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									                                          the
                                          leading




                                                Advice and information to help
Published bY   lane gorman Trubitt, llP         you manage your business




 MORE
 THAN
 MONEY
 Weigh all the
 perks so your
 employees
 want to stay




                  volUMe 8 n iSSUe 1
                          Fall 2007

PlUS:
e-cycling ride
To send or not to send—
holiday recognition
Multi-state tax issues
   Fall
volUMe 8
 iSSUe 1
                   The Leading Edge
  2007

                                                                                                   The professionals at Lane Gorman Trubitt, L.L.P.
                                                                                                   serve all industries, but specialize in serving
                                                                                                   clients in the automotive, construction,
dear lgT Clients and Friends:                                                                      healthcare and real estate industry groups.
                                                                                                   The services we routinely provide include:
As summer begins to fade, we come back from vacations and try to get
focused on business. We hope this 2007 fall issue of The Leading Edge                              accounting & Consulting               and verification
                                                                                                   • Accounts payable outsourcing      • Participant enrollments
Magazine and the topics we’ve written about are fruitful and enjoyable                                                                 • Compliance reviews
                                                                                                   • Agreed upon procedures
for you. in this issue, you will find information on:                                                engagements                       • Assistance with voluntary
                                                                                                   • bookkeeping, reconciliations       corrections under government
• Texas margin tax                                                                                   and write-up services              programs
• Year-end tax planning                                                                            • budgeting                         • Representation before IRS
                                                                                                   • business entity analysis            and DOL examiners
• lGT charities and giving back in the community
                                                                                                     and structuring
                                                                                                   • buy/sell agreements               Tax Services
As you know, we are here to serve you anytime. Please don’t hesitate                               • Compliance returns including      • business succession planning
to contact us at (214) 871-7500 or toll free at (877) 231-7500 if you                                business and personal income      • Corporate reorganizations
are outside the dallas-Fort Worth Metroplex.                                                         tax, franchise, payroll, sales    • income, gift and estate
                                                                                                     tax returns, property tax           tax planning
                                                                                                     renditions, etc.                  • Mergers and acquisitions
We hope the fall season is off to a great start for all of you!                                    • Fringe benefit wage reporting     • Multi-state taxation issues
                                                                                                   • Growth strategies                 • Preparation of federal and
sincerely,                                                                                         • On-site “controller” or             state tax returns
                                                                                                     “accountant” outsourcing          • Proactive tax planning
                                                                                                   • Payroll reports including W-2s    • Representation before
                                                                                                     and 1099s                           taxing authorities
                                                                                                   • Peachtree/Quickbooks set-up,
                                                                                                     training and consultations        Creative Financial Staffing
bob Knight                                                                                         • Personal record keeping,          • Temporary & project staffing
Managing Partner                                                                                     bookkeeping and bill paying       • Temp-to-perm staffing
                                                                                                   • Preparation of compiled or        • direct hire, contingent search
lane Gorman Trubitt, l.l.P. Accountants and Advisors                                                                                   • executive, retained search
                                                                                                     reviewed financial statements
                                                                                                   • Preparation of personal             interviewing
                                                                                                     financial statements              • Technical skills evaluation
                                                                                                                                       • Criminal background checks
                                                                                                   assurance Services
Recognizing the up and coming talent!                                                              • Agreed upon procedures
                                                                                                     engagements
                                                                                                                                       LGT Financial Advisors, LLC
                                                                                                                                       • Wealth strategies
                                                                                                   • Attest and attest-related         • Financial planning

                                angie Martin, LGT’s director of education has
                                 been named in the national publication,
                            CPA Technology Advisor as one of the “40 Under
                                                                                                     services
                                                                                                   • Accounting and general
                                                                                                     business advice
                                                                                                                                       • Investment management
                                                                                                                                       • Asset protection strategies
                                                                                                                                       • Business consulting
                                                                                                   • due diligence services            • Business succession
                            40”. Angie has more than 10 years’ experience in the
                                                                                                   • initial public offerings            strategies
                            accounting education realm. Driven by enlightening                     • internal control reviews          • Buy/sell strategies
                            others, she’s focused on technical accounting,                         • Audited financial statements      • Employee benefit plan
                            technology in the CPA industry, and overall                            • Regulatory and agency audits        implementation
                            professional development. She holds a bachelor of                      • securities and exchange           • Estate and gift planning
                                                                                                     Commission filings                • Insurance strategies
                            science in business administration–accounting from
                                                                                                                                       • Retirement planning
                            Kansas State University and a master’s of public                       Retirement Plan Services              services
                            accountancy from Wichita State University. She has                     • Advanced plan design and
                            also taught as a college professor.                                      administration services           LGT Insurance Services, Inc.
                               Angie not only works to grow and develop LGT, she’s                 • Plan documents (in                •Individual life insurance
                                                                                                     conjunction with client’s         •International insurance
also an independent contract educator for other firms. In addition, she currently
                                                                                                     attorney)                         •High limit disability insurance
serves on the AICPA TECH+ Conference Planning Committee and is a member of                         • CPA’s perspective in
the American Society of Training and Development.                                                    contribution planning             State and local Tax Team
   LGT and LGT Financial Advisors* encompass tax and audit to personal financial                   • Compliance testing                • Audit Representation
planning. We’ve been helping local businesses and entrepreneurs in the Dallas area                 • Balance forward                   • Tax Refundst
                                                                                                     recordkeeping and trust           • strategic Planning
for more than 50 years.
                                                                                                     accounting                        • Tax compliance and reporting
                                                                                                   • Government reporting              • Voluntary disclosure and
*Securities offered through Royal Alliance Associates, Inc., member NASD/SIPC. Advisory services   • Loan and distribution               registration
offered through LGT Financial Advisors LLC, Registered Investment Advisor.                           processing                        • dispute resolution
                                                                                                   • Discrimination testing            • Credits and incentives
                                                                                                   • Vesting determination

                                                                                                                          VOluMe 8   n   issue 1   n   FAll 2007
                                 the
                                 leading




        voLuMe 8      n   issue 1 n FaLL 2007
                                                             contents
             The Leading edge
         www.Leadingedgealliance.com
The Leading edge alliance is an international
professional association of independently owned
                                                             features
accounting and consulting firms. The Leading
edge alliance enables member firms to access
the resources of a multibillion dollar global
                                                             	 4	 More	than	money
professional services organization, providing                	   	   Weigh	all	the	perks	so	employees	
business development, professional training
and education, and peer-to-peer networking                   	   	   want	to	stay
opportunities nationally and globally, around
the corner and around the world.
Members are top quality firms who are very                   	 8	 Riding	e-cycle	can	mean	green	
successful, have deep client relationships, and
strong ties to the community. The alliance                   	 	 for	your	business
provides members with an unbeatable combi-
nation: the comprehensive size and scope of                  	   	   Plan	for	old	tech	disposal
a large multinational company while offering
their clients the continuity, consistency and
quality service of a local firm.
                                                             	14	 Holiday	recognition?
Member firms have access to the best and
brightest teams of business advisors – a peer-               	   	   Thank	clients,	set	company	apart	
to-peer connection that provides the right                   	   	   and	make	lasting	impression
business solutions for clients.
To find out more about the alliance contact
Karen Kehl-Rose, president, at (630)513-9814
or kkr@The-Lea.com.

    Leading edge advisory Committee                          departments
                  Linda Watson
                   Brady Ware
                Marshall Lehman                              	 9	 News	and	information	
         Lurie Besikof Lapidus & Co., LLP
                  Jen Lemanski
                                                             	 	 from	our	firm
        Pannell Kerr Forster of Texas, P.C.
                    Gary Voth
        Pannell Kerr Forster of Texas, P.C.                  	13	 Business	across	state	lines—the	
                 Belinda Ressler
                   Wilson Price                              	 	 tax	implications
                Karen Kehl-Rose
            The Leading edge alliance

         in affiliation with Wise Group
                                                             	16	 Bits	&	Pieces
                   Ann M. Gynn
                      editor
Natasha Fletcher, Amanda Horvath, Stacy Vickroy
                   art directors
                                                             	18	 In	a	nutshell:	Q&A
                   Andrea Jager                              	   	   Chris	DeSantis	responds	to	your	
                graphic designer
                                                             	   	   workplace	dilemmas


The Leading Edge is published three times per year by        	19	 The	Leading	Edge	Alliance
Wise group, 812 huron Road, suite 201, Cleveland, ohio,
44115, (216) 523-1212, FaX (216) 241-5458. Periodicals
postage paid at Cleveland, ohio.

iRs Treasury Regulations require us to inform you that any
tax advice contained in the body of this communication
was not intended or written to be used, and cannot be
used, by the recipient for the purpose of avoiding penal-
ties that may be imposed under the internal Revenue                             Winner 2006 AGD award for publication design
Code or applicable state or local tax law provisions.

          The Leading edge                                                                                                     
                                                                                                                                                    cover




