Information on Federal and State Tax Credits

If your company has certain expenses, you can qualify for tax credits from your sate and from the federal government.  These tax credits reduce the tax amounts that you would otherwise pay to your state and the federal government.

You may already be incurring the expenses.  If yes, you certainly should be applying for credits to reduce your tax payments.  Another consideration is to implement a company project (make expenditures) because the project satisfies a company need and also because a tax credit exists which helps to make the economics of the decision more attractive.

Below are six expenditure categories that could qualify for federal and state tax credits. For each category, links are provided to websites that companies can go to for more information on available tax credits from states and the federal government.

1.  New employees.  The federal government offers tax credits when companies hire employees that qualify for the credits.  Click here to learn about the federal government’s Work Opportunity Tax Credit.

Most states offer tax credits for hiring employees under certain conditions.  Click here for a US Library of Congress site that provides links to all states’ home websites.  From these home websites, information on the tax credits offered by the states, not only for hiring new employees but for other tax credits offered, can searched for and found.

2.  Health insurance.   The National Conference of State Legislatures provides an overview and links to information that describe federal and state programs that provide tax credits to employers that provide health insurance to their employees.   Click here to go to this site.

3.  Investments.  Some states offer tax credits to investors who make qualifying investments in companies located in their states.   The Community Development Venture Capital Alliance has published a report that surveys state tax credit incentives for investments.  Click here to assess this report (PDF file).  The state’s websites should also be used to verify whether the state has tax credits for investments in companies.

4.  Energy.   Click here to go to a US Small Business Administration site with information on federal tax credits for energy efficiency.

At this Energy.gov site (click here), tax credits and rebates offered by states, cities, and counties can be found.

5.  Environmental improvements.  The US Environmental Protection Agency has a site which leads to descriptions of each state’s recycling tax incentives.  Click here to go to this site.

6.  New product and process development.   An article published in The CPA Journal identifies the states that offer tax incentives designed to stimulate the research and development of new products and processes.  Also provided is a brief analysis of each state’s incentives.  Click here to read this article.

The federal government also offers a research and development tax credit (for product and process development).  A GrantThornton site provides an overview of the tax credits and the activities that qualify.  Click here to read this overview (PDF file).

Survey Results on Fulfilling Customer Sales Orders

No more important company goal should exist than to satisfy the customer with the product and/or service offered by the company. Many company processes are used between receiving a customer sales order and delivering the order’s requested product and/or service to the customer.   Below are links to four surveys that identify several such needed processes.  The surveys present data that are measurements that can be used to show how well the processes are carried out.

In addition to the links to the PDF reports on the surveys, information is provided below on some of the key content provided in the survey reports.  The data in the reports should be useful to the small company trying to improve its sales order fulfillment processes.

The Aberdeen Group published a report entitled “The Warehouse Productivity Benchmark Report – A Guide to Improved Warehouse and Distribution Center Performance” in 2006.  The report indicates that most companies surveyed have not been successful in reducing customer order cycle times. Suggestions are made on why this is the case.   The suggestions lead to recommendations.  Useful data in the report includes: actions taken or planned to improve warehouse operations; identification of technologies being used or planned for improved performance; barriers to better warehouse performance; and best-in-class performances compared to average performances.  Click here to access this report (PDF file).

Karl Manrodt and Kate Vitasek, of Metrics Surveys, analyze a 2006 survey by Georgia Southern University on how well distribution centers do in delivering products to customers.  What may be the most useful data for the small company, presented by Manrodt and Vitasek, are median and best-in-class performance measurements for metrics related to distribution.  Metrics include: order cycle time; on-time shipments; dock-to-stock cycle time; % lost sales; % back orders; cases shipped per person per hour; distribution costs as a % of sales; inventory shrinkage as a % of total inventory; and inventory days of supply on hand.  Click here to gain access to these useful benchmarking metrics (PDF file).

Karl Manrodt and Kate Vitasek use the results of another survey, conducted by Vendor Compliance Federation, to prepare a 2008 report focusing on how average and best-in-class do with respect to the four metrics often considered the most important in fulfilling sales orders successfully.  These four metrics are: on time delivery; complete orders; damage free; and accurate documentation.   The report’s data include that in 2007 on average only 51.1% of surveyed companies had on time delivery; 59.5% complete delivery; 100% damage free; and 88.8% accurate documentation.  Best-in-class vendors had these results: on time delivery – 76.7%; complete – 87.5%; damage free – 100%; and accurate documentation – 99.4%.  Click here to gain access to this report (PDF file).

Rob Martinez reported the results of a 2010 Shipware Systems Corporation survey on distribution center metrics.  The survey compares what data best-in-class companies track to what average campiness track.   Results show that increased tracking of distribution-related metrics often correlates with companies found as best-in-class.  The survey also shows that companies that benchmark to other company performances do better in several distribution-related metrics.  The report on the survey can be accessed by clicking here (PDF file).

The data from surveyed companies in the four reports identified and linked to above should be useful to small companies to set goals for one of the most important tasks a company has – keeping the customer happy.

Mobile Banking Offers an Important Tool to the Business Owner

With the smartphone, the small business owner can now have easy and mobile access, at all times, to the company’s and owner’s personal bank accounts.  This mobile access then becomes an important tool that the owner (company decision-maker) has in order to make and implement, more efficiently and effectively, company financial decisions.

Using the smartphone, some of the financial tasks the owner now can timely do are: transfer funds between accounts, to manage cash flows; approve and initiate payroll; approve payments needed to be made to company personnel; snap pictures of checks received to make bank deposits, without visiting the bank; approve vendor bills that need to be paid; and act on account alerts received from the bank.

