Are You Ready for July Sales Tax?

TaxjarMark Faggiano is the founder and CEO of TaxJar, a service built to make sales tax compliance simple for eCommerce sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!

 

 

Not only is July a time to celebrate the country’s independence and maybe hit the beach, it’s also a time when many state’s departments of revenue require that you check in about a little thing called sales tax.

 

We know nobody likes to think about filing tax forms and sending in payments, so we put together this quick guide on how you can make sales tax painless this month… and all the months going forward!

 

Check Your Sales Tax Due Dates

 

One of the frustrating things about sales tax is that every state is different. While one state may want to hear from you on the 20th of the month another might have a due date on the last day of the month. So we’ve put together a handy list of July Sales Tax Due Dates for online sellers. Just go and find your state (or states) and you’re all set!

 

Report How Much Sales Tax You’ve Collected

 

The taxable period ended on July 1st, but now you have to figure out how much you collected over that period. You can do this by pulling reports from all the different channels you sell on, plugging them into spreadsheets, triple checking your math, and wasting a whole lot of time, or you could just sign up for TaxJar and let us do all that work for you. Not only does TaxJar connect with the shopping carts on which you sell, we also organize each state’s info in a return-ready format. That means no puzzling over zip codes to try and figure out how much you collected in each city, county and district on those difficult states like Washington, Florida… and most of the other ones.

 

File and Pay Sales Tax

 

From here, take your TaxJar reports over to your state’s department and revenue and you can quickly and easily fill out your return and remit your payment.

 

Don’t forget a couple of key things here.

 

First, some states require you to file a “zero return” even if you didn’t collect any sales tax in that state. Here’s a list of states that require zero returns.

 

Second, some states offer discounts for filing early or on time. Are you one of the lucky ones? See a list of sales tax discounts here.

And that’s it. You’ve put July’s sales tax behind you. Do you have questions about sales tax? Start the conversation in the comments, or join over 3k online sellers and sales tax experts in TaxJar’s Sales Tax Community!

Common Sales Tax Pitfalls eCommerce Sellers Face

Mark Faggiano is the founder and CEO of TaxJar, a service built to make sales tax compliance simple for taxjarlogoeCommerce sellers. Mark’s passion is solving complex problems for small businesses. He previously co-founded and led FileLater to become the web’s leading tax extension service for both businesses and individual taxpayers before being acquired in 2010.

Sales tax can be one of the biggest headaches eCommerce sellers face. There are so many pitfalls on the path to sales tax compliance that it can be downright treacherous, but if you already have a handle on the most common mistakes, you are going to be just fine.

So what are the four most common sales tax mistakes and how do we fix them?

Nexus – What’s That?
It is common knowledge for most online sellers that they should collect sales tax from buyers in their home states. By operating your business in that state, you have sales tax nexus. But It can come as a shock though to find out just how easy it is to create sales tax nexus in other states. Some activities that create nexus include:

● Having items stored in a state
● Having an employee in a state
● Using a distribution center in a state
● Having delivery vehicles in a state
● Attending a craft show, exhibition, or trade show in a state

If you do have nexus in a state and you didn’t realize, you can register for a sales tax permit with that state. However, if you have been operating for awhile without a permit, you should probably check with a sales tax expert to see what you should do about all the unpaid sales tax.

No Permit? Uh, Oh.
If you have been operating for awhile and you know you have nexus, but you don’t have a permit, you could be in trouble. Most states consider it illegal to collect sales tax without a permit. Be sure to check with your state’s department of revenue to make sure that you have a permit and that it doesn’t need to be renewed. If you have nexus in multiple states, you need a permit from each state.

Collecting the Wrong Amounts
Many sellers have trouble calculating sales tax rates. Let’s say for example that you live and operate your business in Minnesota. Because Minnesota is a destination based state you will calculate sales tax based on where your customer lives. The Minnesota base sales tax rate is 6.875%, but you must add any applicable local rates.
So for example, although the base rate is 6.875%, if your customer lives in St. Paul, you would pay a total of 7.625%. If they live in the Anoka area, you would pay 7.125%. This can be trickier than you think, especially when you sell online and have to set up your shopping cart to collect. You can learn more here about which sales tax rate you should charge to buyers.