                                                     ORE THAN

WEIGH ALL THE PERKS SO EMPLOYEES WANT TO STAY
BY ANN M. GYNN




R
               etaining	 employees	 requires	 more	        Give ‘em a voice                                         Steiner	&	Hoffman,	says	even	doing	little	things,	
               than	 good	 morale	 and	 lots	 of	 dol-                                                              such	 as	 a	 kudos	 for	 a	 particularly	 good	 job	 is	
                                                           Wiss	 wanted	 its	 employees	 to	 know	 they	 have	
               lars.	It	is	an	essential	component	to	                                                               emailed	 to	 all	 in	 the	 firm	 to	 acknowledge	 the	
                                                           a	voice	in	what	happens	at	the	company,	Calick	
               any	successful	business.                                                                             employee’s	work,	can	mean	a	lot	to	employees.	
                                                           says.
   It	 costs	 a	 business	 at	 least	 150	 percent	 of	                                                             EKS&H	has	an	extensive	employee	recognition	
                                                              The	 firm	 created	 an	 advisory	 board	 with	
a	 person’s	 base	 salary	 to	 replace	 him	 or	 her,	                                                              program,	holding	quarterly	gatherings	(both	on-	
                                                           employees	 representing	 about	 seven	 disciplines	
according	to	Bliss	&	Associates.                                                                                    and	 off-site)	 and	 recognizing	 dozens	 of	 people	
                                                           as	well	as	administration	and	other	support	staff.	
   When	 someone	 who	 earns	 $40,000	 leaves,	                                                                     who	have	excelled	the	previous	three	months.
                                                           Members	 include	 everyone	 from	 second-year	
the	 company	 likely	 will	 lose	 at	 least	 $60,000	                                                                  Pearson	says	EKS&H	also	does	not	forget	the	
                                                           employees	 to	 managers.	 However,	 the	 board	
as	 it	 finds	 someone	 else.	 Those	 estimates	 fac-                                                               employees’	outside	“supporters”—their	families.	
                                                           does	not	include	any	partners.	The	board	meets	
tor	 in	 the	 costs	 directly	 related	 to	 the	 person	                                                            Around	April	15—crunch	time	for	the	account-
                                                           every	three	months	to	raise	issues	or	offer	opin-
leaving,	 lost	 productivity,	 hiring	 and	 training,	                                                              ing	firm—gift	certificates	are	sent	to	employees’	
                                                           ions	 about	 ideas	 from	 management—and	 all	
Bliss	details	in	its	report	“The	Business	Cost	and	                                                                 significant	 others	 to	 thank	 them	 for	 giving	 up	
                                                           issues	 are	 then	 taken	 to	 the	 office’s	 managing	
Impact	of	Employee	Turnover.”                                                                                       their	time	with	their	loved	one.
                                                           partner.
   Recent	Harvard	University	research	expounds	                                                                        Top	 leadership	 support	 of	 an	 employee	 rec-
                                                              Board	members	are	rotated	annually	so	more	
on	 what	 creates	 successful	 retention.	 “The	                                                                    ognition	program	is	a	must.	“The	partners	have	
                                                           employees	 can	 be	 involved.	 The	 firm	 typically	
results	 lead	 us	 to	 conclude	 that	 workplaces	                                                                  been	committed	from	day	one,”	Pearson.	“They	
                                                           seeks	employees	who	have	stepped	up	in	other	
which	 provide	 positive	 environments	 that	 fos-                                                                  never	 strayed	 and	 that’s	 the	 backbone	 of	 our	
                                                           ways,	work	hard	and	are	not	shy	about	offering	
ter	 interpersonal	 trust	 and	 quality	 personal	                                                                  success.”
                                                           their	opinions.
relationships	 create	 the	 most	 committed	 and	
                                                              Calick	 explains	 that	 like	 any	 office,	 man-
productive	 employees,”	 says	 Dr.	 Nancy	 Etcoff,	                                                                 The Marine way
                                                           agement	 heard	 rumblings	 of	 concerns.	 The	
lead	researcher	on	the	study.
                                                           advisory	board	offers	a	formal	setting	in	which	         “The	 two	 best	 things	 a	 boss	 can	 do	 to	 retain	
   Successful	companies	already	are	recognizing	
                                                           those	“grumblings”	can	be	heard	and	addressed.	          employees	is	treat	them	with	trust	and	respect,”	
that	 it	 takes	 deliberate	 planning	 and	 efforts	 to	
                                                           Topics	have	included	how	evaluations	are	done	           says	 Wally	 Adamchik,	 who	 recently	 inter-
create	that	environment.
                                                           as	well	as	technology	needs	of	employees.                viewed	100	current	and	former	Marines	for	his	
   “These	 days	 the	 market	 is	 so	 hot	 you	 really	
                                                                                                                    book,	 “No	 Yelling:	 The	 Nine	 Secrets	 of	 Marine	
have	 to	 be	 creative	 to	 keep	 people,”	 says	 Lisa	
                                                           It’s morale                                              Corps	 Leadership	 You	 Must	 Know	 to	 Win	 in	
Calick,	 director	 of	 recruiting	 and	 employee	
                                                                                                                    Business.”
retention	 at	 Wiss	 &	 Company,	 a	 Leading	 Edge	        Rebecca	 Pearson,	 director	 of	 human	 resources	
                                                                                                                       Adamchick	 says	 too	 often	 bosses	 signal	 that		
Alliance	firm	affiliate.                                   at	 Leading	 Edge	 Alliance	 firm,	 Ehrhardt	 Keefe	                                        continued on page 6

The Leading edge                                                                                                                                                         
      cover


                                                                                                                   of	 HiRe	 Expectations,	 a	 service	 line	 of	 Leading	
                                                                                                                   Edge	Alliance	firm	Argy,	Wiltse	&	Robinson.
                                                                                                                      More	 than	 10	 percent	 of	 the	 workforce	 has	
                                                                                                                   opted	for	flex	scheduling,	which	includes	being	
                                                                                                                   able	 to	 work	 from	 home	 sometimes.	 “It	 helps	
                                                                                                                   tremendously	for	retention,”	she	says.
                                                                                                                      The	 firm	 hosts	 an	 On	 the	 Spot	 Award	 pro-
                                                                                                                   gram,	which	empowers	managers	to	reward	an	
                                                                                                                   employee	 with	 a	 $100	 American	 Express	 gift	
                                                                                                                   card	 for	 an	 above-the-call	 effort.	 “It	 has	 a	 one-
                                                                                                                   page	 guideline,	 not	 too	 complicated,”	 Geddes	
                                                                                                                   explains,	noting	the	simplicity	and	quickness	of	
continued from page 5                                    Community involvement                                     the	program	is	a	must.
they	 do	 not	 trust	 people	 because	 they	 do	 not	    SunCom	 Wireless	 found	 employees	 wanted	                  Employees	also	are	given	five	weeks	paid	time	
include	them	in	planning	or	they	micromanage	            to	 work	 for	 a	 company	 that	 offered	 structured	     off	annually.	After	five	years	of	service	that	goes	
them.	“Respect	is	a	two-way	street—if	you	give	          ways	to	get	involved	in	their	community.                  to	 six	 weeks.	 “It’s	 one	 of	 the	 better	 benefits,”	
it	to	me,	I	give	it	to	you.	And	beyond	that—you	            In	 2006,	 it	 formed	 a	 community	 outreach	         Geddes	says.
give	it	to	me,	I	stay	and	work	for	you,”	he	says.        program	 to	 give	 back	 to	 the	 communities	 in	           The	 firm	 also	 offers	 fast	 breaks	 during	 the	
                                                         which	 it	 does	 business	 and	 to	 give	 employees	      summer—allowing	 employees	 to	 adjust	 their	
Assess and value                                         an	outlet	to	participate	in	meaningful	activities	        hours	so	they	can	leave	early	on	Fridays	between	
                                                         while	 doing	 teamwork	 with	 their	 colleagues	          Memorial	 Day	 and	 Labor	 Day.	 They	 still	 work	
David	Russell,	CEO	and	founder	of	Success	with	
                                                         outside	the	office.                                       the	 same	 total	 hours	 each	 week—and	 they	 are	
People,	supports	the	idea	that	engaged	employ-
                                                            In	addition,	SunCom	also	gives	its	employees	          not	 required	 to	 leave	 early	 on	 Fridays	 if	 they	
ees	 will	 stay	 and	 do	 more,	 thus	 achieving	 top	
                                                         eight	 hours	 of	 paid	 time	 off	 to	 participate	 in	   prefer	to	follow	their	non-summer	schedule.
financial	goals.	
                                                         community	activities.                                        The	 business	 also	 created	 a	 buddy	 mentor	
   After	 assessing	 an	 employee’s	 behaviors	 and	
                                                                                                                   program.	 Employees	 can	 volunteer	 to	 serve	 as	
values,	manage	the	employee	according	to	his	or	
                                                         A second home, family                                     mentors	 and	 be	 matched	 with	 new	 hires	 (hav-
her	top	two	values,	which	extends	opportunities	
                                                                                                                   ing	a	mentor	is	required	for	all	employees	up	to	
to	live	their	values	through	their	work.                 A	focus	on	work-life	balance	led	to	a	2006	turn-
                                                                                                                   entry-level	managers).	
                                                         over	rate	of	well	below	the	30-percent	industry	
                                                                                                                      The	 firm	 provides	 training	 twice	 a	 year	 for	
                                                         average,	say	Michelle	Geddes,	managing	director	
                                                                                                                   mentors	 and	 offers	 guidelines	 to	 both	 mentor	
                                                                                                                   and	 mentee.	 Human	 resources	 sends	 quarterly	
                                                                                                                   reminders,	but	stays	out	of	the	day-to-day	pro-
                                                                                                                   cess,	Geddes	explains.
                                    GOOD SUPERVISORS                                                                  Unique	 to	 the	 program	 is	 that	 the	 mentors	
                                                                                                                   are	 not	 only	 career-focused	 but	 they	 can	 be	
                                    Recent studies found that employees satisfied with their                       interest-	 or	 situation-focused.	 For	 example,	 a	
                                    supervisor stay with a company. One-third of employees                         new	mom	returning	to	work	might	be	partnered	
                                    who plan to leave their jobs said they were unhappy                            with	 a	 mentor	 who	 already	 has	 gone	 through	
                                    with their supervisor.                                                         that	experience.	
                                    “It turns out that the best answer to the question of how                         The	 firm	 also	 hosts	 sports	 teams.	 With	 its	
                                    to retain people might be the same as the answer to the                        employees	 socializing	 outside	 of	 work,	 they	
                                    question of how to improve productivity and morale,” says                      form	friendships	that	are	an	attractive	reason	to	
                                    leadership consultant, Wally Bock. “Select people who have                     stay	with	the	firm.
                                    demonstrated that they are likely to succeed as supervisors.                      “It’s	 a	 strong	 culture.	 It’s	 home	 so	 they	 don’t	
                                    Give them training in supervisory skills.                                      want	to	leave,”	Geddes	says.

                                    “Most companies don’t do those things well. They promote
                                                                                                                   A new home
                                    people based on their performance in another job,” he says.
                                                                                                                   Eric	 Holt	 had	 always	 dreamed	 of	 owning	 his	
                                    Bock says that employers also must spend money on                              own	 home.	 It	 was	 his	 employer,	 Ohio-based	
                                    their training budget for frontline supervisors and have                       Aflac,	that	helped	him	achieve	his	goal	through	
                                    mechanisms in place for new managers during the critical                       the	Neighborworks	Columbus	program.
                                    transition as well as to help them grow and develop later.                       The	 program	 operates	 with	 funding	 from	
                                                                                                                   the	Aflac	Foundation.	It	allows	employees	who	




