Passing AF to clients - to do or not

[scenery_guy]

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@Duncanrr wrote:
Another way I could do it is at end of year and total up the number of flights and then charge the fee based off the total number. So if I fly 10 flights on delta I would charge 9.50 per trip to the client. This way it saves them 15.50 per flight for checked bags.

Ultimately, its not much money and would be easier to just wave the charge. I was curious what others do with this.

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End of the year? I would never wait until the end of the year to bill a client for expenses incurred throughout the year. 

Do your clients have employees? Do they travel? Do they get reimbursed for luggage fees? If you answered yes to these questions then you should be billing for luggage per trip. It's customary and acceptable internally so no big shock when you submit a bill for the same. Use the luggage fee to pay your AF and pocked the overages. Better yet upgrade your card to the Reserve and get lounge access all paid for by the luggage fees. 

[kekrre]

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@Duncanrr wrote:
I was wondering if you pass along your AF cards fee to your clients. For example, I have Amex Delta which saves me on luggage check fees. If I didn't have the card then the client would have to pay for that luggage fee.

So, do you pass along the $25 fee to clients until your AF is covered?

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I just read through this thread to make sure nobody suggested what I am about to...

Why don't you simply reimburse yourself from your business as an expense - presumably if you're in a position to pass the fee on to your clients, you can easily arrange for your fee to be paid through your business. I believe that the card fees are deductible at the end of the year as well.

While I think it's arguable that your baggage fees are a business expense (since you specifically mention carring documents), I'm not certain it's professional to charge for that fee regardless of what you're carrying. Beyond that, I think it's hard to justify your clients paying for your credit card, regardless of the benefits it provides, however related to the services you provide. It would be more appropriate if you were actually paying the baggage fee yourself (or charging a fixed "travel fee" that covers any expenses incurred during business travel).

I'm also iffy on whether or not it's appropriate to charge some clients for privileges you will enjoy for all future clients (if there are enough such that a client you visit later in the year will not have to pay a fee that you charged to a client earlier in the year - pure speculation on my part, of course) and possibly for yourself in the future. That is, I'm not certain that it's appropriate to bill someone specifically for your credit card for benefits and privileges you will take advantage of outside the context for which the fee was paid. I don't think it's a stretch to compare this to billing your employer/client for a refundable flight, then picking up a non-refundable flight and pocketing the difference.

I hope I don't come across as preachy - that is not my intention. If I was in a position of flying someone out to meet with me, and being charged for time, travel and accomodations, and I was in a position to review (and contest) such fees, I would likely question paying a baggage fee for any professional as I would be paying for your time and expertise, not your ability to wear clean clothes. However I agree that a fee incurred carrying documents related to such a job is approriately billable. As a client, I would expect that travel-related fees are insignificant costs and would be more than covered by the hourly fee I was paying - as a consultant of some specialty, I would attempt to charge an hourly fee that was sufficient to cover sundry expenses incurred in life, such as food, shelter and the ability to burden airliner cargo holds with small containers of my stuff (although I am under absolutely no illusion that it is always possible to arrange for this, otherwise I would be absolutely rich). If I was self-employed, I would reimburse any actual fees or AFs to myself as business-related travel expenses (or get a business card). In general, if I was a waged employee, I would expect my employer to cover them (but not a credit card AF).

On the other hand, to echo what scenery_guy's last comment, I think you should charge for the luggage fee (as a "travel expense"? "travel fee"?) in all cases, if that's what you're looking to do - I think charging the first few clients for the year and then stopping could cause some headaches.

Regardless, I think the card should be reimbursed from your business, whether you charge a fee or not.

[solxp]

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@Duncanrr wrote:
I was wondering if you pass along your AF cards fee to your clients. For example, I have Amex Delta which saves me on luggage check fees. If I didn't have the card then the client would have to pay for that luggage fee.

So, do you pass along the $25 fee to clients until your AF is covered?

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Couple things.

1. Is this a personal or business card?

2. The annual fee can be claimed as a business expense. If you pass the fee on to your clients the money recieved is income making it taxable hurting you when you file. Need a cpa to answer that question.

3. If your charging your clients the annual fee are you offering them compensations for the rewards your gaining from the purchases your making on thier behalf and billing them for. Are you utlizing these rewards for personal gain. 

