Manufacturers are facing transitional and educational challenges in their workforce, now more than ever. Finding and keeping skilled employees has been a constant struggle for many manufacturers, and recent surges in the economy have added to the challenge of keeping up with production. Close to one third of manufacturing employees are over the age of 55, which means companies have to strategize on how to deal with the imminent gap in knowledge and experience. Management has had to consider some creative tactics to retain its human capital. In this two part series, we will identify specific tactics to consider in addressing these challenges.
Entice Baby Boomers to Stick Around Longer
Though it appears to be somewhat of a short-lived solution, some manufacturers are making company policy changes to delay retirement for the most loyal and experienced employees in their workforce. Programs like flexible schedules and job-sharing are making potential retirees re-consider making a clean break at 65. Creative manufacturers are taking measures to make their workplace more physically comfortable for this generation by making ergonomic adjustments to shop facilities. If these efforts to keep baby boomers working prove successful, companies can reap the advantage of having these “veterans” mentor and teach the younger, less experienced employees. Smart managers see these boomers as playing a crucial role in their succession plan.
Proactively Plan for a Changing Work Culture
How will management deal with succession planning when the new hires don’t think like the outgoing generation? Baby boomers and millennials don’t play the same, and it stands to reason they don’t work the same either. Jack Finning, a partner at AAFCPA, summarizes this well in his industryweek.com article The Massive Retiree Wave Demands Manufacturers Embrace Planning: “…boomers are known for using a direct management style through which they dictate the process for workflow management. Younger generations, on the other hand, are more open to a holistic managerial approach… motivated by transparency, engaged with workers in the field and thriving off ideas that help move processes along or evolve in a new direction.” Generational differences can become barriers to transitioning from senior to more junior workforce. The most successful companies planning for the inevitable changing of the guard will do so by collaborating with their workforce to establish thought-out best practices, determine common expectations, and stay communicative.
For more information, the following links offer two perspectives on how today’s manufacturers are adapting to the changing landscape in America’s workforce.
http://www.standard.net/Business/2017/07/18/Factories-to-baby-boomers-Please-keep-working.html
http://www.industryweek.com/leadership/massive-retiree-wave-demands-manufacturers-embrace-planning
Cryptocurrency has been around since 2008. However, it went from being generally unheard of by most to a frequent topic of household conversation within a few months. At the end of 2017 and the beginning of 2018, there was daily news coverage regarding cryptocurrencies caused by the significant spike in prices (upwards of a thousand percent) that increased the wealth of many coin holders.
What is a cryptocurrency?
A cryptocurrency is an electronic currency that is designed to be exchanged for goods or services (i.e., Bitcoin, Ethereum, Litecoin, and Monero are some of the most popular). Each “coin” can be “mined” utilizing the power of graphics cards to perform complex calculations to solve algorithms. Once a solution is found, a block (as in blockchain) is complete, and a coin is rewarded to the computer responsible for finding the answer. These calculations are verifying that the data batched into a block is accurate. The new block is then sent to all other computer systems on the block-chain network. The block cannot be altered because all systems possess the same information. We discussed blockchain technology in Part 1 here.
How can we use cryptocurrency?
The first transaction ever recorded with Bitcoin was used to order pizza in exchange for 10,000 Bitcoins (BTC). This was long before Bitcoin reached a value of over $19,000. However, ordering pizza is not the only thing we can use cryptocurrency for.
A valuable function created from cryptocurrencies is an immediate exchange of funds globally. Transfers can happen almost instantaneously. For example, $99 million worth of Lite Coin was moved in a single trade on April 23, 2018, and the transaction took about two minutes and thirty seconds to settle. The associated fees for this transaction cost about 40 cents. This process is substantially cheaper than other means of transferring funds from one entity to another. Typical funds exchange services can charge 10% or more for the service and take several days to settle.
Cryptocurrency trading has become quite popular recently and there are risks involved as with any other investment. Smartphone apps have been developed, including Coinbase, to act as an easy to use interface to trade a variety of cryptocurrencies. Prices are known to be extremely volatile and various online exchanges have been compromised where investors lose all the cryptocurrencies that they own. The most important distinction regarding blockchain and cryptocurrencies is that, while the blockchain is not a hackable system, the exchanges and your computer that holds your coin can be. Investors must take the necessary precautions when dealing with this new opportunity.
Up next!
