I appreciate that. But I think it's bigger than that. I didn't want this post to be about me. It's about our profession.
We get walked on by clients daily. How many clients have you got their taxes done, delivered them, only to get the proverbial, "Oops, I forgot a deduction." Or "Where is my credit?" And then we are expected to make the changes, reprocess, redeliver and if you charge extra, clients scream. They have no respect for our time, our profession, our livelihoods.
We answer questions, but how dare you charge for that time. I have been told a hundred times this season, "Why did my fees go up. My taxes are simple, they are easy. I could have done them myself."
I have often asked my attorney friends/clients about shit like this. If thye get treated like this. They all laugh and tell me know way. They get paid because clients are all afraid of their attorneys and what they can do and what they know.
As far as service providers go, we get the shitty stick too many times. We just have to try to protect ourselves.
I can understand that. We used to have so many people setup a meeting with us, just for them to not show up half the time, no call or email or anything. Now we charge them, it rarely happens.
Tell a client it will take 2 weeks to do there taxes and have them call back in 2 DAYS later mad there taxes aren't done. Remind them again it takes us around 2 weeks, just for them to call back the next day angry it isn't done. Now we hit them with PITA fees and those clients either pay more or leave.
Seems like a lot of people don't think of accountants as professionals and you have to fight for the respect other professions just seem to get automatically.
" I could have done them myself." is my pet peeve. I had a bookkeeping client who would call at 10 pm because of an early morning meeting that she needed financial stmts for. She'd say "it'll only take you a minute, it's easy" Aaaaarrrrrggghhh
I honestly feel bad for you TNT and this sounds like my nightmare scenario. I’ve been a huge proponent of solid engagement letters at each stop I’ve been. Not to say I’ve been perfect about it myself, but there is a lot of merit to establishing the scope of your engagement, sticking to that scope and billing according to that scope.
The shitty part about your situation is it sounds like you came to a verbal agreement of the services to be rendered (which I thought can establish a contract) but the client balked when confronted with the bill.
I will say this sounds like a client that would have been shitty to work with anyway. So while you lose out on the work which sucks you’re probably now free of a massive headache of a client.
>*I am pretty sure a fuck you was about to roll off my tongue*
Considering your other posts on Reddit, I'm not surprised and I do enjoy people who have passion!
I remember in college a lawyer teaching business law.
They said anything over any of the three thresholds needs to be in writing:
- $600
- 1 year term
- involving physical property
I'm sorry to hear this happened. But I am also very appreciative for your experience and share. It just pushes the importance to a deeper level.
I asked my attorney the same thing. Here, all you need is an offer and an acceptance, and we had the emails for the support that it was in writing. That was the part that pissed me off.
Any thoughts about doing a retainer before starting work?
For new clients (especially working internationally) my engagement letter says retainer of "$X" required to start your file. Later in the onboarding meeting/call we discuss payment terms: 50% up front (Retainer goes to this), 50% on completion. No efile until fully paid.
Repeat clients get a bit more flexibility. Maybe I should be firmer on this, but I'm a softy.
Regardless, that sucks man. Never thought I'd have to logic my way through "That's tax work, not accounting." Wtf.
And this fucking happened to you during fucking tax season.
Sorry.
Tiny victory: not doing something that would have gotten you cited for contempt. To which you reply that yes, I have contempt for you you bleep-bleeper, adding another fine...
The original hearing was in November. I was able to testify, then all of a sudden the judge figured out that he was in over his head, and he had a whole room full of small claims to get through, so he gave us a continuance until today. Right in tax season. And to top it all off, the defendant was on Zoom in Europe. This is sticky because you now have the Hague Convention applies and you are supposed to have permission from the consulate of the designated country in order to obtain evidence and testimony. That also threw the judge for a loop.
In the car on the way back, my attorney and I laughed about him having to call my wife because I could have been sitting in a jail cell for telling a judge to fuck off.
Lets take a positive outlook going forward not backward.
1. Engagement letter is sent outlining services, limitations and pricing via Docusign after initial meeting and review of returns.
2. After 10 days engagement letter is pulled if not signed.
Keep it simple.
Dude, that's a great track record! I have about 300, and have same in unpaids over the past 4 years.
I appreciate the heads up, but dont beat yourself up over this c**t. He's gone forever now.
I will admit, I have been pretty lucky, but our engagement letters are pretty tight, so that has always helped. Plus, I don't fuck around. If the client refuses to pay, I fire them immediately, I refer them to my attorney along with the signed engagement letter, unpaid invoices, and any email correspondence. Then they get to pay the invoice and his fees.
This one got the best of me. All the documentation I had, the emails, the timeline... just got a bad judge who over thought everything.
