4 Tips to Handling Bookkeeping Client Issues
Bookkeeping professionals often find themselves in situations where you and the client are in disagreement. When these cases arise, who makes the call on what is “right” and what is “wrong?”
When these situations emerge, I find there are several ways to approach the issue so that everyone involved comes out a winner. Here’s four that tend to work best:
1. Don’t Make the Client Wrong
First of all, it’s usually best to not make your client wrong. If I am extremely confident that my choice is the right choice, I can back it up with examples where I have made a similar choice for other clients, and how the results of that choice were positive.
Real World Example: A California client wanted to pay his sales tax on the Cash Basis, not Accrual. California law says sales tax must be calculated on the Accrual Basis. In other words, the State wants its money now, regardless of whether or not you have collected the money from your customer.
I sympathized with the client and told him I understood that it felt unreasonable to have to remit sales tax dollars he had not yet collected. I also learned that an internal process could be changed to mitigate the situation: the office was creating Invoices in situations where Estimates were a better choice.
Since Estimates are non-posting, the related sales tax will now not hit the books until the Estimate is converted into an Invoice. A win-win for everyone, and no laws are bent or broken.
2. Scare ‘em With the IRS
If a client seems to be ignoring your sound advice, let them know what might happen if the IRS were ever to come knocking at the door.
Real World Example: A client working with a 1099 Vendor was collecting timesheets from the Vendor, instead of invoices, and kept asking me to pay the Vendor off the timesheet.
I explained to the client that treating an Independent Contractor like an Employee is a red flag to the IRS, and if there was ever an audit, she could be liable for back taxes, fees, and penalties.
In the end, she choose to consult her tax preparer and a human resources consultant, which is fine with me, as I’m confident those professionals would concur with my position.
3. Admit When You Don’t Know the Answer
If the client challenges your knowledge or expertise, you can always respond that they may be right, and that you will confer with your colleagues and get back to them.
Real World Example: My client opened a new Line of Credit (LOC) with his bank. He setup the account in the QuickBooks Online (QBO) Chart of Accounts (CoA), and connected the bank feed.
When I took a look, I noticed he had setup the LOC as a Credit Card account, and not an Other Current Liability. When I brought this to his attention, he said QBO only offered Bank or Credit Card for bank feed downloads – he could not setup an Other Current Liability in the bank feed.
Now I know that I have setup LOC’s in the bank feed before, so this must be a new “feature” in QBO, introduced by Intuit without any fanfare (but that’s a whole other blog post, isn’t it?). I reached out to my colleague network to ask for opinions on Credit Card vs. Other Current Liability for a LOC, and got mixed results.
Some thought it was okay, some not, but nobody said it was wrong or a bad practice. So chalk this one up as a win for the client.
4. Ask a CPA
If something feels right, or wrong, I may punt the question to the client’s tax preparer and let him or her make the final call.
Real World Example: The onsite bookkeeper at one of my clients added a bunch of new accounts to the Chart of Accounts without conferring with me first. While the CoA already had Expense accounts for meals, for travel, and for conference expenses, she setup sub-accounts under Conference Expenses for: Conference Fees, Conferences-All Other, Conferences-Flights/Baggage, Conferences-Hotels/Lodging, Conferences-Meals, and Conferences-Rental Vehicle/Car Service. I can tell you, I would NEVER have setup accounts such as that on the CoA.
I punted the situation to the business owner and the CPA. The owner said he thought it would be useful to have the conference expenses breakdown, and the CPA said he could work with it, even though he would have to combine totals in those accounts with the other existing accounts when preparing the tax return (more work for him).
Even though I did not like the answer, sometimes you have to pick and choose your battles, and this was one where I let the client “win.”
Conflicting opinions will arise. Use your best judgment, consult with colleagues and experts, offer industry articles or IRS instructions as backup, then decide which direction to go.
I will never agree to a client’s position if I feel it is unethical or illegal; there may be instances where you will feel compelled to resign from an engagement. But usually a happy, legal medium can be found.
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Jody Linick, an AIPB Certified Bookkeeper, QuickBooks Certified Pro Advisor and member of the Intuit Trainer/Write Network, heads up FitBooksPro which specializes in helping professional services providers set business goals, and using the tools available in QuickBooks Online, to manage...