So Many Platforms
This mistake happens frequently. Let’s say you are selling on Etsy and you set up to collect in the states where you have nexus. You think you have it all taken care of, but what about all the items you sell through your personal website? The next step is making sure that you have all the platforms you sell on set up for sales tax collection. So if that’s eBay, Etsy, and your website, make sure that you have all of those platforms set up to collect sales tax from buyers in every state where you have sales tax nexus.

That about sums up some of the most frequent sales tax errors. (Though, with sales tax being so complicated, there are thousands of other pitfalls!) If you have questions about sales tax pitfalls, start the conversation in the comments.

Need help with sales tax? Check out our Sales Tax 101 for Online Sellers Guide!

Forgot how to Handle Sales Tax?

Guest Post from Mark Faggiano of Taxjar.com

Forgot how to Handle Sales Tax? Here’s How…

markfaggianoMark Faggiano is the founder and CEO of TaxJar, a service built to make post-transaction sales tax compliance easier for multi-channel ecommerce sellers.

January is the promising start of a brand new year. It’s time to sit back and count your profits after the holidays, make some resolutions and maybe enjoy a few cups of hot cocoa.

But for many online sellers, January is also the only time of year you have to deal with sales tax.

But never fear. If you have annual sales tax due dates in January (and nearly every online seller does), then TaxJar has your back.  Here’s what you need to know, even if it’s been a whole year since you’ve dealt with sales tax:

1.) Find Your Sales Tax Due Dates – Check out this list of January sales tax due dates to determine when your sales tax filing is due. Most sales tax filings are due on January 20th, 2015, but there are always a few states that just have to be different.  Double check due dates in every state where you’re registered to collect sales tax to ensure you pay on time.

2.) Determine How Much Sales Tax You Collected – If you’re only filing annually, this means you have to determine how much sales tax you’ve collected throughout the entire year. You must also determine how much sales tax you’ve collected through every channel on which you sell. You can do this the time-consuming way, by running reports from all your channels, or the easy way by letting TaxJar do it for you.

3.) Get Your Sales Tax Reports Return-Ready – In a perfect world, states would only want to know how much sales tax you collected from buyers in the entire state and be done with it. But, of course, as with anything sales tax-related, it’s often more complicated than that. Many states want you to break down sales tax you’ve collected by county, city or other taxing district. This can mean poring over every transaction and trying to figure out exactly what districts your buyers lived in.  TaxJar has your back here, too. We’ll give you return-ready reports so you don’t have to spend your time on this tedious task.

4.) File Your Sales Tax Returns – Once you’ve gathered up all of your information, it’s time to file. You can file online or even let TaxJar AutoFile for you (in 26 states and counting!)  Be sure to file on time – states will penalize you if you’re late, but many will also allow you to claim a sales tax discount if you file early.  And don’t forget that many states require you to file a “zero return” when you’re registered there, even if you didn’t collect any sales tax over the taxable period.

And that’s it! You’re done with sales tax. Well, at least until the next time sales tax rolls around.

Sales tax is complex. That’s why we created TaxJar – to handle the burden of sales tax while you get back to running your business.  TaxJar pulls in sales tax collected from all the channels where you sell, compiles your data into return-ready reports, and will even AutoFile your sales tax returns for you in 26 states (and counting!).

Sign up for a 30-Day TaxJar free trial today and put a lid on sales tax. To let us take care of your January sales tax filings, be sure to sign up by January 5th!

 

Optimize Your Listing to Boost Sales by 220%: How Buyers Became Power Sellers eBay!

By:  CrazyLister

Our story starts out a few years ago as a buyer on eBay when I was shopping around eBay for a GPS device. I ended up making a questionable purchase from an anonymous seller in China. The listing for the item had a formidable wall of text, mixed media font styles and colors, and even a smattering of pictures that were unrelated to the product being sold.

