Accounting and Payroll

[mactoolsix]

Service vs Price

I'm considered a "newbee" here, and respect the posts of all the members of this board. However, after 30 years of running a successful sales business, possibly I can chime in some thoughts.

When I started business there was no internet, no big box stores, no mass discount warehouses. I sold a high quality product for extremely high prices. I provided the best service I could, and did well until the internet came along. It taught me a good lesson - the small business can not be successful trying to compete on price. I had to take additional training and offer more than the big suppliers could. I never cut prices but I always offered a better service. On items I couldn't compete on price, I told the customer up front. I offered training and advance service the big guys couldn't. I retired doing three times the volume I did when I started.

I now work for a large income tax and financial practice. Long ago they realized they couldn't charge $150 and hour for doing payroll. They advise most of their clients to use a professional payroll service, and bring the problems to us. They changed their focus to high end tax advice and planning. They do lots of education for both the staff and the client. It's a year around operation, which now receives less than 50% of it's annual revenue from tax preparation.

My point is - sometimes you just need to rethink the wheel to keep it rolling.

Mike

[luke]

Payroll is labor intensive

I have several clients who have sought ME out (from ADP and others) and it wasnt because of cost - it was because they were NOT taken care of by big payroll service! The best advice given so far - is try to replace this client with another (less needy one)! Good Luck!

[geekgirldany]

Just thought I would add my 2 cents here.

As all the others have said you will eventually get new client(s) that need less attention then the one you currently have. You can't compete on price... I've found that out the hard way. People who come to value you, not how cheap of a price you can give. I've had a few switch over from ADP because of lack of personalized customer service. My customers know all they have to do is call me when they get a notice and I will take care of it.

I had one client leave me several years ago. Long time customer that I had previously worked on their bookkeeping/taxes before I even went into business myself. So I had known them a long time. Well they actually started making a good bit of money in their business. Of course they had to start paying taxes on that money. They did not like what I came up with the prior year so they went to a "lawyer" that could save them money by switching them to a S-Corp and not have to pay SS/SE Tax.

I had already explained to them why switching to a S-Corp would still have to pay SS tax through a reasonable salary. Well I guess they did not like that and went to lawyer. Wish they would have told me that before I finished their return. Anyways, I had been charging them $75 a month for bookkeeping and payroll. It had started getting a mess because their secretary was not putting dates on either the checks or check stubs. When they went to the lawyer I assumed it was for all the services I provided. So I just gave them what I had to take to him.

A few weeks later the called back wanting me to continue doing the bookkeeping and payroll. I told them no, I had already filled their spot with a new company. (I really had not). To get the lawyer or someone else to do it.

In the long run it was one of the best things that happened to me. It freed me up to do less complicated bookkeeping and payroll services for other companies. I also charged them more.

I also could not understand how they could switch to someone so quick after being my client for so long. But that is the way it goes sometimes.

Dany

[S T]

Frustrated and Frazzeled

Thanks everyone for their posts on this matter

It has been 5 days of more stressful communication than the 3 months of preparing and filing taxes
Still at an impasse with the client as of Wed night, I concur with everyone that has posted, that I am not going to discount/reduce my fees, it is what it is!

It is not any one issue, it is payroll, its monthly acctg, and it is my Tax Prep fees for Partnerships and Individuals. Interesting that over the weekend, the T/P received a penalty relief imposed in the amount of $ 2,655 (Taxpayer Error) that I petitioned for in August 2010- How quickly the client forgets There was no added charge for that service

Payroll I am okay on, for the bottom line at year end less than $ 150 apart on annual based on Quotes I have seen and verified. It is the "discounters" rates from outside quotes, thrown into the equation - Quotes are really "lowball" and I just don't understand how any professional can offer payroll services for those amounts.

Accounting - my base fees are competitive - it is the additional work that I bill

Tax Prep - the quotes versus what I have been charging - is where the real issue is. All I can say is that the Partnership returns are complex and the subsequent Individual returns are just as complex. T/P doesn't get it and doesn't relay info when obtaining outside quotes nor understand what time and effort goes into preparing those returns. Again the "lowballers" quote structure and not outlining.

I am still on the 'fence" as to what to do, but I do believe I have decided my fees charged or how I base fees will not change. I will suffer a financial loss, if this client doesn't stay with me, but then again as so many of you pointed out, it will free up a lot of my time to entertain the idea of new "less intense and time consuming" clients.

Just wanted to say thank you for everyones support and ideas.

Sandy

[Snaggletooth]

Let Him Decide

Sandy, it's time to quit beating yourself up, and let this guy decide.

Just reading between the lines, if you have had a symbiotic relationship with this company for 17 years, and now all of a sudden there is pressure for change -- look for perhaps a new source behind the scenes. A son or daughter who has just entered the business. A new hire in his sales or production force. Maybe even a new wife. Sudden pressure for change comes from either circumstances or a new source, and I would lean toward a new source.

