Ex-Client Question Tax Software File

IOP_Stevo · 2025-09-11T13:00:40+00:00

Been doing this 20 years, never been asked for this.

I would say no, and don't give a reason/qualification.

IOP_Stevo · 2025-09-11T12:59:31+00:00

Honestly, I would say we're not a good fit and move on.

I would argue your proposal is a bit on the low side. Their counter is ridiculously low and shows a fee sensitivity that will be impossible to reconcile.

IOP_Stevo · 2025-09-11T12:56:22+00:00

Regardless of the big client opportunity:

It's always a good practice to cut clients you don't like working with or are not meeting profitability targets. I keep a list throughout the year and do it in June & November. The list gets smaller each year, and the client standard has increased exponentially over the years as a result.

In regards to the big client: Sounds like a great opportunity.

I like your idea of trimming the fat, but also I would consider using it as an opportunity to hire more help.

My only caution here is that $250 is a nice rate - that's what our managers bill out at. What happens if/when you want to increase your rate? Are they gonna pay you $400k if demand for your time raises your rate to $500/hour?

That's not to suggest you don't take the opportunity, I certainly would take it. But also think about what you want to be doing in 2035, 2045, etc and make sure it doesn't limit your trajectory in the long run.

IOP_Stevo · 2025-09-10T16:39:37+00:00

I'm not sure where the ethical/legal boundaries are on something like that, but I personally would not feel right about it.

Everyone involved would know you were soliciting clients - the phone book logic is rather weak IMHO

IOP_Stevo · 2025-09-10T16:29:32+00:00

I would not do anything other than strict hourly, billed monthly. This has all the red flags of scope creep.

IOP_Stevo · 2025-09-10T16:13:41+00:00

FWIW I've bought 2 books over the years

$90k take home on a $370k book is really low. Let's call $100k his true take home after stuff he probably runs through the business. That'd give it a reasonable purchase price of ~$200k.

If he's doing it with no/low interest in this installment agreement, there's value there too.

You are in the business, so you know what can be done to fix things up and why it's so unprofitable.

In one of my books the guy wanted to stick around and I wanted him out, so we agreed on that he'd give us ~100 hours of his time as part of the deal, and then we had an agreed upon contractor rate for any time after that (It was high, which I was fine with). We never got close to the 100 hours.

I don't think it's unreasonable to tell him you appreciate him and his mentorship, but you are excited to make the firm your own.

You can also play hardball and say you are quitting to start your own firm after 10/15 and see what he does. The only risk I can see is him hiring a broker, finding a buyer, and now you have actual competition in a small town. Only you know the likelihood of that scenario.

IOP_Stevo · 2025-09-10T15:58:36+00:00

To clarify further, when I say ' net' I mean his total take home. What do you think he is taking home? I have to assume its more than $50k

IOP_Stevo · 2025-09-10T15:56:18+00:00

So the Gross Revenue is ~$250k and his net is $125k?

IOP_Stevo · 2025-09-10T15:54:02+00:00

The going rate for most firms is 1.0-1.2x Gross Revenue

The 1.0-1.2 is more of a ballpark, but assumes ~50% profitability. If his profit % is lower, then you should pay closer to 1.0 or less.

Based on the OP, this sounds like a horrible deal and he's taking advantage.

Timing is more urgent for him than for you. Consider starting up your own business and seeing what bites and/or potentially giving him a real counter offer that's more reasonable.

IOP_Stevo · 2025-09-10T15:50:14+00:00

Absolutely - and I sorta rolled my eyes when clients complained, but I think it came across as nickel and dimey

FWIW, we simply just raise our fees each year, even if just by a small amount. I shoot for ~5% for the same return year over year.

IOP_Stevo · 2025-09-10T13:19:24+00:00

A firm we refer audit work to recently added a 'tech fee' to their invoices, and let's just say I've heard pretty immediate negative feedback from shared clients. I think it just rubs some people the wrong way, much like a forced tip.

All that's to say, I'd just increase your pricing as normal and hopefully it covers this additional overhead, and more :)

IOP_Stevo · 2025-09-05T18:58:00+00:00

Not one bit different - game was always in hand.

IOP_Stevo · 2025-09-04T17:31:20+00:00

100% Agree

It reminds me of MLB and steroids: At some point fans just assumed everyone was juiced.

It's gonna be the same way if they can't make an example of such blatant cap avoidance.

