The Exuberant Accountant - Scott Heintzelman

Leaving McKonly & Asbury and Closing Down the Exuberant Accountant Blog

McKonly & Asbury — 2011-08-30T14:41:06-04:00

Of all the ideas for blog posts I’ve written during the past three years, the subject of this post never made my editorial calendar.

I was hired by McKonly & Asbury 22 years ago, right after graduation from Messiah College. I always envisioned myself staying until I decided to retire at some point in the future. However, God has a way of changing our plans and making them his own.

I have been acquainted with the Martin family of Martin’s Famous Pastry Shoppe, (i.e. Martin’s Potato Rolls) for several years (and sit on the Messiah College Board of Trustees with owner Jim Martin) and have come to respect the values they represent and how they have chosen to run their faith based family business. I was taken completely by surprise when they approached me in December with an amazing opportunity to join the company as their Vice President of Finance and Administration.

After a great deal of prayer and soul searching (and talking with the real boss – Mrs. Exuberant Accountant), I have made the decision to join the Martin organization effective October 3rd. In this position I will have the opportunity to be involved not only in finance, but also employee development, mentoring, and business advising – three areas that regular readers of this blog know I am very enthusiastic about.

In transitioning to Martin’s, I will be attempting to fill the huge shoes of a great man named Mr. Ronald Gipe. Ronald has accomplished some amazing things in his career and specifically during his time at Martin’s. I hope to build on the impressive foundation that he laid while serving this business and family.

Click on this link for an excellent video that tells the story of this exceptional organization.

As I leave one of the great accounting firms in the country, I have a sense of sadness in leaving so many special clients and coworkers. I have been blessed with numerous impactful relationships in my life and I will miss serving my clients and working with our team members here at the firm (many of whom I hired and mentored – I love you guys).

Along with the difficult decision to leave McKonly & Asbury came the bittersweet decision to end the Exuberant Accountant Blog. After posting twice a week for three years, this will be my last post. Therefore, I have some folks that need a shout out.

First, I need to thank two people who were integral to the launching of this blog: Jim Rodgers and Michele Golden – two of the best marketing minds I know and two folks who had a huge impact on my decision to launch this blog and offer me advice during the early days…thank you so much!

Thank you Phil Clemens, Dale High, and Barry Shaw: Three faith based family business owners who I admire so much that I wrote each blog post with these amazing leaders in mind.

I also want to thank Terry Harris, the Managing Partner of McKonly & Asbury for his belief in me three years ago when I approached him with the desire and idea to launch the blog during a time when blogging in the accounting industry was a huge, unknown risk. You always believed in me and allowed me to push us forward and try new things. Thank you for being willing to take a chance on me 22 years ago and during many other times of my career.

I want to thank the many thousands of subscribers and readers of this blog. Each time I posted, I could always count on many of you to reach out with positive encouragement, stories to reinforce the blog topic, and amazing discussions. I will miss this interaction as I felt it provided me great insight into how business leaders were thinking and what challenges they were struggling to overcome. I always felt these exchanges gave me wisdom and better judgment as I was advising seasoned executives and mentoring next generation leaders.

Many of you have asked about the book which I am writing, titled “Five Steps to Strengthening Your Family Business.” I do plan to finish the book and I am happy to announce that my good friend Tracey Jones of Tremendous Life Books has agreed to publish the book. We hope to have it published at the end of the year. Thank you for your continued support Tracey!!

A huge thank you to my amazing assistant, Dawn, you have been such a special talent, writer, editor, supporter and most of all a dear friend. I will miss working with you every day.

Finally, my lovely wife Gaye. Thank you for being the most amazing helpmate a person could ever hope for. God gave you the patience of Job and many times you needed it being married to me. As I write this, tears are streaming down my face and I just want to publicly thank you for always supporting me. Thank you for saying “I do” 22 years ago. I love you with all my heart and I am not worthy of your amazing love!!!!

Talent is Overrated

McKonly & Asbury — 2011-08-24T07:51:11-04:00

One of the books I have enjoyed reading this summer is Talent is Overrated by Geoff Colvin.

