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I just realized today that my spam blocker was picking up and deleting a lot of legitimate comments to the site, and I wanted to take a moment and apologize to anyone who did not have their comments posted due to this oversight on my part.  As for a resolution, I have now disabled the spam blocker and will moderate every comment manually to ensure this will not happen in the future.

This presidential race has garnered much attention for those who wish to socialize medicine by having the government guarantee health care for all.  Some of the problems in our current system are due to the government being a major customer of most if not all health systems.  However, the government either federal or state do not generally contribute to the profit of these health systems.

Medicare and Medicaid both work under a “cost reimbursement” system that only allows the government to be billed the actual cost of the procedure, rather than the market rate for that procedure.  The effect here is that to maintain profit margins across the whole system the “market rate” for those with private insurance and those who pay for themselves must be increased.  So we pay for the government health care plans with our tax dollars and further pay a subsidy to the hospitals through increased health care costs and higher insurance premiums.

A move to a single payor system (the government pays for and regulates all health care) could eliminate the profit from healthcare and greatly diminish quality.  It’s hard on the people with private insurance to make up the difference for Medicare and Medicaid twice (taxation and subsidy), but if a governmentally run healthcare system eliminates the profits from the industry there will be less pay for doctors, less structural improvements, less equipment upgrades, and more regulation of services provided. 

The effect of this change would not be apparent over night as it would be several years before the lack of structural improvements took a toll on the whole system, but it seems the system would necessarily deteriorate over time as profits were replaced with cost reimbursements across the board.

Yesterday the Federal Reserve released doom and gloom comments to the markets.  It seems that they believe the answer to the lack of cash in American’s pockets is to print more money, (rates have been cut by 3.25% since September 2007) so that there is more cash to go around.  Fortunately they measure inflation in a way that makes us appear to have little or no inflation, so they are able to lower interest rates and pretend it does not affect consumer prices. 

Unfortunately, America’s economy is highly dependent on oil, which is traded in dollars, making the Fed’s decisions to devalue the currency even harder on citizens as they attempt to buy the same goods today and tomorrow with an ever depreciating dollar.  Perhaps Americans should start saving their money in Euros until the Federal Reserve gets out of inflation denial.

Twenty percent of US corn production has been diverted to produce ethanol, and it is being heavily subsidized to get it up to speed. Now E-Fuel corporation wants you to make ethanol in your backyard from either sugar or liquor. In an article in Scientific American the company asserts that it takes 14 pounds of sugar to make 1 gallon of ethanol and the company will provide you with bulk rate sugar for between 15 and 30 cents per pound.

If my math is correct, that means that just the cost of the input, excluding the cost of the $10,000 machine, water, and electricity, is between $2.10 and $4.20 per gallon. In the same article the company states that one of its main objectives is for customers to be able to produce ethanol for about $1.00 per gallon. This seems to be unattainable until you consider the possible dilution of the ethanol (the same article states that 65% ethanol is acceptable to fuel an automobile, suggesting water for dilution).

Considering dilution the best possible cost is between $1.37 and $2.73 excluding the cost of the machine, electricity, and water. This also assumes that the company delivers on its promise to provide a source of sugar at the rate of 15 to 30 cents per pound. This may not solve our energy independence issues overnight, but it is at least a step in the right direction, putting power in the hands of the people.

Nothing said here will bring an end to corporate taxation, but I would like for a minute to pretend that it is negotiable to examine its legitimacy and the effects of the system in place.  Our founding fathers waged war with England for taxation without representation, but when we levy taxation against non-voting entities that is exactly what we get.

The corporation is a legal liability shield and capital raising device used to run many American businesses, however, without real people (employees, shareholders, vendors, customers) this legal entity is just a shell.  Most citizens are persuaded by politicians to look at corporations as merely a shell rather than to look at them for the sum of their real-people parts.  Thus, taxation of no one in particular is better than taxation of a specific person, so corporate taxation is popular.

This does not come without side effects as taxation without representation is not entirely true.  There is not legally sanctioned voting representation, so representation comes through the back door with lobbying, political contributions, and good old-fashioned bribery.  The result of taxing a non-voting entity with much money and power is a lot of unethical behavior brought about by the structure of the system.  The answer is not to police the unethical/illegal activity further, but to examine the system that produces it.

An excellent tenant of good government is transparency.  This is another problem with corporate taxation - the taxation of no one in particular.  Who really pays corporate tax (the corporation of course)?  The real people involved with the corporation must pay the tax in some way shape or form, because the shell in and of itself has no income or wages to tax.  The shareholders pay with decreased stock appreciation and lesser dividends.  The employees pay with lower wages and lesser benefits.  The vendors pay with lower profit margins themselves.  The consumers pay with higher prices used to subsidise the tax.

