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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.

A few weeks ago I built myself a new home PC after I bent the pins on the processor in my old PC. Since I know support for WIndows XP will be going away in a few years, and I don’t really care to purchase Vista, I decided to see how well I could cope with “free” software for operating purposes.

At first I tried Ubuntu, because there is often an article about it in the technology magazines I read, so I wanted to see if there was anything special about this latest open source contender. It seems to me that Ubuntu still shows its youth as a distribution when compared to OpenSuse and Fedora, as many simple things that should be automatically detected and configured are left to manual tinkering with the configuration files.

Frustrated with some of Ubuntu’s quirks, I decided to try OpenSuse to see if a more established open source system would be more to my liking. As a first time Linux operator, I have appreciated the friendliness of OpenSuse and it’s ability to handle some of those simple things automatically (I don’t want to edit my xorg.conf file every time I want to switch my monitor or screen resolution). Most of the issues that I have had since installing OpenSuse were dealing with more advanced issues that the average user may not have need to bother with.

One issue occurred because I used Network Manager vpnc instead of the terminal vpnc program. After using the terminal vpnc program and writing my own configuration file for it, I honestly prefer the terminal program. However, after operating Windows only for 10 years, I know why I had an initial inclination towards the GUI program.

I also wanted to try and meet all of my PC needs with a free system to see from a business standpoint if it makes sense for companies to pay Microsoft obscene amounts of money anymore. I will report more fully later, after a year or so of usage, but my impression so far is that the majority of desktops in almost any organization could completely run on open source software while having little if any problems as a result.

My experience is in a public accounting firm, where the staff are considered to be professional employees. As such, I would think we should be beyond the point of severe micromanagement, but apparently we are not. I have recently been reminded of this as I have had a couple large projects on which I am not allowed to use all of the resources at my disposal.

The tool I wish to use is a certain software program that has been recently acquired by the firm, and in my opinion, its usage would increase efficiency and reduce errors.  I guess when you bill clients by the hour efficiency isn’t everything.

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.

Small businesses often forget the importance of backing up important data files as most of their time is spent growing revenues and cutting costs.  Both Mozy and Idrive offer a couple gigabytes free for personal or very small business use (this would be good for at least your Quickbooks files) but are limited to Windows based machines.  Unlimited personal use plans are also reasonably priced from these two vendors.

However, being a proponent of open-source programs and software, I expanded my search to find a company that at least supported a Linux solution.  It appears the standard solution is rsync.   Even Ibackup, the other provider I found uses the open-source rsync utility to facilitate Linux backups.

 So, no matter your machine’s configuration, make online backups part of your daily routine to ensure that no matter what calamity may strike, your business will be back up and running smoothly.

An article at PCWorld.com showcased several open-source projects that serve as alternatives to software products for which most users pay dearly.  One of my favorites as an accountant was GNUCash.  While I have not had time to thoroughly review the product, the screenshots appear similar to the registers in Quickbooks.

Considering the price of Quickbooks, and its lack of interoperability between versions (one of the greatest annoyances I have with the program) GNUCash may provide a very simple but powerful alternative for users that are familiar with accounting programs.  I doubt that it is as pretty, but it seems to be a great value.

There were several other products shown in the review and it is a great article for small business owners who are tired of paying high prices for products that overpromise and underdeliver.

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.

Following a discussion with one of my former professors regarding an article from the Pennsylvania CPA Journal I was given an opportunity to speak to a group of students at Creighton University regarding certain Excel skills that I have ascertained and use on a daily basis to be effective in performing my work.  I know that the local universities do not require much in the way of developing technical proficiency with key tools because of my recent experience as a student and experience with new staff from various local schools that are astounded by some rather simple but effective formulas that make our work much quicker and easier.

My rule is basically to never do by hand what you can get the computer to do for you.  Use Excel as a spreadsheet, not as a calculator or worse, a typewriter.  Use Excel to perform valuable functions that speed up your work, instead of merely digitizing work that was previously done on paper.  I remember during my first month at work, someone on the other side of the cubical wall asked if anyone knew how to use a VLOOKUP function in Excel, and the local area of the office was silent.  Then there was a mention that a very technically inclined person from the other side of the office my know how to use the function properly.  I could not believe that no one who had been at the firm for several years knew how to use this function.  At the time, I was not familiar with it myself, but I have since become very familiar with the family of lookup functions.

Another great decision making / problem solving skill that would be great to have out of the university is to quickly recognize a situation where a database program is going to be more effective than a spreadsheet.  I have done a ton of trial balances for tax clients in Excel, because that is the way it has been done for the past 20 years.  However, with the integration of improved trial balance software (CaseWare), I am starting to wonder if anyone’s trial balance should see the inside of a spreadsheet, no matter how simple (especially if there will be a lot of book-keeping adjustments made).  The trial balance software reduces errors and duplication of work from year to year by giving accounts permanent associations that generate useful reports automatically.

Not that universities don’t do a great job at giving us the proper foundation to be adequate accountants, but firms as well as other employers expect someone who has graduated from an accounting program to have a certain level of proficiency with these types of tools that is not necessarily instilled in our post-secondary educational system.  I was thrilled that this professor understood the issue and allowed me to speak to his class, but I would like to see the next step of required curriculum or testing to establish a baseline for technical proficiency that employers can depend upon.

With the recent decision by the SEC to allow foreign corporations to file their financial statements in accordance with IFRS (no reconciliation to GAAP required), does GAAP (and FASB) have much of a future?  FASB, recognized by the SEC as a standard setting body, has traditionally served setting standards for public companies who report to the SEC.

However, with the recent decision to no longer require foreign companies to reconcile with GAAP, the SEC has taken the first step towards requiring no publicly traded company to report based on GAAP if they use IFRS.  FASB and the IASB are still working on their convergence project to create a single international standard for accounting, but with this move the SEC has tilted the balance of power in favor of the IASB.

If FASB and IASB have a serious disagreement, I doubt IASB will have much incentive to concede (or even compromise).  FASB may remain in play for privately held companies, or public companies that are deeply entrenched in GAAP and have no international components, but the a large number of US based public companies will probably take the option to report on IFRS when it is given to them.  This proposition is already being floated around the SEC and will probably be approved shortly (if IFRS is good enough for one set of publicly held companies, it is good enough for another set of publicly held companies).

Accountants and auditors for publicly held companies may have only one set of standards to be intimately familiar with in the near future as IFRS is positioned to take the place of the American standard of accounting embodied in GAAP.  Apparently good guiding principles trump stringent, sticky, loophole-filled rules.

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.