bizztrategy @ Ellis CPA

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Response to a potential client

Regarding the training

We are perfectly happy to provide the training. However, it is very hard to find competent accountants or bookkeepers. We have found it works best to have your staff work hand in hand with us. You will find there are fewer irregularities that way.  Somebody looking over their shoulder never hurts.

Describe your experience/expertise in working in the Oil/Gas industry. Please include any dealings with corporate taxes in your answer.

My oil & gas experience dates back to the seventies and the oil boom in the DJ basin. At that time I joined Arthur Andersen & Co., the biggest accounting firm in the world, until it ran into Enron and went under.  But when I was there they were the biggest and best in the world. Also they were prominent in the Oil and Gas industry with many notable clients, including regional companies King Resources, Colorado Interstate Gas, Mountain States Oil Tools, Inc. and other luminaries of that time. Today I still have clients throughout Colorado and other oil & gas producing states including North Dakota and Texas. Most of my clients today are service companies.  Some of them do very large volumes. Immediately before starting my practice, I was also CFO for Energy Minerals, a publically traded company with many Wyoming properties and a drilling unit as well.

Our lead tax person grew up in the oil patch. Her father has had a significant position with Williams for a number of years. She herself did work for a number of oil and gas based companies

Regarding tax …
We have a national reputation in income tax strategy. We make no bones about saying that 99% of closely held companies pay more tax than the law requires. The first thing we did with a large new oil and gas based client was to amend previous tax returns for a $100,000 refund. On the basis of that reputation we have built this firm from a small local firm to a national firm with clients in 46 or 47 states. We have done taxes for all of our oil and gas based clients for my entire career. When it comes to income tax, we don’t believe any firm in the country provides more effective guidance or tax work.

We are perfectly competent to serve your needs.

What are your capabilities as far as Corporate Review? Describe your experience and timetable for completing a review.

There are three levels of public financial statements. Audit, Review and Compilation. In my background I started doing audits for Fortune 500 companies and progressed eventually to doing Reviews and Compilations.  A review is a service “in-between” audits and compilation. It is basically a follow the numbers kind of thing. But we have the experience and the competence and we will deliver a sound product timely.

Regarding timing, reviews take more time than a compilation, but we don’t see any reason for it not to be done promptly. We have an entire firm here and we are a little over-staffed so we have the staff available to assign to new projects. We actually expect to pick up new clients every year and want to be able to deliver the goods promptly. Which we will do with you.

Do you have any experience in family succession planning and estate planning? Please describe.

If anyone has experience doing tax work for businesses, he also has experience in family succession. However, that doesn’t mean he knows what he’s doing or that he can do it effectively. To give you an idea of our competence I will describe something we just experienced. We have a large client in the oil/gas field that wanted to take advantage of the low gift tax rates in place until this year to move a large part of their business to their children. We convened a meeting of the largest law firm in the city, a specialist in Vail and several other people. Everyone was tasked with preparing the gift to AVOID tax. The attorneys were running the show. When we got the final product back at the end of the year, it didn’t look right to me. The attorneys said it was OK, but I kept up the issue until the Vail attorney finally admitted I was right, They had failed to do what they were hired to do.  But after the first of the year, the door had closed, costing the client millions in eventual estate tax . You are right to tread cautiously in this area because large sums are at stake.

Please provide a realistic description of your availability. How often are you in your office? How quickly do you return calls? How long will it take to respond to our questions?

Forgive me for laughing. My first response was … who on earth have you been working with? But one of my staff who has worked on both sides in the past told me as she walked out a few minutes ago, we are one of the best offices in the city for getting back to our clients.  I always thought this kind of thing was limited to people working out of their garage.

This is what you can expect. If we’re in the office, we will take your call and answer your questions. If we think research or discussion is necessary we will tell you when we will get back to you. We will get back to you when we tell you we will, generally the same day. If it’s important, we will do the work and get back to you quickly. We don’t ever want to be the weak link that delays everything on your end. If we’re busy when you call, we return calls when we become available.

You will also have a relationship with more than one person at our firm with whom you have confidence and are comfortable. If the first person is not available, the second person generally will be.  I personally am in the office every day with very few exceptions, even on the weekends. I travel very little. But even if I’m gone, my staff is here and they are responsive and competent.

Our entire firm is oriented toward client service. You don’t build a national practice from Grand Junction, CO without exceptional client service.

Describe your experience/expertise in 401(k) accounts and personal tax filings (for the families of the two principles in the corporation).

We have as much experience with these things as any other firm. But this is not a specialty for us. If you are doing this as an employee benefit, that makes a lot of sense. If you’re doing this for the owners, we think you’re shooting blanks. And wasting your money.  Somebody has told you that a simple timing difference that takes away long term capital gains treatment is a good way to save money. We would like to talk to you about this and give you our thoughts. Then we’ll do what you want to do.