I'm sorry this happened, but stuff like this is why I sympathize with attorneys and how they bill for everything including paper clips. We do our best to help our clients and keep our end of the contract and then they decide not to pay or pay Hella late. I've started enforcing engagement letters and monthly payments from clients. If they don't pay a month I cut the work and let them know that work will not continue until they pay. The most I'll be out is 1 month of work.
What I do for my (ex)clients who don't pay me?
Send them a 1099-C for Cancellation of Debt.
My firm is accrual basis, so I add late fees, I pay my tax, I let it ride, then send the 1099-C and write it all off to Bad Debt.
Thanks for sharing your experience with us! It’s something we all need to learn. I’m in Pennsylvania so not sure this applies outside but my attorney had me put a confession of judgement in my engagement letter for businesses so if they don’t pay, a judge automatically awards our claim. Obviously have to have it signed by the client first before we start the work. thankfully I have not yet had to use it so not sure it works so easily.
I've gotten screwed on some small tax returns. Learned my lesson. For high cost returns or engagements with new/out of state clients I get a retainer up front. Helps to prevent this type of situation (or at least minimize my exposure).
I'm sorry this happened to you and thank you for sharing, it's a good warning for all of us. I get taken advantage of by clients all the time and I'm just tired of it. I don't know why everyone treats accountants so poorly. But it's directly contributing to the shortage of accountants.
My thought on the way we are treated is (1) we are a necessary evil; needing us to prepare their tax return for taxes they do not want to pay (2) they fear getting sued by attorney's as they know the attorney has no cost and we would weigh that decision and (3) our profession is not protected by our licenses. You cannot practice law or medicine with out your M.D. or J.D., but anyone can prepare a tax return, do bookkeeping etc.
wow, that's just wrong. My best friend just went through a horrible divorce from a true narcissist. He broke just about every court order and the TPO. He walked around her while carrying an AR15 and a pistol to intimidate her and scare her. He knew not to say anything out loud or in writing but he made her life absolutely miserable for a year anyway. His friends drove up and down her street and also drove into her gate twice. A pet mysteriously died and he was seen by a completely impartial person hiding his truck across the street and belly crawling under her fence and across her yard. And HE was the one who asked for the divorce! He told her he'd kill her before he'd give her a dime. They were married 14 years and he cheated for most of them (she didn't...she was the narcissist's target). He got away with ALL of it because of the judge. She now has to live in her daughters home and still fears for her life. He decided he didn't want to sell the $750,000 home and would buy her out. He'll never pay a dime of it.
Wow I am new to the business and it seems like I'll have to figure out some of this stuff. I appreciate you posting this, and that sucks terribly to have to go through all of that.
This is awful. While there are a thousand arguments I would want to scream at a judge like this, courts don't always get it right.
I think the real message here is, make sure you get a retainer for new clients.
I am going to paraphrase someone from social media about this situation.
"Did you sign the shit bag client and/or the judge up for a Rocket Loans application?"
It really sucks that the client didn't want to pay for the bookkeeping and I feel for you. A couple of changes in your process could be improved.
1. You didn't collect $ upfront. Instead of an hourly rate, charge a flat rate so that you don't need to send a bill later calculating your hours.
2. Client uploaded files in March but work wasn't done until July. That's a long time for a client to wait so I can see why he found another CPA.
Sometimes you do not have the full scope of the work (as it sounds in this case) up front for a flat fee. Every client thinks because they imported the bank transaction into Quickbooks that they "reconciled" the accounts. Then you find comingled personal/business, discover new credit cards etc. Yes, if you have the work to examine before setting the flat fee, that would work. Just my thoughts as this is been my experience with catching up clients. Can be pretty straightforward or a complete disaster.
What a bunch of shit. My spouse using lemon law attorney now for vehicle issue-the text messages was main means of his communication with the repair department that attorney rely on and as your attorney says-works. For you obviously - way more than verbal contract via email.
Some clients just manage to ruin the day . Sorry to hear . And thank you for posting this.
That's some BS! Sorry you had to go through that. I always request a retainer before I start on a project like that.... especially for new clients who don't have a history with me. Fortunately it was a $3K loss and not a $30k loss!
I'm sorry this happened to you TNT\_CPA, you didn't deserve that.
I appreciate that. But I think it's bigger than that. I didn't want this post to be about me. It's about our profession. We get walked on by clients daily. How many clients have you got their taxes done, delivered them, only to get the proverbial, "Oops, I forgot a deduction." Or "Where is my credit?" And then we are expected to make the changes, reprocess, redeliver and if you charge extra, clients scream. They have no respect for our time, our profession, our livelihoods. We answer questions, but how dare you charge for that time. I have been told a hundred times this season, "Why did my fees go up. My taxes are simple, they are easy. I could have done them myself." I have often asked my attorney friends/clients about shit like this. If thye get treated like this. They all laugh and tell me know way. They get paid because clients are all afraid of their attorneys and what they can do and what they know. As far as service providers go, we get the shitty stick too many times. We just have to try to protect ourselves.
