How to Deal With Difficult Clients

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I got two emails on the same day from two clients dropping us, and both took me by surprise.

The first client was a 65-year-old guy who owns a printing company (yes, they still exist, but I am certain they will be out of business in ten years). He heard me on a podcast, and we discussed his tax situation.

Long story short, his previous accountant was his neighbor, who I think did his work for free. Not to mention he was out of state. We have a lot of clients all over the country, but the guy could never wrap his head around that. Anyway, we converted him to QuickBooks Online. His daughter worked for him and was supposed to be the internal bookkeeper.

The former CPA screwed his books up so badly, not to mention never amortizing goodwill from when he bought the business, and that caused the guy to lose out on a $35,000 deduction per year. The tax depreciation schedule had recovery lives that don’t exist under MACRS and were all depreciated using straight line.

In my engagement agreement it addresses back work. If I need to do any back work, or fix something, I charge an hourly rate. The QB didn’t match the tax return, so I have no idea where the numbers came from. I had to fix that and the current year stuff. Then he was overdrawn in his bank account by $47,000.

First of all, I don’t know what checks are actually outstanding and which ones didn’t exist. But I wasn’t going to delete a check that might bounce, setting me up for a lawsuit. I spoke to his daughter, again supposedly the internal bookkeeper, and told her that she had to go through the account and delete the checks that weren’t outstanding.

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About Craig W. Smalley, EA

Craig Smalley

Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.


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Jan 19th 2018 18:24

This is something I need to learn to do. I am always doing things for free, or "nearly free", but I have to learn time is money. It's hard to do when you have a limited number of clients, but I need to go ahead and do what you do and make anything that is not a part of the engagement letter on an hourly basis with a retainer.

Thanks (2)
Jan 22nd 2018 04:59

Things I always remember about human nature, which applies both inside and outside of business:

That which is freely (or cheaply) given isn't valued. Also,"What have you done for me lately" is a very common mentality.

Trying to create customer loyalty/goodwill is mostly a futile effort. When you've done a good job and created value, bill accordingly.

I take pleasure in knowing that, if a client quits for whatever reason, I billed him handsomely and got what I could out of him. If he remains a client, that's icing on the cake.

Thanks (1)