                                                                                                                                      voLuMe 8    n   issue 1   n   FaLL 2007
have	 at	 least	 a	 year	 of	 service	 with	 Aflac	 to	     Rose	Iten,	president	of	the	Leadership	Group	at	
receive	 guidance	 in	 the	 home-buying	 process.	          Lurie	 Besikof	 Lapidus	 &	 Company,	 a	 Leading	
The	program	offers	dedicated	mentors	as	well	as	            Edge	Alliance	firm.
counseling	to	help	participants	overcome	credit	                Her	company	starts	at	the	beginning	to	make	
obstacles,	 learn	 about	 homebuyer	 and	 owner-            sure	 the	 job	 and	 the	 person	 are	 a	 good	 fit	 by	
ship	 responsibilities	 as	 well	 as	 identify	 down	       using	the	Predictive	Index,	a	customized	survey	
payment	assistance	options.                                 completed	by	prospective	hires.
   Participants	set	their	own	home-buying	objec-                The	 Predictive	 Index	 first	 requires	 the	
tives	and	goals	then	work	with	Neighborworks	               employer	to	define	the	position—know	what	it	
Columbus	 counselors.	 The	 program	 usually	               is	looking	for	in	that	particular	job.	For	example,	
takes	six	months	to	a	year.
   “I	thought	it	was	great	that	a	company	would	
                                                            someone’s	perception	of	a	receptionist’s	respon-
                                                            sibilities	could	be	a	person	to	answer	the	phones	
                                                                                                                          CONSISTENT
offer	 such	 an	 incentive	 for	 employees,”	 says	         and	 greet	 visitors	 to	 the	 company.	 Another	             FEEDBACK
Holt,	 a	 lead	 specialist	 in	 benefit	 services	 who	     person	might	think	of	a	receptionist	as	someone	              Linda Finkle, executive coach and CEO
has	been	a	homeowner	for	three	years.	“It	makes	            to	answer	phones,	greet	visitors,	order	supplies,	            of Incedo Group, says ongoing and
me	appreciate	being	an	employee	and	makes	me	               respond	 to	 general	 inquiries	 and	 handle	 all	 of	        consistent performance appraisals
loyal	to	the	company.”                                      the	filing.	Neither	description	is	incorrect—but	             are important. “People like to know
   Other	employees	agree—a	recent	survey	from	              the	 visions	 are	 different	 and	 could	 require	            how they are doing, what’s next for
the	Neighborworks	program	showed	84	percent	                people	with	different	attributes.                             them and what they need to do to get
rated	 the	 assistance	 as	 very	 important	 and	 72	           “An	assessment	tool,	like	the	Predictive	Index,	          there,” she says. “It doesn’t have to
percent	 of	 participants	 indicated	 the	 program	         allows	you	to	define	the	position,	the	behaviors	             mean a raise, but what I often hear is
will	 influence	 their	 decision	 to	 stay	 with	 the	      and	 motivators	 needed	 by	 that	 person,”	 Iten	            how infrequently people actually have
company.                                                    says.	“Is	this	a	position	that	requires	an	indepen-           a sit down with their boss on their
                                                            dent	person	who	needs	little	direction	or	some-               performance. Do this quarterly, twice
The right fit                                               one	who	is	a	team	player	and	can	collaborate?                 a quarter is even better.”
                                                                “That	 way	 you	 create	 opportunity	 for	 suc-
Studies	show	that	75	percent	of	turnover	occurs	
                                                            cess	from	the	get	go—you	tap	into	that	internal	
within	 the	 first	 90	 days	 of	 employment,	 says	
                                                            motivation,”	she	says.                                        Lurie	goes	beyond	using	the	Predictive	Index	
Jody	 Ordioni,	 president	 of	 BRANDEMiX.	 That	
                                                               The	Predictive	Index	also	enables	a	company	            in	 the	 hiring	 process.	 Managers	 and	 employ-
indicates	 employees	 often	 decide	 based	 on	 the	
                                                            to	pose	questions	that	identify	whether	the	pro-           ees	 are	 given	 the	 results	 so	 they	 can	 better	
first	day	whether	they	want	to	leave.
                                                            spective	 employee	 would	 fit	 into	 the	 business’	      understand	 how	 to	 interact	 with	 each	 other	
   “You	can	always	throw	money	and	bonuses	(at	
                                                            culture	as	well	as	how	they	would	work	with	a	             more	effectively.	“Gathering	information	sounds	
employees),	but	if	people	don’t	find	work	satis-
                                                            particular	manager.                                        simple,	 but	 it	 takes	 a	 committed	 effort	 to	 use	
fying	 and	 fulfilling,	 they	 will	 leave,”	 says	 Mary	
                                                               “It	gives	a	chance	to	look	at	the	hiring	deci-          the	information	to	create	a	caring	work	environ-
                                                            sion	strategically	and	objectively,”	Iten	says.	           ment,”	Iten	says.	e




                                      CLOSE THE DOOR
                                      Mary Cantando went through a stretch of four years with zero
                                      turnover when she managed a technical service company of 80
                                      employees.
                                      “One of the secrets to my success was to close the door on
                                      Monday morning and think of five employees I could least afford
                                      to lose,” says the author of “The Woman’s Advantage: 20 Women
                                      Entrepreneurs Show You What It Takes to Grow Your Business.”
                                      “Then I would make a note on my calendar of something special
                                      to do for each of those five that week,” Cantando says. “I always
                                      considered this one of my highest weekly priorities.”




The Leading edge                                                                                                                                                           
technology



Riding e-cycle can mean green for your business

B    eing	 green	 is	 about	 more	 than	 doing	 good	
     for	 the	 environment.	 For	 businesses	 that	
understand	 e-cycling—being	 green	 with	 their	
                                                          unit	 is	 not	 viable	 or	 the	 client	 recycling	 the	
                                                          computers	 does	 not	 want	 them	 remarketed,	
                                                          MPC	 employees	 work	 by	 hand	 to	 deconstruct	
                                                                                                                     MPC	 works	 with	 a	 local	 steel	 re-melting	 plant	
                                                                                                                     that	 uses	 the	 material	 to	 produce	 reinforcing	
                                                                                                                     rods	 for	 concrete	 used	 by	 the	 construction	
electronic	equipment	also	means	saving	money	             the	electronic	equipment	piece	by	piece.                   industry.	Aluminum	in	the	products	is	smelted	
and,	in	some	cases,	earning	dollars.                         As	a	result,	MPC	has	become	a	great	source	for	         into	 2,000-pound	 blocks	 that	 are	 then	 sold	 to	
   Since	1983,	Materials	Process	Corp.	has	built	         hard-to-find	or	obsolete	computer	replacement	             aluminum	 manufacturers.	 The	 options	 for	 e-
a	business	focused	solely	on	electronic	recycling.	       parts	such	as	integrated	circuits,	semiconductors,	        cycling	seem	almost	endless.	
“We	 were	 green	 before	 green	 was	 green,”	 says	      transistors,	 diodes,	 capacitors,	 connectors	 and	          Schachtman	 and	 MPC’s	 David	 Kutoff	 say	
Todd	Schachtman,	president	of	global	sales.               inductors.                                                 that	 prospecting	 for	 clients	 really	 is	 not	 a	 sales	
   Today,	 the	 electronics	 recycler,	 a	 client	 of	       It	 also	 operates	 an	 electronic	 precious	 metals	   process	 but	 an	 educational	 one	 so	 companies	
Leading	 Edge	 Alliance	 firm	 Lurie	 Besikof	        	   recovery	 program—taking	 the	 precious	 metals	           can	 learn	 about	 of	 all	 the	 possibilities	 and	
Lapidus	 &	 Company,	 boasts	 more	 than	 2,600	          from	 circuit	 boards,	 connectors	 and	 backplates	       benefits	of	e-cycling.
clients	and	is	ISO	certified.                             present	in	most	computers.	Employees	examine	                 “Today’s	 environmental	 stewardship	 has	 met	
   Its	 future	 remains	 bright	 given	 the	 volume	      each	 component,	 shred,	 sample	 and	 determine	          the	economics	of	business,”	Kutoff	says.	“It’s	the	
of	 electronic	 equipment	 being	 used	 and	 tossed	      the	quantities	and	purity	of	the	precious	metals.          right	thing	to	do	and,	more	often	than	not,	you	
each	 year.	 The	 National	 Safety	 Council	 and	 the	       For	 example,	 a	 customer	 ships	 printed	             can	make	money	off	it.”
Environmental	 Protection	 Agency	 estimate	 more	        circuit	 boards	 for	 e-cycling.	 MPC	 weighs	 the	           Clients	find	that	dispensing	of	their	outdated	
than	130	million	cell	phones	are	discarded	and	250	       shipment	 then	 recovers	 re-marketable	 parts.	           electronic	 equipment	 costs	 them	 nothing—or	
million	computers	become	obsolete	each	year.              The	 hazardous	 components	 and	 non-refinable	            even	 makes	 them	 some	 money.	 Schachtman	
   MPC	 works	 with	 companies	 to	 recycle	 their	       material	are	removed.	The	boards	are	shredded	             says	 once	 a	 client	 hires	 MPC,	 it	 rarely	 leaves.	
computers	 and	 other	 equipment	 after	 they	            into	 smaller	 pieces	 before	 being	 shipped	 to	         The	same	can	be	said	for	MPC	employees—the	
purchase	new	equipment.	“Every	single	computer	           a	 smelter.	 The	 smelter	 then	 heats	 the	 pieces	       average	tenure	is	11.3	years—all	of	whom	work	
component	is	recycled,”	says	Schachtman.	“You	            to	 create	 an	 ash,	 which	 is	 then	 screened	 and	      in	a	zero-landfill	environment.
walk	our	site	and	you	won’t	find	a	Dumpster.”             divided	into	fractions	to	figure	out	the	quantity	            “We	know	exactly	where	everything	goes	down	
   He	advises	that	MPC	first	sees	if	reuse,	which	        of	gold,	silver,	palladium	and	platinum	from	the	          to	the	crust	of	the	bread	from	someone’s	lunch.	
is	 the	 best	 way	 to	 recycle	 the	 whole	 unit,	 is	   original	shredded	material.                                We’ve	 created	 our	 own	 fabric,”	 Schachtman	
possible	 after	 the	 computer/server	 has	 been	            Another	 example	 of	 e-cycling	 involves	 the	         says.	 “It’s	 just	 second	 nature,	 a	 microcosm	 of	
wiped	and	tested.	When	reuse	of	the	complete	             steel	 frames	 and	 cabinet	 covers	 of	 computers.	       what	do	on	a	global	level.”	e



                                                 PLANNING	FOR	NEW	TECH	MEANS	
                                                 													PLANNING	FOR	OLD	TECH	DISPOSAL
                                                 One of the first steps in preparing for new technology in your business is to
                                                 identify what to do with your old technology, says Marc Meyer, a senior network
                                                 engineer at SS&G Financial Services, a Leading Edge Alliance firm.
                                                 “Plan what you’re going to do with the old when you purchase the new,” he says.
                                                 Options can include recycling, donating or offering an employee purchase program.
                                                 He points to retail outlets such as Staples and Office Max that will recycle printer
                                                 cartridges. Dell has a recycling option when a new computer is purchased. For a
                                                 small fee, it will take the computer, wipe the hard drive and certify that it’s clean.
                                                 Meyer says wiping the data from the hard drive is a must. Disk-sanitizing programs
                                                 are available that write over the hard drive. He recommends having the software
                                                 make at least three “passes” to ensure the hard drive is clean.
                                                 If you’re donating the sanitized computer, consider if your licensing would allow you
                                                 to reinstall the operating system—a benefit for the recipient but a possible violation
                                                 if you surpass the licenses allowed for that software.
                                                 SS&G also has used an employee-purchase program to get rid of its outdated
                                                 electronic equipment. Meyer explains for a nominal cost such as $40 to $50,
                                                 employees were able to buy a 3-year-old computer.
                                                 He says the most important consideration for any company getting rid of its
                                                 equipment is to find a reputable and trustworthy way to handle the disposal.