We discuss the taxation of cryptocurrency and how it can affect investors and miners in Part 3.
Blockchain – What is this new buzzword? I’ve heard colleagues, clients, and even politicians throwing it around, but according to Accounting Today, only 1% of today’s workforce considers themselves an expert. So why is it becoming such a hot topic? Who is it affecting? And what does it mean for your business?
What is blockchain?
Blockchain is defined as “a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network” (Merriam-Webster definition). In other words, it’s a collection of transactions and data that is unchangeable and near-incorruptible. This system is known as distributed ledger technology. Blockchain isn’t just about recordkeeping; it’s about how the records are both created and kept. Each transaction is called a block, and each block is recorded sequentially, creating a chain (hence the name). Transactions are created authentically with layers of verification that make it easy to track, trust, and store. The most well-known use of blockchain is through Bitcoin and other cryptocurrencies. But its application is so much more vast than that, and its potential future usage is far more significant than most people realize.
Who’s using it and how?
A considerable number of the big banks and technology companies around the world are starting to implement blockchain technology including J.P. Morgan Chase, IBM, and Microsoft to name a few. Beyond the big business applications, many startups are using this technology for everything from payment systems, to information sharing, smart contracts, and more. Even governments around the world are starting to invest in this technology; the Dubai government has plans to issue all government documents using blockchain by the year 2020. This global change and innovation is sure to have a huge impact on businesses large and small alike. A major sector where privacy is important is the medical field. Blockchain is a solution where doctors, insurance companies, and hospitals can share patient medical files in real time if they are on the same network. The technology can maintain patient privacy while improving the quality of care received from a patient’s care provider.
Other thoughts
Is this technology safe?
Blockchain uses cryptography (secret code) which prevents records from being modified, altered, deleted, or destroyed. With this fast-paced electronic data stream, it makes it nearly impossible for a hacker to create an alternate chain more quickly than the actual valid chain.
The pace of technological change is continually accelerating. For example, as of the year 2000, the rate of technological progress was five times faster than the average rate of growth during the entire 20th century.
How can we help?
At DiSanto, Priest & Co. we’re keeping abreast of the latest technological innovations, including blockchain and its many applications. We understand that we live in a time of exponential technological advancement. With that rapid growth comes new rules and regulations for both tax and financial purposes. That’s where we come in! As your trusted advisor, we’re here to help you as we navigate through this new and exciting time.
Setting up a data interface between your QuickBooks file and your bank can dramatically reduce the time burden created by the manual data entry of transactional activity. Downloading bank feeds directly into QuickBooks eliminates the need to post transactions individually, keeps records current, and allows more time to address more pertinent business needs.
Initiating online banking service through QuickBooks is the first step in setting up a bank feed. Depending on the bank, you may be required to download a bank statement through their online portal for security purposes. You can specify the date range on your bank’s website to be downloaded into QuickBooks, of which a maximum of 90 transaction days is available to download when you first link an account. In cases where there are more than 90 days of transactions, you may upload the files to QuickBooks online via WebConnect if your bank supports QuickBooks Online (QBO), Quicken (QFX), Comma-Separated Values (CSV), or Microsoft Money (OFX).
Transactions are added either in batch form or individually, and users have the opportunity to review all operations before the download is accepted and applied in QuickBooks. Subsequent transaction downloads will be automatically matched and posted consistently with prior postings. The risk of posting duplicate transactions is eliminated because QuickBooks only accepts transactions that were not previously downloaded. Unmatched transactions are classified as an uncategorized income or expense, at which point you can assign and approve the appropriate category before allowing them.
For more information on whether your business is a candidate for this feature and how it could be beneficial, please contact our DiSanto Priest & Co.’s Business Resource Center.
Rhode Island’s Commerce Corporation aims to help Rhode Island businesses flourish. They support local businesses in many ways by providing lucrative incentives such as tax credits and grant programs. One such initiative is the Innovations Voucher program which offers grants to companies performing research and development in partnership with local universities, research centers, or medical centers. New in 2018, this grant can also be given to Rhode Island manufacturers to fund internal R&D projects at their manufacturing facilities.
The grant is available to Rhode Island small businesses with 500 or fewer employees in the state. Awarded vouchers can range from $5,000 to $50,000 depending on the project. Similar to the federal research and development tax credit, the voucher must be used to fund new or more innovative products or processes. Businesses cannot use the grant money for ordinary and necessary business expenses such as marketing, website development, software purchases, etc.