It was not the item or the seller, but the listing itself that triggered my bias against purchasing this product. However, I bit the bullet and made the purchase because hey, it was cheap.

As luck would have it, I got a whole lot more than what I had paid for: a great item for a bargain price. I had wrongly assumed that the quality of the item would be poor, or at the very least suspect based on listing description. After checking up on similar listings for GPS devices, I discovered that these listings followed in the same vein of haphazard, even weird product listings which cheapened the face value of their items considerably.

I was struck by a crazy idea. Why not create a more professional description for the same GPS devices and sell them at a higher turnover rate? A quick phone call later with my partner solidified our decision to become sellers on eBay. We were in business.

Some six months later we were ranked among the top eBay sellers of GPS devices. Our listings topped search results on eBay US, UK, Australia, France and Germany despite the fact that our prices were far from the lowest.

A few months later, eBay awarded our business with a certificate of achievement.

And yet, our selling method was not to be the cheapest on the market as I was dropshipping directly from fellow eBay sellers. This meant that my prices were by no means the lowest on the market. But I was the highest ranked seller in my product categories. So what was the difference?

Optimizing listing descriptions

We set ourselves apart from the competition by fine-tuning our listing aesthetic via CrazyLister’s optimized listing descriptions, and of course above all else, with a finger to the pulse of our conversion rate.

Understanding the Importance of Conversion Rate

Similar to Google search, eBay uses a search engine algorithm to determine the order as they appear in search results. This algorithm is measured by a combination of metrics which displays the sort order of listings to a potential customer.

So, how do listings make the cut? How does eBay calibrate the metrics which dictate who is ranked on top?

Simply put, these metrics are both quantitative and qualitative. Here is a list of examples of qualitative metrics: customers’ location, recent searches on eBay, watched items, etc. Whereas quantitative metrics include but aren’t limited to the following: items’ title, location, price, and sellers’ respective feedback record. Naturally eBay won’t disclose their exact metrics and their exact hierarchy of relevance, however numerous reports and studies by eBay sellers clearly indicate that the most important metric that determines the rank of a listing on search results is (drumroll please):

Conversion Rate. Why is conversion rate the most important factor when determining a listing’s rank in eBay search results? The answer is simple – bottom line profit. eBay makes money when there is a sale. As such, it is in eBay’s best interest to place the most relevant, highest converting items at the top of search results.

Boosting your products’ conversion rate leads to high ranking search results which leads to improving YOUR bottom line – sales, sales sales!

Find Your Conversion Rate Using Free Resources

Visit eBay’s Listing Analytics App:

Step 1: Go to “Applications”

Screen Shot 2014-12-04 at 11.15.34 AM

Step 2: Sign up for the free to the “Listing Analytics”

Screen Shot 2014-12-04 at 11.16.30 AMThe column you are looking for is “sell through rate” (conversion rate)

Screen Shot 2014-12-04 at 11.17.24 AM

Improve Your Conversion Rate to Boost Sales – Here’s How!

When a potential customer is looking at your listing, there are several implications to consider:

  1. There is a pre-established interest with the product’s price, title, and image (otherwise the customer wouldn’t have clicked on your listing in the first place).
  2. The customer has their virtual purse open and are ready to purchase.

So what is stopping them?

Your product listing is a determining factor in the process of converting page viewers into customers. Case and point, by revising the listing descriptions of our supplier, we managed to increase the conversion rate on the GPS listings from 2% to 4.4% – that’s well over double gross sales. People make snap decisions when purchasing online based on superficial qualities such as the professional aesthetic of your listing descriptions. Most people aren’t keen on taking risks when it comes to anonymous, even potentially fraudulent sellers on eBay. Our revised and refined listings proved this point exactly: by creating aesthetic, professional listings we succeeded in selling OVER DOUBLE of SAME GPS devices for an even HIGHER price.

The Next Step to Boosting Sales: Revising Your Description

How do we improve our conversion rate? By optimizing our product listing!