                                                                                                                                        voLuMe 8    n   issue 1   n   FaLL 2007
       VOluMe 8 n issue 1
           FAll 2007


                                        lane gorman Trubitt, l.l.P.
                                                          Certified Public Accountants and Consultants



Big changes on the horizon—the Texas Margin Tax

o    n May 19, 2006, Gov. Rick
     Perry signed House Bill 3,
which converts the Texas Franchise
                                        ciation, business association, joint
                                        venture, joint stock company, hold-
                                        ing company or other legal entity.
Tax from a tax on the greater           Among the types of organizations
of net worth or net income paid         excluded from the definition are:
by corporations or limited liability    passive entities, certain real estate
companies into a margin tax on the      investment trusts and real estate
modified Texas revenues of busi-        mortgage investment conduits,
ness entities having any limited        sole proprietorships, certain grant-
liability form under state law.         or trusts and estates, and general
   The margin tax is essentially a      partnerships with direct ownership
gross receipts tax, which by its very   entirely composed of natural per-
nature is vastly different than the     sons. A passive entity is defined as
previous franchise tax. Whereas         a general or limited partnership or
the franchise tax was levied on tax-    a trust, other than a business trust.
able capital and earned surplus, the    In addition, to qualify as passive,
margin tax is calculated by taking      the entity’s federal gross income
gross revenue minus the greater of      must comprise at least 90 percent
cost of goods sold, compensation        of certain types of income, includ-
or 30 percent of gross revenue,         ing dividends, interest, distributive
to arrive at taxable margin. Then,      shares of partnership income, and
multi-state businesses must apply       gains from the sale of real prop-
a Texas apportionment factor to         erty, commodities and securities,
taxable margin to determine the         among others. Rental income is not
amount subject to tax. Next, the        qualifying passive income. Passive
taxable margin is multiplied by a       entity determination is done on an
tax rate of 1 percent for most busi-    annual basis.
nesses and 0.5 percent for retail and   —Jo Chadwick, CPA, Principal & Pat
                                        McCown, CPA, Principal                  taxable entities with total revenue   determining the amount of the
wholesale businesses. The business
                                                                                less than $400,000 to a 20 per-       business loss carryforwards of the
margin tax becomes effective Jan.
                                        The Legislature’s initial effort on     cent discount for taxable entities    taxable entity as required for taxable
1, 2008, with the first returns due
                                        House Bill 3 left a number of ques-     with total revenue greater than       reports originally due before Jan. 1,
May 15, 2008, reporting revenue
                                        tions that were rectified in the        $700,000 but less than $900,000;      2008, that were not exhausted on a
for the tax year ending 2007.
                                        2007 legislative session. On June                                             report originally due before Jan. 1,
   In addition to the major change                                                   An “E-Z computation and
                                        15, Governor Perry signed House                                               2008; (2) multiplying that amount
of the margin tax and comparing it                                              rate,” provides an optional alter-
                                        Bill 3928, the margin tax correction                                          by 2.25 percent for reports origi-
to the franchise tax, another adjust-                                           native method for calculating tax
                                        bill. Following is a summary of its                                           nally due on or after Jan. 1, 2008,
ment concerns types of entities                                                 for businesses with total revenue
                                        major provisions:                                                             and before Jan. 1, 2018; and 7.75
subject to the new tax. A taxable                                               of $10 million or less whereby a
                                                                                                                      percent for reports originally due
entity responsible for the margin           A discount for small busi-          qualified taxable entity calculates
                                                                                                                      on or after Jan. 1, 2018, and before
tax is defined as a partnership,        nesses with total revenue between       tax by multiplying appportioned
                                                                                                                      Sept. 1, 2027; and (3) multiplying
corporation, banking corporation,       $300,000 and $900,000 is cal-           total revenue by 0.575 percent;
                                                                                                                      the amount obtained under (2) by
savings and loan association, LLC,      culated on a sliding scale ranging
                                                                                    Calculation of the temporary      4.5 percent;
business trust, professional asso-      from an 80 percent discount for
                                                                                credit on taxable margin by (1)                         continued on page 12


The leAdinG edGe                                                                                                                                          
LGT, L.L.P.




   items to discuss with your lgT tax advisor
   individUalS                            Kiddie tax changes &                   itemized deductions                      Charitable contributions
   Check your portfolio and               Section 529 plan contributions         When considering whether to              Consider making your charitable
   estate plan                            Kiddie tax changes will take effect    accelerate or defer deductions, you      contributions at the end of the year.
   Check to see if you should re-bal-     in 2008, applying the parents’         should be aware of your adjusted         This will give you use of the money
   ance your portfolio before year’s      higher rate to dependents younger      gross income, as your ability to         during the year and simultaneously
   end, keeping an appropriate bal-       than 19 and dependent full-time        maximize itemized deductions is          permit you to claim a deduction
   ance between growth and income         students younger than 24. If your      often tied to AGI.                       for that year. You can use a credit
   assets, limiting risk according to     child is between the ages of 18           Deduction planning is also            card to charge donations in 2007
   your tolerance. Have some invest-      and 23 by the end of this year, you    affected by the standard deduction.      even though you will not pay the
   ments outpaced others such that        may want to sell some investments      For 2007 returns, the standard           bill until 2008 A mere pledge to
   you should trim positions? Have        to take advantage of the 5 percent     deduction is $10,700 for married         make a donation is not deductible,
   any decreased in value below what      long-term capital gains rate and       taxpayers filing jointly, $5,350 for     however, unless it is paid by the
   you paid for them, such that you       avoid ordinary and short-term tax      single taxpayers, $7,850 for heads       end of the year.
   could sell them and offset other       rates on future income. Another        of households, and $5,350 for               To avoid capital gains, you may
   gains?                                 option is to gift (up to $12,000       married taxpayers filing separately.     want to consider giving appreci-
     Is your estate planning strat-       without incurring gift tax) long-      If your itemized deductions are          ated property to charity, such as
   egy appropriate? Do you have a         term appreciated assets to the child   relatively constant and are close to     publicly traded securities. Note,
   will, durable power of attorney and    who then sells them, capitalizing      the standard deduction amount,           however, for claimed donations of
   appropriate health care directives     on the 5 percent rate.                 you will obtain little or no ben-        cars, boats and airplanes of more
   in place? Have you updated those          The kiddie tax changes have         efit from itemizing your deduc-          than $500, the amount available
   and retirement plan documents to       made IRC section 529 plans more        tions each year. But simply taking       as a deduction will significantly
   cover the birth of a child, marriage   attractive than ever due to the        the standard deduction each year         depend on what the charity does
   or divorce, or a change in your        tax-free nature of the withdrawals.    means you lose the benefit of your       with the donated property, not just
   business succession plan?              Speaking of which, have you made       itemized deductions. To maximize         the fair market value of the donat-
                                          your 2007 contributions (up to         the benefits of both the standard        ed property. If the organization
                                          $12,000 for each donee without         deduction and itemized deduc-            sells the property without any sig-
                                          incurring gift tax) to such plans      tions, consider adjusting the tim-       nificant intervening use or material
                                          for your children and/or grand-        ing of your deductible expenses so       improvement to the property, the
                                          children?                              that they are higher in one year and     amount of the charitable contribu-
                                                                                 lower in the following year.             tion deduction cannot exceed the
                                                                                                                          gross proceeds received from the
                                                                                 Medical expenses                         sale.
                                                                                 Medical expenses, including
                                                                                 amounts paid as health insurance         Tax monster—
                                                                                 premiums, are deductible only to         alternative Minimum Tax
                                                                                 the extent that they exceed 7.5          There is no doubt the Alternative
                                                                                 percent of AGI. Consider bunching        Minimum Tax can wreak havoc
                                                                                 medical expenses into years when         with your tax planning. Originally,
                                                                                 your AGI is lower.                       AMT was designed to ensure that
                                                                                                                          high income earners did not use
                                                                                 State taxes                              tax shelters to pay little or no
                                                                                                                          income tax. Today AMT is affecting
                                                                                 If you anticipate a state income tax
                                                                                                                          more and more taxpayers largely
                                                                                 liability for 2007 and plan to make
                                                                                                                          because it has not been indexed for
                                                                                 an estimated payment, consider
                                                                                                                          inflation.
                                                                                 making the payment before the
                                                                                                                             The computation for AMT either
                                                                                 end of 2007. Note that in 2007
                                                                                                                          lessens or completely eliminates
                                                                                 you can choose to deduct as an
                                                                                                                          the value of many items such as
                                                                                 itemized deduction state and local
                                                                                                                          state income taxes, property taxes,
                                                                                 sales taxes instead of state and local
                                                                                                                          miscellaneous itemized deduc-
                                                                                 income taxes.
                                                                                                                          tions and personal exemptions that
                                                                                                                          reduce taxable income under regu-

   10                                                                                                                         VOluMe 8   n   issue 1   n   FAll 2007
                                                                                                                                              LGT, L.L.P.




TO MAXiMiZe The beneFiTs OF bOTh The
sTAndARd deduCTiOn And iTeMiZed
deduCTiOns, COnsideR AdJusTinG The
TiMinG OF YOuR deduCTible eXPenses


lar rules. It is a separate income tax   (3) spreading the exercise of stock
computation. The final income tax        options over multiple years, (4)
owed is the higher amount com-           redeeming savings bonds or CDs
puted either under the AMT calcu-        before year end or (5) selling assets
lation or under normal rules.            using an installment sale, postpon-
   In 2006, the AMT exemption            ing gain to a later year.
amounts were $42,500 for sin-               Avoid investing in “private activ-
gle individuals and $62,550 for          ity” tax-exempt bonds: The interest
married couples filing jointly. For      earned on “private activity” tax-       year, your best bet is to maintain
2007, the exemption amounts are          exempt bonds (such as a bond            this stability. If your deductions
considerably less: $33,750 for           that funds constructing a football      are not so evenly spaced and you
single individuals and $45,000           stadium) is tax-free but not tax        tend to have great fluctuations in      ited IRA. Also, IRA owners can
for married couples filing jointly.      exempt if you are subject to the        income from year to year, you may       make a one-time tax-free transfer
Congress may extend the higher           AMT. However, interest on “public       be able to shift some AMT-trig-         from the IRA to a health savings
2006 amounts into 2007. If so, it        purpose” municipal bonds (bonds         gering items from an AMT year to        account (HSA).
will likely happen later this year.      used to finance capital projects,       a non-AMT year, so as to reduce            The 401(k)/403(b) maximum
   To minimize risk that the AMT         such as school buildings) is not        your liability in a non-AMT year        contribution for 2007 is $15,500,
poses to you in 2007, plan now to        subject to the AMT. Naturally, you      almost to the point at which you        plus a $5,000 catch up allowed for
deal not only with the current law       will want to weigh an investment’s      would become subject to the AMT.        employees age 50 or older by year
but also with changes in the law         return versus the tax savings prior     Your tax professional can tell you      end (catch up is not applicable
that are likely to come this year. If    to your investing decision.             whether this might be possible in       to a SIMPLE 401(k) or SIMPLE
you anticipate an AMT problem,              Use the new “refundable AMT          your individual situation.              IRA). Traditional IRA and individ-
consider the following planning          credit”: This credit was enacted in                                             ual Roth contributions are $4,000
points.                                  2006 and is targeted to help those      Retirement planning                     with a $1,000 additional catch up
                                         who incurred huge amounts of            Individuals over 70 1/2 can have        for those over 49. Don’t forget, if
Timing income and expenses               AMT on ISOs during the tech stock       up to $100,000 transferred from an      you don’t qualify for a Roth contri-
                                         boom-and-bust of the early 2000s.       IRA directly to a section 501(c)(3)     bution because of AGI limits, you
Since a number of otherwise
                                         This credit can only be claimed         public charity through the end of       can make a non-deductible con-
deductible expenses do not reduce
                                         for AMT paid for 2003 or earlier.       2007—be sure to start early if you      tribution to a traditional IRA and
AMT income, timing strategies
                                         Consult with an expert as there are     plan to do this to ensure enough        then rollover the account in 2010
that defer such expenses from a
                                         limitations.                            time to complete the transfer by        when the AGI limitations on Roth
year when AMT does apply to
                                                                                 Dec. 31, 2007. Required minimum         accounts disappears for two years.
a potential non-AMT year could
result in tax savings. Examples to       Plan investment expenses                distributions can be used to fund
decrease your “non-AMT” deduc-           Investment expenses are a miscel-       the charitable contribution, there-     BUSineSSeS
tions and increase your income           laneous expense for regular tax         by avoiding income tax on that          Year-end tax planning should
would include (1) paying your            purposes but not deductible under       income (if the 2007 RMD hasn’t          always start with having a good idea
property taxes in January instead        AMT rules. Consider delaying pay-       been distributed yet).                  of your business’s financial posi-
of December, (2) paying your             ment until after year end.                 A new law allows non-spouse          tion. You may also want to get an
employee business expenses, union           If your AMT liability and your       beneficiaries the ability to rollover   idea of your personal tax situation,
dues, investment expenses in 2007,       regular tax liability tend to be        inherited retirement benefits after     particularly when your business is
                                         approximately equal from year to        the participant’s death to an inher-