Honestly IMHO I think your better off simply writing off the annual fee as a business expense. If I got a bill which included 5.00 for baggage fee from someone I contracted with I would probably start shopping around for someone who is not nickle and diming me. If you need the extra revenue that badly for the business and I am not saying this is the case then would it not be better to simple increase your hourly rate that is what most people/business do to cover business expenses. Plus that gives your the ability to claim the AF as a expense.

[youngandcreditwrthy]

I agree with this fact:
Many clients will try to nickel and dime YOU...

Try to get something for nothing as the saying goes.

So for the uhm..let's say "unmentionable" clients who are surly, demanding, and cheap... Charge them how they treat you.

Otoh, if you have easy going, respectful, and courteous clients... Toss 'em a bone if you can.

The Golden Rule and Karma are especially useful imo in this scenario. :-) some people have to be let know that the world doesn't revolve around them, and if they are such a hassle that they can't pay a $5 fee, the perhaps their business isn't paramount anyway.

If it's only $5, and ops are suggesting the business pro pay it in lieu of the client, then it's only $5..why can't the client pay it? ;-)

It's quite obvious to see who is on what side in this post ;-)

[youngandcreditwrthy]

And btw if you write off business expenses, the TAXPAYER has to foot the bill... Something I'm not always okay with. I think businesses/churches/ non profs gets too many d a m n tax breaks already... But taxes are a whole other concern.

[scenery_guy]

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@solxp wrote:

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@Duncanrr wrote:
I was wondering if you pass along your AF cards fee to your clients. For example, I have Amex Delta which saves me on luggage check fees. If I didn't have the card then the client would have to pay for that luggage fee.

So, do you pass along the $25 fee to clients until your AF is covered?

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Couple things.

1. Is this a personal or business card?

2. The annual fee can be claimed as a business expense. If you pass the fee on to your clients the money recieved is income making it taxable hurting you when you file. Need a cpa to answer that question.

3. If your charging your clients the annual fee are you offering them compensations for the rewards your gaining from the purchases your making on thier behalf and billing them for. Are you utlizing these rewards for personal gain. 

Honestly IMHO I think your better off simply writing off the annual fee as a business expense. If I got a bill which included 5.00 for baggage fee from someone I contracted with I would probably start shopping around for someone who is not nickle and diming me. If you need the extra revenue that badly for the business and I am not saying this is the case then would it not be better to simple increase your hourly rate that is what most people/business do to cover business expenses. Plus that gives your the ability to claim the AF as a expense.

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As long as OP is "in business" it does not matter if the card is personal or business. What matters is the expenses are generated while doing business (and documented as such) and can most certainly be used as a write off.  Yes, funds billed for baggage are taxable income, and that's the point (to me) as it's more income. I'm not sure how making income is hurting anyone. That's the goal when in business, or at least my goal. 

Of course the OP is using rewards for personal gain. We all are, and that's the credit card rewards game. Don't think your (or my) clients are not doing the same. Heck I put AU cards in my employee pockets so I can reap the rewards from their spending on business projects. They are not free to use their cards unless my cards are declined or not accepted. I will happily reimburse right away but to this day I have never needed to, and my employees are very happy that they never need to worry about any expense out of pocket. 

Yes, I agree - write the AF off as a business expense and I am sorry if I was not crystal clear about that. But don't miss the opportunity to bill a client for a customary expense that you incur. Make money off baggage fees and don't feel bad about it. Look at it this way, if you did not have the Delta card what would your baggage fees be per flight? $50. You made a good business decision and got a Delta card saving you first bag fees. You should profit for the good business decision. 

Raise your hourly/day rate if you want to earn more money for your time but never ever bundle expenses into this rate. Any good client will be able to pick you apart as where do the "hidden expenses" stop? You eat the bag fees but do you charge for taxi rides? What about bus fees or subway fees? Airport parking? What about valet parking at hotels? Or self parking fees? This rate is your compensation for work, your time laboring for others. Don't make it more than that and don't confuse your customers as they need it simple. Hourly rates should include 4 things: pay going to employee, workman's comp insurance, payroll taxes to be paid by employer and profit. 

