Problem clients. All accountants have them, but how do you spot and get rid of them without damaging your business?
AccountingWEB's US sister web site AccountingWEB.com has some tips. It interviewed certified public accountants, Fred Slater and Ellen Minkow, partners in MS 1040 LLC in New York. They reckon that there are four main types of problem client:
Those who don't want to pay for a professionally done tax return, so they try it themselves, get partially into it, and bring in the rest to you. Tell these would-be clients that they only take new clients on a referral basis.
All ask for a price at the very beginning. One possible way to get rid of them is to increase your fee.
“Sometimes, all you have to do is explain to the client the amount of work we have to do on [a certain type of tax work]," says Slater. Sometimes, clients understand. And sometimes they don’t, he adds.
You know they’re falsifying business expenses by padding and fudging.
These clients probably don’t realize that good accountants can do that, he adds. They may not understand the position that they are putting themselves in.
“ ... You sit down and explain the dangers of what they are doing,” Slater says. “You end it with, ‘I have a license and I can’t do that without losing my license.’ You can explain to them how many millions of dollars that license gets you over your lifetime and when you add up working for 40 to 50 years, it’s a lot of money ... ”
Trust your instincts. But if you end up with a client with a criminal history, you’ll want to see plenty of documentation. “One reason is to protect our rear ends and theirs,” Slater says. “There’s no doubt they’ll be scrutinized for a number of years for whatever they did.”
Minkow and Slater said clients have agreed to a settlement of charges against them even though they vowed innocence because they were persuaded by the partners.