If this guy knew what we do, he wouldn't rush toward a low-fee tax preparer for partnerships. I would be suspicious that such a preparer doesn't really know how complex a partnership return can be.

I hope this chunk of business is not substantial enough to be critical. The owner (or someone) is trying to pry you downward, and if he is successful this will NEVER stop. I know you don't want to lose a big chunk of business but there comes a time when these people deserve "Peggy" and the bimbo clerk.

This is not worth it if turmoil in your life is going to be stirred up. Look around, make sure you have competitive fees, and let it go. He will either change or he won't.

I know I'm making this sound easier than it really is, but when you boil away all the layers of reasoning, this is really all that is left. Look past the worry, past the self-doubt, past the computations, and have a moment of solace for the service you've rendered over the last 17 years. Then move on, with or without him.

I don't lose many people, but occasionally this happens for one reason or another. The loss has always been temporary and someone will come along to take their place.

[Snaggletooth]

Keeping Tabs

Hi Sandy -

I (and probably several others) would like to know how this turns out for you.

I am one of several people on this board who have brought a perplexing question, and on more occasions than I can enumerate, Sandy was there to help with her experience, advice, or sometimes just a relevant link to guide the query to a proper place.

There's lots of knowledge and help available on this board, but few (if any) more so than yourself. We would like to know how this works out, and are keeping our fingers crossed that whatever the result (either way) will really be in your best interest.

[S T]

Snags Thanks

Snags thanks for your thoughtfullness and all of the kind things you say. I try to give back to the all that are posting as much as I can, as I always receive so much from all the posts with my crazy lame questions and scenarios.

Your earlier post might have hit on something , such as the "Son" being brought in which graduated with an IT-Computer Degree and while a nice person and I have known him for years, can still be a "snot nosed kid" who thinks he knows it all and then even worse, thinks he knows it better! Fortunately he does not have control in the biz, only ideas and thought processes which can be good or bad. The son has not yet learned the "value of a dollar and/or service"

As of Friday nite (a whole week) I am still in limbo - it has literally been the week from "h" regarding this issue - I really have never experienced anything quite like this. ( I try to quit and can't and the client tries to terminate and can't) Lots of phone calls from the client - he is not ready to just "fire: me on the spot - he is just still negotiating and trying to wear me down. However, I have to say he is a broken record and not listening to anything that I am saying or conveying. He is just on an agenda of costs and comparing phone quotes, wants me to take short cuts if need be, don't worry about audit controls, etc. I am having a difficult time with those issues. I don't deal well with compromising on my services and internal paperwork controls, and finally told him today I would NOT.

Now the t/p client is "empowered" with his new software system and has Quickbooks available (it is a 3 tier POS-Bridge system) he is ready to be more responsible and take on more of the day to day accounting work such as data entry in return for my reduced fees on accounting, but he is still smart enough to know he needs a professional to monitor and produce reports for bankers, etc. So some negotiating on the Accounting services. Client is monthly cost conscious, so a lot of what I presented took certain items that I would do for no cost, and converted them to an additional hourly fee. It will be his choice as to who handles. So monthly accounting could end up a set monthly fee for outlined services, and then an hourly fee for other issues.

Odd that this post came up tonight as I was dealing with this, I just received another penalty notice for an error that the " t/p made" and is being assessed $ 2,100 - so I guess I am able to bill my hourly fee if he wants me to respond Would that be an omen - two notices during this week, one a relief of penalty abatement I filed for and t/p received the check this week, and then now another notice of penalty assessment due to t/p error that has to be petitioned for abatement.

Where I am now having an issue on services that I don't want to negotiate on would be items such Tax Return fees and possibly Payroll responsibilities.

So the offer received and the counter offer went back tonight with the final sentence being the "issue" had to be resolved so both of us could move forward, and words after certain items on fees such as "It is not feasible or not negotiable"

As I know more I will post, I think I have presented my final and best position to the client. I just don't think I have much more to offer and I am tired of it. It either works or it doesn't!

So as Possi (I think) said on an another post today the "virtual water cooler" is in place, and it is so good to know that so many of you can share your thoughts and ideas with me. Your support and thoughts are so appreciated.

Sandy

[Lion]

Frustration

Sandy, I'm sure you're frustrated by now. Don't give so much that you'll resent working for them as a client for years to come. Keep your fees where you'll be willing to put up with this client -- and his son -- for years. Not that it provides anything other than moral support, but we're all behind you.

[JohnH]

Good luck with this situation, Sandy. From what you said, it appears that the son may be much of the driving force here. Sometimes parents will do dumb things just because they hope to pass the business along to children, even when the children are too immature to handle the responsibilities. I've seen lots of meltdowns over that very issue, as have many of us on this forum.

Hope you can keep the business, but it has to be on your terms. Lion is exactly right - if you turn over your pricing policies to your client, you will come to resent it.