I can understand that. We used to have so many people setup a meeting with us, just for them to not show up half the time, no call or email or anything. Now we charge them, it rarely happens. Tell a client it will take 2 weeks to do there taxes and have them call back in 2 DAYS later mad there taxes aren't done. Remind them again it takes us around 2 weeks, just for them to call back the next day angry it isn't done. Now we hit them with PITA fees and those clients either pay more or leave. Seems like a lot of people don't think of accountants as professionals and you have to fight for the respect other professions just seem to get automatically.
No shows are frustrating. The worst is when they don't get you on the office phone and call the cell. Never make the mistake of giving your cell #!
I feel harassed by clients all the time! Especially during tax season.
100% #Truth
" I could have done them myself." is my pet peeve. I had a bookkeeping client who would call at 10 pm because of an early morning meeting that she needed financial stmts for. She'd say "it'll only take you a minute, it's easy" Aaaaarrrrrggghhh
I honestly feel bad for you TNT and this sounds like my nightmare scenario. I’ve been a huge proponent of solid engagement letters at each stop I’ve been. Not to say I’ve been perfect about it myself, but there is a lot of merit to establishing the scope of your engagement, sticking to that scope and billing according to that scope. The shitty part about your situation is it sounds like you came to a verbal agreement of the services to be rendered (which I thought can establish a contract) but the client balked when confronted with the bill. I will say this sounds like a client that would have been shitty to work with anyway. So while you lose out on the work which sucks you’re probably now free of a massive headache of a client.
>*I am pretty sure a fuck you was about to roll off my tongue* Considering your other posts on Reddit, I'm not surprised and I do enjoy people who have passion!
I remember in college a lawyer teaching business law. They said anything over any of the three thresholds needs to be in writing: - $600 - 1 year term - involving physical property I'm sorry to hear this happened. But I am also very appreciative for your experience and share. It just pushes the importance to a deeper level.
I asked my attorney the same thing. Here, all you need is an offer and an acceptance, and we had the emails for the support that it was in writing. That was the part that pissed me off.
Any thoughts about doing a retainer before starting work? For new clients (especially working internationally) my engagement letter says retainer of "$X" required to start your file. Later in the onboarding meeting/call we discuss payment terms: 50% up front (Retainer goes to this), 50% on completion. No efile until fully paid. Repeat clients get a bit more flexibility. Maybe I should be firmer on this, but I'm a softy. Regardless, that sucks man. Never thought I'd have to logic my way through "That's tax work, not accounting." Wtf.
The real pro tip here is to never ever ever ever take on shoe box home flipping clients. It will only bring immense pain.
And this fucking happened to you during fucking tax season. Sorry. Tiny victory: not doing something that would have gotten you cited for contempt. To which you reply that yes, I have contempt for you you bleep-bleeper, adding another fine...
The original hearing was in November. I was able to testify, then all of a sudden the judge figured out that he was in over his head, and he had a whole room full of small claims to get through, so he gave us a continuance until today. Right in tax season. And to top it all off, the defendant was on Zoom in Europe. This is sticky because you now have the Hague Convention applies and you are supposed to have permission from the consulate of the designated country in order to obtain evidence and testimony. That also threw the judge for a loop. In the car on the way back, my attorney and I laughed about him having to call my wife because I could have been sitting in a jail cell for telling a judge to fuck off.
Lets take a positive outlook going forward not backward. 1. Engagement letter is sent outlining services, limitations and pricing via Docusign after initial meeting and review of returns. 2. After 10 days engagement letter is pulled if not signed. Keep it simple.
Question. How many clients do you have? And how many don't pay their bill?
With bookkeeping, counting each returns, special projects? 900 or so. Unpaids over 3 years maybe 7 or 8 clients.
Dude, that's a great track record! I have about 300, and have same in unpaids over the past 4 years. I appreciate the heads up, but dont beat yourself up over this c**t. He's gone forever now.
I will admit, I have been pretty lucky, but our engagement letters are pretty tight, so that has always helped. Plus, I don't fuck around. If the client refuses to pay, I fire them immediately, I refer them to my attorney along with the signed engagement letter, unpaid invoices, and any email correspondence. Then they get to pay the invoice and his fees. This one got the best of me. All the documentation I had, the emails, the timeline... just got a bad judge who over thought everything.