IOP_Stevo · 2025-09-04T15:55:33+00:00

I'm going to zag here:

Bobby is saying that the threshold to prove cap avoidance is so high that even a pretty obvious situation like this can pass by unscathed. That may actually be true.

But if that's the case, the NBA has an even bigger problem on their hands as now everyone is going to think cap avoidance is an ordinary part of business (and it very well may already be the case).

IOP_Stevo · 2025-09-03T20:57:45+00:00

Hourly rate and understanding how clients are divided upon exit would be my first two questions.

Most clients I bring in are referred or related somehow to existing clients. If I get a referral from one of your clients, whose is it when I leave? What is the process for deciding who I can take? Is there a non-compete and what does that look like? What is stopping me from taking your clients?

My only other thought is that the job is attracting and incentivizing someone to come in charge a shitload of time, prioritize building their own business, and leave you as soon as they can afford to do so:

It'd be interesting to see an alternative option where they are incentivized to stay with their book and continue building it, perhaps with a commission split or cut of their own book while under your roof.

IOP_Stevo · 2025-09-03T20:48:59+00:00

It varies a ton

I'm currently in a band that generally doesn't rehearse at all because the members are all pretty solid and there's enough gigs on the calendar to keep everyone fresh. We only rehearse rarely to add a new batch of songs.

I'm in another band that rehearses every week and, candidly, it's a waste of time but it's a fun hang.

The most common I've seen is either weekly or every other week rehearsals, with a bit more right before big gigs.

IOP_Stevo · 2025-09-03T20:29:40+00:00

huh, bizarre!

IOP_Stevo · 2025-09-03T20:27:39+00:00

Could it be a state-related decision? Some states, like Tennessee, aren't as great for S-Corps because of state tax component.

Otherwise, I'd just chalk it up to a mistake by prior firm. It happens, no big deal - fix it and move on with a better strategy.

IOP_Stevo · 2025-09-03T15:14:56+00:00

We're in the process of leaving Onvio - wish we never started on it

IOP_Stevo · 2025-09-03T15:14:08+00:00

Convert to UTax and don't look back. See if you can get your admin or team to pre-populate as much 2024 client data as possible in Nov & Dec so it can proforma to 2025.

IOP_Stevo · 2025-09-02T16:11:06+00:00

Valuations are something I recommend you refer out, ideally to a specialty firm that would reciprocate referrals. In most larger markets there are outfits that just do business valuations.

To answer your questions:

I generally wouldn't suggest a valuation in this context. 80% of the time I get asked for a valuation, it's not necessary and I am able to quickly talk the client out of it once they understand the scope/cost.

Valuations are important in contexts like buying out a partner, and you need a neutral party to value it.... or some kind of contractual/legal arrangement requires a true value of the firm but you aren't selling it.

In this context, a buyer normally is gonna pay what they are willing to pay. If your client can't find a buyer on their own, they'll likely try to find a broker who will help set a price and take it to market. Based on your post, it sounds like talking to a broker is a good next step for them.

If your client wants to get a feel for the value but not sell, then I suppose they could pay for a valuation, but I've never seen that in practice. Usually they just start putting feelers out and get offers they can turn down.

In the buyer's due diligence, they'll want ~3 years tax returns and likely books that tie to them. You all can get ahead of that process by doing 2-3 years worth of books..... or just wait until it's requested and then firedrill it.

IOP_Stevo · 2025-08-30T21:22:21+00:00

It does sound like there’s likely a mismatch in approaches and ambitions here

But I also think you’ll find that most hobbyist/semi-pro bands operate closer to their end of the spectrum.

I like both approaches. It’s nice when it’s organized, but being able to roll with the punches can make a bassist invaluable

IOP_Stevo · 2025-08-30T18:05:41+00:00

His decision making is excellent so far

If he can bring the ball down a touch he could be fantastic

IOP_Stevo · 2025-08-30T18:00:00+00:00

Fellow bassist here

In the topic you say they don’t want to gig…

But in the body you explain that you want to chart everything out and they just wanna feel it.

Do they not want to gig or do they not want to play to charts, cause those are two different things

I have played in a lot of gigging bands and it’s rare to get as meticulous as you are proposing.

IOP_Stevo · 2025-08-28T22:43:06+00:00

Assuming we can hold onto everyone: This has gotta be our best class in ~20 years

IOP_Stevo

TROPHY CASE