The leAdinG edGe                                                                                                                                          11
LGT, L.L.P.



         items to discuss with           a flow through entity (S corpora-        the current year. For 2007, up to       be set up as late as the due date of
                                         tion, partnership and some limited       $125,000 of eligible property may       your tax return, including exten-
           your lgT tax advisor          liability companies), since your         be expensed rather than depreci-        sions. Employers can now offer
                continued from page 11   business’s taxable income or loss        ated over time. The expense is          Roth 401(k) plans, with no limita-
                                         will flow through to your personal       phased out as qualified property        tions on income, so this may be
                                         tax return. You can then determine       placed in service during the year       attractive to higher compensated
                                         what tax planning opportunities          exceeds $500,000. Generally, eli-       employees whose Roth contribu-
                                         will benefit both you and your           gible property is new or used busi-     tions would be phased out other-
                                         business. We have outlined a few         ness personal property acquired         wise (AGI greater than $114,000
                                         here for your consideration:             by purchase for use in the active       if single and $166,000 if married
                                                                                  conduct of a trade or business. It      filing joint).
                                         Basis in S corporations,                 also includes off the shelf computer        The Pension Protection Act of
                                         partnerships and some limited            software and some vehicles (sub-        2006 is a massive tax bill over-
                                         liability companies                      ject to limitations). The Section       hauling the funding and disclosure
                                                                                  179 expense deduction cannot cre-       of rules for defined benefit plans,
                                         Be sure you have sufficient basis in
                                                                                  ate a taxable loss.                     covering conversion of pension
                                         any flow through entities to ensure
                                                                                                                          plans to cash balance plans, liber-
                                         that you will be able to utilize any
                                                                                  Business retirement plans               alizing payout and rollover rules
                                         losses flowing through to you from
                                                                                                                          and changing many other provi-
                                         your business.                           Make sure you have the best avail-
                                                                                                                          sions regarding pension plans and
                                                                                  able retirement plans for your com-
                                                                                                                          their beneficiaries. Be sure your
                                         Year-end bonus/deferral of               pany well in advance of its fiscal
                                                                                                                          plan administrator is aware of the
                                         year-end payroll                         year end to maximize owner con-
                                                                                                                          changes, and that required amend-
                                                                                  tributions and increase employee
                                         C corporations can pay year-end                                                  ments are made to your plan.
                                                                                  participation. Make a tax-deduct-
                                         bonuses to reduce taxable income.                                                    There are many other tax plan-
                                                                                  ible contribution to an employer-
                                         If a C corporation has a taxable                                                 ning opportunities available, and
                                                                                  sponsored retirement plan. 401(k)
                                         loss, deferring year-end payroll                                                 analysis of your unique circum-
                                                                                  plans and Keogh plans must be
                                         may reduce recipients’ current year                                              stances will help determine the
                                                                                  set up by year end. Contributions
                                         personal tax liability.                                                          best course of action for you and
                                                                                  to those plans and Simplified
                                                                                                                          your company. e
                                                                                  Employee Pension (SEP) plans can
                                         Section 179 expensing for                be made up until the due date of        LGT Tax Advisors Reneé Baugh, CPA,
                                         certain assets                           your business tax return (includ-       Principal; Jerri Hammer, CPA, Senior
                                         Consider making planned future           ing extensions) regardless of your      Manager; Teresa Ovesen, CPA, Manager;
                                         business equipment purchases in          accounting method. SEP plans can        and Matt Peck, CPA, Senior Manager,
                                                                                                                          authored this article.




           Big changes on the                 An additional compensation               Inclusion of a limited liability        Inclusion of the net distribu-
           horizon—the Texas             deduction for small employers who        partnership as a taxable entity sub-    tive income from a limited lia-
                                         initiate health care coverage equal to   ject to the business margin tax;        bility company treated as a sole
                   Margin Tax            50 percent of costs for the first year                                           proprietorship for federal income
                 continued from page 9                                                Texclusion of nonprofit self-
                                         of coverage and 25 percent of costs                                              tax purposes as “wages and cash
                                                                                  insurance trusts, trusts qualified
                                         for the second year of coverage;                                                 compensation” if the person receiv-
                                                                                  under IRC §401(a), and trusts
                                                                                                                          ing the distribution is a natural
                                             Inclusion of gross rental income     or entities exempt under IRC
                                                                                                                          person;
                                         of taxable partnerships instead of       §501(c)(9) from the definition of
                                         net rental income when determin-         “taxable entity”;                            Taxpayers can change their
                                         ing total revenue;                                                               method of calculating taxable mar-
                                                                                       Joint and several liability of
                                                                                                                          gin from year to year, e.g. compen-
                                              Reduction of the amount of          each member of a combined group
                                                                                                                          sation, cost of goods sold, or the EZ
                                         control required for inclusion of a      for the tax of the combined group;
                                                                                                                          method. e
                                         related entity in a combined group
                                         from 80 percent to more than 50
                                         percent;



   1                                                                                                                         VOluMe 8   n   issue 1   n   FAll 2007
                                                                                                                                                 TAX



Business across state lines—
the tax implications
By Mary F. Bernard, CPa
Kahn, Litwin, Renza, and Co., Ltd.



W      hen	your	business	crosses	state	lines,	what	
       tax	issues	should	you	address?	Will	you	be	
subject	to	income,	franchise,	business	privilege	
or	gross	receipts	taxes?	When	does	your	business	
activity	become	more	than	solicitation	of	sales?	
These	are	just	a	few	of	the	concerns	of	a	multi-
state	business.	
   Whether	 a	 state	 has	 the	 right	 to	 tax	 the	
income	 of	 a	 business	 incorporated	 in	 another	
state	 depends	 on	 the	 relationship	 between	 the	
state	 and	 the	 business	 entity.	 States	 do	 not	
impose	 taxes	 based	 on	 any	 standardized	 tax	
system.	The	amount	of	activity	or	connection	to	
a	state	required	to	create	nexus,	or	the	right	to	
tax	an	entity,	varies	from	state	to	state.

Nexus
Nexus	 describes	 the	 amount	 and	 degree	 of	
business	 activity	 that	 must	 be	 present	 before	 a	        Solicitation or beyond?                                         These	 activities	 were	 all	 considered	 to	 be	
                                                                                                                            connected	to	the	process	of	solicitation	of	sales.
state	can	tax	an	entity’s	income.	If	a	taxpayer	has	           How	do	you	determine	if	your	business	activities	
                                                                                                                               On	 the	 other	 hand,	 the	 following	 activities	
nexus	 in	 a	 particular	 state,	 the	 taxpayer	 must	         are	 strictly	 solicitation	 of	 sales	 or	 if	 you	 have	
                                                                                                                            were	considered	to	exceed	the	mere	solicitation	
pay	 and	 collect/remit	 taxes	 in	 that	 state.	 There	       stepped	beyond	the	protected	activities	allowed?	
                                                                                                                            of	 sales	 and	 could	 subject	 the	 taxpayer	 to	
must	 be	 at	 least	 a	 “definite	 link	 or	 minimal	          As	“solicitation”	is	not	defined	in	the	law,	judicial	
                                                                                                                            income	tax	within	the	jurisdiction:
connection”	before	a	state	can	impose	an	income	               interpretations	provide	guidance	in	this	area.	In	
                                                                                                                            •	 maintaining	an	office	within	state,
tax	on	a	taxpayer.	For	income	tax	standards,	the	              Wisconsin	 Department	 of	 Revenue	 vs.	 William	
                                                                                                                            •	 replacing	spoiled	products,
mere	 presence	 of	 a	 warm	 body	 within	 a	 state	           Wrigley,	Jr.,	the	court	held	that	the	“solicitation”	
                                                                                                                            •	 providing	technical	assistance,
may	not	be	sufficient	to	establish	nexus.	There	               of	 orders	 includes	 “any	 explicit	 verbal	 request	
                                                                                                                            •	 repairing	products,
must	be	some	type	of	distinct	business	activity	               for	 orders	 and	 any	 speech	 or	 conduct	 that	
                                                                                                                            •	 direct	sales	of	products.	
exceeding	 solicitation	 of	 sales.	 The	 amount	 of	          implicitly	 invites	 an	 order.”	 The	 clear	 line	 is	
                                                                                                                               It	is	important	to	note	that	business	activities	
activity	or	connection	necessary	to	create	nexus	              the	 one	 between	 those	 activities	 that	 serve	 no	
                                                                                                                            other	than	solicitation	of	sales	may	subject	you	
is	 usually	 defined	 by	 state	 statute	 or	 case	 law	       independent	business	function	apart	from	their	
                                                                                                                            to	 income	 tax	 in	 some	 states.	 These	 activities	
and/or	regulation	within	each	state.                           connection	to	the	soliciting	of	orders	and	those	
                                                                                                                            include	 attendance	 at	 trade	 shows,	 having	
    Generally,	 nexus	 for	 income	 tax	 purposes	 is	         that	the	company	would	have	reason	to	engage	
                                                                                                                            inventory	 on	 consignment	 or	 stored	 in	 public	
created	if	a	legal	entity:                                     in	 anyway	 but	 chooses	 to	 perform	 through	 its	
                                                                                                                            warehouses,	 licensing	 intangibles,	 financing	
•	 derives	income	from	sources	within	the	                     in-state	sales	force.
                                                                                                                            activities,	installations,	and	training.	All	of	these	
     state,                                                       The	 court	 determined	 that	 the	 following	
                                                                                                                            activities	 are	 considered	 by	 some	 states	 to	 be	
•	 owns	or	leases	property	in	the	state,                       activities,	 among	 others,	 were	 permitted	 and	
                                                                                                                            sufficient	to	impose	income	tax.	
•	 employs	personnel	in	the	state	in	activities	               would	not	subject	the	taxpayer	to	income	tax	in	
                                                                                                                               With	 states	 becoming	 more	 aggressive	 in	
     that	exceed	“mere	solicitation”	or                        a	jurisdiction:
                                                                                                                            identifying	business	activities	within	their	state,	it	
•	 has	capital	or	property	in	the	state.                       •	 provision	of	company	cars,
                                                                                                                            might	be	a	good	idea	to	determine	the	nature	and	
    States	also	are	prohibited	from	imposing	a	tax	            •	 provision	of	stock	of	free	samples,
                                                                                                                            extent	of	your	state	tax	filing	implications	sooner,	
when	an	entity’s	only	connection	with	the	state	               •	 recruitment	or	training	of	sales	
                                                                                                                            rather	than	later.	Once	a	state	issues	you	a	nexus	
is	 the	 solicitation	 of	 orders	 for	 sales	 of	 tangible	       representative,
                                                                                                                            questionnaire,	 your	 options	 become	 limited.	 A	
personal	property,	and	such	orders	are	accepted	               •	 setting	up	display	packs	and	assisting	with	
                                                                                                                            voluntary	 disclosure	 agreement	 with	 a	 state	 can	
and	shipped	or	delivered	from	outside	the	state.	                  retail	display,
                                                                                                                            bring	you	into	compliance	for	income	and	sales	
However,	 this	 does	 not	 offer	 any	 protection	             •	 use	of	hotels	or	homes	for	sales	meetings,
                                                                                                                            tax	purposes	with	a	limited	look-back	period	and	
from	sales	tax,	franchise	tax,	gross	revenue	tax,	             •	 intervention	with	credit	disputes,
                                                                                                                            often	eliminate	penalties	and	sometimes	interest.	
business	 opportunity	 tax,	 or	 single	 business	             •	 maintenance	of	non-reimbursed	home	office	
                                                                                                                            Being	proactive	can	save	you	money.	e
taxes	that	exist	in	some	states.	                                  by	in-state	employee.