As far as personal tax of the ownership group, that’s the most important thing we do. Publically held companies don’t care about taxes; all they care about is Earnings Per Share. But small companies care a lot because that money comes out of their pocket. That’s what floats the boat. Everything we do is oriented toward saving you money and adding to the amount of money that sticks to the walls. We even say we will save you more money than we cost you. A large part of that comes from our attention to your personal taxes.

Do you typically work on an hourly rate or retainage? Describe how payment would be set up with our company. Please give an estimated cost.

We charge hourly rates from $100 an hour up to $500 an hour. Most of your work will be between that somewhere. We do ask for a retainer that is less than the minimum on tax returns. The top rates are seldom encountered.  

You can click here to look at our fees on our web site.  http://www.elliscpafirm.com/pricing.htm

Of course your company would probably be too complicated for our minimums.  So far, twenty some thousand was the most we have charged for a tax return. One current client paid $50,000 the year before they came to us. I cannot imagine that. We do progress billing frequently and stand on our heads to keep our clients in the loop. We will always give you an update if and when we think it could get expensive.

But until I know more about your company and what you want us to do, I really can’t provide a reliable estimate.  I can tell you, we’re in this for the long haul and we’re not interested in abusing our clients. Never-the-less, what we do is expensive. The talent we employ is very capable and very expensive. There are no bargains when it comes to quality people. We pay our people as much as we think we can afford. And the quality of our services reflects that.

www.strategyfactory.us

Don’t waste money on generic tax preparers.  Generic tax preparers are relationship marketers selling the sizzle, which is just background noise. They pull this off by distracting your attention away from the lack of results with a great relationship experience.  In the thirties, these people were called ‘grifters’.  Modern day grifters come in all shapes and sizes, from one man operations working out of their garage to big, established & highly reputable firms. But they all have one thing in common. They talk in grandiose terms about what they’ve accomplished for you, but they never reduce it to easily measured concrete savings that result in a real number you can take to tne bank. 

ELLIS is a results based marketer. We tell prospective clients we will save them more than we cost. We then explain where the savings will come from in easily understandable terms. We measure actual results after the fact and report the savings to you. If we fail to accomplish the savings we intended, although we never have except in the case of a collapsing company, we sit down or get on the phone and explain why that happened and we lay out the prospects for future savings.  In the old days they called people like us straight shooters. 

We can do this easily because 99% of the owners of closely held businesses pay more tax than the law requires. We know this because we’ve been monitoring it for 35 years. We won’t even tell you why. We’ll let you guess. But the obvious answer is probably the right one. 

ELLIS is selling the bacon; others are selling the sizzle.

www.elliscpa.us

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One life. 
One chance. 
No regrets.

You own a business, a business with potential and opportunity. People tell you that and you feel it in your bones.

Of course, there are the naysayers. (First lesson: don’t surround yourself with naysayers.). Normally you wouldn’t pay any attention to this group. But the fact of the matter is, you haven’t been able to gain the traction to separate yourself from the competition. The economy has been a constant hinderence, but you know your competition is dealing with the same economy, and you realize some of you aren’t likely to survive, perhaps even you. Come to think of it, your competition does seem to be doing better in the marketplace than you are. You know there is something you could probably do to separate yourself from the competition and pull away from the pack. But you can’t quite put your finger on it.

If that describes you, ELLIS can help.

First of all, the economy is unlikely to improve for decades. ELLIS’ forecast predicts continued withering of the American economy stretching over decades. But it also predicts, specifically, how you can assure your success while those around you face ruin and despair. In fact, ELLIS goes so far as to predict that every company that survives to thrive in the 21st century will adopt the following business model, or one very like it. The companies that are most successful have already adopted it. Some of them were instrumental in devising it.

Amazon is the future of business. 
Google & Wikipedia are the future of knowledge. 
Apple is the future of innovation & customer loyalty.

These are the companies you must emulate to have any hope of surviving and thriving in the tumultuous and chaotic 21st century.

The business model I am going to describe was created by Steve Jobs as he pulled Apple from the brink of bankruptcy and propelled it to the most valuable company in the world. Your business model must put you into position where you can compete on level playing ground with Amazon. Right now, these three companies, especially Amazon, are busy spoiling your customers. And it isn’t price that will be the determining issue. People stand in line overnight for the opportunity to purchase the most expensive smart phones in the world. It’s efficiency. You’d damned well better be as efficient as Amazon, or you may as well start planning your business’ funeral right now 
 
Amazon is the most efficient business in the world right now because they have the best infrastructure. Everything from marketing to receiving the order, to pulling and packaging the product to delivering it to your home is done accurately, effectively and efficiently. In some localities you can get your order delivered the same day you place it.

Be honest. How does your business stack up?

