Working Remotely? Beware of Online Scams and Phishing Schemes

Like many others, your company has likely transitioned many of its staff members to a work-from-home model. This is a good time to remind everyone to be diligent in checking for potential malware and online scams. While many people are adjusting to working from home for the first time, they are also being asked to homeschool children or care for elderly family members. This distracting environment makes it easy for employees to inadvertently click a bugged link or document, thereby introducing malware or ransomware into your systems.

Recently, we’ve seen reports of the following phishing scams:

• Fake coronavirus maps and websites – there have been numerous attempts of malware on sites that offer fake maps of the spread of the virus. We recommend you only use trusted news sources like CDC.gov.
• False ads for masks and protective gear – again feeding on people’s fears, scammers are pushing malware or phishing for personal information through sites claiming to have protective gear for sale. We recommend shopping local, or through a known online retailer.

COVID-19 has already caused countless interruptions to our daily lives, but we urge you to mitigate additional long-term business disruptions by offering your employees frequent reminders about these online risks.

For additional information about coronavirus scams, please reference the FTC’s consumer information page. If you have any concerns regarding your company’s finances, please contact us.

For more information on COVID-19 and to get the latest updates, visit our COVID-19 Resources page.

Resources Available to Help Your Business and Family

As you’ve probably noticed, more and more businesses are temporarily closing their doors each day. Some of them working remotely, some providing free shipping options, and others just closing completely for the time being. With all of the uncertainties surrounding COVID-19, chances are you and your business are feeling the impact as well. You can rest assured that government agencies are hard at work creating programs to provide support to ease the burden on businesses, individuals, and the economy.

Here are some of the resources currently available:

1. For when you need to make a plan – The Rhode Island Society of Certified Public Accountants (RISCPA) knows how critical it is for businesses to prepare for the future, especially as we don’t know how severe COVID-19’s impact will be. Refer to their COVID-19 Business Planning Checklist to make sure your business is ready, here.
2. For when COVID-19 has taken a bite out of your revenues – The U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans up to $2 million. These loans can be used to help meet financial obligations and operating expenses that would have been met had the disaster not occurred. This SBA assistance is available in the entire state of Rhode Island and the counties of Bristol, Norfolk, and Worcester in Massachusetts. Visit SBA.gov/disaster to confirm eligibility and start the loan process.
3. For when your employees are unable to work due to a public health emergency – The Families First Coronavirus Response Act was signed on March 18, 2020 and takes effect on April 2, 2020. The Act provides the following provisions:
   1. Emergency Family and Medical Leave Act (FMLA) Expansion
   2. Emergency Paid Sick Leave Act
   3. Employer Tax Credits for Paid Sick and Paid Family and Medical Leave

For more specific details on the provisions under the Families First Coronavirus Response Act, see our recent email update.

4. For when your business is working remotely – Microsoft is providing six months of its Office 365 tools for free to enable remote collaboration, file sharing, and video conferencing. Access this free service, here.
5. For when you’re out of work due to COVID-19 – The Rhode Island Department of Labor and Training (DLT) is processing COVID-19 related unemployment insurance claims faster and more generously. Visit their website for more details on how to apply.
6. For when your child’s school is closed – “Grab and Go” meals are available for children at various sites throughout Rhode Island. There are no ID or residency requirements, but the child must be present; schools cannot give a meal to an adult on behalf of a child. Click here for a list of food sites and their respective hours.
7. For when your child is completing their schoolwork in a remote environment – Cox Communications is offering its low-cost internet service to families that don’t have an internet connection at home for free for the first 30 days. They are also partnering with PCs for People to allow families to purchase discounted, refurbished computers. Click here for more information.
8. For when your accountant’s office has temporarily closed – On Friday, March 20, 2020, the IRS issued Notice 2020-18, which automatically extends the filing and payment due date for Federal income tax returns from April 15 until July 15th for Affected Taxpayers. This notice only provides relief for Federal income tax returns and Federal income tax payments. For information on state income tax filing and income tax payment deadlines and extensions see the American Institute of Certified Public Accountants (AICPA) State Filing Relief Chart for Coronavirus, here.