The Leading edge                                                                                                                                                              1
            strategy




thank clients, set company apart
and make lasting impression
To	send	or	not	to	send.                                    Family	 Sunshine	 Center	 work	 with	 the	 local	                She	opted	to	“celebrate”	with	a	Chinese	New	
   Based	 on	 the	 mail	 each	 December,	 more	            mall	 to	 host	 a	 community	 event	 in	 which	                Year	 card—complete	 with	 red	 envelope	 and	
businesses	continue	to	say	“send”	about	holiday	           children	 age	 12	 and	 younger	 are	 invited	 to	             chocolate	coins	for	luck.	This	year,	Coplick	says,	
cards.	 The	 reasons	 behind	 the	 correspondence	         create	cover	options	for	the	holiday	card.                     she	 will	 send	 “birthday	 wishes”	 cards	 because	
frequently	 are	 to	 say	 thanks	 and	 to	 serve	 as	 a	      “We	 have	 volunteers	 help,	 and	 we	 provide	             her	firm	is	turning	5.
reminder	about	your	company.                               balloons	for	the	kids.	It’s	a	positive	event	for	the	
   “I	see	companies	make	huge	mistakes	on	how	             Family	Sunshine	Center	and	Wilson	Price,”	says	                spider in red hat
they	approach	holiday	cards,”	says	Thom	Singer,	           Marketing	Director	Belinda	Ressler.	Wilson	Price	
                                                                                                                          Holmes	 Pest	 Control	 in	 Tennessee	 found	
author	of	“The	ABCs	of	Networking”	and	“Some	              buys	 the	 crayons	 and	 paper—an	 inexpensive	
                                                                                                                          customizing	 their	 holiday	 cards	 as	 the	 way	 to	
Assembly	 Required:	 How	 to	 Make,	 Grow	 and	            investment.
                                                                                                                          stand	out.	“It	is	important	to	not	only	make	the	
Keep	Your	Business	Relationships.”                            Plus,	Wilson	Price’s	name	is	publicized	when	
                                                                                                                          receptionist	smile	and	nod	but	for	the	CEO	or	
   “Since	 everyone	 sends	 these	 cards	 at	 the	         the	 mall	 promotes	 the	 event	 and	 local	 media	
                                                                                                                          business	 owner	 to	 really	 get	 a	 kick	 out	 of	 our	
holidays,	 your	 clients	 and	 other	 business	            frequently	cover	the	event	as	well.	
                                                                                                                          cards,”	says	Genma	Stringer	Holmes.
contacts	 are	 bombarded	 with	 cards,”	 Singer	              She	says	a	party	is	held	at	the	office	to	vote	on	
                                                                                                                             Several	summers	ago,	a	brainstorming	session	
says.	 “While	 some	 may	 feel	 it	 is	 important,	 in	    the	best	holiday	picture	to	use	on	the	card.	The	
                                                                                                                          resulted	 in	 a	 card	 eventually	 nominated	 for	
which	case	they	should	continue	to	send	them,	             winner	receives	a	$500	savings	bond.
                                                                                                                          advertising	 awards.	 The	 card’s	 cover	 included	
they	 must	 realize	 that	 this	 gesture	 does	 not	          Ressler	 says	 in	 addition	 to	 the	 publicity,	
                                                                                                                          a	silver	web	with	a	spider	in	a	red	hat	hanging	
make	them	stand	out.”                                      community	involvement	and	client	recognition,	
                                                                                                                          on	 it.	 Inside,	 it	 said	 “Silver	 webs,	 silver	 webs,	
                                                           the	“Kids	Helping	Kids”	card	has	another	benefit.	
                                                                                                                          soon	it	will	be	…	Thinking	of	you	at	this	time	
design contest                                             “There’s	not	a	debate	now	about	what	to	do	at	
                                                                                                                          of	year.”
                                                           the	holidays,”	she	says.
Wilson	 Price,	 a	 Leading	 Edge	 Alliance	 firm,	                                                                           Holmes	 says	 that	 the	 card	 jump-started	
faced	 the	 challenge	 of	 sending	 out	 holiday	                                                                         everything.	 “We	 then	 started	 sending	 cards	 at	
cards	 consistently	 among	 its	 shareholders	 as	         forget december                                                Halloween,”	she	explains.	“Now	everyone	starts	
well	as	giving	gifts	that	could	be	expensive	and	          A	 few	 years	 ago,	 experts	 suggested	 sending	              asking	in	August	about	our	holiday	cards.”
sometimes	end	up	causing	hurt	feelings.                    Thanksgiving	 cards	 to	 stand	 out.	 That	 trend	
   Now,	 “Wilson	 Price	 Presents	 Kids	 Helping	          is	 being	 embraced	 by	 more	 companies.	 Singer	             shake it up
Kids”	 is	 an	 annual	 program	 that	 includes	 the	       says	 he	 got	 six	 such	 cards	 in	 2006.	 “Still,	 it	 is	
                                                                                                                          Last	 year,	 Advertising	 Ventures	 created	 the	
creation	 of	 the	 Wilson	 Price	 holiday	 card	 and	      easier	 to	 stand	 out	 as	 one	 of	 six	 than	 one	 of	 a	
                                                                                                                          “Giving	Game,”	an	online	snowglobe	that	shook	
a	 donation	 to	 support	 the	 Family	 Sunshine	           hundred.”
                                                                                                                          up	a	charitable	gift.	The	Rhode	Island	company’s	
Center.	 Each	 August,	 Wilson	 Price	 and	 the	               He	also	receives	a	St.	Patrick’s	Day	card	from	
                                                                                                                          friends	 and	 clients	 received	 an	 e-card	 letting	
                                                           a	colleague	who	is	of	Irish	descent.	“It	is	unique	
                                                                                                                          them	know	they	could	participate	in	Advertising	
                                                           and	 the	 only	 St.	 Patty’s	 Day	 card	 I	 get,”	 Singer	
                                                                                                                          Ventures’	 long	 tradition	 of	 donating	 gifts	 to	
                                                           notes.
                                                                                                                          charities	in	their	honor.
                                                               Singer’s	 colleague	 is	 doing	 it	 right.	 “Cards	
                                                                                                                              Clients	clicked	on	a	link	that	took	them	to	an	
                                                           should	 reflect	 their	 own	 business	 personality	
                                                                                                                          electronic	 snowglobe—after	 clicking	 “shake,”	
                                                           in	terms	of	the	holidays,”	says	David	Brimm	on	
                                                                                                                          the	 snowglobe	 came	 up	 with	 a	 visual	 of	 a	
                                                           behalf	 of	 Quill,	 an	 office	 supply	 and	 printing	
                                                                                                                          charitable	 gift	 with	 a	 statement	 about	 the	 gift	
                                                           company,	which	has	been	in	the	custom	holiday	
                                                                                                                          such	as	“donate	a	Hasbro	toy	to	family	services.”	
                                                           card	 business	 for	 51	 years.	 “The	 cards	 are	
                                                                                                                          If	 the	 client	 liked	 the	 gift,	 she	 or	 he	 clicked	
                                                           designed	 to	 be	 unique	 and	 specifically	 for	 the	
                                                                                                                          “donate.”	 If	 a	 different	 gift	 was	 preferred,	 the	
                                                           business	 professional	 so	 that	 the	 cards	 stand	
                                                                                                                          client	could	click	“shake”	and	the	process	would	
                                                           out,”	he	says.
                                                                                                                          begin	again.
                                                               Colleen	Coplick	of	Type	A	Public	Relations	in	
                                                                                                                              The	 game	 not	 only	 offered	 an	 interactive	
                                                           Vancouver,	Canada,	says	she	tried	the	December	
                                                                                                                          way	to	thank	clients	and	get	them	involved	but	
                                                           holiday	card	for	a	couple	years.	“It	got	completely	
                                                                                                                          an	 opportunity	 to	 display	 the	 staff’s	 talents	 in	
                                                           complicated,	 time-consuming	 and	 one	 year,	 I	
                                                                                                                          creating	the	custom	e-card	and	game.
                                                           didn’t	even	manage	to	get	them	out	in	time,”	the	
                                                           small	business	owner	says.



14                                                                                                                                            voLuMe 8    n   issue 1   n   FaLL 2007
                                                                                                   nies are
                                                                                         if compa ing gifts or                      w much
                                                                                                 er                   at ing ho me
                                                                                          consid at ions, calcul tep. so
                                                                                                                          s
                                                                                          even don is an important d or donate
                                                                                                  ch                   en
                                                                                           for ea es prefer to sp f of each
                                                                                                                           l
                                                                                           business amount on beha or the amount
                                                                                            the same thers opt to tail
                                                                                                     o
                                                                                            cl ient— l ient.                                pany
                                                                                                                                  s his com
                                                                                             to each c               dD irect say           d on
                                                                                                            ntegratefI             ula baseform
                                                                                                         nsorte o               d uses a
                                                                                               Chris Co               cards an
                                                                                                          ents gift               gift.
                                                                                               gives cli                ine each                                nice
                                                                                                            o determ                                 e. It’s a
                                                                                                rev enue t                             er  employe
                                                                                                                             t $250 p                   ugh it’s
                                                                                                                  lients ge                  even tho          e with
                                                                                                 “The   bigger c          an rem  ember—           hing nic
                                                                                                            tha t they c                 o somet
                                                                                                  amount                       ey can d                $100 pe
                                                                                                                                                                 r
                                                                                                                     oney, th                nts get                  s
                                                                                                  not a   ton of m             sm aller clie           lly t ranslate
                                                                                                             xpla  ins. “The            by  but usua
                                                                                                   it,” he e                   oo shab                   gift.”
                                                                                                                    till not t              e a small
                                                                                                    emp  loyee—s          ht out  or mayb                             f
                                                                                                              inner nig                                      olume o
                                                                                                    into a d                                     on the v
                                                                                                                                      is based                   and we
                                                                                                                            amount                   out well
                                                                                                                 says the                 It works           translate
                                                                                                                                                                        to
                                                                                                     Consorte           dollars spent. “         actually
                                                                                                                                               s
                                                                                                      business
                                                                                                                 and                rous gift
                                                                                                                          ore gene                 r.”
                                                                                                       find th at the m         in the  next yea
                                                                                                                  re b usiness
                                                                                                        even mo