In 20+ years I have learned what is customary and acceptable. I bill for it all and if a client has issues I will discuss them point by point. I sometimes will credit back for an item but that is a very rare occurrence, less than 1%. I review all of my policies with new clients and follow up with a detailed estimate (and I am clear that this is an estimate and may go up or down based on actual situation). If I need to institute a change adding a billable item I make it clear to all my clients via email as to what the changes will be in advance. 

Don't ever forget we are in business to make money. I am pained when I see people leaving it on the table but I do understand YMMV and I do not know the exact details of your business or clients. I was shown the things I stated here a long time ago by someone who was successful in my industry and I adopted them and have done well. 

[scenery_guy]

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@youngandcreditwrthy wrote:
And btw if you write off business expenses, the TAXPAYER has to foot the bill... Something I'm not always okay with. I think businesses/churches/ non profs gets too many d a m n tax breaks already... But taxes are a whole other concern.

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What? I know you are not suggesting that business owners eat expenses that are currently allowed as write offs in the tax code? That's hilarious. 

I am paying nearly $70,000 in personal taxes due to my business. After entering my income (gross sales) but before I entered expenses my total tax due was almost $400,000. That's a small business in the scheme of things and it qualifies me as a taxpayer for sure. In my lifetime I will have paid more in taxes than most people earn in a lifetime before taxes are paid. 

Please don't lump all businesses in with religious or 501(c)3 organizations. I will agree that they should share the tax burden a bit more but I'm paying too much as it is now based on the amount of money I spend in my community paying employees and purchasing supplies. Small businesses combined are the largest employer in the US. We are the backbone to this economy and the lifeblood to middle class. You want to take issue with ultra large corporations then I am with you as I would love to have access to their tax rates. 

End rant. I'm at work on a beautiful Sunday because I own a business and have work to do, and it's going to be a long day. 

[BlueNightStar]

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@scenery_guy wrote:

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@youngandcreditwrthy wrote:
And btw if you write off business expenses, the TAXPAYER has to foot the bill... Something I'm not always okay with. I think businesses/churches/ non profs gets too many d a m n tax breaks already... But taxes are a whole other concern.

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What? I know you are not suggesting that business owners eat expenses that are currently allowed as write offs in the tax code? That's hilarious. 

I am paying nearly $70,000 in personal taxes due to my business. After entering my income (gross sales) but before I entered expenses my total tax due was almost $400,000. That's a small business in the scheme of things and it qualifies me as a taxpayer for sure. In my lifetime I will have paid more in taxes than most people earn in a lifetime before taxes are paid. 

Please don't lump all businesses in with religious or 501(c)3 organizations. I will agree that they should share the tax burden a bit more but I'm paying too much as it is now based on the amount of money I spend in my community paying employees and purchasing supplies. Small businesses combined are the largest employer in the US. We are the backbone to this economy and the lifeblood to middle class. You want to take issue with ultra large corporations then I am with you as I would love to have access to their tax rates. 

End rant. I'm at work on a beautiful Sunday because I own a business and have work to do, and it's going to be a long day. 

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Amen. I support and shop at almost exclusely small businesses, both local and online. Successful small businesses have their act together - quality products that don't break after three uses (what's the point of paying half price for a poorly made mass produced product that you have to continually replace?), wonderful customer service and a good price point that reflects the value of what you are purchasing. My local car mechanic has saved me a fortune on car repairs because he knows me and is aware that I don't have a lot of spare cash to fix my aging car. Anything he can refurbish himself or get me used, he does. I could go on and on but my point is that quality small businesses are priceless.

[youngandcreditwrthy]

You misinterpreted my stance...

I was not bashing small business... I am well aware of everything you said... And agree.

Otoh, if you are paying more in taxes than most, you probably earn more than most.

It is indeed a beautiful Sunday... I'm just relaxing at home ;-)

I was also referring to the fact that many business owners try to write every single thing they pay for off as a "business expense"

Which I suppose is fraud.

Good day :-)

[webhopper]

Rather than charge the client, I think you should write it off on taxes as a non-reimbursed work expense...  I'm sure there are quite a few of those, such as dry cleaning of suits.   etc.

I plan on writing off my AF for the PRG on my taxes, since it is a non-reimbursed work expense.