DiSanto, Priest & Co. is still open! Although we are working remotely, we are still here to support you with all your business needs. Please reach out, just as you always have, via e-mail, give us a call us at (401) 921-2000, or fill out our online contact us form.

For more information on COVID-19 and to get the latest updates, visit our COVID-19 Resources page.

The new tax law, 26 U.S.C. § 162, has left rental real estate owners wondering whether they qualify for the new 20% deduction for qualified business income (QBI). While final regulations indicate that stand-alone, triple-net lease rentals would not qualify for the QBI deduction, there are three alternate paths in which rental activities could qualify for the deduction: 

1) As a Section 162 Trade or Business 

To qualify for QBI as a Section 162 trade or business, the taxpayer must meet certain facts and circumstances requirements. Case law requires a Sec. 162 trade or business to have a profit motive and pursue considerable, regular, and continuous activity. For example, a hobby would not qualify as a trade or business. The final IRS regulations list several factors to consider when determining whether the rental activity is a Sec. 162 trade or business:

• Type of property rented (commercial vs. residential)
• Number of properties rented
• day-to-Day involvement of the owner or the owner’s agent
• Terms of the lease
• Type and significance of any ancillary services provided under the lease

2) As a Rental to a Related Party

The final regulations state that if the rental activity qualifies as a trade or business, it should be consistently treated as a trade or business under other U.S. Code sections. The taxpayer should also comply with the requirements under Sec. 6041, such as filing required 1099s if assuming the position as a trade or business. 

The final regulations offer clear guidance on related party rentals. The rental activity qualifies for the QBI deduction if the rental party rents or leases to an individual or pass-through entity that is commonly controlled. To be considered commonly controlled, the same person or group of persons must own at least 50% of the rental activity and the related trade or business. If the related party is a C corporation, it will not qualify under this rule. Also, if the income of the related party is derived by an activity that is classified as a specified service trade or business (SSTB), the rental activity will treat any rental income from the SSTB as SSTB income when calculating the QBI deduction.

3) As a Rental that Qualifies Under Safe Harbor

A rental activity will also qualify for the QBI deduction if it falls under the safe harbor rule, through Notice 2019-38. To meet the safe harbor requirements, the taxpayer must satisfy the following factors during the taxable year:

• Maintain separate books and records to reflect income and expenses for each rental real estate enterprise
• For rental real estate enterprises that have existed for less than four years: a minimum of 250 hours of rental services are performed per year
• For other rental real estate enterprises: in at least three of the past five years, a minimum of 250 hours per year of rental services were performed
• Maintain contemporaneous records, including time reports, logs, or similar documents, regarding the following: 
  • Hours of all services performed
  • Description of all services performed
  • Dates on which such services were performed
  • Record of who performed the services
• A statement is attached to a timely-filed, original tax return for each taxable year that the taxpayer relies on safe harbor

These records must be made available for inspection at the IRS’s request. The contemporaneous records requirement applies to taxable years as of January 1, 2020.

To meet the safe harbor rule, taxpayers can combine activities that produce the same type of rent to form a rental real estate enterprise. Thus, commercial rentals can only be combined with other commercial rentals, and residential properties can only be merged with other residential rentals when consolidating activities into a single real estate enterprise.

The self-rental and safe harbor regulations provide clear-cut paths for qualifying for the QBI deduction. Other rental real estate activities may also qualify under Sec. 162 as trade or business activities, however, they need to be analyzed on a case-by-case basis. 

If you believe you could qualify for this deduction and need help navigating this area, feel free to call Jessica Corvese at 401-921-2000 or email jcorvese@disantopriest.com. Be sure to follow us on LinkedIn to stay informed on the latest tax updates.