do good                                                   receive	a	card	from	the	charity	saying,	“a	generous	       should	 consider	 experience	 gifts—a	 catered	
                                                          donation	has	been	made	in	your	name.”                      breakfast	or	visit	from	a	chef	for	an	office	lunch,	
When	Ann	Taylor	of	Origin	Design	owned	her	                  She	 says	 clients	 appreciated	 the	 effort.	 One	     or	 perhaps	 doggy	 day	 care	 for	 the	 client	 who	
own	 PR	 firm,	 she	 used	 to	 send	 custom	 cards	       client	 even	 wrote	 a	 handwritten	 thank	 you	 to	       cares	passionately	about	her	dogs.
but	 eventually	 went	 the	 charitable	 route.	 “It	      Taylor	 for	 making	 the	 donation.	 “It’s	 not	 often	
just	felt	more	genuine,”	she	says.	“It	allowed	us	
to	 do	 something	 good,	 while	 also	 promoting	
                                                          that	 you	 receive	 a	 ‘thank	 you’	 for	 your	 ‘thank	    money, money, money
                                                          you,’”	Taylor	adds.
ourselves.	 If	 you	 only	 have	 so	 many	 dollars	 to	                                                              “I	 thought,	 ‘what	 would	 I	 want?’	 Money!”	 says	
spend,	 why	 not	 get	 the	 maximum	 good	 from	                                                                     Chris	Consorte	of	Integrated	Direct	in	New	York	
them?”
                                                          personal, unforgettable gifts                              City.	“So	now	we	give	our	clients	Visa	gift	cards	
   Taylor	matched	her	clients’	interests	with	the	        Collect	 all	 the	 information	 about	 your	 clients	      in	various	amounts.
donation.	For	example,	the	donation	on	behalf	            you’ve	gathered	through	your	interactions	over	               “We	do	this	for	all	our	clients—and	we	always	
of	a	real	estate	developer	went	to	the	local	parks.	      the	 year	 and	 create	 a	 highly	 personalized	 gift	     get	 a	 call	 thanking	 us	 and	 telling	 us	 how	 cool	
A	health	care	client’s	donation	would	go	to	the	          basket,	 says	 David	 Nour,	 managing	 partner	 of	        our	gift	is	and	looked	forward	to,”	he	says.	“One	
Make-A-Wish	Foundation.                                   the	Atlanta-based	Nour	Group.                              client	even	told	me	that	he	was	boarding	a	flight	
   Making	 a	 donation	 in	 an	 amount	 similar	 to	         For	 example,	 find	 an	 autographed	 baseball	         and	 forgot	 his	 ATM	 and	 credit	 card	 at	 home.	
what	she	would	have	spent	on	a	gift,	Taylor	says	         from	 a	 client’s	 favorite	 player,	 a	 mug	 from	        He	 happened	 to	 have	 our	 gift	 to	 take	 back	
her	clients	are	not	told	the	exact	amount.	They	          a	 favorite	 destination	 or	 a	 golf	 shirt	 from	        home—we	totally	came	to	his	rescue.	Now	that’s	
                                                          a	 favorite	 course.	 Nour	 says	 companies	 also	         a	win-win	if	I’ve	ever	heard	one.”	e



The Leading edge                                                                                                                                                             1
      BRIEFS




bits pieces
goveRnMenT oPens                                   susPiCion oF aBuse,                                         Lessons FRoM a
oPPoRTuniTies FoR                                  ConFusion suRRound                                          CondiMenT
sMaLL Businesses                                   FMLa aBsenCes                                               “You	want	ketchup?”
                                                                                                                  They	 throw	 the	 packets	 into	 your	 food	
New	regulations	requiring	“small	businesses”	      Misunderstandings	 about	 the	 Family	 and	
                                                                                                               bag	and	away	you	go.	But	those	little	pack-
with	federal	contracts	to	recertify	their	size	    Medical	 Leave	 Act	 often	 results	 in	 illegitimate	
                                                                                                               ets	have	created	a	buzz	in	the	complex	con-
likely	 will	 mean	 more	 opportunities	 for	      leave,	according	to	a	recent	report	by	the	Society	
                                                                                                               sumer	marketing	mix.	While	the	marketing	
small	businesses	interested	in	working	with	       for	Human	Resource	Management.
                                                                                                               budget	 for	 Heinz®	 is	 big,	 the	 ketchup	
the	U.S.	government.                                  Nearly	 40	 percent	 of	 human	 resource	 pro-
                                                                                                               maker	did	not	go	with	the	best	ad	agencies	
   “The	 Small	 Business	 Administration	 	 is	    fessionals	 expressed	 confusion	 over	 how	 to	
                                                                                                               in	the	country	for	its	next	commercial.	And	
making	 tremendous	 progress	 improving	           implement	 FMLA.	 Respondents	 reported	 more	
                                                                                                               its	“Top	This	TV	Challenge”	promotion	can	
federal	 contracting	 opportunities	 for	 small	   requests	to	take	FMLA	leave	in	the	last	five	years	
                                                                                                               help	businesses	with	marketing	budgets	of	
businesses,”	 agency	 administrator	 Steven	       as	 compared	 to	 10	 years	 ago,	 particularly	 for	
                                                                                                               all	sizes	be	inspired.
Preston	says.                                      episodic	 conditions	 such	 as	 ongoing	 injuries,	
                                                                                                                  Last	 April,	 Heinz	 went	 to	 the	 American	
   Small	 business	 contracts	 originally	 were	   illnesses	and	non-life-threatening	conditions.
                                                                                                               public	 to	 create	 its	 commercials.	 It	 invited	
awarded	for	up	to	20	years	even	if	the	busi-          Many	 HR	 professionals	 noted	 in	 the	 study	
                                                                                                               fans	of	the	condiment	to	upload	30-second	
ness’	size	changed	during	that	time,	accord-       that	they	were	suspicious	of	abuse	based	on	the	
                                                                                                               spots	to	a	specially	created	site,	TopThisTV.
ing	 to	 the	 Small	 Business	 Administration.	    timing	 of	 FMLA	 leave	 requests	 around	 week-
                                                                                                               com	 by	 early	 August.	 In	 addition	 to	 free	
By	 mandating	 recertification,	 the	 govern-      ends,	holidays	and	pleasant	weather.
                                                                                                               media,	Heinz	used	its	own	product	to	pro-
ment	 seeks	 to	 identify	 companies	 that	 no	       Among	the	other	SHRM	study	key	findings:
                                                                                                               mote	 the	 contest,	 printing	 such	 phrases	 as	
longer	meet	the	“small	business”	definition.
                                                   •	 Of	the	leave	taken,	59	percent	was	for	medi-             “Starving	 for	 the	 Spotlight?”	 and	 “Want	 a	
   Although	 these	 businesses	 will	 not	 lose	
                                                      cal	reasons,	38	percent	for	family-related	              Taste	of	Showbiz?”	on	more	than	200	mil-
their	contracts,	the	federal	government	can	
                                                      reasons,	and	38	percent	for	an	employee’s	               lion	packets	and	57	million	bottles.
no	longer	count	them	as	“small”	contracts.	
                                                      episodic	condition.                                         People	wrote,	cast	and	shot	and	uploaded	
Thus,	federal	agencies	will	need	to	increase	
                                                   •	 Nine	of	10	organizations	assigned	other	                 more	than	4,000	commercials	by	the	dead-
their	efforts	to	contract	with	new	businesses	
                                                      employees	to	temporarily	handle	duties	of	               line—and	even	more	spent	hours	watching	
to	 meet	 their	 small	 business	 contracting	
                                                      the	employee	on	FMLA	leave.                              them,	according	to	Heinz.	The	top	15	com-
goals	of	23	percent	as	set	by	Congress.
                                                   •	 A	majority	of	respondents	said	FMLA	                     mercials	 as	 determined	 by	 Heinz	 judges	
For more information, visit www.sba.gov.              can	have	a	negative	impact	on	employee	                  were	 posted	 on	 the	 site	 for	 popular	 vote.	
                                                      absences,	employee	productivity	and	                     The	winning	one	will	receive	$57,000	and	
                                                      business	productivity.                                   air	on	national	TV	this	fall.
                                                   •	 Fifty-five	percent	of	surveyed	organizations	               The	 buzz	 created	 generated	 so	 much	
                                                      now	offer	sick	time	as	part	of	a	paid	time-              interest	 that	 Heinz	 already	 has	 announced	
                                                      off	plan	that	includes	vacation	and	personal	            “Top	 This	 Take	 Two”	 to	 be	 launched	 in	
                                                      days.	Thirty-seven	percent	offer	sick	time	as	           October.
                                                      a	separate	benefit.
                                                   For more information about the study, visit www.shrm.org.




1                                                                                                                           voLuMe 8   n   issue 1   n   FaLL 2007
sMaLL Business oWneRs                                                                                      Read a good BooK,
oPTiMisTiC aBouT gRoWTh                                                                                    Found a heLPFuL WeB
Although	almost	two-thirds	of	small	business	owners	say	the	overall	economy	will	grow	at	the	              siTe?
same	or	slower	rate,	they	expect	their	own	revenue	to	increase,	according	to	an	August	survey	
                                                                                                           We	want	to	hear	from	successful	business	lead-
by	Capital	One	&	BusinessWeek	Research	Services.
                                                                                                           ers,	 like	 yourself,	 what	 you’re	 reading—books,	
  So	how	will	they	make	that	growth	happen?	“Capital	remains	an	important	driver	of	small	
                                                                                                           magazines	 or	 on	 the	 Web.	 Where	 do	 you	 get	
business	growth,”	The	Capital	One	Small	Business	Study	states.	Small	businesses	say	additional	
                                                                                                           your	inspiration?	What	helps	you	develop	your	
capital	would	make	it	easier	to	grow	the	business.
                                                                                                           great	 ideas?	 What	 sources	 do	 you	 find	 invalu-
  About	half	of	small	business	owners	rely	on	their	personal	savings	to	fund	their	businesses,	
                                                                                                           able	to	your	business?	What	do	you	read	to	keep	
and	 only	 three	 of	 10	 tap	 into	 commercial	 banks,	 lenders	 or	 financial	 companies.	 Forty-four	
                                                                                                           your	sanity?
percent	 of	 small	 business	 respondents	 reported	 that	 they	 do	 not	 feel	 their	 banks	 value	 or	
                                                                                                              We’ll	share	your	suggestions	with	other	read-
appreciate	them.
                                                                                                           ers	of	The Leading Edge.	Send	your	ideas	to	ann@
  The	survey	included	representatives	from	603	small	businesses	from	more	than	40	services	
                                                                                                           wisegroup.com	 or	 your	 Leading	 Edge	 Alliance	
and	industries.	For	the	purposes	of	this	study,	small	was	defined	as	companies	with	fewer	than	
                                                                                                           firm	(contact	information	is	on	page	2).
10	employees.
  The	 survey	 also	 asked	 for	 small	 business	 executives,	 “How	 would	 you	 use	 $50,000	 to	
improve	your	business?”	Here	are	some	of	those	free-form	responses:

•	 Marketing,	advertising,	market	
                                                                                                           gLoBaL TRade daTa aT
   research                                                                                                youR FingeRTiPs
•	 Hire	an	outside	salesperson
•	 Increase	inventory.                                                                                     Businesses	 seeking	 entering	 or	 expanding	 in	
•	 Open	an	additional	location                                                                             the	 global	 market	 might	 benefit	 from	 visit-
•	 Travel	to	more	business	events                                                                          ing	 www.trade.gov—the	 International	 Trade	
•	 Expand	our	intellectual	                                                                                Administration	 of	 the	 U.S.	 Department	 of	
   property	protection                                                                                     Commerce.
•	 Hire	an	accountant	to	get	the	                                                                             The	 site	 contains	 a	 wealth	 of	 information	
   books	in	shape                                                                                          about	specific	countries	as	well	as	trade	in	gen-
                                                                                                           eral.	The	trade	administration	exists	to	strength-
The Capital One Small Business Knowledge                                                                   en	the	competitive	of	U.S.	industry.
Center includes the full details of this
                                                                                                              Trade.gov	 also	 has	 valuable	 links,	 including	
study and more research. It can be found
at http://knowledgecenter.businessweek.                                                                    the	TradeStats	Express™	national	trade	and	state	
com/smallbizconfidence.                                                                                    export	 data	 (tse.export.gov).	 Users	 can	 enter	
                                                                                                           specific	 parameters	 and	 uncover	 global	 patterns	
                                                                                                           of	U.S.	merchandise	by	product	and	market.
                                                                                                              Another	resource	links	businesses	to	the	U.S.	
                                                                                                           government	 export	 portal,	 export.gov,	 where	
                                                                                                           they	can	find	information	about	expanding	their	
                                                                                                           export	markets.




