Top 4 Red Flags About Bad Clients!

by | May 17, 2022 | Audits, General Business, Mary's Wisdom, Uncategorized | 0 comments

Over the course of my career I have regretted becoming engaged by select clients.  The interesting thing is a voice in head always told me to “run!” After a few hard lessons, I listen now.  Ignoring that voice has cost me aggravation, time and money.   I thought it would  be good to share some of my experience dealing with difficult clients and the red flags that can help you identify them.   

Here are some red flags! 

Say what? That makes no sense!

I had a client who was being audited.  He insisted that his services were not taxable.  The auditor “did not bother” to understand his business.  I asked for a few contracts and invoices.  They described the provision of a taxable service.  I reviewed the website.  Again, the website described a taxable service.  I asked to see insurance coverages.  The documents described coverage associated with a taxable service.  

It walked like a duck, quacked like a duck…you get the picture.  Needless to say, there was nothing I could do to change the tax assessment.  During an audit all of the paperwork must support the tax position.   The engagement was a complete waste of time and money.

Everyone else is “stupid.”

We all know this person.  The person acts like everyone who asks a question or doesn’t agree quickly with his conclusion is “stupid.”  A prospect called and asked for research on taxability.  She told me that he could understand my assessment that what he did was taxable because I “lacked imagination.”

Either the transaction is taxable or it’s not.  There are many rules that govern taxability.  It’s not my job to tell anyone what they want to hear.  She found someone else to service her.  I moved on to someone who values what I do.  It was a win-win.

Everything is an emergency.

You get a call from someone who needs a filing by 5:00pm today.  It’s 3:00pm.  This person was referred to you 3 months ago and you never heard back.  You don’t know the facts of the case and the taxing authority says you can’t have an extension.  The assessment is going to be deemed final in 2 hours.  Your client had over a year to respond.  Need I say more?  Procrastination on a client’s part shouldn’t constitute an emergency on yours.  

The contact is non-responsive.

You set a deadline. You need data from your designated contact. He won’t respond to phone calls, email, or text. The signatory on your contract has told you she doesn’t want to hear about the matter. She trusts your contact completely.

You can’t service the account. The only thing you can do is withdraw from the engagement. Do it formally before you prejudice the client’s matter. This type of engagement is a nightmare because it stresses you out and leaves someone with the wrong impression of your work. No impression is better than a bad one!

Please notice that I didn’t mention anything about payment. Non-payment is a deal-breaker. Depending on the scope of the work, I never release work until I receive a retainer and the account is current. A slow paying client is hard to peg. It can be sign that they have no intention to pay you. Or it may be that your pay cycles don’t match. Talk and increase the retainer accordingly. The bottom line is you can fix this issue. You can’t fix the other flags.

I don’t know about you but I’d rather eat a dirt sandwich than become involved in a matter where there is no chance that the client will get a “good” outcome. The client is never happy and almost never pays in full. Pay attention to the signs…You can’t cut and run fast enough!

 

Safeguard Your Business: 3 Must Know Pre-Sales Tax Audit Steps

This tax tip is about 3 things you should do before you or your client receives a Notification of Routine Sales and Use Tax audit letter. If you follow these guidelines, your life or at least the audit will be a lot simpler. These measures should be in place before the sales tax audit starts.

Taxable Purchases and Employees

There are differing sales and use tax ramifications when dealing with taxable items given to employees versus items that are sold to employees. The difference is who pays the sales or use tax.

Sales Tax Exemptions- Tax Exempt Customers

Every jurisdiction has sales and use tax exemptions available to certain taxpayers. Exempt organizations include governmental agencies and other exempt entities can include educational, religious, and charitable organizations.
When making sales to exempt organizations, it is important that to obtain the appropriate documentation required to substantiate the tax-free nature of the sale.

Sales & Use Tax Audits- Accounts of Interest

When you are going through at sales and use tax audit, the audit will not only review source documents, but they will also review your accounting records, i.e., the GL. Auditors focus on certain accounts of interest. These are accounts where they know there may be sales and use tax compliance issues.