Any successful company motivated to grow its sales volume should first focus on the existing relationships it has worked so hard to build. As a best practice, companies should leverage and revitalize current areas of business before tapping resources to develop new product lines and expand selling opportunities in existing markets.

In Inc.com’s article, 7 Powerful Strategies for Strong Sales Growth, Drew Greenblatt advocates for increasing efforts with current clients first, “All the systems are set up. The team knows how to make it right. Stick to your knitting and grow market share in what you do best already.…exploit this foundational portion of your business to get the easiest quickest sales.” 

See below for how your company can handle existing business in different ways, leading to growth opportunities and an overall stronger customer base.

Become more customer-centric than market-oriented. 

Approach client management and new revenue development as separate functions. Understand your client portfolio, strategize new engagement opportunities, and direct resources accordingly. Nurturing these existing relationships can also give way to lucrative cross-selling and upselling opportunities. Appreciate that customers within the same industry may have unique needs and purchasing criteria, and create individualized sales plans for each customer. 

Embrace the digital economy. 

Networking and maintaining relationships used to mean face-to-face meetings with current and prospective customers, but nowadays, the internet is the mainstream transaction tool. It is integral to building and nurturing customer relationships, generating sustainable growth, and promoting brand awareness. Invest in a well-coded website to increase your Google search ranking and “inbound marketing” opportunities – make it responsive, mobile-friendly, and easy for customers to access the information they need. Use social media and email marketing to broaden your digital reach, take advantage of direct customer access, and keep buyers engaged.  

Expand your existing product range with complementary goods or services that meet your customer needs. 

To expand within your existing market, a competitive scope grows revenue while increasing the value you provide your customers. While this may seem like a large undertaking, you can readily implement this strategy by outsourcing to other companies that are willing to produce under your brand name. Outsourcing minimizes production investments, allows your firm to focus on its core mission, provides autonomy in choosing suppliers, and creates access to current technologies.

Boosting flat-lined sales can be challenging, but these strategies employ relatively modest investments that build on pre-existing, successful relationships. The strategies all support one main goal: to communicate to target customers that your firm is committed and has the bandwidth to address their growing needs. For more information on how your company could benefit from these recommendations, contact us. Follow us on LinkedIn for more industry insight on growing your business.

Despite continuous sector growth, it remains no secret that industries across the board are currently facing a wide range of challenges impacting their bottom lines. For private business owners, skyrocketing expenses, skilled-labor shortages, and recent changes to the tax laws may lessen their ability to effectively compete within the marketplace. Many industries face similar barriers in achieving sustainability and financial success, therefore opportunities to optimize cost savings and increase earnings potential are ever important. For this reason, there has never been a better time for businesses to determine their eligibility for the employment-based Work Opportunity Tax Credit (WOTC).

Established in 1996, the WOTC is one of the most widely used federal tax incentives to date. The purpose of the WOTC is two-fold, in that both employers and employees can benefit. First, the WOTC aims to encourage businesses to hire from designated target groups within the workforce. Upon hiring these specific individuals, the employers receive compensation by means of a reduction in income tax liability. By reducing your tax rate, your business could benefit tremendously from reduced costs and surplus cash flows. Of equal importance is the WOTC’s solution of leveraging hourly-wage and entry-level individuals who are well equipped and openly available to fill the workforce shortage, which effectively solves two issues simultaneously.

The WOTC also benefits the individual employees comprising the 14 target groups published by the Department of Labor. Typically, the individuals within these groups are under-employed, such as disabled veterans, seasonal workers, or homeless community members. Besides the obvious benefit of gaining employment, the WOTC assists employees by building confidence, reducing their reliance on federal aid, and learning new skill sets. By incentivizing the employment of target groups, the WOTC provides greater opportunities for quality jobs which otherwise may not be obtainable.

