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Very Small Startups

I am regularly approached by rather nice women who have been trading for 6 months who are turning over such small amounts of money I wonder whether there is any point in it all. They need help with their tax return, and that probably won't take very long to do, but I wouldn't want to charge them for the inevitable set up time and hand-holding that goes with it as I don't see a way of making money from them that won't bankrupt them. Most of them tell me their partner is supporting them financially. That's the problem in many ways, as it clouds the fact that they aren't running a viable business.

What advice do you give to people like this who you wouldn't want as a client for the reasons I've outlined? And can you see a way any practice could specialise in the area and make a reasonable profit?

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I only have one set of fees which are on the website ...

so if they have got as far as talking to me then I assume the fees are OK.

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10th Jul 2012 09:16

Even I ...

...who would hold a shaving mirror under the nose of the prospect and let them sign up if the mirror steamed just a little bit, would avoid these jobs like the plague.

In my experiance you cannot make money as they just can't pay enough and they need huge amounts of hand holding.

That said, I did have a few of these jobs but only because:

a) I had to take them as I had their brother/sister/husband/wife/mother/father that was a grade "A" job

b) I wanted to have their brother/sister/husband/wife/mother/father that would be a grade "A" job if I could get it

c) Doing the job brought me some good PR (never discount this, helping the local community can bring you much reward)

d) I fancied them! (I was single in those days!)

 

Steve

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10th Jul 2012 12:26

micro clients

Steve McQueen wrote:

."..who would hold a shaving mirror under the nose of the prospect and let them sign up if the mirror steamed just a little bit, would avoid these jobs like the plague.

In my experiance you cannot make money as they just can't pay enough and they need huge amounts of hand holding.

That said, I did have a few of these jobs but only because:

a) I had to take them as I had their brother/sister/husband/wife/mother/father that was a grade "A" job

b) I wanted to have their brother/sister/husband/wife/mother/father that would be a grade "A" job if I could get it

c) Doing the job brought me some good PR (never discount this, helping the local community can bring you much reward)

d) I fancied them! (I was single in those days!)"

 

Steve

for resons c) & d) I would take them on -usually you find if you can keep them up to date the hand holding get less after 12 months and you can ask them to email only to save admin time.

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10th Jul 2012 09:34

Systemising

Steve McQ - I remember your excellent posting a while ago on how you could make money out of the subbies on very low income. It was all about systems, money up front and insisting on doing no more than agreed in advance. That sounded a shade too much like hard work to me, but these women are a different breed in that they are mainly reasonably well educated.

On the other hand the women I've described have very little business nous and in the long run that would drive me insane. 

I've got a nagging feeling that someone else will come up with a system to get their tax returns done at a lowish price while still managing to make a profit if I don't do it, but I need to be convinced it is worth the effort trying to devise the system in the first place!

 

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10th Jul 2012 10:01

Don't prepare accounts

The only way is to say that if they prepare a 1 page income and expenditure account for you, you will put it straight onto a tax return as it stands and file it for them.  If you have to end up preparing the accounts for them, you won't cover your costs and they will go bust.

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Agree

As Euan says in the majority of cases these are extremely simple cases and you need only stick the 3 numbers onto the tax return (will be even easier when cash accounting comes in?!)

As far as charging is concerned, if you don't like the thought of turning them away and don't know of anyone who might help them out then I'm inclined to do it pro-bono.  It only takes a small amount of time and takes the pressure of you in worrying about how much to charge.  I used to do a day a month for a local charity helping out the public with tax/accounts/financial stuff and I preferred it to the paid stuff!  The icing was that every now and then I'd get a call from someone who I'd seen months before or who had been recommended by someone I'd seen and who became a paying client.

Obviously you can set a limit to the time, £s value or work you are prepared to do free of charge but I still get more of a kick out of helping someone out than I do getting a cheque for £60 (or cash of £50!)

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what I do with mirco 'prospect' who has next to zero chance of making a proper business out of it but enough upstairs to do it themselves with some hand-holding is to get them to buy a book.

Taxcafe has one about basic accounts and tax returns, you look proactive, they leave you alone, every one is a winner:

http://www.taxcafe.co.uk/keepingitsimple.html

 

I do sometimes suggest clients who just dont get bookkeeping buy it as it saves me the bother to explaining it, although the template used is not the same as we use, its better than nothing.

 

 

 

 

 

 

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10th Jul 2012 17:55

Thank You

I particularly like the suggestion of the taxcafe manual, but all the other comments are thought-provoking too.

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Be selective

I too love the Tax Cafe guides (especially on property taxes). They also provide in PDF (you can ask them not to send the paper) so you can then be selective and send the clients only the pages they need.

This is particularly relevant with "keepingitsimple" as Part 1 covers how to save hundreds of pounds in accountancy fees!

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Paul - yes I buy some of those property ones from time to time, but keep them for myself!   The accounting fee thing is just blurb on the sales pitch but its just bookkeeping really, which quite frankly I have never made a return on trying to teach clients how to do, you tend to have to take it on the chin or charge a nominal sum, easier to say, "well I would charge you £500 to teach you how to do this, or you could spend £20 on this have a bash yourself and we will talk about what you need to improve".   I think most clients appreciate that sort of thing more than you saying, well I would charge £500 for this, but I will teach you for £250 and both sides being miffed about it. 

I did find with this one that half of the book seems to be sales pitch for accountants anyway as it introduces lots of more complex tax things such as VAT and which scheme to be on and seems to finish every chapter, saying this is a bit tricky and you might need some advice........ which suits me just fine in that anyone that probably ought to have an accountant will probably come back anyhow, and if they are the types Moonbeam is on about then quite frankly you didnt want them to anyway. There is nothing in there at all about what expenses to deduct for SA for example, just where to mechanically stick the numbers from your bookkeeping into the returns.

I should point out that feels like a party political broadcast on behalf of Tax Cafe™.

May I also thank my other sponsors Xero, TaxCalc, VT and of course Moneysoft, I will of course expect free subscriptions to the above for advertising services rendered in due course.

 

 

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11th Jul 2012 17:25

How about

pointing the micro client in the direction of VT Software. Get them to enter their income and expenditure into Cash Book (downloaded for free). You pick up the file via Dropbox (or whatever) and open it in VT Transaction +. You can then check it and export it to say BTC  tax software and prepare the tax return. Simple low cost tax return service.

Can't help with the hand holding though!

I've no connection to VT or BTC other than as a customer. I'm sure other packages could do the same.

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