Clairvoyance: Convincing Your Clients You Can Read Their Minds, with Eva Rosenberg

Session Moderator: We want to welcome Eva Rosenberg today

Eva, a.k.a. the Tax Mama, is the proprietor of the Tax Mama web site at www.taxmama.com, and brings decades of tax and business experience with her. Combining formal training at national CPA firms and years in the trenches with her warm, homey style, she does her best to protect her brood from the ravages of the U.S. Income Tax system.

Eva's free, weekly newsletter, Ask TaxMama www.taxmama.com/asktaxmama is a great resource. Her office in Southern California specializes in small businesses, non-filers trying to get back into the system and Internet-based businesses across the globe.

Eva, welcome and thanks for joining us today!

TaxMama: Thanks Gail. And welcome all.

This is an interesting day to be discussing Clairvoyance. Actually, this trick can be summed up in two words…

Pay Attention!

That's it. That's the whole secret. Oh, you want me to elaborate? To fill up the hour? OK. Let me add - Pay Attention! And Remember.

You want even more???? OK. Pay Attention! Remember. And CARE. That's it. That's the whole secret.

How did I come by this great wisdom? Well, I have a problem that has plagued me all my life. I cannot recognize faces. Unless it's someone I see regularly. Months later, I probably won't recognize you, even if we've been close. It's a curse. But, it was offset with two other skills. I can generally recognize voices after hearing them once or twice - and, this one is great - I can remember lots of useless information. Pretty much anything a client has said to me, once I hear, see or know their name, I can remember for years. I remember who they were dating, that building project they started, the Internet business that was going to make them a fortune, the color of the Thank You note they sent me, the favorite movie they told me about, their daughter's college trip to Scotland....bored yet? I told you....lots of useless information. But, it really helps me when it comes to reading their minds.

Oh, so how do YOU do this? Well, it's quite simple really. Some tax pros really do have the skill to listen to their clients and remember all the personal and business information they tell us. Others need some tools to make it look like we do.

First Tip: This is one everyone uses - read last year's tax return.

Investment Income: Have the return open to the schedules and back up information you entered. You don't use detail on the tax return because you don't want IRS to see all the different bank accounts and securities? Don't be naive. Through IRS's 1099 reporting they already get all that data. In fact, in their CP-2000 program, they'll be matching all those 1099s to your clients' returns, so you may as well have the line item there for the IRS to match. Not only does this make your life easier when the CP-2000 notice comes and says something is missing, it helps avoid getting the notices in the first place.

Use the list of bank accounts and dividend sources to make sure you have entered all the current year income sources. If you have any blank lines, press your client for information. They have generally forgotten an account or a stock (or it has merged or changed names again!). Incidentally, be aware of the major bank and stock mergers -you will look brilliant to your client for knowing about the changes.

Ironically, clients are always surprised that we know all their bank accounts and stocks - even though the information is right there, before their very eyes. Scour the detail on last year's Schedule C carefully. Make sure you enter all the sources of income on line 1's detail schedule. (Many programs, like ProSeries, will let you suppress the detail, but you will still have it on your computer.) As you rattle off last year's employers/clients -your client will be amazed and astounded at how much you remember about them.

Business and Employee Business Expenses: Using last year's returns...you know the drill. This was the basic stuff that you already know. Before I enter new territory, if you have any questions... please feel free...

Second Tip: Know their industry!

If you're not a renaissance person who has worked in every industry there is - or a flake who couldn't hold a job… CHEAT. OK - do some reading. Take full advantage of IRS's Market Segment Specialization Guides http://www.irs.gov/bus_info/mssp/index.html. They will tell you a great deal about your clients' industry. You will learn the terminology, the common kinds of expenses, the de rigueur contracts used by the industry. Don't wait until they are audited to read these puppies, they are an excellent source of information about the industries they cover. Besides, you'll know just what IRS is looking for when you prepare the return - and your client will think you're a genius!

If IRS does not have a guide - and you want to become an expert in the industry, do some research. You're obviously online. Type in the name of the industry and find all the major companies, associations and unions involved. Their sites and, often, free printed material, will tell you a great deal - all for free.

TaxMama: I've been lucky. By the time I was 25, by doing lots of freelance work and working for Accountemps and Accountants Overload during college, I had the privilege of working in a couple of dozen industries. I had an opportunity to learn all about their suppliers, terminologies, short cuts, certain secrets and where some of the bodies were buried. So my clients now, get the benefit of experience I sometimes don't even remember having had...except when an issue arises.

Ready for more? Or do you want to talk? Because I am getting to the ---

Third Tip: Listen! This is the REAL secret.