Although the WOTC may sound like a complex undertaking, the benefits it produces are undeniable. The first step for a business in any industry is to speak with a tax professional and determine eligibility. In an economy where prices continue to rise, pressure to meet demands grows, and the workforce needed to get the job done is dwindling, determining your eligibility for the WOTC is definitely worth the call.

Please contact us at (401) 921-2000 or email John Rainone at jrainone@disantopriest.com to learn more.

The Federal Reserve’s incremental adjustments to interest rates in the past year have manufacturers reconsidering how to address capital investment needs. Multiple factors can affect whether a company chooses to lease or buy – the return on investment, cash flows, and the productive life of the asset. Generally, the cost of capital is at the top of the list. The low cost of borrowing money over the past ten years tipped the scale toward choosing to borrow and purchase, rather than lease equipment. However, with the prime rate now at 5.0, the choice has become a little murkier. Locking in a borrowing rate now for anticipated purchases over the next year is one short-term solution for which there is generally a premium attached. Even under circumstances where a business has the cash to make capital purchases outright, it may still make better business sense to consider fair market value (FMV) leasing. 

There are a variety of benefits of FMV leasing in today’s market:

• Avoiding the burden of asset obsolescence: This benefit is most apparent when considering purchases of technology and software. Life cycles for these assets typically fall within a 3-year range, which generally coincides with their leasing periods. Upgrades are a natural progression in a leasing program, and in some cases, can be made before leases expire, depending on the agreement.
• Improved cash flow and liquidity: While the purchase of a capital asset requires payment or a significant down-payments and fees upon delivery, lease payments typically begin after the equipment is operational. Without committing to a significant cash outlay, the company can direct cash towards investments in its business versus its infrastructure. 
• Flexibility: Generally, the lessee has options to purchase some or all leased equipment at termination; therefore, taking the risk out of committing to a purchase at the onset.  Leased assets are quicker to obtain and tend to be more flexible than equipment loans giving a business the perspective that time brings into the final decision.

GAAP’s new lease accounting standards, Accounting Standards Update (ASU) 2016-02, have added a new metric, further blurring the lines between owned and leased assets from an accounting perspective. The standards, effective by 2020, re-characterize leasing arrangements whereby a lessee’s contractual access to leased property represents an asset, and the related future obligation to pay for that right is debt. Owned and leased assets will basically tell lenders and vendors the same story about your business; removing the advantage of one over the other from a business reporting stance. (See more about ASU 2016-02 at DiSanto, Priest & Co.’s blog, THE NEW LEASE ACCOUNTING RULES – JANUARY 2020 IS NOT THAT FAR AWAY).

If you’d like to discuss a strategy that would best suit your company’s capital investment needs, please contact us.

The recent outcome of the Sullivan v. Sleepy’s LLC et al. civil case, and the Massachusetts Supreme Judicial Court’s (SJC’s) interpretation of the Mass General Laws has clarified how employers are required to pay commissioned retail employees. 

On May 8, 2019, the SJC issued a unanimous opinion that, under Massachusetts law, salespeople who are paid solely on draws and commissions are entitled to separate and additional overtime and Sunday pay. Prior to the SJC’s decision, retailers had been hanging their hat on two opinion letters issued by the Massachusetts Department of Labor Standards (DLS) over ten years ago that suggested employers did not need to make separate and additional overtime and Sunday payments to 100% commission employees, provided that the employees receive an amount equal to at least 1.5 times the minimum wage for all overtime and Sunday hours worked. 

The SJC’s decision has marked the end of paying non-exempt, retail employees on a commission-only basis in Massachusetts. State law entitles these employees to separate and additional overtime payments, beyond draws and commissions, of at least 1.5 times the Massachusetts minimum wage (currently at $12.00/hour); and premium pay for Sunday work, also equal to no less than 1.5 times the minimum wage. The court also explained that employers are barred from retro-actively repurposing, or renaming, draw and commission payments as overtime or Sunday payments.