Awarded vouchers can be used for the following activities:
- Technological development or exploration
- Product, service, or market development
- Services and activities including access to research or scientific expertise
- In-house research and development projects in a manufacturing facility
- Improved business practices that help grow the business and create operational efficiencies
Applications are accepted on a rolling basis, so it’s never too late to contact the Rhode Island Commerce Corporation.
On Thursday, June 21, 2018, the U.S. Supreme Court overturned its previous 1967 and 1992 rulings on two cases, National Bellas Hess vs. Illinois and Quill vs. North Dakota, that had upheld physical presence being required in a state before it could impose sales tax on purchases made by residents in their state. In a 5 – 4 decision in Wayfair vs. South Dakota, the Supreme Court ruled in favor of the state authority to require online retailers to collect sales taxes without regard to physical presence in the state.
With this decision, states stand to gain much-needed tax revenues for their budget deficits. In addition, there may be even more significant cost consequences for small online retailers that do business in multiple states.
As part of the ruling in the 1992 Quill vs. North Dakota case, Congress was given ultimate power to resolve sales tax issues pertaining to interstate commerce. Discussions surrounding the concept of an “internet sales tax” is not new. Each year, since 2010, legislation has been introduced that proposed a federal tax bill; however, to date, Congress has failed to pass any such legislation that would lend a sense of uniformity to sales tax regulations.
Now that states are being given the authority to pass their own legislation to impose sales tax on purchases from out-of-state retailers regardless of physical presence, and with the inevitable increased complexity that retailers will be forced to comply with, it is possible that Congress will be spurred to provide federal guidance surrounding applicability and compliance as a result of the ruling.
In our previous post, Authenticated Financial Information, we explored the need for a private company clearinghouse that can be used to protect and deliver trustworthy financial information. One of the ways firms and their business clients are utilizing a clearinghouse is for SOC report distribution – a process that is becoming more challenging to manage as an increased focus on third-party controls has led to a rise in requests for reports.
If you consider the way most service organizations distribute SOC reports today, you might think of basic methods like email and mail, often with no standardized process or central group managing it. Requests are often sent to various individuals at a service organization from different types of requestors. While convenient, these methods offer little in their ability to track where reports have been sent to and in verifying that the person requesting the report is qualified to receive it. What happens when there is a change or updated report available? How would the previous recipients be notified? What is the approval process? Are NDAs appropriately collected?
Aside from internal challenges, what about the customer experience? Providing customers with an easy, quick way to receive reports is important, but one should also consider if their distribution methods reflect a level of security and control that one would expect from an organization that has already undergone a SOC engagement.
RIVIO solves all these challenges and boasts a high level of user-friendliness for all parties. It puts a service organization in control over the distribution of their SOC reports while also keeping everything confidential and secure.
How does it work?
RIVIO Clearinghouse is a platform designed for three different users: CPA firms, businesses, and third-party users. It provides one location for each party to request, share, and verify information – all through a secure, accessible environment that has undergone all three SOC examinations, has received an ISO 27001 Certification for Service, TRUSTe Privacy Policy Certified, and EU-US Privacy Shield certified.
- Request: The platform offers a way for organizations to request SOC reports from their CPA firms and provides a way for customers to request reports from their service providers. When requests are issued, a notification is generated through the system and produces a link for the appropriate party to respond by uploading the SOC report.
- Share: SOC reports can be shared with individual customers or with groups through defined distribution lists. The platform tracks recipients of reports and also provides a way to recall information, should a report be updated.
- Verify: The platform has a validation process to confirm information came from an authentic source and has been unaltered.
Are you ready to take control of SOC report requests? Visit RIVIO.com to learn more.
There is a growing demand today for accurate, source-verified financial information. But, what is driving this demand? Users of audited financial statements, such as investors and lenders, have increased their focus on the authenticity of the information they receive. While technology has positively impacted the speed and accessibility of information, it has also had some negative impacts – creating new ways to alter and compromise information.
Unfortunately, there are plenty of instances of fraud occurring, either by altering information after it’s been reviewed by a CPA firm, completely falsifying an audited financial statement, or even creating a fictitious firm. Those committing these types of fraud have put the information that others provide under great scrutiny. How can those receiving the information be sure of its validity?