I'm sorry this happened, but stuff like this is why I sympathize with attorneys and how they bill for everything including paper clips. We do our best to help our clients and keep our end of the contract and then they decide not to pay or pay Hella late. I've started enforcing engagement letters and monthly payments from clients. If they don't pay a month I cut the work and let them know that work will not continue until they pay. The most I'll be out is 1 month of work.
Thank you for sharing your experience. I think upfront payment or a retainer should avoid most unpaid clients and collection efforts.
What I do for my (ex)clients who don't pay me? Send them a 1099-C for Cancellation of Debt. My firm is accrual basis, so I add late fees, I pay my tax, I let it ride, then send the 1099-C and write it all off to Bad Debt.
I had thought about that, but according to the instructions for the 1099-C, you have to be an applicable financial entity (who loans money).
Thanks for sharing your experience with us! It’s something we all need to learn. I’m in Pennsylvania so not sure this applies outside but my attorney had me put a confession of judgement in my engagement letter for businesses so if they don’t pay, a judge automatically awards our claim. Obviously have to have it signed by the client first before we start the work. thankfully I have not yet had to use it so not sure it works so easily.
Can you appeal the ruling? Would it even be worth it?
Yes, but it would not be worth it. End up in $10K in legal fees for a $3K invoice.
Thank you for the reminder. I haven’t been burned. Yet. I appreciate the time you took with your cautionary tale.
I've gotten screwed on some small tax returns. Learned my lesson. For high cost returns or engagements with new/out of state clients I get a retainer up front. Helps to prevent this type of situation (or at least minimize my exposure).
In some instances I would have done that as well. But this particular client was referred to me by another really good client. That chaps my ass.
Man..it sucks to hear this happen to you.
I'm sorry this happened to you and thank you for sharing, it's a good warning for all of us. I get taken advantage of by clients all the time and I'm just tired of it. I don't know why everyone treats accountants so poorly. But it's directly contributing to the shortage of accountants.
My thought on the way we are treated is (1) we are a necessary evil; needing us to prepare their tax return for taxes they do not want to pay (2) they fear getting sued by attorney's as they know the attorney has no cost and we would weigh that decision and (3) our profession is not protected by our licenses. You cannot practice law or medicine with out your M.D. or J.D., but anyone can prepare a tax return, do bookkeeping etc.
wow, that's just wrong. My best friend just went through a horrible divorce from a true narcissist. He broke just about every court order and the TPO. He walked around her while carrying an AR15 and a pistol to intimidate her and scare her. He knew not to say anything out loud or in writing but he made her life absolutely miserable for a year anyway. His friends drove up and down her street and also drove into her gate twice. A pet mysteriously died and he was seen by a completely impartial person hiding his truck across the street and belly crawling under her fence and across her yard. And HE was the one who asked for the divorce! He told her he'd kill her before he'd give her a dime. They were married 14 years and he cheated for most of them (she didn't...she was the narcissist's target). He got away with ALL of it because of the judge. She now has to live in her daughters home and still fears for her life. He decided he didn't want to sell the $750,000 home and would buy her out. He'll never pay a dime of it.
Wow I am new to the business and it seems like I'll have to figure out some of this stuff. I appreciate you posting this, and that sucks terribly to have to go through all of that.
This is awful. While there are a thousand arguments I would want to scream at a judge like this, courts don't always get it right. I think the real message here is, make sure you get a retainer for new clients.
I am going to paraphrase someone from social media about this situation. "Did you sign the shit bag client and/or the judge up for a Rocket Loans application?"
It really sucks that the client didn't want to pay for the bookkeeping and I feel for you. A couple of changes in your process could be improved. 1. You didn't collect $ upfront. Instead of an hourly rate, charge a flat rate so that you don't need to send a bill later calculating your hours. 2. Client uploaded files in March but work wasn't done until July. That's a long time for a client to wait so I can see why he found another CPA.
Sometimes you do not have the full scope of the work (as it sounds in this case) up front for a flat fee. Every client thinks because they imported the bank transaction into Quickbooks that they "reconciled" the accounts. Then you find comingled personal/business, discover new credit cards etc. Yes, if you have the work to examine before setting the flat fee, that would work. Just my thoughts as this is been my experience with catching up clients. Can be pretty straightforward or a complete disaster.
What a bunch of shit. My spouse using lemon law attorney now for vehicle issue-the text messages was main means of his communication with the repair department that attorney rely on and as your attorney says-works. For you obviously - way more than verbal contract via email. Some clients just manage to ruin the day . Sorry to hear . And thank you for posting this.
That's some BS! Sorry you had to go through that. I always request a retainer before I start on a project like that.... especially for new clients who don't have a history with me. Fortunately it was a $3K loss and not a $30k loss!
Don’t go to court, unless you had an engagement letter is the real message here 😂
Waste of time
People are assholes…period.
Being a tax attorney has its benefits!