The SJC’s decision is already impacting Massachusetts retailers and other companies that pay on 100% commission/draw basis. Now that it’s clear that draws and commissions cannot substitute for other wage and hourly entitlements such as overtime and Sunday pay, employers must carefully examine their pay policies to ensure compliance. Additionally, they are now obliged to recalculate and pay the amounts their employees are entitled to in overtime pay before a lawsuit is filed — failure to do so could have a significant financial impact. Under the Massachusetts Wage Act, sales people not paid for the shortfall prior to filing suit are entitled to automatic treble damages plus attorney fees. 

For more information regarding the most recent developments in Massachusetts Overtime Statute and the implications it may have on your business, please contact us.

For over 100 years, attorneys and CPA’s have worked side by side. Few professions share such a long-standing working alliance for the good of their clients.  So, how similar are we?

• Both professions are made up of a highly educated and skilled workforce.
• Both professions have very strict education and testing requirements to gain entrance.
• Both professions are highly respected and trusted by their clients and the community.
• Both professions form deep, long-lasting personal relationships with their clients – sometimes lasting generations.
• Lastly, both professions are facing short- and long-term partner succession challenges.

Like all businesses and professions, those in senior leadership roles are not getting any younger. With over 7,000 people turning 65 every day, the challenges for succession planning have never been greater. While the statistics vary, a large percentage of equity partners in both law firms and accounting firms will be eligible to retire in the upcoming years – and many already have.

It is no surprise that the impact of retiring equity partners in both professions will be great. The so-called “brain drain”, decreased interest by future equity partners, and client relationship transitions will all lead to a “perfect storm” of leadership transition difficulties for firms specializing in both professions. For many firms, there is also the tendency to be nearsighted as they struggle with the day-to-day operational challenges that come with working in client services. So what can firms do now?

• Senior partners need to be transparent and realistic about their retirement plans (assuming there are no agreements requiring mandatory retirement).
• Firms must train future leaders not only in technical skills, but also in relationship management, business development, general firm operations, and leadership skills.
• Firm leaders must champion the process, embrace its realities, and celebrate its opportunities.
• Senior partners need to “push work down” and delegate partner responsibilities early.
• Senior partners should share and introduce their professional networks to others, often and early.
• Firms need to track and plan financially for future partner retirements and the resulting financial obligations over the next 5 to 10 year period (at minimum).
• Firms need to evolve their compensation models to encourage transition over a period of years, not months.

None of these goals can be accomplished quickly. Employee and client loyalty are the top priorities to keeping a firm sustainable, able to meet its retirement obligations, as well as providing for the future benefit of its emerging leaders. Those future leaders, however, need to know what is in front of them – so transparency is critical.

At DiSanto Priest & Co., we have counseled many professional firms on succession planning. In fact, our own succession plan is always front and center in all of our partner discussions. We have successfully retired many partners over the last ten years and continually plan for future successions to follow. Click here to learn more.

Why You Need a Disaster Recovery Plan

Having a comprehensive Information Technology Disaster Recovery Plan (DRP) is central to your business operations. No matter what industry you’re in, there’s no escaping the fact that conducting business has evolved into a technology-centric venture. Your IT network is the center of business operations and without a robust, optimized, and secure IT infrastructure, you will not be able to compete in today’s marketplace.

Time is money and the cost of a downed network – in lost productivity, customer responsiveness, and reputation – is significant. Therefore, implementing a DRP is critical to business continuity. When disaster strikes, having a detailed written plan that outlines the steps to get your business up and running will prove invaluable in times of crisis.

IT networks are vulnerable to disasters, both natural and man-made. Natural disasters can include events like hurricanes, tornados, floods, blizzards, and lightning strikes. Man-made disasters can include events such as cyber-attacks, terrorism, electrical fires, and water pipe bursts. Given there are a number of developments that can seriously threaten your business’s ability to operate normally, it’s imperative you develop a DRP.