I could regale you for hours with stories about everything from these companies’ tax strategies to their regulatory management to workforce management. In all of these areas and others they excel. Years ago they determined to make the willful effort to be constantly improving in every they had complete control over, and to do everything they could to gain control over everything else.

Ellis offers the business model and infrastructure to emulate these companies, regardless of your size or resources. It is completely feasible that your company is in the exact same situation Apple was in, in1998. This business model and infrastructure may be all that stands between you and putting your mark on the universe.

We’ll describe the business model and infrastructure in subsequent posts. In the meantime you can find out more by visiting our web site.

http://www.elliscpa.us

http://www.strategyfactory.us

Noble beginning

Double entry accounting was first documented in book form in 1494 by Luca Pacioli, a Franciscan monk, contemporary & actual buddy of Leonardo Da Vinci. Giovanni di Bicci de Medici introduced double entry accounting to the Medici family in the 14th century. The use of double entry accounting in the records of the office of the Treasurer of the Medici family has been confirmed as early as 1440.  But Antonio Manucci’s use of double entry records predates the most recent of those by 150 years,

Government treasurer’s offices are rarelly considered creative or innovative, as you’ve all learned by now if you are old enough to read this blog. If your mother is reading this to you, just trust me on this. Governments originate nothing. They copy of things they’ve seen elsewhere. Which is a lead pipe cinch double entry accounting was in widespread use by the time the treasurer’s office heard about it.

So it is safe to assume, if double entry accounting was in widespread use in Italy in the middle of the 15th century, the 13th century date documented by the Manucci family is a reasonably safe bet. It was probably in use well before that.

800 years

The point of all that laboring is to make the further point that the accounting profession is in dire need of updating. We have been using the same basic structure and financial reports for 8 centuries … That’s 800 years … almost a millennium. Actual financial reports have been found in these ancient records. That is a very long time, especially when you consider everything else in the world from iphones to Chevrolets are updated annually, or even semi-annually. Magazines are updated monthly, and blogs, but not this one, are updated daily. In a mere decade the products barely resemble each other. But accounting is still plodding along using the same old stuff.

Applause please

It was a remarkable invention, allowing us to measure a business’ progress or regression over time or at a moment in time.The former came to be known as the income statement and the latter came to be known as the balance sheet. Some have said the industrial revolution rested on the back of double entry accounting. It was at least one of the legs on the stool because it made it possible to manage a shop’s progress and health even if you couldn’t see it. But, silly us, here we are talking about this as though it were historical.

One more thing

At one time accounting was an art. But the technocrats who failed quantum physics have taken it over and given everyone the impression it involves higher mathematics. But in actual fact, all you ever needed to know then, which is less the case now, was how to add and subtract, which you could do on your fingers. And many did. Then came calculators which were as large as harvestors and hopped around on tables and made as much mechanical crunching, crashing noises as any actual harvestor. (I have witnessed them and they are truly terrifying.) At that point you didn’t even need a passing acquaintance with your fingers. Today you don’t even need to know how to hold a pencil or recognize paper. Lacking creative or innovative abilities, these lower technocrats have been happily copying (much like the treasurer’s office) what came before them. Before long, 800 years have passed and this is where we are today.  It is as though we’ve digitized the Roman Legions without accounting for modern military appurtenances.

Negative Progress?

Accounting has progressed backwards since it was originally invented prior to the 13th century from a respected art (remember Pacioli was buddies with Leonardo Da Vinci) to a little considered backwash of lower technocrats. Most people consider the accounting department analogous to the swamp.  If you want to drive people away in a bar, tell them you’re an accountant. Serial killers attract more and friendlier people. A further indication of the profession’s standing in the world is this, most accounting graduates want to be a tax person instead of an accountant. (Holy cow. How is that possible?) Tax is related to accounting like a carrot is related to a national forest. But to them, it’s the epitome.

Accounting, all by itself, should be a respected and valued profession. Accountants should be as popular as guys doing magic tricks. Like them, accountants should hear exclamations like, “I can’t believe you did that.” You certainly have the tools to do wonderful and magical things for businesses.

To be continued.  We’ll come back to this subject from time to time.

Best Advice

The lack of progression in the the accounting profession is of course an unsettling circumstance for some of us accountants, who have, at least myself, become determined to reinvent the accounting profession to better serve the needs of a battered clientele during the troubled and turbulent 21st century.

Here is my best advice … avoid accountants and accounting firms that develop relationships as a marketing tool. These are the guys who work the room like a politician at every event, who want to play golf with you. They’ll buy you drinks, wash your dog and mow your lawn. The problem is, while they’re patting you on the back, they may be picking your pocket.

Try to go with one who is a value or results based marketer.

It’s a sad fact of life, but we all market our services. Most of us, it’s sad to say, by developing relationships.