Accounting and bookkeeping for client list
What you need to know about client list
I have a few clients who buy either client lists or book of business or even a business. Their question is if these are expenses.
Logically, when people pay for stuff, they assume it is an expense.
Money left my pocket.
In accounting, these are treated differently. The main question is, did we consume this in one year?
The answer would be no.
For example, if I buy a client list, it will benefit me and provides me with income for a few years so I can expense the portion that did not yield any income. That would be for clients that I paid for but didn’t come to me.
Same thing for a goodwill, in the past we use to depreciate 75% of the value. Now we can assess the goodwill and see if it lost value then we can write it off.
Here are some general questions about these intangible assets. Meaning, we can’t even see them.
How do you value a client list?
Some sellers can say my clients, let’s say 100 provide $100,000 income per year. On average $1000 per client.
So, if one did not buy stuff from us, we can consider the client gone and reduce the value by $1000
- Figure Out the Likelihood that client stays with you.
- Calculate each Client Costs from step 1
- Calculate Monthly Income. From step 1
What is customer list accounting?
A customer list or List is a set of information about certain clients.
For example, lawyers list in Ottawa, Accountant lists in Ottawa.
This list includes:
First name:
Last Name:
Email:
Phone:
Yearly income
Addresses
Sales
What type of asset is a customer list?
Client list or customer list are classified as Intangible asset. Assets are located in Balance Sheet.
Can customer lists be capitalized?
Yes, customer list or client list are capitalized and can also be depreciated.
What are the five major types of intangible assets?
These are assets such as:
- Intellectual property, patents, copyrights, trademarks, trade names,
- Brand equity
- Goodwill
- Client list
- Licence
Is a customer list an asset?
Yes, customer lists are classified as assets. These are also classified as long-term assets.
What are examples of intangibles?
These are assets such as intellectual property, patents, copyrights, trademarks, trade names, and goodwill.
What are the 5 Major intangible assets?
Intellectual property, patents, copyrights, trademarks, trade names,
- Brand equity
- Goodwill
- Client list
- Licence
How do you classify intangible assets on a balance sheet?
They are listed as assets on the balance sheet and formal name for them are Intangible assets.
What are the two main characteristics of intangible assets?
Intangible assets have two main characteristics:
- They do not have physical existence or shape.
- They are not financial instruments. In most cases, they provide services over a period of years and normally classified as long-term assets. Identify the costs to include in the initial valuation of intangible asset.
Contact us for more information
When you subscribe to the blog, we will send you an e-mail when there are new updates on the site so you wouldn't miss them.
About the author
-
I highly recommend Moe Tabesh. His service is phenomenal, to say the least. His tax knowledge is extensive and he’s been able to save me a substantial amount of money by following his recommendations. In addition, he is warm, kind, understanding, positive, and flexible, which are qualities I find rare in most accountants I’ve worked with. You’re in good hands with Moe, I can’t recommend him enough.
Samantha Biron
-
Moe and everyone at Numetrica have been incredible at helping with my new corporation and corporate and personal tax returns and my other small business. Their accounting skills are out of this world and the technology they use makes everything so simple and fast. The time you will save will be worth every penny. Thanks again Moe for all your help!
Jeremy Prudhomme
-
Mr Tabesh (Captain Number Cruncher) and his perfect team are not only professional in their fields, they are extremely passionate about their clients! Numetrica City continues to support us with corporate and personal tax returns, bookkeeping (thank you so much Sherry ) and We are so happy and appreciative for you and your responsible team, Moe!!!
I really recommend these guys to everybody.Farshid Dehnavi
-
I did my first Corporate tax return and cloud accounting with Numetrica City and I am very satisfied with the work they did. The team was very responsive and answered all my questions. I 1000% recommend their services.
Keddy Declan
-
I would highly recommend Numetrica City-Accountants, Tax and Bookkeepers. Exceptional customer service. I am assured that all my company tax services and payroll are taken care of because of the great team that Moe has. I like the fact that I do not have to worry about driving to a physical location for my accounting services, my company's accounting tax preparations are done online due to the excellent cloud service Numetrica City has. Definitely score a10/10. Thank you for all the good work that you guys do. Greatly appreciated!
Sibeso Kehinde
Discovery
Proposal
Set-up
Get Connected
Reviews
Trust in the superhero accountants of Numetrica to keep your numbers in order and for expert advice on growing your business. Numetrica specializes in providing clients with in-depth accounting and bookkeeping services in Canada and the United States as well as financial advice to assist you in making the right decisions for your business.
Comments