I don’t know about you, but I personally don’t know HTML nor am I skilled in web design. When I was working as a seller on eBay, I had to spend days watching Photoshop instructional videos, what a snooze-fest. Through painstakingly meticulous work and with a lot of blood, sweat and tears, I managed to revise the listings according to the various input we received about our GPS devices.

But then it dawned on me: there should be an easier way to create professional, aesthetic listings without extensive knowledge in web design. So I shopped around for an editor that could do the coding for me. Unfortunately, this is what I discovered:

There are a lot of tools to create listings, the problem is that none combine the two simple features that I absolutely required:

  1. Easy to use – I needed an editing tool that was simple.
  2. Total customization – why use generic templates when I know exactly what I need? I needed an editor that I could use and manipulate to create the exact listing I WANTED, not be forced to work around a generic design.

But an editor with those specifications did not exist. Either you needed to know HTML to code custom listing or use generic template services. Admittedly generic templates are easy to use, however they do not allow total customization. It is crucial to customize a listing in order to able to respond customer’s concerns and feedbacks – without that there is no way I could have addressed my customer’s needs and improved my conversion rate without customizing my listing description. The key to boosting sales is in customization.

So, with a lot of hard work and a dedicated team of optimization specialists, we created CrazyLister.com.

CrazyLister is a super easy Drag&Drop editor for eBay sellers. It allows any seller with zero coding skills to create professional, 100% customizable listings. Making a change to a listing takes only minutes or seconds, compared to hours of coding. And it gets better: if I want to add a YouTube video to my listing I simply use CrazyLister’s editor to drag the video icon onto my design template and input the URL address of the video. Try comparing this to manually copying a piece of code from YouTube and finding the correct location in the HTML code of the description, only to realize that YouTube code is not compatible with eBay… talk about a headache!

With CrazyLister, we made things simple. Using our editor makes the listing process fun and intuitive, if you’ve been battling your listings to look professional and you are a bit of a dinosaur like me with HTML code then we recommend you try CrazyLister out!

Quick Wrap-Up

Here are the steps to boost your sales:

  1. Measure your current conversion rate.
  2. Figure out what is important to your potential customers and what they expect to see on your product listing.
  3. Revise your description to remove unnecessary information and bring focus to all relevant information using images and strategic highlighting choices.

For advanced, professional listings, use CrazyLister to easily create or revise your current listings to make them stand from the crowd. We wish you the best of luck! Happy selling!

(eBay Awards: Viktor Levitin and Maxim Godin with certificate of achievement for outstanding sales)

Screen Shot 2014-12-04 at 11.18.05 AM

For our full story plus exclusive tricks and tips, read more here. – See more at: https://www.thatkat.com/?p=3351&preview=true#sthash.reK5G8kF.dpuf

eBay Bidder Search — A New, Free Buyer History Replacement Tool

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Guest Post by WatchCount.com

As a seller, did you ever use eBay’s former Advanced Search by Bidder feature? If you used that search functionality during its 10-15 year (or more) tenure before eBay quietly removed it in 2014, you know how helpful it was. It showed most items purchased by a buyer during the prior month or two, and could provide insights to help both the seller and the buyer post-transaction.

Here at WatchCount.com we got wind of eBay’s removal of that search feature, and we quickly got to work on creating a tool to fill the gap! You can find our free and easy to use, near-identical replacement eBay Buyer/Bidder History Search Tool located here. Just enter an eBay User ID, and we’ll try to dig up and display most items purchased by the user over the prior couple months. (eBay’s privacy filters prevent us from displaying certain items, like private listings, and bids on active auctions.)

While researching the viability of launching a replacement for eBay’s long-standing Bidder Search feature, we learned some of the reasons why small sellers found it valuable.

One popular use of the former eBay tool, and of our new one, was/is to examine suspicious buyer claims. For example, you might be able to detect a fraudulent SNAD claim if you look up the buyer’s purchase history and discover that they bought an identical item from another seller at a lower price, before receiving the item they bought from you.