Addressing Sales and Use Tax Credits

This tip is about what you can do when you discover that you have overpaid sales or use tax on the purchase that you make for your business. As we discussed in an earlier video, there are various sales and use tax exemptions available to purchasers for miscellaneous reasons.

Sales and Use Tax Compliance- Scanning Documents

This sales tax tip is about document retention. Specifically, making sure you have a plan in place when it comes to scanning your documents. We talk about it a lot because it is so important to have a good document retention policy in place, especially in a sales and use tax audit context.

Sales Tax and Bad Debt Write-Offs

In our discussion, we are focusing on bad debts and how they affect the sales and use tax that you report to the taxing authority. We also discuss the importance of documenting which bad debts were written off and how important it is in an audit context.

Accounting Software Upgrades & Reluctant Staff

The effectiveness of an accounting software upgrade is underminded if your accounting staff refuses to use it. You must manage your expectations and help your staff wrap their heads around the new technology in order to make the most of your oftentimes expensive upgrade.

Sales Tax Nexus- Am I Required to Collect Sales Tax?

A few years ago, the Wayfair case was everywhere. It changed the landscape regarding sales tax nexus and registration requirements for remote sellers all across the country. Let’s talk about what the case may mean for you and your business. For some people, it means very little. For other people, the world exploded.

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Things to Do After Receiving a Sales Tax Audit Notice!

Nothing can kill a sugar or caffeine buzz quicker than a sales tax audit notice, right?  Not so fast!  The worst thing you can do is panic or allow a sales and use tax audit notice to color your day.   You've got this!!...You do!  Take a deep breath and DO NOT PANIC! ...

Sales and Use Tax Audits- Don’t Forget the Credit Cards

When you first receive notification that your business is going to audited for sales and use tax compliance, there are a number of areas of concern they may occur to you.  One thing that business owners routinely overlook is company credit cards and how they can...
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The Marriage of Sales Tax Compliance & Clear, Concise Invoices

Sales and use tax compliance is a complex thing. Knowing whether you must register in a jurisdiction (i.e., do you have nexus), whether what you sell is taxable, what tax rate you should charge, the applicable sales tax exemptions, etc. can be a lot to digest when you are starting your business. One thing that all business owners can do to make their lives easier is have clear and concise invoices.

Sales Tax Audits- Can the Auditor Do That?

Once you involved in an audit, you must understand that the taxing authority has broad powers as it relates to what documents they can request. If a state tax auditor requests data, you should produce it. If you don’t, there are consequences that are very unpleasant. Find out how much power the auditor has and how to navigate the process.

The Sales Tax Audit is Over! Now What?

Congratulations! You have survived your sales tax audit. While you can breathe a sigh of relief, don’t think that the tax authority is through with you because the audit is over.

Depending on the sales tax audit results, (i.e how much money your company owed in sales and use tax), you may be audited again.

Why Use a Sales Tax Consultant? Not All CPAs Address Sales Tax!

Sales and use tax is a specialized niche area. While your book keeper or CPA may be helpful in myriads of other ways, sales and use tax compliance is not their speciality. You may need to consider another resource, like a sales tax consultant.

Top 5 Sales Tax Audit Gotchas!

Here we discuss about five things you can do to make your audit go smoother. Four of the five tips are things to do when you set up your accounting practices and systems.

Top 5 Sales Tax Audit Documentation Mistakes!

The key to all audits is documentation. You must prove what you do, that you collected the correct amount of sales tax, all sales tax collected was remitted, etc.

Texas Taxes for the Construction Industry

Texas Taxes for the Construction Industry

Join us for Texas Taxes for the Construction Industry, where we'll dive into all things tax-related, specifically tailored to contractors.
Texas Taxes for the Construction Industry

Texas Taxes for the Construction Industry

Join us for Texas Taxes for the Construction Industry, where we'll dive into all things tax-related, specifically tailored to contractors.
Copy of Texas Taxes for the Construction Industry

Copy of Texas Taxes for the Construction Industry

Join us for Texas Taxes for the Construction Industry, where we'll dive into all things tax-related, specifically tailored to contractors.

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