You are meeting with your client in February or March (or, heaven forbid, August or September) of the year AFTER the one you are filing. If you are the least bit personable, you are having a conversation with your client about the present. They are telling you about a job change, a new baby, new car, their sex life...oops…

If you are not the kind of person who automatically remembers useless information like this, keep an extra piece of paper handy and write quick, quiet little notes about their conversation. Next year, when they show up, you will be able to remind them about a particular project they were on in March, ask about that love interest, remember the client they were trying to pitch - their daughter's soccer win, that fender bender, or that lottery win they were bragging about. Not only does this take their breath away, it often reminds them of income or expenses they'd forgotten about because it happened 10 months ago. But you, you remembered! You're such a caring bloke!

Some people take the time, after the client leaves to enter the information into a client database, like ACT! http://www.actsoftware.com/home/. This is an excellent contact database, remembers personal information (like family, children, hobbies, gossip), demographic info (like birth dates, ID #s, business associated with the client, referrals), follow-up info (like - well, let's talk more about that...!). See, you have a big advantage, you are listening to them during their next filing year. I guarantee you that they are not listening to what they are telling you. And they won't remember having told you any of it. When you hit them with this - wow! (Just read your notes for about 5 minutes before they show up.)

OK, so you've impressed them. Helps to fill out their 2001 (or 202 return), but...what else can you do with this?

Fourth Tip: Take the Initiative - Follow Up.

While you're sitting there, frantically working on the current year's tax return and your client is happily babbling away, make some more notes. Listen to what they are saying and look at the return - Do they have $100K in income but no interest or dividends? Make a note to talk to them about savings and investments. I usually get them into two publications - Bottom Line/Personal http://taxmama.com/Articles/invest.html for general financial, budgeting and investing ideas and the MoneyPaper http://moneypaper.com/ to get started, one share of stock at a time.

Does their W-2 show no 401k (403b) plan, no child care adjustments, no other cafeteria plan data? Talk to them, THEN, about taking advantage of the tax reduction tools at their disposal. If their company doesn't offer these services - your note is to follow up with the employer and get the boss as a client. The boss is missing an excellent opportunity. You have the answer for him/her!

OK, so this time, you would be clairvoyant - you'd just be a hero - and a rich one - for setting up the plans and getting the stream of income. (Can't handle this? Team up with someone who can.) Look at the bottom line of their Schedule C - is their profit so high that they are paying $10,000 in SE tax? Time to talk about an S-Corp maybe? Or other planning, tax deferral tools? YOU bring it up. Don't wait for them to ask. I just had a client leave, a few minutes ago because we just finished his 1999 return last month, his income was close to $100K on Schedule C and he was hit with huge SE taxes. That's always a nasty surprise

He's happy to pay me a bunch of money to do some planning. Set up a cafeteria plan through his payroll service, start a SEP or SIMPLE for next year, establish a corporation....and after he pays me he'll still save over $6000 - probably more. Thinks he minds being called into my office - on my initiative? What else can a good busybody do?

You know they always wanted the American Dream - that house. But, of course, they can't afford it. Even if they don't have office in home, but they show no mortgage expenses - ask them - how much is your rent. Generally, it's high enough that they could afford to buy. You are so clairvoyant that you know just the right Realtor(tm) who can find them exactly the home they can afford. And you know, it's been on their mind for a while, they just didn't think they could afford it yet. (Start with Realtors (tm) in your own client base.) You don't need an electronic system to track all of this. Although, we do love our gadgets! You could do something as simple as using a colored piece of paper to put into the file. The color will stand out and you can easily retrieve it later. Or keep a master file with pages about 'things for my clients. Make a point of calling them and following up on at least one or two clients each week. They'll love to hear from you...because each time you call, it's to save them money. They'll also know you're not too busy and distracted for them...so, they won't mind referring their friends.

Session Moderator: Sending related articles and clippings can be nice too, or email links to information that will be useful

TaxMama: And that, my friends, is how you grow your practice through clairvoyance!

Session Moderator: And of course, your newsletter

TaxMama: There are more tricks I use...but they come through instinct. And of course, through Ask TaxMama. You send your clients to read that and I'll send them back to talk their tax pros!

Session Moderator: An excellent trade!

Session Moderator: Any questions for TaxMama?

TaxMama: So...now, you have questions, your own tricks and comments...we'd love to hear them!

Session Moderator: Tell us about your site - how often you update it, where you go for information, what you try to bring to your readers.

TaxMama: TaxMama.com provides nothing but free information about tax issues. The newsletter for the public, Ask TaxMama comes out each Friday (usually). It is kind of a Dear Abby of tax answering real people's questions every week! Even if I don't sleep. Quite often, the questions are complex and I give them enough information to understand WHY they need a tax pro.