Similarly, when a high value bid rolls in on a big ticket item you’re auctioning off — but the bidder barely has any feedback score and has only a short lifetime at eBay — we’re told it can help sellers to know if the bidder has completed any similar purchases recently. If not, such a suspicious bid might be best canceled, to limit the risk in allowing those kinds of counterintuitive transactions to unfold.

On the brighter side of the coin, we’ve heard from sellers who like using our new Buyer/Bidder History tool to help cross-sell their inventory to recent buyers. If you know what the buyer likes, you can include custom-printed promotional literature in your outgoing shipments to them or in follow-up emails.

We’ve even read that some sellers periodically receive inquiries from former buyers who’ve accidentally misdirected their question to the wrong eBay seller! The accidental seller can make a quick lookup to their recent buying history, and the buyer can then be politely handed off to the proper seller with laser-targeted accuracy, ensuring a smooth customer service experience.

As with all of our alternative eBay search tools (like our recent Best Offer selling price lookup feature), we’re dependent on functionality served by eBay’s publicly accessible developers platform. With eBay having sunset their Advanced Search by Bidder tool, the longevity of their back-end API support, and thus that of our own tool, is unclear to us. As such, we’ve tagged our new Bidder History Search tool as ‘Experimental’ for the time being. But we still remain cautiously optimistic that eBay’s API platform will continue to support us going forward, with a niche eBay tool that certain small sellers find particularly unique and valuable.

 

 

If Your Mom is Online Seller, Here Are Tips to Survive Mother’s Day

Celebrating Mother’s Day can be a challenge when your mom is an online seller, spending her days running from the computer to her camera to the printer to that pile of shipping boxes and back again. If your mom is running an online business, here are some tips on how to share (and survive) Mother’s Day with her.

Mom

1. Pick up errant packing peanuts for her. Here’s a peanut pick-up tip – collect runaway peanuts with a plastic file folder. Rub the folder up and down your pants to generate static electricity, then move the folder over the peanuts and watch them attach like magic. Just keep the folder away from you, or you could end up as that person walking around with peanuts stuck in their hair.

 

2. Go on a box-and-bubble-wrap run. Take a tedious chore off of Mom’s “to do” list and go get some boxes and bubble wrap for her. You might think flowers would make a better Mother’s Day gift, but for an online seller, boxes and bubble wrap smell like roses.

 

3. Make sure the coffee pot is full. After a few hours of running around finding products to be shipped, packing items, answering customer emails (some of which are the topic of a different set of tips), and dealing with marketplace insanity, your mom can end up exhausted and conked out on the couch. Keep a strong pot of coffee available so she can revive whenever she feels the need.

 

4. Don’t plan a barbecue for shipping day. Barbeques are always fun – except on shipping day. Your mom doesn’t want to be seen by your friends as “that crazy lady”. Determine when she does her shipping, and save the barbeque for a less hectic day.

 

5. Hide your baseball cards. You know mom wants to get her hands on those baseball cards you’ve been collecting since childhood. She’s just waiting for the right moment to swoop in and post them on eBay. Do yourself and mom a favor – hide them, so you can continue to enjoy a great relationship.

 

6. Get her a plant – she needs the oxygen. When mom is frantically running around, an oxygen-emitting plant will help her breathe, and remain calm and focused. Plus, she’ll get to enjoy a bit of greenery in her workspace.

 

7. Learn how to use a box tape machine. Yes, you. You could help out once in awhile, you know. Just remember to watch where you put your hands when taping a box. Otherwise, your fingers get stuck to the tape, then the tape gets stuck to itself, and you end up with a big sticky mess.

 

8. Cook your own dinner and do the dishes for once. Of course your mom makes the best lasagna

this side of Rome, but that doesn’t mean you can’t try your hand at making spaghetti. If all else fails, there’s always the microwave. Zap up a meal, and forget about doing dishes.

 

9. Make sure her phone has a mute button. As every online seller knows, there are times when a mute button comes in handy. Your mom don’t want those “difficult” customers to hear what she really thinks. Get her a phone that will let her vent – at full volume – while keeping everyone happy.