Now with a smartphone (mobile device), the owner does not need to be at his desk and desk top computer to have access to one of the most important company information sources – the data in the bank account.  And, because of this, performing financial tasks, such as the ones identified above, at optimal times, will add value to the company.  The better the company’s money supply is managed, the better off the company will be.

And, the utility of the mobile device to manage cash through the bank account is likely only to get better as banks develop additional applications.   These applications likely will allow for better cash flow and cash management analysis leading to better financial decisions.

Here are links to two websites with useful information about mobile banking and security.  The first link is to a Federal Reserve Bank of Boston primer on what mobile financial services are.  This document seems to be an excellent overview of mobile banking as of 2010.  Click here to access this overview (PDF file).  The second link is a McAfee report on security concerns with mobile devices.  Click here to access this report (PDF file) and to read about security concerns with mobile devices.

Using mobile devices in a company’s banking processes requires efforts at understanding mobile banking options offered and how to use the options.   The better these options are understood and used, the more valuable the mobile device and its management of the bank account will be for the company.

Also, the use of mobile device banking has consequences for the company’s accounting processes.   Accountants need to be on top of what mobile device banking options are, how the company can best use them to be more successful at cash management and at accounting, and how to integrate the mobile banking options with the accounting system so that correct accounting continues. 

An Accountant Needs Project Management Skills

Projects are a likely way of doing business in an accounting department.  So it seems to me that accountants should have good project management skills.  Such skills have been identified, developed, and documented by educators and practitioners.  Taking advantage of this and learning the skills should be a goal for accountants.

Several websites are good resources for leaning about project management practices.   Max Wideman maintains a website which serves as a good introduction to project management.  Click here and then click Issacons.   Free Management Library also provides good information on project management.  Click here.  The British site ProjectSmart is a resource that tries to help managers at all levels improve their project management performance. Click here. 

PMPODCAST has available several podcasts on project management, including one on project management for non-project managers (episode 211).  Click here to go to PMPODCAST.

A top goal of a project is for the project to bring value to the company.  Part of an accounting manager’s responsibility is deciding to proceed with a project only when the potential resulting value justifies proceeding.   The accountant should be able to comfortably discuss the project’s value with others in the company.   Determining a project’s value is part of being a good project manager.

Becoming a good project manager takes time, education, and experience.   Accountants should take the time, learn good project manager skills, and apply them.  If they do, they will be better able to help the company’s leaders transform the company.

As the Accountant, Become a Business Leader

Out of stock inventory items should be avoided at all costs.  Customer satisfaction should be the top business priority of the company.   A customer who arrives for a purchase only to find the item out of stock will not be satisfied.  On the other hand, having too much quantity of an item in inventory is expensive, in many ways, to the company.  Being "out of" versus being "over stocked" represents a challenging conflict that, if resolved, will bring much value to the company.

This conflict represents a real opportunity for the small company’s accountant to gain recognition and acceptance from the company’s leaders and to become one of them.   The company’s accountant is well positioned and should be capable of taking on the challenge of developing the needed measurements and processes to avoid stock outs and keeping quantities on hand at an optimal number.

The key to success in this area, I believe, is good estimates of future sales.  Many accounting systems, such as QuickBooks, provide current sales rates, which is a good starting place for estimating future sales rates.  Then, with future sales rates, one who relishes in the details, in measuring and tracking data, and in reporting, such as a good accountant, should be able to shine by proactively consulting with the other company leaders so that all those processes that affect on hand inventory counts are understood and are managed for optimal inventory levels.  The active accountant can take ownership of this area and by doing so should enhance his/her position as one of the transformative leaders in the company.

The Internet can be a source of ideas and sound practices on maintaining optimal levels of inventory.  Four Internet designations with such ideas and practices are discussed below.

Guy Yehiav and Sammy Kolt at this blog “Pump Up the Profit” present ideas about minimizing inventory distortion (avoiding stock outs and over stocking).  Click here and here to go to these blogs on this subject.   Joe Schreibfeder publishes articles about inventory management on his website.  His articles examine how much safety stock is enough and how to factor past lost sales into future sales estimates.  Click here to gain access to these articles.

Cyber Insurance Needs

As a small company accountant, you likely have been given some responsibility for the company’s insurance coverage.  If yes, think about whether the cyber (Internet and computer-related) insurance coverage the company has is adequate.

Many small companies now depend extensively on their computers and Internet connections for on-going business operations.  Even small companies can maintain large amounts of electronic data on customers, vendors, and employees.  Small companies often use the Internet extensively for sales, marketing, transferring data between the company and other businesses, such as banks and vendors, and other uses.  Interruptions of these processes can cause the company great loss.

The federal government’s Internet Crime Complaint Center reported that in 2010 about 122,000 complaints that the Center had received were referred to law enforcement officials.  Complaints included the following company-related events:  non-delivery of merchandise; online auction fraud; credit card fraud; and advance fee fraud.

In 2011, according to the Identity Theft Resource Center, 340 organizations publicly disclosed that customer data on their computer systems had been breached.  In each case, the customers had to be notified of this breach, which is very expensive.

As the company’s accountant, you would be wise to think about what cyber insurance coverage is adequate for your company.

Information at an Insurance Information Institute web page (click here) provides good advice and recommendations about insurance coverage for companies with heavy Internet usage.

Adding to the complexity of evaluating adequate cyber-related insurance coverage is the practice of keeping customer and other data at 3^rd party providers (cloud computing).  Discussions at GIGAOM (click here) and Business Insurance (click here) deal with cyber insurance coverage and cloud computing.  Insurance policies that deal with the risk of keeping data at 3^rd party cloud providers are evolving.

Recognizing the threat is important.  Although such recognition can insure adequate insurance coverage, much more important is that such recognition should lead to adequate physical and procedural protections at the company to minimize the risks.