The good news is that the new tax law, the Tax Cuts and Jobs Act, includes lower tax brackets and a near doubling of the standard deduction. However, there is also much uncertainty looming regarding the new tax law, as several provisions within the Tax Cuts and Jobs Act (TCJA) remain unclear. Changes to income, confusion regarding itemized deductions for state and local taxes, and other unclear provisions have already caused some taxpayers complications. The new tax law makes strategic tax planning for 2018 more important than ever.
Why outsource/offshore in an America first economy?
There is not a day that goes by that you don’t use a car, use an electronic device or wear clothes that are manufactured internationally. In the tax and accounting business putting numbers in boxes is like a white collar manufacturing business. In many professional service industries, portions of what is done for the client, patient and customers fall into this broad definition of manufacturing. These tasks, if possible can be handled offshore. But shouldn’t we be looking to bring these jobs to the US not take them offshore? Read on…
Years ago, when major companies outsourced service there was a backlash due to communication barrier and inability to solve problems, and the purpose of service is to communicate effectively and solve problems. We would not outsource all of our services. We think this is best kept domestic. But email requests, tracking down answers, process following, and many other functions of our business can be offshored, which in essence will improve service.
3. Intelligence and design
When you buy a new iPhone it used to say designed in Cupertino on the box, that is because they are highlighting that the most important part of the phone, the intelligence that goes into the engineering and design was domestic, no one cares that the high volume manufacturing is done in countries most people can’t find on a map, because the phone would be substantially more expensive and isn’t our goal as a country to have the highest standard of living, that comes from the best paying, highest value jobs as the prize? The US is winning that game. We are NOT outsourcing the engineering or design of the Tax Blueprint®, the Tax Operating System®, Bookkeeping with Purpose ®, Tax Annual Review™, the Wealth Blueprint™, Wealth Annual Review™, etc. We are offshoring putting numbers in boxes, see #1. We are outsourcing the manufacturing of the ‘disc’, the music and movie on the disc (the content), which is the highest value, we are keeping domestically.
4. Domestic Employee Costs are rising, and Domestic Employee Performance is dropping.
Blame it on the millennials, blame in on the lowest unemployment in decades, blame it on entitlement, then why in this case does not matter for me the business owner, that must operate in the environment that exists, not the one I wished existed, what matters is how we serve our clients with the highest level of service with our current environment. Until customers except the excuse, that ‘good help is hard to find’ when we make mistakes or are too slow, or we are too expensive, then we must adapt. So, we are outsourcing #1 and keeping #2 & #3.
5. Lower Taxes
This is our primary goal and we will use technology and systems to be the best. We have no intention of offshoring tax planning, but we are working on making our software Artificial Intelligence-based, this will increase speed, increase accuracy and lower costs. This falls under #3.
6. Numbers that help you run your business and life
This is something we are working diligently on. A real-time dashboard that shows you how you are doing in your business. We want our domestic team focused on helping you interpret the numbers so that you can improve business efficiency and lower your taxes (and other costs, a LOT of services coming in this area). We will be offshoring the production parts of the business wherever we can. See #1.
7. It’s like having elves
Although some of the offshoring happens during domestic hours as well.
We get documents and information in during Pacific – Eastern times. But, our offshore employees are likely on the opposite side of the planet. While we are sleeping the numbers are being put in boxes, we wake up and the work is ready to be triple checked. Many services, like Design Pickle, 99 Designs, Upwork and others like them are great services and work gets done while you sleep, as well.
8. The Robots are coming
Technology is growing at a pace never seen in human history. In the last couple of years, you have heard about driverless cars, in the next two years you will see a driverless car and shortly you will be using one. A driverless car is substantially more complex than putting numbers in boxes. Repetitive tasks are being demonetized, tax preparation and bookkeeping fall into this category. We are moving the company in the direction of #2, #3, #5 and #6. Because if we don’t we will be replaced by Artificial Intelligence and Robots.
9. The tax division is being subsidized
Every business unit needs to stand on its own, the Tax division will be profitable this year due to adding technology, improving internal processes and doing #1. Either we double our fees or manage costs through systems, efficiency, and offshoring, we are choosing the later. Our clients expect more from us than other tax firms, and they expect more at the same prices they pay other accounting firms, offshoring allows us to build something that does not exist anywhere else.
10. One check vs triple check
The new process is our partner puts numbers in boxes, they have a CPA or equivalent (they are only CPA’s in this country, the initials are trademarked and given out by a domestic association/business). Then we look, once again, a third check, once again we are outsourcing #1 and keeping #2, #3, #5 and #6.
Here is a list of the biggest data breaches in the 21st century (http://bit.ly/2DG9FIF). Notice something? They are ALL domestic. The technology we are using is much better than a vast majority of accountants.
12. Security part 2
The nesting doll approach – The biggest data breaches were data extracted from a database or the biggest ‘doll’. But data and documents stored inside a software program, that is stored inside another software program, that is in a world-class cloud service creates a big barrier to nefarious entry. Easier to hack the above mega corporations than us.
13. Security part 3
All your data is in the cloud, every major company has moved to cloud-based computing, the average tax prep, and accounting office is tragically behind technologically, most store all your data on a PC or a client/server environment which is connected directly to the internet, our approach is safer than what most our clients are doing in many other parts of their lives.
14. Security part 4
Your data does not ‘leave’ the country for the numbers to be put into boxes, there are plenty of software options to allow access to software across borders without the data leaving the borders. Also, our partner has no USB ports, no printers and all employees have to put phones in lockers before putting on their headset and logging in to their workstation, data is safer than virtually any business you are working with domestically.
15. Security part 5 – Your wallet
The most amount of risk in your life is in your wallet. The magnet strip on the back of your credit card has more information that a thief can use to impact your life in a negative way. Most people hand their card out several times a day without a thought but are distressed at much safer scenarios.
16. Amazon Effect
We all compete with Amazon now. Not because we are all in the same business, but because they have raised the bar on speed, efficiency, and cost. They have set a standard that things can be cheaper, better and faster at the same time. Amazon is entering every market they think they can improve speed, cost, and quality. If you don’t improve those three things they will get into your business and do it for you.
17. Planned Obsolescence
Intel is famous for starting on the next two generations of chip design as they are releasing the designs they currently have. The 386 and 486 chips were being worked on as the 286 was being released. They competed with their own product because if they didn’t other chip makers like AMD or TI would. We are working at putting the current old business model out of business before a competitor does it to us.
18. Economic/Political shift
In the last couple of years, we have shifted from stagnant employment to a statistical full employment level. Also tightening immigration controls are reducing the labor force further. I’ll let CNBC and Fox News fight over the impact, and whether it is good or bad for the future, but business people must adapt to the real world, not the hoped-for or should be world. We must make business decisions on the way things are not the way things ought to be. That is what we are doing, you should too.
19. America first!?
We are putting America first by focusing our efforts. #5 & #6 will put millions of dollars back into the hands of those that most deserve it, the American small business owner and entrepreneur.
As you can see outsourcing/offshoring is a critical key to our ability to serve you better. As you can also see it was not a haphazard decision, it was thoughtful and it every stakeholder and YOU in mind.
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