For public companies, this is avoided by use of EDGAR. However, for private companies, there hasn’t been a similar Clearinghouse until recently. CPA.com, an AICPA company, collaborated with Confirmation.com to develop RIVIO Clearinghouse to not only ensure that financial information provided by a CPA firm is protected, but also to provide a more efficient way for all parties to exchange information.
RIVIO provides an online platform that enables CPA firms to exchange information with their private business clients who can then share it out to any third parties that may need this information. It streamlines and controls the process while also ensuring that third parties receive authenticated financial information. For private businesses, it brings more trust to the information provided to third parties and facilitates a more efficient manner for exchanging information.
This cutting-edge solution is a gamechanger for CPA firms and their private business clients, and it is rapidly gaining market acceptance. In a time where it is becoming more challenging to control and protect information, RIVIO is positioned to meet the growing need for authenticated information.
Learn more at RIVIO.com
It’s a small world, after all.
Our partner Bill Pirolli just returned from a whirlwind tour of China as part of his service to the profession. Bill is a member of the US Board of Directors of the American Institute of Certified Public Accountants (AICPA) and the 38-member Board of Directors of the Association of International Certified Professional Accountants.
The Association Board is the combined efforts of AICPA and the Chartered Institute of Management Accountants (CIMA). Combined, these organizations represent the world’s largest and most influential collection of accounting professionals with over 650,000 CPA and CGMA members and students from 179 countries worldwide.
The trip’s purpose was to meet with the leaders of the Chinese and South Asian markets of CIMA and get a viewpoint of the economy, culture, and the profession from the other side of the world.
With a population of 1.3 billion people, China is the world’s second-largest economy; yet, in many ways, it is still a developing country outside of its major cities like Shanghai, Beijing, Guangzhou, and Shenzhen. These four cities alone are where over 100 million people live and work. Compare that to the largest four cities in the United States – New York, Los Angeles, Chicago, and Houston – where the total population is a mere 17 million.
In the past 20 years, the economy of China has boomed along with the need for trained accounting professionals and many other specialized workers. The market capital of Alibaba is almost that of Amazon, and Tencent is now larger than Facebook. Bill had the opportunity to meet with many Chinese CFOs (including Coke China) and hear about the regional differences that businesses like McDonald’s, Coca Cola, KFC, and Subway make in their products or delivery to suit the Chinese market.
The trip also included an event to honor recent graduates of the CGMA (Chartered Global Management Accountant) program and their induction into CIMA membership. The highlight of the Board’s activities was a visit to the residence of the US Ambassador to China, Terry Branstad, to hear about some of the top financial, cultural, and political issues of the day.
Yes, regardless of how big, it is a small world.
One of the most rapidly growing means that companies are using to increase their sales is by offering their products through Amazon. Many businesses are selling their products through the Amazon FBA program (Fulfillment by Amazon). When a seller uses the FBA program that Amazon offers, they are typically instructed to ship inventory to an Amazon warehouse with an agreement that, as the company sells their products through Amazon, Amazon will take ownership of product shipment and order fulfillment. The seller’s products are stored in Amazon fulfillment centers where Amazon picks, packs, ships, and in some cases, provides customer service for those products.
When using FBA, a company generally sends its inventory to one Amazon warehouse location; however, depending on how the product is listed for sale, Amazon may relocate the inventory across many states where they have fulfillment centers. Owning inventory in another state creates nexus in that state for sales and income tax. If Amazon is handling a company’s customer service and delivery for their products, there is also the potential for states to take the position that those services are creating an agent relationship, allowing the company to create or maintain a marketplace in those states.
The opportunities provided to businesses through FBA to expand their customer base without having to handle much of the back-end fulfillment responsibilities, especially for small and medium-sized businesses, has proven to be advantageous for many sellers. With the expansion of business through e-commerce also comes the potential for the expansion of a company’s nexus footprint for state and local taxes.
According to the Tax Foundation’s Fiscal Fact No. 572, forty-five states and the District of Columbia collect statewide sales tax in addition to having either income, gross receipts, franchise, or business privilege tax filing requirements once nexus is established in their respective states. For all states, owning inventory that is stored or warehoused in a particular state creates nexus for sales and income tax purposes and, in many states, third-party fulfillment arrangements will create nexus for sales tax purposes.
Whether you are using FBA or other avenues of e-commerce, the challenges of state and local tax compliance requirements can be extremely daunting and challenging. Contact us to see how we can help you determine where you have left or are looking to create a nexus footprint.