare, review, or sign a tax return. We don't offer tax planning to clients a firm sends us, and we send any tax question back to the firm that owns the relationship.
Get that in writing before the first client moves. The agreement should cover:
- Non-solicitation of tax work, in both directions.
- Who the client calls for which kind of question.
- What happens to the books and the software subscription if the client leaves either firm.
- How any referral compensation is handled.
That last item is an ethics question, not a business one. AICPA Code section 1.520 (Commissions and Referral Fees) requires members to disclose referral fees to the client. The Texas State Board of Public Accountancy has its own rules for Texas licensees. I'm not the right person to interpret either one for your firm. Read the Code and talk to your state board before you structure anything. Whether you choose a referral model or a white-label one also affects disclosure. We compare the two in white-label bookkeeping vs. a referral partner, and the mechanics of the handoff are in how a CPA firm refers bookkeeping clients without losing them.
7. What does the bookkeeping partner put on your desk in January?
Everything above feeds into this. A bookkeeping partner earns its place by what shows up in your portal in the second half of January, while your staff still has room to review it before the March and April deadlines.
Here's what that should look like for a Texas client:
- Every bank, credit card, and loan account reconciled through December 31, with statements attached.
- Contractor payment totals and W-9s ready ahead of the January 31 1099-NEC deadline, with payments made through card processors separated out.
- A fixed-asset additions schedule with invoices, so depreciation decisions stay with your team.
- Owner draws, distributions, and officer compensation kept in separate accounts, never mixed together in "owner's equity."
- A note on franchise tax exposure: where total revenue landed against the $2.65 million threshold, and whether the client's PIR or OIR details changed.
- A sales tax summary showing that twelve months of filed returns tie to the general ledger.
- For churches, a fund balance roll-forward and a list of clergy payroll items to review.
The full checklist is in the year-end bookkeeping handoff every tax preparer wishes they got. If a prospective partner can't show you a sample January package for a client like yours, you don't have enough information to trust them with the client yet.
The thread through all seven
Put the seven tests side by side and they make one point. Staffing trouble in a Texas practice isn't a headcount problem. It's a calendar problem. Your team's crunch runs from February through April, and Texas adds a monthly sales tax cycle, a May franchise report, and industry-specific filings on top of it. When bookkeeping clients get pushed to the margins of the firm, that calendar catches up with you.
A good Austin partner takes that calendar off your plate and hands back work your preparers can trust. Whichever firm you choose, run them through these seven tests with one of your real clients in mind: a remodeler, a church, a restaurant, a SaaS consultancy. You'll learn more from that than from any capabilities deck. If you want to see how we set up the back-office relationship with Texas firms, our page for CPA firms lays out the model.
Questions Austin CPA partners ask about bookkeeping partners
Will a bookkeeping partner prepare our clients' tax returns or franchise reports?
It shouldn't. At Turnkey CFO, we never prepare, review, or sign a tax return, federal or state. We deliver reconciled books and supporting schedules, and your firm handles every filing that calls for a preparer's judgment. Put that division in the engagement letter.
Can we receive a referral fee from a bookkeeping partner?
That depends on the professional standards that apply to you. AICPA Code section 1.520 requires disclosure of referral fees to the client, and the Texas State Board of Public Accountancy has its own rules. Review both and talk to your state board before agreeing to any arrangement.
Does a bookkeeping partner need to be local to Austin?
Being local matters less than knowing Texas. What counts is fluency with the Comptroller's filings: the 20th-of-the-month sales tax cycle, the May 15 franchise report, mixed beverage taxes, and how construction contracts are taxed. A Texas-based partner usually has that fluency already, and being in the same time zone helps during onboarding.
Which clients should we send first?
Start with a monthly sales tax filer whose books are current, not your messiest catch-up client. You'll see how the partner handles the close, the 20th-of-the-month cycle, and communication before you trust them with a rebuild or a church with multiple restricted funds.
What if a client's books are a year behind when we refer them?
Plan for catch-up as a separate project with its own timeline, finished before the first January handoff. A partner who promises to fold a year of backlog into routine monthly work is setting up a late delivery in January.
Frequently asked questions
Will a bookkeeping partner prepare our clients' tax returns or franchise reports?
It shouldn't. At Turnkey CFO, we never prepare, review, or sign a tax return, federal or state. We deliver reconciled books and supporting schedules, and your firm handles every filing that calls for a preparer's judgment. Put that division in the engagement letter.
Can we receive a referral fee from a bookkeeping partner?
That depends on the professional standards that apply to you. AICPA Code section 1.520 requires disclosure of referral fees to the client, and the Texas State Board of Public Accountancy has its own rules. Review both and talk to your state board before agreeing to any arrangement.
Does a bookkeeping partner need to be local to Austin?
Being local matters less than knowing Texas. What counts is fluency with the Comptroller's filings: the 20th-of-the-month sales tax cycle, the May 15 franchise report, mixed beverage taxes, and how construction contracts are taxed. A Texas-based partner usually has that fluency already, and being in the same time zone helps during onboarding.
Which clients should we send first?
Start with a monthly sales tax filer whose books are current, not your messiest catch-up client. You'll see how the partner handles the close, the 20th-of-the-month cycle, and communication before you trust them with a rebuild or a church with multiple restricted funds.
What if a client's books are a year behind when we refer them?
Plan for catch-up as a separate project with its own timeline, finished before the first January handoff. A partner who promises to fold a year of backlog into routine monthly work is setting up a late delivery in January.