Things are shaking

Thanks to Apple

I have to admit, I give people way more credit than they deserve. Especially big wig type people. At least until they show me otherwise. Then I’m death on them.

I’m constantly disappointed by the best attorneys in town, or the only CPA practice I had any respect for, or on and on and on. Competence is apparently relatively rare. Now comes a revelation from Deloitte, one of the big 4 auditing firms and one of the largest consulting firms in the world.

From the Deloitte Dbriefs comes this tidbit … “Tax executives face growing demands to transform their tax department’s capabilities, shift their focus, and add value.”

Let’s take them in reverse order.
“Add value” means saving taxes.
“Shift focus” to saving taxes.
“Transform the tax department” means quit just slapping numbers on paper and start saving taxes.

I thought the attitude that tax preparers did their job by slapping numbers on forms was limited to my competitors. I thought they were the only idiots in the world. But today it turns out that attitude infected the entire tax industry including the tax departments of the very largest companies in the world. You know … the household names. I used to work there; these people used to report to me; and that is something new.

This doesn’t speak well of our country. First of all, this isn’t brain surgery. (I’m assuming brain surgery is difficult, but who really knows?) And it’s not flying a jet plane (same deal). All it takes to save on taxes is take advantage of all the tax preferences and tax savings devices embedded in our complex tax code by the United States Congress. They’re not hidden. They’re right there in plain sight. Everyone knows they’re there, you know it and I know it, but the crazy thing is, everyone in the tax industry is too busy slapping numbers on tax returns to take the time to learn them and use them, Except us and Apple’s tax strategist and a few others.

To be fair, the tax strategists at Apple, Google, Amazon, GE & Caterpillar have all come to the public’s attention one way or the other for legally saving massive amounts on taxes. The only reason this has suddenly become a big deal is because every CEO in the country found out by watching TV that Apple cut $400 billion dollars out of their tax bill legally … completely legally. And they used that savings to fund their rocket to most valuable company in the world. That was the wake-up call. Must have been a big shock because they’re calling their tax people on the carpet.

If you have a few extra minutes, read the post about Apple’s tax strategy.

Quiz for the day … what fruit goes best with a ‘double Irish with a Dutch sandwich’?

I intend to put this term on the tongues of every businessman in the country. Spread it around.

Does this make sense?

Is there something wrong with this picture?

One out of six men in their most productive years (25 to 54) are not working. Our best and brightest are sitting in a wading pool in their front yard sucking down brews and working on their tan. They’ve given up ever getting a decent job. At the same time, illegals are swarming into the U.S, to take advantage of amnesty promised by the Republicans. Does this make sense?

Agriculture in the San Fernando Valley is being shut down to save a few fish, while cities, farms, businesses and families fall apart. Does this make sense?

Russia is using it’s gas pipeline to blackmail Europe while the Keystone pipeline that could set Europe free (and the U.S) is continually delayed. Does this make sense?

Journalists couldn’t think of a single instance in which America’s relationship with a foreign country had improved in the last five years. Does this make sense?

OK. I’m just wondering. Are we stuck in a time warp where nothing makes sense any more?

Graph (above) & article (below) from The Weekly Standard …

“Can the private sector innovate and create wealth faster than governments and central banks destroy it?”

Although it seems a perfectly obvious question to ask, it’s relatively startling to see it in black and white and to read it on the written page.

This is the battle we’re faced with. This is the battle we’ve been fighting ever since the 2008 decision to waste our money by bailing out GM, IAG and all the big banks instead of letting them take their lumps in the market place. Since then annual drollops of quantitative easing have added shame to suffering every year.

Today the national debt stands north of $17 trillion and we add to it daily. There is no opportunity to turn this around, it can’t be ignored and sooner or later … we will pay the piper. That will be a bloody day because government spending and pensions will come to an abrupt halt, And you know what that means … there’ll be no more low level government functionaries to insult you.

I don’t know about you, but when they shut the government down, I didn’t miss a damned thing.