While your customers will be sympathetic at first when disaster strikes, they are unlikely to wait for long periods of time before they begin looking at competitors to meet their needs. If you don’t yet have a DRP drafted for your business, the time to begin developing one is now. There are many websites and resources that provide DRP templates such as www.disasterrecoveryplantemplate.org. You should also consider utilizing an Information Technology (IT) consultant with experience in developing DRPs.  

Formulating a DRP

There are many factors that determine how comprehensive a DRP will be – including the company size, human resources available, and budget. Businesses should perform a cost-benefit analysis to determine how extensive their DRP needs to be to meet their business and customer needs.

Establishing and implementing a DRP requires the support of upper management. The tone at the top of the organization is central to communicating just how important the DRP really is. To begin developing an effective DRP, a team of key employees (which should include members of upper management and IT) should collaborate, brainstorm, and perform a risk assessment to determine the types of risks and disasters that are most likely to occur which would impact daily business continuity.

A thorough DRP does not just cover one type of disaster that could occur; it should cover all the most likely disaster scenarios that could impact your business and should outline a recovery plan for each of the scenarios. For example, responding to a hurricane disaster where the physical office could be impacted by flooding, wind damage, and power failure will be very different than responding to a cyber-attack.

When a disaster occurs, the DRP should clearly identify the individual or individuals who have the authority to activate the DRP. The names and contact information for each critical individual or vendor that is responsible for executing the various aspects of the DRP should be included in the plan. If a key person cannot be reached in an emergency, a backup individual and their contact information should be listed in the DRP. Since an emergency can occur at any time and time is of the essence, it is vital to maintain updated contact information for key parties at all times. Training key employees responsible for executing the DRP is also extremely important.

A DRP Checklist

There is not just one DRP that will work for all types of companies. Each DRP should be unique and specific to a business’s set of circumstances. Below is a list of some items to consider including when developing a DRP. 

• Purpose and goals of the DRP.
• Diagram of the entire IT network.
• Updated inventory listing of all critical IT assets (hardware and software).
• Description of the elements in place to prevent certain disasters from occurring, such as generators and surge protectors.
• Description of what the business does and the tools in place to detect possible issues before a disaster occurs such as antivirus software, network monitoring tools, and regular employee training.
• Likely disaster scenarios and the plan for an orderly recovery for each scenario.
• Define the recovery time objective or the maximum amount of time allowed between the disaster taking place and when normal operations and service levels are resumed. This will vary depending on what each business is willing to accept.
• Location of backups.
• Comprehensive off-site data backup procedures including the procedures for regularly testing backups.
• The frequency at which backups are performed. Data should be backed up with enough frequency that any potential data loss is not deemed unacceptable to the business. If no more than 4 hours of data loss is acceptable for a particular application, then backups should be conducted for that application at least every 4 hours.
• Clearly list the recovery priorities, i.e., the most critical business continuity systems that need to be up and running first.
• List of software and systems that will be used to recover from the disaster and any useful/helpful information related to these.
• Name and contact information for those who will be tasked with implementing and executing the DRP. Be specific in terms of who is responsible for identified tasks.  Backup personnel should also be clearly identified in case the individual in the first position to respond is unable to do so.
• List any vendors that will be used in the disaster recovery efforts and how to get in contact with them.
• Contact information for law enforcement, first responders, property managers, and other critical parties should be included.
• Description of how communication with employees will occur.
• Description of how communication with customers will occur.
• Possible relocation site if work cannot be conducted in the normal business location and directions on how to get to the relocation site. Careful consideration should be given to the location of the alternate site since you don’t want to select a location that would also be impacted by the disaster.
• Document history which includes dates the DRP was revised, what was revised, and by whom.

Download the DRP Checklist here.

