What am I runnin', a charity?!!

[JoshinNC]

I must have some of the cheapest clients in the world. One of my client's is a mid 20's physician's asst. and her salesman husband. Last year they made about $105,000, should make $25 - 30k more this year. I was in her medical office the other day and she says, "Hey, hubby and I are gonna get a 1099 at the end of the year for some contract work. Will that make us not get a refund?" I tell her I don't know for sure, but it will definately create additional tax as there are no withholdings and it's subject to SE tax. Her, "Wow, I wonder how much extra tax?". I say, well if you'll get me your hubby's last pay stub and the amount of the 1099 you expect to get I can figure it out for you (I do the payroll for her medical office, so I already had that info.

So, the next day she faxes me everything, I work it up and tell her because she has been overwithholding at work (already advised her against to invest it as opposed to wait for a huge, $6k+, refund but she won't listen) she will basically break even. We then discuss setting up an LLC next year if they continue to get the 1099's in an attempt to avoid some SE tax. All together between a couple of phone conversations and working up the estimate I've got about 1 and 1/2 hours in this thing.

I send her a bill for $75 (1 hour), hear nothing. Wait 15 days, send her a past due notice. Get a phone call this morning from her. "I got a bill from you. What's that for? I didn't know you were going to charge me. I thought that was part of doing my taxes."

After admonishing her for thinking I'm operating a charity and that I bill for everything over 30 minutes during the "off season" I told her to forget the bill.

Was I wrong? How do you guys handle this?

[JG EA]

I consider that sort of thing part of year round service. However I tell clients in writing that they are entitled to a one hour tax planning as part of year round service. Other engagements will be an additional charge.

If you are going to charge maybe telling them in advance? "I'd be glad to figure that out for you, my fee for this type of service is ..."

Or include the extra work in their tax bill when done with an extra line on the bill to explain. Of course with this option you run the danger of not being paid because they may go somewhere else.

[August @ ADG Financial]

We wouldn't charge for this either. Especially since you were in their office and offered I would think it was implied you were doing it as a service for them. If one of my Clients calls for any appointment and brings it in and then says, we''ll what do I owe you. Then I will charge them an hourly rate as you did. August

[Black Bart]

Tightwads

My clients are right up there with yours in this department. And my policy varies from client to client -- I just play each individual case by ear (no general policy) because some I want keep and some I don't.

I think your doctor's assistant was/is a cheapskate. Taking her position, I guess next time you go there you could say "You're charging me? What for? I thought subsequent medical work was covered by the first office visit charge." Too, I wonder if she thinks an hour of her time is worth $75?

I find that the more money they make, the worse they are and they also think their work is priceless beyond value while yours is nothin'. I detest 'em, but it's a curse of this profession that nobody thinks accountants/tax preparers need their money, or if they do, then it shouldn't be very much.

So, I might have written it off or not depending on what I could figure to get outta the doc in the future. And, like Forrest, that's all I have to say about that (if I keep it up, pretty soon I'll be demandin' capital punishment for cheapskates).

[Zee]

I think your charge was very reasonable.

[geekgirldany]

Your charge was reasonable. I suppose you should have told her first. I find that if you don't they do expect it as part of their tax service. I have been including it as part of their tax service. The only thing is that I don't really charge enough to cover my time. Starting 08 I will have to charge. There are a few customers that I have been charging. I will spend an hour explaining and then they come back again.... again... again. One in particular does it alot.

[Zee]

Given the new preparer penalties, it's about time everyone started charging for these "little tasks", no?

[erchess]

Everyone wants to be paid

market rates for the work they do. Everyone thinks the market rates for what they do are too low. That is human nature.

I personally do not build any charge for additional work into the fees I charge for preparing the return because clients vary so widely in how much they need. If we want to ask how you could have been perfect, the answer would have been to remind her of the charge she would be incurring. It was understandable that she would think you were going to give her a freebie on this because many of your competitors would have built the charge in to what they charged at prep time. You could of course pretend to be under the same sort of idea the next time you want treatment from her but the cases differ in that no US Medical practice builds potential future work into the charge for today''s work. I am inclined to think that forgiving the debt may have been a smart way for you to keep a client, particularly since the amount was too small to bother with your collection agency much less a court claim.

[DaveO]

You are far from alone

I went out to a small restaurant to bid their bookkeeping work a while back. They had no cash register, income was total of bank deposits. They did payroll but no tip reporting. There previous accountant charged $75 per month and $80 for year end reports including the 1065. This included picking up and dropping off all the papers, two trips per month at least.

I tried to explain that we would be more and that their previous accountant likely went out of business because she didn't charge enough. They said "Oh no, very simple only $75 per month". After reviewing my notes I just called up and said we were declining to bid their work.

[Donald Rihn, EA]

Clients always think work is easy

I went out to a small restaurant to bid their bookkeeping work a while back. They had no cash register, income was total of bank deposits. They did payroll but no tip reporting. There previous accountant charged $75 per month and $80 for year end reports including the 1065. This included picking up and dropping off all the papers, two trips per month at least.