A headline on Drudge (Washington Scrambles to Provide Food, Clothing to Illegals Streaming Across Border) and the linked-to article in Reuters highlights our government’s ‘drunken sailor’ spending proclivities. We are still throwing around money like it was made out of paper.

Article here …

(John Mauldin of Mauldin Economics asked this question at their 2014 Strategic Events conference.)

Looking At Every Angle

Looking At Every Angle
Most closely held businesses are unwilling to pay for anything but the bare minimum. An example is analytics. Despite the fact that analytics can deliver insights to your business that will drive profits higher, few closely held businesses are willing make the investment necessary.
That’s why the vast majority of closely held businesses will never leave a mark on the universe.
Contrast that to large publicly held businesses. It is not uncommon for publicly held companies to have consultants from two or three firms on their premises every single day of the year. They overspend on this. But they try to be sure they have considered every single angle.  That’s why they’re big and you’re not.
Ellis analytic accounting is not exorbitantly priced. It is well within reach for any closely help business.  
The downside is small, but the upside is large.

By the way, I’m also an anarchist.

From Vox Day, via Zero Hedge

“One need not be a socialist, or oppose capitalism, to oppose the income inequality that is the result of theft. With the assistance of the Federal Reserve and Congress, the banks have financially raped the American economy and the American people through fraud and political corruption. A reckoning is overdue. Everything that has been done in the last five years has been done in order to postpone it. And yet, a reckoning is coming nevertheless, because that which cannot continue will not continue. The rich simply cannot consume enough to substitute for more equitable consumption; how many cars can a man drive? In how many homes can a man dwell?”

<a href =””&gt; Vox Popoli

People are bitching about the income inequality between the richest 88 people in the world and the rest of us. But there are more important things out there we should be paying attention to. The worst thing about this kind of income inequality is the potential for creating a landed aristocracy. But the answer is an estate tax that prevents passing on enormous estates to heirs unhindered, or worse yet, parking them in dynasty trusts,. A few generations of heavy taxation and incompetent heirs would eliminate that wealth. You probably hate estate tax, but that is all that stands between us and a landed aristocracy. Is it really healthy to have families like the Kennedy’s and the Bush’s rise to the top of the food chain? Would it even be possible for another Lincoln to rise to the Presidency?

Kill those dynasty trusts.

Very rich people make a lot of money, but they don’t just take it away from us. We have to participate willingly for capitalism to work, and we do. After all, it’s the best system out there for delivering the goods we want for a price we can afford. The only alternative, and it’s not a very good one, is centralized planning.

The income inequality we can’t deal with so readily comes from other sources. The most egregious comes from the abuse of government and power … just because they can. In many countries, this one included, that is the big problem. People get rich just because they’re powerful enough to take it away from us. Our government first bled us dry in the name of social engineering, just because they could, just because we trusted them. Then when we were already bled dry, they drove us deeply into debt to raise the money to feed their magnificent machine, enriching themselves and their favored classes as they went. just because they could.

The only way to deal with that is political revolution. Perhaps there will never be enough opposition to put a stop to this kind of income inequality. Perhaps we can never recover. Perhaps the values we used to hold dear are gone forever. But perhaps someday people will begin rolling out the guillotines.

Just thinking.

News From Davos


From Bloomberg

Mergers and acquisitions are surging, with $130 billion in takeover offers already announced this year. And enterprises from Microsoft Corp. to Volkswagen AG are readying plans to step up capital spending after companies have squirreled away a record amount of cash to protect against a new financial crisis.

“The animal spirits are coming back,” said Mark Zandi, chief economist for New York-based Moody’s. “This is going to be a good year” for capital expenditures and hiring.

We’ll deal with animal spirits in the next post.  Sounds weird, but there’s a simple explanation. This post however is dedicated to why big companies see things differently than small companies and why they would take an expansive approach at exactly the time many prognosticators are projecting doom and destruction.