 

10. Get your laundry out of her workspace. There is nothing worse than tripping over a sock when you’re piled high with boxes. It would be a wise move to clear her workspace of any laundry, shoes, golf balls, or other assorted items that have the potential to ruin her day.

CrazyLady
These tips will help you and your online seller Mom survive, and hopefully enjoy, Mother’s Day.  Remember to give her a card, a cake, a hug or something else that will help make the day perfect.

 

Post contributed by Vendio Services, Inc. Vendio provides Simply Powerful services for online sellers.

Spring Clean Your Business Finances & Get a Jump on Next Year’s Tax Time

How stressful was tax time this year?  Are you looking forward to forgetting all about Schedule C’s and 1099-whatzit’s until 2014? We don’t blame you. But what if I told you that taxes don’t have to be stressful. That with the right preparation tax time could breeze by just like spring?

 

Spring Clean Small Business Finances

 

In fact, Outright is offering an email series “Spring Clean Your Business Finances” to do just that – get your business finances in order so you can master tax time 2014 (and beyond).

 

The six-mail series will breakdown the reasons that tax time is so trying for small business owners, and give you helpful to do’s you can implement today so that taxes never get the better of you again. You’ll learn important things like:

 

 

  • Why you may be paying too much in taxes
  • How real small business owners handle tricky tax issues
  • The one good rule of thumb for expensing your in-town trips
  • How the finally master the one overlooked tax that most small business owners owe

Plus, the advice is doled out in 6 weekly emails, so you won’t be overwhelmed. It will be a lot easier than actual hands-and-knees spring-cleaning, and just imagine how much better you’ll feel when it’s done! Even better, people who sign up for the course by April 29th get a discount code on Outright Plus for new Plus subscribers.

 

Week ONE Screenshot

Sign up today for Outright’s Spring Clean Your Business Finances email series!

 

Thanks to Jennifer Dunn and Outright.com for this post!

Online selling: why haven’t you tapped into it yet?

Monday: pay the rent. Wednesday: pay the Internet bill. Thursday: pay my phone bill. This list goes on, and I’m almost certain it’s not dissimilar to the reminders in the diaries of most people.  There are increasingly more things we have to worry about in terms of finance, so it’s no surprise that people have turned to internal resources to make some extra cash – online selling.

The concept is familiar to most people: you find unwanted goods in your house, and you sell it onto a second home. Online retailers such as Amazon and Play.com sell branded items but also act as a medium through which you can earn some cash from those pairs of jeans that no longer tickle your fancy, or that DVD box set you grew out of years ago. However, you are not limited to just digging out long-forgotten household items as there’s nothing stopping you from turning online selling into your full-time job.

Chris Dawson was made redundant in 2004 and needed to make money, quick. With a knack for things technological, he didn’t turn to his local paper to look for his next vacancy; instead, he started to buy computer parts and sell them on eBay. This is now his primary source of income, and with this expertise, he co-founded TameBay. Chris’ case isn’t out of the ordinary either; there are people out there whose lives have been turned around after utilising online selling outlets. Don’t just take my word for it, see for yourself here.

The great thing as well is that it doesn’t necessarily have to be something bought at budget price and then sold on. After the creation of Etsy seven years ago, it’s now possible to make some money from goods you have made yourself. Katrina Briggs Gordon launched her shop selling crocheted fashion accessories and handmade greeting cards in January 2011, and hasn’t looked back since.

Have I tempted you yet? Good. If you’ve ever sold anything online, you’ll know the feeling of accomplishment and pride when a stranger buys one of your products out of their own free will. If you haven’t, it’s a feeling you’re missing out on! So without further ado, I introduce you to Parcel2Go’s Definitive Guide to Online Selling. Put more simply, it’s a comprehensive guide to selling on three of the biggest platforms: eBay, Amazon and Etsy. It takes you right back to the start and makes sure you get the most out of your online selling, whether you’re doing it as an individual, or want to follow in Chris Dawson’s footsteps and earn your living from it. From knowing which outlet is right for your products, to maximising your target reach with online tools and SEO; this is no doubt the one-stop guide you need.

