Running a Tax Practice – Easy or Hard

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I always hear how stressful it is to run a tax practice. Before I jumped into my own full-time practice, that just seemed like utter nonsense. After all, if you set the ground-rules and adhere to them, your practice should run smoothly. You’ll love what you do, and life will be all rosy and sweet.

Which reminds me of my 7th grade math and science teacher, Ben Levine. He walked into class, and outlined our duties and responsibilities as students. He would brook no nonsense. He expected us to adhere to his rules strictly. Well, that lasted a day or so, until the girls found out he didn’t have the ___ to stand by his rules. Then, not only did they walk all over him – they got him fired the following year. That was a real shame. Because in 7th and 8th grade I learned more from Ben Levine, than I have ever learned from all the other math and science teachers I have ever had, combined.
Why did I digress? Because he did what many of us do. We start out with a hard, firm line; then let clients cross it – until they cease to respect our boundaries. That’s what causes the stress.
I fell into that trap as well. Even before we opened for business. We were going to open our doors after New Year’s Day, on the following year. My relatively new husband I were planning to take off for the last three weeks of December. But a colleague called and begged me to help out a client.
Chris was representing them before IRS on a heavy-duty collections case, based on IRS having created SFRs (substitute for return). They had not filed tax returns for 10 years – and IRS wanted them all. He pleaded with me to give up a week of my precious time off to prepare the tax returns. I gave in, but insisted on getting paid for all the work, up-front.
The client gave me a check for the first tax return, of the 10. And post-dated checks for all the others. I took a week away from my husband, and gave it to this fellow. Naturally, none of the other checks were ever good. And, after a while, he disappeared off the face of the earth.
Lesson? (Well, it took me another couple of times, trusting clients to learn the lesson. But I did collect from those folks.)
Lesson 1: Never do the work before you get paid. Period. No matter what the heartbreaking story is, it’s probably not true.
Lesson 2: If you don’t get paid up-front, do the work understand that this might be a gift – a pro bono project. If you can deal with that, and care enough for the client to give your time away – do the work. (Sometimes, you just WANT to help.)
Lesson 3: Some people, especially those who have always been struggling financially, will move heaven and earth to pay you – even if it takes years.
  • One client took several years to pay me, even after bankruptcy. Then, when he was in a position to do so, threw a huge project my way.
  • Another client, a previously abused mother, paid me $25 whenever she had it, over a couple of years, until she was all paid up. Then, studied accounting and became a CPA.
Lesson 4: People who haggle over your initial fee will never value you. Turn them away as clients. This is reported to me often by other tax professionals. Those who start out trying to push down your fees are the same ones who insist on calling you daily, with just a “quick question” and never want to pay for the time you’ve tracked. Either dump them, or quote a high fee, requiring a retainer, that is always replenished BEFORE you take their calls or do their work.
Lesson 5: Get everything from your clients in writing. Do not accept information verbally. They will deny they ever said “it”, if “it” turns out to be inconvenient for them. This only happened to me once. A doctor’s wife gave me some numbers on the phone. I prepared the tax return. The balance due shocked her. She decided to reduce their income amount, saying that she never told me their income was that high – that I made up the number. I kicked the client out – and never accepted anything verbally since. Your clients can provide information via letter, fax, or email. Save the document.
These are just some basic lessons I learned very early on. As long as I stuck to my principals, my practice was a joy. But the minute I let people sneak in who were consistent about not following instructions, or about wheedling ‘just a quick questions”, or were too controlling, calling about status on a daily basis, it stopped being fun.
Want it be fun again?
Look at your client base and your staff.
Who brings you joy?
Who simply aggravates you?
Dump the negative elements in your practice.
As one person pointed out in one of the discussion boards, a friend of his reduced his client load from about 500 clients to 47. He works fewer hours. Yet he gets paid more for providing more services. And he has no stress.

Does your practice need to be re-thunk?

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By PurpleReign
Jun 26th 2015 01:11

Great post. I have an aunt who was very successful, her advice: as a business owner you set and maintain the standards in your business. She also said: high standards are the key to being successful.

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