The lack of transparency imposed by corporate taxation may be the worst of all as the government is able to raise revenues with little to no legal accountability.  The group paying the tax is ambiguous, so it is hard to unite an ambiguous group to oppose tax increases or to help in drafting better tax policy (except for the opposition from the corporations themselves).  The opposition comes in the form of lobbying and bribery, which ends up being rather effective, but further muddies the ethical considerations and transparency of government.

After reading about Notchup on the Neil McIntyre blog, I went to the site to investigate how this project works.  The most interesting part to me was how they make the sale to the companies that will pay you for an interview.

If I were running HR for a company, I would seriously consider using a service like this.  By companies paying for your time (instead of paying a recruiter to find you) they are getting qualified candidates who are potentially more engaged for a fraction of the cost a recruiter would charge.

This truly seems to be a win/win situation for all parties involved, a shining example of people motivated by capitalism.

The key to this process for the individual, is that you need to have experience and qualifications that are in demand (the types who are always getting calls from recruiters).

I think small businesses would do well to look into this arrangement as an alternative to other recruiting methods that are either very costly or rather ineffective.

In an article on WebCPA.com, there is an assertion that the workers in Generation Y (born 1978-1990) are gaining traction in the workforce due to increased demand for workers to replace those retiring baby boomers. The things that these Generation Y employees are looking for are career development and increased work/life balance (generally less work and more of a life). However, when you run a CPA firm that is dominated by the billable hour, how do you empower the employees and give them what they want while keeping up the hours/employee to remain profitable?

The simple truth, you either have to rethink your business model or somebody is going to not be happy with the outcome: more hours worked or less top-line revenue per employee. When there is a conflict of interest between partner desires (increased revenue) and employee desires (more life outside of work), who wins? In the past, partners would win this hands down because new accountants were plentiful, so if someone quit because of this issue, they were easily replaced. Now it appears the balance of power may be shifting to the employee as article after article in the accounting realm comes out touting ways to improve employee retention and attract top talent in an increasingly tight job market.

I don’t think we are near mutiny, as there is always a certain respect due to the one who signs your paycheck, but we are at a point where there is an opportunity for younger staff to have some input on the way firms are run going forward into the future. The partners and administrative staff in charge of recruiting are looking more to the recently hired staff to determine what it was that attracted them and what it takes to keep them happy and get them to stay.

I think it is in the best interest of public firms in this tight job market to keep pay very close to private sector pay and manage the workload as much as possible to avoid constant retraining due to increased lack of retention. Public accounting is great experience, but public practices need to work harder now more than ever to see the benefits of that experience within the firm, rather than letting private clients reap the benefits of the public accounting training.

The majority of small and medium sized businesses utilize some type of desktop accounting software to handle their book-keeping and accounting chores.  Among the most prolific are Quickbooks and Peachtree.  Quickbooks is now offering its own web-based solution called Quickbooks Online Edition for $24.95 per month ($300 annually).  However, from a review of the comparison between Quickbooks Pro 2008 and Quickbooks Online Edition, it appears that the online edition is missing support for inventory tracking and pricing, as well as additional cost for customized invoicing, delayed billing, class tracking, and time tracking. 

Another plus for the online edition is its support for 3 users plus your accountant at the $24.95 per month base fee compared with $200 per user for QB Pro.  If you’re a small company with no inventory, QB Online may provide a sufficient solution, or you may be stuck on your desktop if you are in love with either the QB or Peachtree software for handling all facets of your business.

There is a very acceptable alternative that I have had a chance to review lately that has flown largely under the radar.  An Ohio based software development firm, Noguska, LLC, has developed a web-based accounting software that appears to be a comprehensive solution that is completely scalable in NolaPro.  NolaPro is free to download and install on your server or desktop, however you can opt for a NolaPro hosted solution for $25 per month, $60 quarterly ($20/month), or $200 annually ($16.67/month).

As an accountant I often have instances where I have one entity with multiple companies and multiple QB files and Quickbooks is slower than dirt at switching between the companies as it unloads one database and loads up another.  In NolaPro, separate companies are on drop down boxes that switch nearly instantly.  More than one user?  NolaPro doesn’t mind as it supports unlimited users with customizable rights.

So QB roles out a new edition, you have to run out and buy the latest and greatest, and your accountant has to do the same to remain compatible.  In the hosted NolaPro solution, upgrades are made automatically and free of charge, and if you choose to host yourself, the upgrade is free for download, just as the original program was.  NolaPro makes its money by the natural consulting business that develops from the utilization of its software.  The software is encrypted so that they have the rights to customization and such.  So if you have a highly specialized invoice for customers, but you want to be cheap, you can download the NolaPro program for free and take the money you saved to hire NolaPro consultants to make your special invoice.