Have you got your cup of tea ready? Good, now head over to Parcel2Go now to see just what their online selling guide could do for you.

 

This post was contributed by Carl Smith, on behalf of Parcel2Go. They offer a comprehensive range of services worldwide, sending over 2 million parcels each year. To find out more information on courier services from Parcel2Go.com, visit their website and see what they can do for you.

Your Clients Don’t Have Money: Should You Lower Your Fees?

Cliff Ennico

“I work in a service business where I bill by the hour.

Because I work out of my home, and have no overhead, my fees are pretty reasonable. I try to price my services at about 80% of what my closest competitors charge, and have had little trouble finding business at that level.

Recently, I’ve been having problems.  My customers are telling me my fees are too high, and are either performing this service themselves or foregoing having it done.  Even worse, some of them are using my fees as leverage to negotiate even lower fees from my competitors.  Some of my competitors are giving in and giving them what they want.

I realize times are tough and people are squeezing their pennies so hard you can see through them.  But if I cut my fees any lower than they are, I may have trouble paying my bills.  Is there anything I can do to turn the situation around?”

It used to be that you could justify your fees by citing your expertise or experience.  Whenever someone asked me why I charge $500 for forming a limited liability company (LLC) when it took me only about an hour to do the paperwork, I used to reply, “well, it’s taken me 30 years to learn how to put together an LLC in one hour.”

No more.  People want the expertise, but they won’t pay extra for it.

These days, I have to contend with online incorporation websites such as Legalzoom.com that charge only a fraction of what attorneys charge for forming LLCs.  Even worse, there is a large and growing surplus of unemployed young attorneys fresh out of law school who are desperate for work and will charge whatever the client is willing to pay.

Just yesterday, a client called me asking for my help in reviewing a set of documents for a franchise he was thinking of buying.  Generally, I charge a $1,500 flat fee for this service, reflecting the five or six hours of time it normally takes me to review the documents, research the franchise online, prepare a memo to the client explaining the pitfalls, explain those pitfalls to the client, and negotiate an addendum or “clarification letter” with the franchise and its legal counsel.

When I quoted my fee and explained why I needed to charge what I charge, there was dead silence on the phone for a few seconds, until the client said “I only have $250 in my budget for legal services.  What will that buy me?”

For a split second, I thought about laughing in this guy’s face, hanging up the phone on him, or screaming at him about the amount of work involved in a project like this and the liability we attorneys have whenever we do less than perfect work.  A year ago, I might have done just that.

Not yesterday.

After asking the client some questions to make sure he wasn’t just bluffing, I told him that for $250 I would give him one hour on the phone and answer any questions he and his wife had about the franchise documents.  I told him there would be no thorough review of the documents, and that I would ask him to sign a letter saying that my obligation to him as a lawyer was limited to that one-hour phone call.

He gratefully accepted my offer, and of course I actually ended up giving him slightly more than one hour on the phone.

So how do you make sure you’re getting paid what you’re worth?  Here are some ideas.

First, consider giving your clients a “menu” of options, with fees attached, such as “For X dollars, you get this, but for an additional Y dollars, you get the following extras”.  Real estate brokers have been playing this game for years: you tell them you cannot spend more than X dollars, they show you a bunch of junky houses in that price range, but then they show you some really nice houses that are just a few thousand dollars more than the limit you told them.  When people see what they are not getting by “splitting pennies,” some of them – the ones you want – will migrate to your higher fee structure.

Just be sure you clarify in writing the limited service your client is getting, because clients have a nasty habit of forgetting the details once the work is done.

Second, consider going “high end” with your service and pitch only those clients you know can afford to pay a reasonable fee.  Just be aware that all your higher-priced competitors will be pitching the same few people.

Lastly, if all else fails, add new services that people will pay any amount of money to have done for them, no questions asked.  People won’t pay top dollar for an LLC, but if they need help fending off an IRS investigation . . . ?

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books.