However, on Thursdays, I produce an e-mail only newsletter for tax pros only. It's called Ask TaxMama Pro. many of you read it. You know that IT never appears online. So any questions you ask remain private. Your clients will never see it. But we do help each other get specific answers to issues each week. In fact, I have an S-Crop problem I need to resolve and I know I'll get help from one of my readers.

The site is updated each week, without fail. In fact, I have a wonderful new person helping me with the design and if you've seen Taxmama.com lately, you'll find that Serenata has made it easier to navigate and search. We're working on the resource center, to debut next month. So, if anyone has any great tax or business resources to add, we're quite receptive.

On occasion, readers end up getting referrals to tax pros who read Ask TaxMama because we have readers from all over the world. Many are Americans living overseas who have not filed for some time.

Session Moderator: How long has your site been existence?

TaxMama: TaxMama.com has actually been in an experimental stage for over a year. Only since Rena has cleaned it up would I say the site is live - about two months. But we get over 10,000 visitors each month. In fact, many IRS folk check in to keep me honest. But we have unmasked some tax scams and poor products. Lots of strangers (ok, they're friends now) have saved thousands of dollars

Session Moderator: Can you share some examples?

Paul Malen: www.excel.com

TaxMama: Hi Paul, is the excel a resource or a scam?

For instance - scam - I've constantly been bombarded by folks selling the Tax People system. It comes under many names. And they pay tax pros really great commissions to refer them.

Session Moderator: We did a story on that recently

TaxMama: You bet, they've been in the news recently.

TaxMama: But for the longest time, I was the only one warning people away from them. Actually, I really need to remember to tell people not just to stay away from them, but use Gail's book on QuickBooks as a better resource.

Session Moderator: Thanks!

TaxMama: Especially since Intuit is moving so strongly into the consumer marketplace we are going to be seeing our small business clients using that product more and more. Too many tax pros aren't familiar with the tools their clients are using. In fact, we've been having a running argument about CPAs vs. EAs and how beneficial they are for small businesses, right here on this site. Gail, what's the URL for that?

Session Moderator: Here's the link to the ongoing controversy between CPAs and EAs: http://www.accountingweb.com/cgi-bin/item.cgi?id=28316&d=101&dateformat=%o-%B

TaxMama: I brought the argument to Robert Sommers's attention - theTax Prophet. He still feels that start-ups should start with a CPA....I need to convince him that EAs can set up businesses as well. Many, like me, have traditional accounting education and can provide the guidance a new business needs. Because we have street smarts'

Anyway....folks, tell me what you've done to WOW your client?

Brenda Richter: I bundle services & charge a fixed price over several months.

Session Moderator: Do your clients respond favorably, Brenda - any objections?

Brenda Richter: Since the bundled package includes 4 meetings a year my clients thinks it's great that I take the time to meet with him.

That's an excellent idea. We started doing that, too. Clients are happy to know that their needs are going to be taken care of, and they like to know that they'll be paying a fixed amount each month. Otherwise, would you be meeting with him more than once?

Brenda Richter: I usually set it up so that they pay an annual fee but I divide it by ten and they pay February thru November.

TaxMama: Actually, what we did was set up a monthly fee, and track the time. At the end of the year (meaning when the corporate return is completed) we bill for the difference.

Session Moderator: And what if they overpaid?

TaxMama: It's usually only a couple of hundred dollars - but it lets us increase the next years' monthly fee.

Brenda Richter: I don't track time. it is not relevant. I provide value thru the services and results I offer

TaxMama: Track the time. You won't need to charge for it. But it gives you the option.

Session Moderator: We're almost out of time - any other questions for Eva?

TaxMama: We started tracking when the client started needing other services, like loan packaging, etc. We started spending an extra few hours each week for a while...and it became noticeable. If they overpaid, we reduce next years fees

Brenda Richter: Track profit contribution it's noticeable.

TaxMama: Can you get them to pay you a percentage of profit? I had one client offer to pay a % of gross that if we would do his bookkeeping. Had I accepted, it would have meant nearly $6K month income. I really didn't think that was fair to him! The work wasn't worth more than $500 per month. But it was generous! Darn. Sometimes I hate ethics!

Session Moderator: Eva - thank you so much for joining us! We wish you a lot of luck with your web site, and hope to bring you back again to the AccountingWEB workshop!

TaxMama: Thanks Gail - and all!

Session Moderator: And thanks to all of you who attended today.

Workshop sponsored by Arthur Andersen:

Arthur Andersen

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