This is a needy client, inherited three years ago from a retiring EA, who does not like change. He has an outside accountant (she doesn't do taxes) to do his accounting and comes to me for tax preparation and payroll. Outside Accountant made an error with payroll journals last year and client wanted it fixed during tax season. So I looked over the spreadsheet, found the error and communicated the error to the outside accountant.
When I wrapped up the tax return, I sent a fee note for the return and a separate line item for $300, being the extra time incurred (during tax season) on identifying the error on the payroll tax accounts. Client called me to discuss. He expressed surprise at the fee note (although he knew, after the fact, that I had done the work) but stated that accountant was prepared to pay my fee for the error. I established that client does not always send information to accountant on a timely basis. I pointed out that tax season is busy for tax professionals and accountants, especially when the client does not want an extension, and every professional - including me - makes at least one mistake during the season. He asked that I speak with the accountant.
I have just come off the 'phone with her. I said I was unhappy about her falling on her sword; my first offer was to split my fee three ways. She understands that I need to charge for my time but feels I should have been upfront about there being an additional charge. On the latter basis, she said she would not have charged for the work. She feels that she has to represent the client. I agree with that to a point, of course. However, it was her mistake. Call ended much less positively than I expected.
Client is a B client and, frankly, not that far from a C. I have one other mutual client (new this year and a solid B, I think) with this accountant. So, what advice do the assembled minds have?
Cut the client loose after Q4 payroll?
Accept that I should have gotten an engagement letter or, at least, an understanding that client would pay, ie, write off the $300?
Something else?
Accountant would have a very good point had my engagement letter not said that I charge by the hour. Or maybe she has a very good point regardless. Hence the post.
Client was not aware that I do monthly accounting as well and seemed mildly interested when I mentioned it.