ELLIS Forecast

If you can survive 21st century chaos long enough to improve in every area you have compete control over, you’ll participate in the biggest, craziest boom ever. You don’t make the improvements, doom and destruction are waiting down the road. Our firm is forecasting an unusual future. On the one hand we are forecasting continued sluggishness for the overall economy. But on the other hand we are forecasting increasingly discriminating taste of most buyers. The ability to deal with this is what will separate sucesses from failures.

With two competitors on the same street in the same block of the same city with all the same outward appearances and the exact same pricing, why would one thrive and one face demise?

Because of their business model and their infrastructure …

Here’s the lay of the land …

@ Google & Wikipedia are the future of knowledge, not the university system.
@ Amazon & Apple are the future of business. They and Apple are busy spoiling your customers right now.
@ Apple is the future of innovation and customer loyalty.

With that competitive landscape staring you in the face, you have to adapt to survive. If you can’t compete on a level playing field with Amazon, your customers will be disappointed and you won’t survive. Amazon and Apple are making customers very particular.  Who on this earth has never purchased anything from at least one of these behemoths?

If you haven’t already experienced the rising expectations, you will soon.

That’s where ELLIS comes in.

We are specialists in helping small businesses over this hump. Our business model will improve your business in every area you have complete control over. Our infrastructure helps make your internal workings hum like a Stradivarius.

Of course, you’ll have to do you share, sales, marketing and product or service development. But we can provide the time for you to concentrate on theses essential areas that you may have never concentrated before.

In the final analysis, Ellis makes it possible for you to leave your mark on the universe.

Why Davos Companies are Different from your Business

The companies that participate at Davos are all the biggest and best in the world, They already have their business model and infrastructure in place. The writing has been on the wall for a long time. The issue is all the other businesses in the world, especially wholly owned business in the United States. I can’t speak for other countries, but I suspect it will not be unlike the U.S. in this respect.

Most wholly owned business don’t think it’s worth the money to pay for consulting or for being on the cutting edge. While most very large businesses pay to have the world’s biggest consulting firms in their place of business on a daily basis.=; often more than one at a time. Whether they take their consultants’ advice, they want them around. This is one of the reasons few small wholly owned businesses break free of the crowd. 99.99% remain small and wholly owned for their entire existence.

  • Infrastructure is key
  • Google is the future of knowledge
  • Amazon is the future of business
  • Apple is the future of community
  • Ellis is the future of professional services
  • the way Americans do business is changing
  • regulatory strangulation
  • talent drought
  • faster deliver
  • better service
  • more digital revolution
  • tax increases (never cuts) as we socialism a try
  • mind bogglingly complexity
  • economic turbulence as Pacific Rim raises
  • new and unexpected competition
  • … from new and unexpected sources
  • … often financed by government, ala Government Motors
  • and, last but not least …
  • greater opportunity for those who are ready

Are you ready?

Dream Job or Nightmare?

From the Wall Street Journal …

” In a U.S. economy struggling to create jobs, at least one field is booming: compliance. Hefty fines and other penalties have jolted companies, especially banks, into a compliance hiring spree, as governments at home and abroad tighten business laws and regulations and ramp up their enforcement activity. “

This is because government is turning to penalties as a likely source of increased revenues. And they’re coming at us from all directions – IRS, other federal agencies, states and various state agencies. Where it used to make some sense to pay the penalties when caught instead of incurring the cost to comply, that is rapidly changing.

Finding their previous approaches to raise taxes inadequate to fund their needs, governments across the nation are finding penalties a richer source of new funding. The IRS, which was attempting it increase funding by policing the tax preparation profession and going after schedule C filers and S corps have lately been turning their attention to penalties for mundane activities as a more lucrative funding source.

Watch out or you may get hammered with a completely unexpected and very hefty fine out of the clear blue sky … $55,000 on a W-2 issues, hundreds of thousands of dollars on a foreign asset filing irregularity, and penalties of $10.000 is not uncommon for non or late filing.

However, we have found that there is generally a legal way around these regulatory issues that business are being penalized to death over. We have been finding satisfactory solutions for clients on any number of non-tax regulations and potential penalties. It is a good idea to be proactive. Take action before they rope you in. Otherwise many of your options will fade away.