Category: Client Management

Client Communication and how to avoid the “You didn’t tell me” plus How to Get Friggin’ Paid!

Today, we embark on a mission—a mission to fortify your practice, protect your interests, and ensure you receive the compensation you deserve. As General Patton once inspired his troops in WWII, I am here to galvanize you, the valiant tax professionals, to stand firm in the face of challenges and emerge victorious in your IRS representation cases.

The Battle Plan: Document Everything

In the trenches of tax representation, one of the most formidable adversaries we face is the dreaded “But you didn’t tell me that” client. These clients, whether through selective memory or genuine misunderstanding, can pose a significant threat to your practice. The solution? Documentation.

  • Reduce to Writing: After every significant discussion, reduce it to writing. Send an email summarizing the main points, decisions, and actions required. This not only serves as a reminder to the client but also as a protective shield for you.
  • Certified Mail: For critical communications, send letters via certified mail. Even if the client doesn’t claim the certified mail, the regular mail will reach them. Keep the returned certified mail unopened as evidence.
  • Client Acknowledgment: Always request a reply from the client acknowledging receipt of your communication. This can be an email, a signed letter, or a duplicate copy of the letter they sign and date.

Strategic Communication: Clarity and Precision

To prevent misunderstandings, clarity and precision in communication are paramount. When advising clients on actions like making payments to the IRS while you wait for returns to be prepared, a Form 433-A to be compiled, or Appeals to respond, be explicit. Explain the consequences of changes in their financial situation, such as winning the lottery or receiving a raise, and how these could affect their resolution status such as dropping out of Currently Not Collectible or adding a new liability can kill their Installment Agreement or Offer-in-Compromise.

The Art of Getting Paid: Ensuring Fair Compensation

In this battle, your time and expertise are your greatest assets. Ensure you are compensated fairly for your services.

  • Engagement Letters and Retainers: Always use engagement letters and require retainers up front before starting any work. This applies to any type of professional work you do for a client. For tax return preparation, a retainer of at least 50% is advisable. For IRS representation cases, secure a retainer of $3,000 to $5,000 for exams.
  • Value-Based Flat Fees: For collections cases, consider a value-based flat fee structure. Collect 100%
… Continue reading

Raising Fees – Why is it so hard?

Welcome to our exploration of a topic that many tax professionals and licensed practitioners often grapple with: raising fees. Despite the ever-present dynamics of inflation and market forces, numerous professionals find it incredibly challenging to increase their rates. In this post, we’ll dive into several key reasons behind this hesitation and examine how it affects your clients, profits, and overall psyche.

**Existing Clients vs. New Prospects**

One major distinction to keep in mind is the difference between existing clients and new prospects. Generally, it’s easier to raise fees for new clients than for those who have been with you for some time. Let’s start by discussing why increasing fees for existing clients can be so daunting.

**Fear of Losing Long-Term Clients**

The primary concern here is the fear of losing clients. Many professionals worry that a fee increase will drive away loyal long-term clients. This concern, while valid, is often overblown. Most clients understand that fees need to increase over time due to rising costs such as software upgrades, memberships, and staff salaries.

**Practicality and Perspective**

In practical terms, a reasonable fee increase of 3-10% is often barely noticeable to most clients. For example, raising fees by 3-5% annually allowed me to retain 98% of my clients during my 14 years of practice. More importantly, the clients who stayed valued the quality of service even with the increased fees.

**Client Loyalty and Economic Sensitivity**

Another factor is client loyalty. Long-term clients might feel unfairly treated with a fee hike, but the reality is that loyalty is not easily broken by marginal increases. Economic sensitivity is another concern; professionals hesitate to raise fees for fear that clients can’t afford them. However, economic conditions on tax returns don’t always represent the clients’ full financial scenario.

**Valuing Your Services**

Not raising your fees may inadvertently undervalue your services. Lack of confidence in the value you bring can make fee increases seem daunting. Yet, charging higher fees often enhances the perceived value and worth of your services.

**Consistency and Predictability**

While maintaining steady fees provides a predictable experience for clients, small, gradual increases can condition them to expect and accept changes. This method helps avoid larger, more shocking increases down the line.

**Fear of Negative Feedback**

The fear of negative feedback also plays a role. While some clients may complain, the impact is generally minimal if you provide excellent service. Occasionally, you might lose a few clients, but those … Continue reading

“Got a Minute?” and the case for not answering your phone

As a licensed tax professional, you’ve probably experienced the dreaded “Got a minute?” phone call. You know the one: it starts innocently enough, but before you know it, you’re knee-deep in a complex tax issue that requires hours of research. If you’re still answering your own phone, it’s time to reconsider. Here’s why you should let someone else handle those calls and why giving out your personal cell number is a big no-no.

The “Got a Minute?” Call: A Time Thief in Disguise

The “Got a minute?” call is a classic time thief. It’s never just a minute. Clients often underestimate the complexity of their questions and the time it takes to provide a thorough answer. By the time you’ve hung up, you’ve lost valuable time that could have been spent on billable work. As Forbes points out, tax professionals are already overwhelmed with the sheer volume of calls and emails during tax season. Time blocking and call scheduling are essential strategies to manage this workload effectively.

Why Your Personal Cell Number Should Stay Personal

  1. Boundary Issues: When you give out your personal cell number, you blur the lines between your work and personal life. Clients may feel entitled to call you at all hours, disrupting your personal time. As one Reddit user humorously noted, “My doctor is only open like Mon-Thurs from 9-3pm, so I don’t see why people feel the need to access their CPA 24/7”. Setting boundaries is crucial for maintaining a work-life balance. When I first started my practice, I made the mistake of giving my cell phone out to my clients. It was even printed on my business card. Most clients are good in not bothering you, but there were a few that called at 7am or 9pm. Oh, if that happens, just don’t answer it. You can respond the next business day.
  2. Professionalism: Using a personal number for business can come across as unprofessional. Clients may perceive you as less established or less serious about your practice. A separate business number allows you to present a more polished image. Having a dedicated business line (just like an email with a domain name not Gmail.com) shows that you are more of a professional.
  3. Privacy Concerns: Sharing your personal number can lead to privacy issues. You might receive texts and calls from clients at inconvenient times, and your personal number could end up in
… Continue reading