Who are your high-value clients and what are you doing to show them the love?
FreshBooks recently tasked me with writing an article about using cloud accounting to identify high-value clients in my business. It was a fun piece to write because I’d recently dug into my own data to analyze the ROI of attending FinCon and to negotiate with a client to pay me a fixed fee per project rather than an hourly rate.
If the only report you look at on a regular basis is your Profit & Loss statement, I encourage you to check out the article and take a deeper dive into your numbers. The results can be an eye-opener!
Looking for a small business accounting solution? I’ve used FreshBooks (<– affiliate link) for my freelance writing business from day one. I love how simple it is to invoice clients, track expenses and run reports at tax time.
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If you’re struggling to manage credit card bills, car loans, student loans and other debt payments each month, perhaps you’ve considered cashing in on some of the equity in your home to consolidate those debts into one monthly payment with a low interest rate?
Another tax season has come to a close, and my tax pro friends around the country are likely enjoying some much-needed rest and relaxation. Hopefully, despite the crazy hours they’ve been working over the past couple months, they took a little time out of their days to laugh.
At one firm where I used to work, two of my coworkers brought comic relief to tax season with a “wall of shame.” On one wall in their office, they’d collect the craziest and most absurd emails, notes and documents from clients. Stuff like a client dropping off a note on April 14th that says, “I can’t find any of my W-2s or 1099s, but I’m pretty sure I made $150,000 last year. We can still file on time, right?” Or maybe another client who felt compelled to attach a political screed to his tax organizer, as if his CPAs were personally responsible for the Internal Revenue Code.
Because most tax professionals I know love sharing this stuff (while safeguarding confidential client information, of course!), I asked a few of them to share some of the craziest deductions they’ve seen clients try to claim on a tax return. Enjoy!
The Sharp Shooter
Enrolled Agent Steven J. Weil, Ph.D. and President and tax manager of RMS Accounting in Fort Lauderdale, FL says one of his clients tried to deduct the cost of practicing at the firing range to increase his firing accuracy. “When asked just how this was business related, he said ‘Well, when you [tick] off as many people as I do every day at work, you need to be prepared.”
No word on the profession of Dr. Weil’s client. I’m hoping he wasn’t an IRS auditor.
The Board of Directors
I’ve seen companies deduct expenses for some pretty lavish board meetings, but Tax-Free Wealth author and CPA Tom Wheelwright’s client pushed the boundaries even further.
“One of the craziest tax deductions we’ve seen is a client who thought their boat was deductible because all of their kids were on their board and the boat was always used for board meetings,” Wheelwright recalls.
Maybe I should incorporate, appoint my six-year-old as Vice President and deduct the cost of his Legos as an honorarium?
Dr. Weil shares another story of a client who reported very little income on her tax return, despite showing up to her appointment in a very expensive car.
“I had to ask some questions to make sure that all income was being reported,” Weil recalls. “After asking about any other income and getting a negative response, I said, ‘I see you are driving a new Maserati. How can one afford that on such low income?’ To which she replied, ‘It’s a charitable contribution. You see, my boyfriend is a much older man with a wife and family, so he gave me the car as a charitable gift, to make sure I remain charitable.’”
The Match Maker
I was delighted to learn crazy tax deductions aren’t limited to the U.S. Hannah Xu, a tax accountant and founder of Xceptional Consultancy in London, says one of her clients is a relationship expert. “One of his clients successfully found a partner and got married. My client was invited to attend the wedding, which required him to fly from London to India. He claimed his flight and accommodation and argued that the purpose of the trip to India was not for leisure, but to feature a solid case study for his business to attract more clients.”
The Road Warrior
Xu shares the story of another client who took his travel expenses too far. “In the UK, if you or your employees have to travel more than five miles to work on a client’s premises and you stay there for more than five hours, you are able to claim your travel and food expenses,” Xu says. “One employee drove around the same roundabout several times until he recorded enough mileage so that he could claim his travel and food expenses tax-free.”
The Uninformed Advisor
Unfortunately, sometimes the worst advice comes from the people you are paid to give it. Wheelwright worked with a client who got terrible advice from their former tax preparer. “They actually told the client that as long as he used money from his corporation to pay expenses, pretty much everything was deductible, whether or not it had anything to do with their business.”
Spoiler alert: That’s terrible advice.
Do you have any great stories to add to this list! I’d love to hear them!