I tried to explain that we would be more and that their previous accountant likely went out of business because she didn't charge enough. They said "Oh no, very simple only $75 per month". After reviewing my notes I just called up and said we were declining to bid their work.

I did the monthly work for a local non-profit. For a very cheap price, but I did it as a public service. The CPA that did the annual audit didn't discount.

Then they hired a new administrator. After a few months the administrator said that they could do the work themselves, saving them my small fee.

Four months later the new adminsitrator came back, asking that I continue to do the work again. I said it would be at a new price, considerably higher than my "cheap price", but still less than what I would charge a regular business.

They declined. However, their administrator and staff do draw nice large paychecks. They think that everyone else should help their non-profit out by cutting fees or by donations.

[veritas]

Just do what the medical field does

Pass it on to everyone else.

[JohnH]

Josh, I want to know

Why are you stealing my clients?

[JoshinNC]

Gotta do something to stay alive.

Why are you stealing my clients?

Actually, I have a pretty good client base. Maybe I did fail to let her know upfront, but usually it's understood (at least in my mind) when you ask somebody to do something for you there should be an expectation of paying something.

[Black Bart]

I agree, Josh

Actually, I have a pretty good client base. Maybe I did fail to let her know upfront, but usually it's understood (at least in my mind) when you ask somebody to do something for you there should be an expectation of paying something.

Just because you didn't previously say you charge for services; that would not lead a reasonable person to assume they're free. Basically, she said "I've got a problem" and you replied "Send me the info and I"ll look into it." Sure, she could hope that her past patronage might compel you to give her a freebie, but it would be unrealistic to automatically assume it. Suppose she comes to your office, you mention "My XXX is killing me," and she says "Stop by the office -- I'll take a look." You (and almost everybody else in the world) would still expect to be charged a fee regardless of whether or not she had treated you previously for an XXX problem (there aren't any medical "warranties").

I find that many high-income people make poor clients, often displaying a sense of entitlement and a sort of aggressive ignorance -- a professional pilot told me doctors frequently crash airplanes because they think being smart enough to fly through medical school means they're smart enough to fly through the air and "it ain't necessarily so."

Just this past season, I turned away a young, new, salaried physician ($105K W-2) with a large medical group. She had totally unrealistic expectations, essentially asking "Why should I have to pay any income taxes?" Or, to rephrase; is there no exception for noble folk? Clueless about tax brackets, she was certain her slacker husband's low earnings ($10K W-2/zero W/H) would "help" since he'd be "taxed as a low-income person" and "surely he qualifies for that UNearned income credit" (fools rush in...).

Quibbling about (reasonable) fees indicates a lack of customer loyalty and/or appreciation for my efforts on their behalf. Adversarial relationships with IRS are okay, but a customer who wants to fuss with me isn't going to be one my clients for long.

[JoshinNC]

She actually made the statement

Just because you didn't previously say you charge for services; that would not lead a reasonable person to assume they're free. Basically, she said "I've got a problem" and you replied "Send me the info and I"ll look into it." Sure, she could hope that her past patronage might compel you to give her a freebie, but it would be unrealistic to automatically assume it. Suppose she comes to your office, you mention "My XXX is killing me," and she says "Stop by the office -- I'll take a look." You (and almost everybody else in the world) would still expect to be charged a fee regardless of whether or not she had treated you previously for an XXX problem (there aren't any medical "warranties").

I find that many high-income people make poor clients, often displaying a sense of entitlement and a sort of aggressive ignorance -- a professional pilot told me doctors frequently crash airplanes because they think being smart enough to fly through medical school means they're smart enough to fly through the air and "it ain't necessarily so."

Just this past season, I turned away a young, new, salaried physician ($105K W-2) with a large medical group. She had totally unrealistic expectations, essentially asking "Why should I have to pay any income taxes?" Or, to rephrase; is there no exception for noble folk? Clueless about tax brackets, she was certain her slacker husband's low earnings ($10K W-2/zero W/H) would "help" since he'd be "taxed as a low-income person" and "surely he qualifies for that UNearned income credit" (fools rush in...).

Quibbling about (reasonable) fees indicates a lack of customer loyalty and/or appreciation for my efforts on their behalf. Adversarial relationships with IRS are okay, but a customer who wants to fuss with me isn't going to be one my clients for long.

that when a patient asks her a question that she can answer off the top of her head she does so, but if they need to be seen she tells them to "make an appointment". To me this inferred that she believes because she didn't come to my office, sit in front of me for an hour and then physically see my job it must have been simple and therefore free. I tried to explain to her that I essentially had to do an estimated tax return, but that didn't seem to catch in her head. Kinda like the call I got the other day from a prospective client, "You use TurboTax right, so I can just bring you last years file and you can load it on your computer." Me: "Well no, I use REAL tax softward that requires REAL tax KNOWLEDGE" ...click.