QB Online did not offer an inventory solution with its product, but NolaPro includes an integrated inventory/shopping cart program, where the online shopping cart is tied directly to the inventory system within the accounting package.  I do not know how this works on a desktop installation, but it is pretty neat to see it work on a web-based installation.

If you want to see a demonstration I have set up a clean demo on my site at http://nolapro.numberinsights.com/ (usr: admin, pwd: pass) or there is a demo on the NolaPro site, but it has been messed with quite a bit and doesn’t really give you a feel of what your initial installation will look like, but it is at https://demo.nolapro.com/.

I desired to do an evaluation of Netsuite, as I have read about their solutions on WebCPA.com, but it has been almost a month since I emailed the company asking for more information and I have received no reply.  However, I am happy that I found NolaPro in my search for solutions to aid the small and medium sized business customers my firm serves.

Over the past few weeks I have tried a few different office suites for personal applications and my experience has crowned a definitive winner.  The applications that I have compared are Google Docs, Zoho Office, and Edit Grid.  For the most part, I care about the performance of the spreadsheet application  (that is why Edit Grid is included although it is only a spreadsheet application-I’m an accountant so the spreadsheet the most important part of the suite in my opinion), but I have had cause to evaluate the word processing applications as well. 

The most important part of any online application for my purposes is speed.  For an online application to be a viable substitute (or even a good compliment to) for a hard disk based program, it must offer similar performance in terms of responsiveness to the user and speed of loading a document. 

Both Zoho Office and Edit Grid strive to give you the familiar look and feel of the Microsoft productivity suite (for Edit Grid this is only Excel), while Google shows no respect for the leader of the pack and gives you a bare bones utilitarian feel.  Google offers several top level toolbars on tabs that may make you think you have less options available because the extra functions you would normally have in toolbars stacked upon one another are really on a different tab.  However, Google does make good use of most standard shortcuts that regular users utilize reflexively.

I was rather impressed with both the Edit Grid and Google spreadsheet programs.  Google was by far faster than Edit Grid, although I may not have the fastest connection at my office.  The connection was fast enough for Google’s spreadsheet to respond with little lag or delay.  One feature in Google’s spreadsheet program that was missing from both Edit Grid and Zoho was the ability to duplicate an existing worksheet into a new sheet.  In Edit Grid and Zoho one had to insert a new sheet and copy and paste the information into the new sheet.  Had these programs accomplished this task quickly, it would not have caught my attention as a problem, however, they both stalled terribly in the copy and paste function of one whole sheet to another whole sheet.  They eventually got the job done, but it consumed a lot of resources on my machine to accomplish what seemed to me to be a rather simple task.

Overall, neither the familiarity oferred by Zoho nor Edit Grid was substantial enough to overcome the shortcomings associated with consumption of resources and slow speed.  Another annoyance specifically associated with the Zoho writer (which looks great) is that it frequently autosaves and on my machine it stalled what I was typing and returned my cursor to the top of the page (thus I am writing this in Google’s writer).  In my opinion, Google’s web based applications would make a suitable compliment if not nearly a replacement for my desktop applications if I were not a professional consumer of Excel.  For my personal needs, having Google based documents is handy and provides a quality experience that doesn’t lead to more frustration than productivity. 

I would love to see the other applications become more competitive, but until they adopt a “function over form” mentality, they product will continue to be subpar compared to Google.

Accounting Web featured an article applauding the value that HSA’s (Health Savings Accounts) may add to health care options during this fall’s open enrollment season.  High deductible health plans (HDHP’s) paired with an HSA account give employees the option to shoulder the burden of first dollar coverage (up to their deductible - minimum of $1,100 for individuals and $2,200 for families) while maintaining an adequate plan to cover catastrophic events.

This is an excellent option for those that are not often sick and will likely need only routine checkups to maintain their health.  Many HDHP plans offer coverage for preventative care in total, but not for sick care.  However, those with young children or sickly spouses will quickly eat up big chunks of their deductible on sick care and have to shoulder the burden of these costs up to their deductible amount. 

In the end, a lower upfront premium can become a higher total cost of health care for employees with families that do not have an alternative option elsewhere.  However, insurance companies will penalize employers for offering an regular PPO plan alongside the HDHP plan because of issues with adverse selection (those with families and those that are sickly will likely choose the regular PPO, while the young, single, and healthy will take advantage of the premium savings and tax advantaged savings in the HDHP/HSA combination).

For employers and employees in the open market more options are better, but for those that switch from a regular PPO as their only option to an HDHP/HSA combination as their only option, the winners will be the employers and young, single, and healthy employees at the expense of employees with families that do not have a PPO option through the spouses employment (it is very likely that both spouses may simultaneously lose the PPO option as employers opt for lower premiums offered by the HSA/HDHP combination).