Testing and Updating your DRP

Simply having a DRP is not enough. Testing the DRP in a simulated environment is vital to ensure the plan will work as intended. Testing is also beneficial to employees who will be tasked with implementing and executing the DRP because the more comfortable they are with executing the DRP, the smoother things will go in an actual emergency. The frequency of testing will vary based on the needs of your company but should occur at least twice per year. One thing to note is that having a test fail is not necessarily a bad thing because it will alert you to an issue that can be corrected ahead of an actual real disaster event.  

Once developed, written and tested, the DRP should be reviewed and approved by key members of upper management and any feedback from upper management should be incorporated into the DRP as deemed necessary.

A DRP is a living document and can’t just be developed and filed away. An outdated DRP is almost as bad as not having one at all. It is important to conduct risk assessments annually to consider new vulnerabilities that could impact the business and to take into consideration any new IT tools that can be used to further reduce downtime or make the business less vulnerable to disasters. Any changes made to the DRP should be tested, staff should be notified of the changes, and training materials should be updated. We live in a world of constant change and this requires key employees to update the DRP at least once a year.

Safeguarding your Business

All employees should know where to locate the DRP and have a copy available to them at all times. In the event of a disaster, employees need to clearly understand their roles and responsibilities and also know who to contact so that incident response can begin. Key employees who will play a role in the execution of the DRP should be given a hard copy and an electronic copy of the most recent DRP to be filed away in their homes or some other off-site location.  

In a competitive business environment, your company simply can’t afford the significant downtime and data loss which can lead to lost revenue, lost customers, and other significant expenses. While all disasters can’t be avoided, their impact can be minimized with an updated and tested DRP in place.

Increasing Fee Pressures

At one time or another, every Attorney, CPA, or business professional has received push-back from a client who is less than happy with the amount of fees charged for services. Professional service providers gain expertise as a result of years of training, experience, and ongoing education, all of which translates to passing on tremendous value for clients. Sometimes, however, communicating the value of services to a client can be a challenge. There is a saying, “If you think a good lawyer is expensive, wait until you see how much a bad one can cost you!”

Fee pressures have become increasingly intense, particularly as a growing portion of consumers have decided to utilize online companies that provide an array of commoditized, lower-cost professional services. However, clients that use these online services don’t know what they don’t know, and sometimes a conversation with a legal professional can uncover an issue that, left unchecked, could develop into a significant legal or financial problem. For example, during an in-person consultation, a client might casually mention a business practice that could expose him to huge legal or financial liability; or a client could refer to her new business location in a different state, where she has not properly registered or started paying the required taxes. Getting clients to come in for a consultation can often persuade them that the services of a professional are necessary. But many clients still insist on keeping their costs as low as possible.

Communication Is Key

What is a professional to do?

The most important thing you can do, of course, is to communicate in an upfront and transparent manner about your fee structure and the anticipated costs to your client. Whether you bill by the job or by the hour, utilize retainers, monthly fees, or some other billing method. Clients should have a clear idea of what to expect when they receive your bill. In addition, describe the value they will receive from paying your fees, such as personalized and attentive service.

There are steps you can take to keep your clients’ costs reasonable while still providing quality services. This can be accomplished, in part, by keeping your own expenses down.  

Reducing Operating Expenses

Some firms have lowered their own overhead by decreasing their physical footprint in high-cost metropolitan areas, or leaving these areas altogether for nearby, less expensive, locations. Firms can also use space more efficiently. According to one source, 26% of attorneys have office space exceeding 1,000 square feet per attorney (that’s larger than many apartments!). Reducing administrative costs by re-evaluating staff needs and/or outsourcing tasks when practical and automating procedures such as time-tracking and invoicing may provide additional savings. Some other cost-cutting measures could include renegotiating lease terms and shopping around for savings on travel, insurance, technology, and even office supplies.

Clear and transparent communication with your clients about fees and taking measures to regularly examine how your operating costs can be reduced may still not make your client happy to receive your bill, but it should provide a greater opportunity to meet a client’s expectations.