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Ask HN: A large community owner is trying to strong-arm us. What should I do?

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Ask HN: A large community owner is trying to strong-arm us. What should I do?

#1

Post by cod3boy »

I am the founder of StartGlobal https://startglobal.co/ where we help anyone incorporate a business in the US, get EIN, bank account, phone number, and address. Recently we’ve been experiencing delays from IRS to get the EIN. IRS was shut down and they are slowly getting back to speed.

Even though it was not our mistake, I think it was our responsibility. At first, I tried to design some beautiful logos for the client to keep them happy. By this time we already finished the incorporation process at the state and registered agent.

When the EIN delay was going beyond expectations, I agreed to do a full refund without taking any cut (after issuing a full refund, we were at a loss because we already paid for registered agent, filings, state fee, even out of pocket logo design). I then sent the following email taking the blame and issuing a full refund.

I've issued a full refund, you should have an email with details. You may keep the fully incorporated company, registered agent service paid for 1 year, and the EIN application set to IRS and the logo we did. I am really sorry you had to go through this experience, and greatly appreciate your patience until now. I truly understand your situation and I'd be no different. But please be aware that this was not the experience I hoped for, and I hope you forgive me for wasting your time.

Now after the refund, the client asked us for some edits in the logo and also to work again on the EIN followup with IRS and see if we can get it, and we did it on a good faith that client might pay after we get it. After many followups with the IRS, we were able to finally get the EIN and when I asked the client if they’d like to continue the process and pay us, he is saying he’d like the EIN for free because I “promised” to get him everything for free. He is a founder member of a large startup community and being an early-stage company I am afraid if this will affect our reputation if we don't do this. What should we do?

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#2

Post by sharemywin »

If you promised it deliver it.

you're not getting paid because you offered to do it for free. chalk it up as a life lesson. sales 101.

going forward, you need to position your service for what it is. Dealing with government BS so the client doesn't have to. and set that expectation early there will be problems but that's what your there to deal with(for a price). You need to explain how much pain and frustration your saving them.

And if they can't appreciate what you are doing for them you need to find other customers.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#3

Post by sharemywin »

sharemywin wrote: post #2

If you promised it deliver it. you're not getting paid because you offered to do it for free. chalk it up as a life lesson. sales 101. going forward, you need to position your service for what it is. Dealing with government BS so the client doesn't have to. and set that expectation early there will be problems but that's what your there to deal with(for a price). You need to explain how much pain and frustration your…

I know one thing I would like a button to close a company down. I still get letters from the state from all kinds of agencies I have know idea about. quarterly reports I didn't file.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#4

Post by codegeek »

If you issued a full refund, you are not obligated to do anything more for them. You already accepted responsibility by issuing a full refund even though the IRS delays are unprecedented and your client needs to understand that. I would say "We are happy to continue the work but we need to re-establish formal relationship again through a new contract/payment in order to ensure we are able to provide quality service to you".

If they don't like it, you can tell them to go somewhere else politely unless you are at their mercy and begging for their business. A client that takes a full refund AND then still expects free work is not a client you want to work for. They will continue to make your life worse.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#5

Post by cod3boy »

codegeek wrote: post #4

If you issued a full refund, you are not obligated to do anything more for them. You already accepted responsibility by issuing a full refund even though the IRS delays are unprecedented and your client needs to understand that. I would say "We are happy to continue the work but we need to re-establish formal relationship again through a new contract/payment in order to ensure we are able to provide quality service t…

Thanks for the input! I am trying to see how we can solve this. I offered a $200 discount (our total price was $599) and they were still not ready to accept.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#6

Post by cod3boy »

sharemywin wrote: post #2

If you promised it deliver it. you're not getting paid because you offered to do it for free. chalk it up as a life lesson. sales 101. going forward, you need to position your service for what it is. Dealing with government BS so the client doesn't have to. and set that expectation early there will be problems but that's what your there to deal with(for a price). You need to explain how much pain and frustration your…

Yes, keeping a note for future. When we accepted the order, EIN was a 3-4 day process and suddenly everything went chaos with the covid impact. But surely a lesson managing expectations.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#7

Post by cod3boy »

sharemywin wrote: post #3
sharemywin wrote: post #2

If you promised it deliver it. you're not getting paid because you offered to do it for free. chalk it up as a life lesson. sales 101. going forward, you need to position your service for what it is. Dealing with government BS so the client doesn't have to. and set that expectation early there will be problems but that's what your there to deal with(for a price). You need to explain how much pain and frustration your…

I know one thing I would like a button to close a company down. I still get letters from the state from all kinds of agencies I have know idea about. quarterly reports I didn't file.

Thanks for the input. We are trying to figure this out now. It should be easy to start a company, but more easier to close one down.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#8

Post by giantg2 »

If the premise of your company is to make it easier for people to start a company, I'd say just do this one for free. If they tell others that it was a still a lot of back and forth then it people might not think that it's worth the extra money to start the company. I set up my own LLC and it was really pretty cheap and easy (the sales tax system is another story).

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#9

Post by sloaken »

You need to add in a 'force majeure clause' to your contracts.

The IRS issue was not your fault. There was NOTHING you could do about it. EIN number, was probably the easiest part of setting up the company. Value ... maybe a 10% refund.

I think your taking the blame, was not a good business practice. Explain what happened, offer a discount, or offer a logo, or cancel everything (eating expenses, but not giving it away free).

Write this off as a lesson learned.

Re: Ask HN: A large community owner is trying to strong-arm us. What should I do?

#10

Post by kyleishie »

sloaken wrote: post #9

You need to add in a 'force majeure clause' to your contracts. The IRS issue was not your fault. There was NOTHING you could do about it. EIN number, was probably the easiest part of setting up the company. Value ... maybe a 10% refund. I think your taking the blame, was not a good business practice. Explain what happened, offer a discount, or offer a logo, or cancel everything (eating expenses, but not giving it awa…

I completely agree with this. Taking 100% blame for something you had 0% control over was a bad move. Your intentions were good but as sloaken said “maybe a 10% refund”.

The issue you have now is that this client has been trained to walk all over you and expect everything they ask for. Not too dissimilar to that of a dog that learns to cry for table scraps.

The bottom line is that your clients come to you because they need you as much, if not more than, you need them. You don’t have to throw it their face but it’s extremely useful to remind yourself of it from time to time as it will help you take up for yourself when, and hopefully before, these types of situations arise.

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