Pick and Choose new Clients Based on Complexity

Hey all, I'm pretty much "full" and can't really take on much in the way of new clients.

With the extra 3 months this year, I don't mind grabbing a few new ones here and there.

Is it wrong or discriminatory to turn something down simply because it's a hassle?

For example:

Potential new client, "Filed last year as jointly and need to file separately this year. I want the refund that was carried over
to apply to me for 2019" (but indicated husband doesn't agree/not amicable).

I know how to do it, and I could just quote a price that would be worth it for me. But that price will be so egregious when she hears it, and to be honest, I really don't have the time for this sort of thing.

If this was a current client I would deal with it, of course. But if I'm going to take a new retail 1040 client, I want it to be a nice and simple family or a retired person with investments or the like.

Is it wrong in any way to send non-clients with issues like these away and not even quote a price?

I believe that the filtering of clients based on potential perceived hassle is imperative for tax practices due to the 80/20 rule (20% of the clients generate 80% of the revenue while 80% of the clients generate 20% of the revenue). I've worked for a number of firms where a few select clients caused the majority of the headaches, research time, and overall stress while generating a tiny portion of the firm's total profits. As a result, these problem clients left less time to work with the awesome, simple, and easy-going clients who had to contend with longer turnaround times even though they provided the greatest portion of the firm's revenue and profits.

At this point, I turn away more clients than I take on as I am trying to be extremely careful about avoiding problems as much as possible prior to the commencement of a new client relationship. For some situations, a higher quote makes sense. For others, it's mutually beneficial to inform them that their situation is "not a good fit".

I believe that the filtering of clients based on potential perceived hassle is imperative for tax practices due to the 80/20 rule (20% of the clients generate 80% of the revenue while 80% of the clients generate 20% of the revenue). I've worked for a number of firms where a few select clients caused the majority of the headaches, research time, and overall stress while generating a tiny portion of the firm's total profits. As a result, these problem clients left less time to work with the awesome, simple, and easy-going clients who had to contend with longer turnaround times even though they provided the greatest portion of the firm's revenue and profits.

At this point, I turn away more clients than I take on as I am trying to be extremely careful about avoiding problems as much as possible prior to the commencement of a new client relationship. For some situations, a higher quote makes sense. For others, it's mutually beneficial to inform them that their situation is "not a good fit".

Agreed.... the thinner our work, the narrower our expertise, the more efficient. We shouldn't be all things to all people. I won'r do C corps any longer for example. Stopped doing any work with foreign transactions that require special procedures. Yes, I can do it. But in that time I could do 3 1040's that I charge $600 to do.

As an independent business operator in a free country you can choose who you want to do business with as long as you don't discriminate based on race, religion, sexual orientation etc. Check your state's law.

When I am approached by a new prospect and after reviewing the paperwork or prior return etc. I have already determined that it will not be a good fit for my operation I simply tell them that I am sorry I can't accept them as a new client because it does not fit my business model and they will be better elsewhere. I even have a list of other tax preparers that appreciate my referrals.

It is much easier to be upfront with them right away, compared to accepting them as a client knowing that there may be issues down the road and then trying to figure out how to get rid of them.

We all do it. I have prospects come to me that I know I do not want. If it is because of the nature of their work, I politely tell them it does not fall within my area of chosen practice. I know the profile of my ideal client and I strive to achieve it. It cannot ALWAYS be achieved, which is why I have clients for whom I only do 1040s. In my ideal world, I would be working with small business owners in a controllership capacity (and not of C-Corp variety--been there, done that, will not again by choice).

Another example is non-profits. I have one remaining non-profit (a PF), but other than that, I will not accept any further non-profits. They are just too big of a hassle, and the ordinary non-profit expects discounts simply for having tax-exempt status, which really pisses me off. Not to mention the abuse I have observed over 15+ years...

Absolutely pick and choose if you have that luxury. But I have a situation where I have orally agreed to do a large 2019 return back during 2019. I now find myself hopelessly behind for not only 7/15 but 9/15 and 10/15. And the client's CFO has already contacted me with complicated questions which I researched and answered and got paid for. However I see more complication an areas I really hate getting in to and I am seriously considering resigning. The clients still has a couple of months or more to find someone else. They have big NOLs and expect more in 2019 so the 7/15 extensions should be simple. I have done several returns over the years that I regretted once I got into them. Don't give yourself a heart attack.

I have orally agreed to do a large 2019 return back during 2019. I now find myself hopelessly behind for not only 7/15 but 9/15 and 10/15.

May I ask you how much due diligence did you do prior to agreeing to the engagement. You say orally agreed, did they sign an engagement agreement? What does your agreement say about quitting in the middle of tax prep?

I just rejected an engagement last week even though I am not really busy because when I looked at the books and records it was a mess and just speaking to the two partners gave me the headache! These people were highly recommended by another business client so I had to be very diplomatic.