The Leading edge                                                                                                                                            1
            Q&A



In a Nutshell by Chris De Santis
ConsideRaTions iF an eMPLoyee is aBouT To JuMP shiP

Q: One of my best staff members told me                    opportunity?	 Does	 he	 or	 she	 know	 his	 or	 her	             As	 for	 the	 week	 off,	 focus	 on	 results	 and	
he is considering a competitor’s offer,                    future	 worth	 at	 the	 present	 employer?	 If	 not,	         have	clearly	executable	goals.	Work	to	set	clear	
including a 10 percent salary bump and                     why	not?	                                                     parameters	 as	 to	 when	 the	 work	 needs	 to	 be	
an extra week vacation. This person adds                      Let’s	return	to	the	systemic	issues.	Are	you	the	          delivered	 and	 to	 what	 level	 of	 quality.	 Allow	
more value than almost any other staff                     type	of	manager	who	creates	a	favorable	climate	              people	 who	 meet	 or	 exceed	 their	 goals	 before	
person. I really want to keep him and can                  in	which	to	work?	If	your	best	and	brightest	are	             the	 deadlines	 to	 bank	 the	 time	 saved	 or	 take	
afford it. However, how do I deal with                     willing	to	move	on	for	10	percent,	are	you	really	            some	 portion	 of	 it	 back	 as	 free-time.	 You	 get	
the other staff—I can’t afford to increase                 creating	the	kind	of	workplace	that	tethers	peo-              what	you	want	sooner	at	no	additional	charge	as	
everyone’s salaries or give more vacation?                 ple	to	the	organization?	The	larger	question	is:	             the	time	was	allocated	and	they	get	an	addition-
                                                           do	you	know	what	is	important	to	your	people	                 al	incentive	for	delivering	quality	work	before	a	
                                                           relative	 to	 making	 them	 both	 productive	 and	            deadline.	The	key	here	is	to	be	accurate	in	your	
                                                           happy	in	their	work?	If	you	cannot	answer	the	                assessment	 of	 what	 it	 actually	 takes	 to	 do	 the	
                                                           question	or	worse,	if	you	do	not	care	on	either	              work.	Secondly,	only	give	this	option	to	the	high	
                                                           or	both	counts,	then	you	will	forever	be	playing	             performers	who	have	demonstrated	their	ability	
                                                           a	numbers	game.	                                              and	commitment	to	the	organization.	
                                                              Having	said	that,	I	know	that	some	businesses	                My	last	point	on	the	topic	goes	back	to	you.	
                                                           only	want	bodies,	not	minds.	If	you	are	in	that	              To	a	great	extent,	you	are	the	main	reason	peo-
                                                           sort	 of	 business,	 I	 am	 not	 of	 a	 mind	 to	 help.	 I	   ple	stay	or	go.	Honestly	assess	“Am	I	somebody	
                                                           have	a	deep-seated	belief	that	the	whole	person	              I	would	really,	really	want	to	work	for?”	It’s	my	
                                                           should	be	engaged;	the	mind,	the	heart,	and	the	              hope	that	you	are.	e
                                                           body.	 There	 is	 dignity	 in	 all	 work	 and	 people	
                                                           who	perform	it	should	be	treated	well	and	with	               Do you have a workplace question you want answered? What
                                                           respect	regardless	of	the	status,	or	lack	thereof,	           do you want to know to make work a better place? Send your
                                                                                                                         questions to DeSantisCP@aol.com to get Chris DeSantis’
                                                           that	 the	 work	 entails.	 Create	 a	 work	 environ-          two cents as to what he thinks you might want to do.
                                                           ment	 that	 is	 unassailable	 by	 the	 competition,	
A:	While	I	realize	your	concern	begs	an	imme-              engaging	 the	 whole	 person	 and	 nurturing	 the	            Chris DeSantis uses his 20 years’ experience in training
diate	 reply,	 I	 ask	 that	 you	 consider	 the	 larger	   best	and	brightest.                                           and development as an independent consultant. He spe-
                                                              Back	 to	 your	 original	 concern—I	 have	 been	           cializes in the design and delivery of management and
picture.	 It	 would	 be	 better	 to	 deal	 with	 this	
                                                           preaching	 and	 you	 have	 a	 problem	 that	 needs	           organization development interventions. A presenter at
systematically	 rather	 than	 react	 to	 the	 incident	                                                                  Leading Edge Alliance seminars, DeSantis focuses his work
when	 a	 similar	 situation	 will	 certainly	 repeat.	     solving—here’s	a	fix	that	might	work.	Monetize	               on assisting individuals or groups in identifying obstacles
Dealing	only	with	the	incident	means	that	you	             the	person’s	contribution	relative	to	how	much	               to effectiveness and subsequently works with them to
will	be	doomed	to	deal	with	it	again	and	again.	           more	 he	 brings	 in	 or	 compare	 to	 colleagues’	           create user friendly solutions aligned with the company’s
                                                           results	and	reward	him	with	a	percentage	of	the	              strategic initiatives. He earned his undergraduate degree
There	will	always	be	incremental	offers	made	to	
                                                           difference.	Once	this	bar	is	set	you	will	then	be	            from the University of Notre Dame, an MBA from the
your	 most	 valuable	 employees,	 in	 this	 case	 10	                                                                    University of Denver and an MA in organizational develop-
percent	 plus	 a	 week’s	 vacation.	 Not	 knowing	         able	to	reward	anybody	who	rises	to	this	level	of	            ment from Loyola University.
what	the	employee	is	getting	paid	I	can’t	say	if	          performance	as	you	will	know	his	or	her	worth	
that’s	 expensive	 or	 cheap,	 but	 I	 do	 know	 as	 a	    to	the	company.	
problem,	this	isn’t	something	that	goes	away.
   My	 question	 to	 you	 is,	 if	 a	 competitor	 can	
buy	 away	 an	 experienced	 employee	 for	 merely	
10	percent	more	than	what	he	or	she	presently	
makes,	what	makes	your	work	environment	so	
unattractive?	In	addition,	you	are	talking	about	
a	 top	 performer,	 someone	 who	 should	 see	 a	
future	 at	 his	 workplace.	 If	 the	 employee	 has	 a	
shot	at	moving	up,	why	would	he	give	that	up	
for	a	few	bucks?	Moving	to	a	new	position	has	
a	whole	host	of	headaches.	So	what	gives?	One	
more	week	off	and	10	percent?	It’s	not	a	lot	in	
the	 larger	 scheme	 of	 things	 especially	 if	 this	
person	 sees	 future	 opportunities	 where	 he	 or	
she	 is	 presently	 working.	 Does	 this	 person	 see	

1                                                                                                                                            voLuMe 8    n   issue 1   n   FaLL 2007
The members of the Leading edge alliance                                  The Leading Edge Alliance is an international professional association
are leaders in many key markets, including:                               of independently owned accounting and consulting firms. The alliance enables
                                                                          member firms to access the resources of a multibillion-dollar global professional
alabama                  honolulu                  oregon                 services organization, providing business development, professional training
albania                  harrisburg, Pa            Panama
                                                                          and education, and peer-to-peer networking opportunities nationally and
atlanta                  hartford                  Paris
australia                hong Kong                 Puerto Rico            globally, around the corner and around the world.
austria                  houston                   Philadelphia
Bahrain                  hungary                   Phoenix                Members are top quality firms who are very successful, have deep client
Baltimore                india                     Pittsburgh             relationships, and strong ties to the community. The alliance provides members
Bangladesh               indiana                   Poland                 with an unbeatable combination: the comprehensive size and scope of a large
Belgium                  indonesia                 Providence
                                                                          multinational company while offering their clients the continuity, consistency
Bolivia                  iowa                      Richmond
Boston                   ireland                   Reno
                                                                          and quality of service of a local firm. Member firms have access to the best and
Brazil                   israel                    Romania                brightest team of business advisors—a peer-to-peer connection that provides
British virgin islands   italy                     Russian Federation     the right business solutions for clients.
Buffalo                  Jordan                    san Francisco
Bulgaria                 Knoxville                 saudi arabia
Cayman islands           Korea                     scotland
Chicago
Chile
                         Las vegas
                         London
                                                   seattle
                                                   senegal
                                                                          The Leading Edge offers:
China                    Los angeles               serbia                 • access to the best and brightest CPas and business advisors—a peer-to-peer
Cincinnati               Macedonia                 singapore
                                                                            connection that provides the right solutions for clients.
Cleveland                Madison, Wi               slovakia
Colombia                 Mauritius                 south Carolina
                                                                          • innovative, practice-proven strategies for improving performance in management,
Costa Rica               Mexico                    spain
Croatia                  Miami                     sweden
                                                                            business processes, finance, operations, information technology and marketing.
Cyprus                   Michigan                  switzerland
                                                                          • a leading knowledge resource for multi-disciplinary information and
dallas                   Minneapolis/st. Paul      The netherlands
dayton                   Moldova                   Tokyo                    industry-specific expertise responsive to clients’ unique needs.
denver                   Montenegro                Toronto
                                                                          • The strength and reputation to attract the highest quality team members.
ecuador                  Montreal                  Tucson
egypt                    nashville                 Tunisia
                                                                          • The alliance offers accounting and consulting services through a global network of
el salvador              nebraska                  Turkey
Fort Lauderdale          new orleans               ukraine
                                                                            firms with more than 7,500 professional staff in more than 300 cities.
ghana                    new Jersey                united arab emirates
                                                                          • The Leading edge alliance offers world-class business advisory expertise and
germany                  new york                  u.s. virgin islands
greece                   nicaragua                 venezuela                experience with innovation, progressiveness and quality.
guatemala                norway                    Washington, d.C.
honduras                 orange County, Ca         West virginia

                                                                          To find out more about The Leading edge alliance, visit
         Visit LeadingEdgeAlliance.com                                    www.Leadingedgealliance.com or contact Karen Kehl-Rose,
         for a detailed listing of member firms.                          president, at (630) 513-9814 or kkr@The-Lea.com.

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