The main idea of the book is debunking the age old theory that some people are just born with a talent; that this talent comes easily for them. The book cites Mozart and Tiger Woods as examples. Most people think, as I did, that these two men were born with a natural bent toward their talents.

But the book reveals that both these gentlemen had fathers who started training them at very young ages. In fact, by the time Mozart and Tiger came into the public eye, they had been practicing their skills for years. The author backs up this theory with research that shows that it is only through 10,000 hours of practice can world class performances be achieved. This practice is what makes a talent exceptional.

Geoff Colvin calls this enormous amount of practice “deliberate practice” and states that deliberate practice is made up of the following:

It must be designed specifically to improve performance.
It can be repeated a lot.
Feedback on results is continuously available.
It is highly demanding.
It isn’t always fun.

For the majority of us, the 10,000 hours of deliberate practice would be a daunting challenge, which is why these great performers are in the minority of our population. The rest of us would find it very difficult, if not impossible, to expend this amount of time and energy on one area of interest. The author states that this is what makes deliberate practice powerful – it pushes a person beyond what they can currently do and enables them to know more and remember more than the average person.

Colvin asserts that even though most people will not develop a super talent, we can apply the principles of deliberate practice to our lives to improve both our professional and personal life. Using deliberate practice to hone our skills in the workplace and at home can allow us to become better than average and lead to accomplishments far greater than we would have thought possible.

True Blue Leadership

McKonly & Asbury — 2011-08-21T12:01:00-04:00

If you have been reading my blog over the years, you know I am a huge fan of Tracey Jones, President of Tremendous Life Books and her late father Charlie “Tremendous” Jones. Tracey and her father have written and published tons of great leadership books (a passion of mine).

About ten years ago, Tracey was living in Austin, Texas when someone dropped off a bunch of puppies near the company where she worked. Tracey had never been around dogs before, but she picked up one with a blue merle coat and as we all know, the rest was history - she was smitten.

Over the years, Mr. Blue, an Australian shepherd/Basset hound mix, has been her constant companion and as taken on the role of Chief Motivational Hound.

Mr. Blue, with Tracey’s assistance, has pawthored a book: True Blue Leadership: Top 10 Tricks, and they are about to embark on a book tour. They are returning to all the cities they’ve lived in together. All proceeds go the the Books for Tremendous Living Foundation and the local animal rescue charities of choice. There are some amazing organizations hosting and helping Tracey and Mr. Blue with this.

Here’s the link to the tour info which will be updated weekly. If you’ve got friends, family, or contacts in Harrisburg, PA, Saint Louis, MO, Austin, TX or Chattanooga, TN, this will be a fun event for them to attend!

There will be another tour in the spring as Mr. Blue has been asked to be on an animal telethon in Las Vegas!

If you get the chance, I encourage you to attend one of Tracey’s events and meet Mr. Blue. If you would like to host a future event, please let Tracey know and she and Mr. Blue will pack up the van and head your way.

Risk Management and Fraud Seminar – September 16th

McKonly & Asbury — 2011-08-16T09:34:52-04:00

Register today for McKonly & Asbury’s 2011 Risk Management and Fraud Seminar! With great feedback from last year’s seminar, we are once again hosting this seminar with new topics geared towards learning about threats to your business and how to minimize those risks.

We are proud to welcome back Scott Sutherland, Special Agent of the FBI, to return and share his knowledge again!

Sponsored by Citizens Bank, this seminar will take place on Friday, September 16, 2011 at the Radisson Penn Harris at 1150 Camp Hill Bypass in Camp Hill, PA.

Registration and breakfast will begin at 8:00 am and the seminar will run from 8:30 am – 3:15 pm with lunch provided at noon. There is a $50 registration fee and CPE credits are available.

Topics include:

Fraud Risk Assessment – Looking for Exposure
Fraud Trends – What’s Hot, What’s Not
The Many Faces of Risk
Demystifying Bank Fraud Protection
Insurance Fraud

Speakers include:

Scott Sutherland, Special Agent of the FBI
Samuel BowerCraft, Senior Manager of McKonly & Asbury
Tom Strause, Partner of Financial Outsourcing Solutions
Pat Bosma, Senior VP/Market Manager – Capital of Citizens Bank
Paul Hample, Vice President of Citizens Bank
Rob Felter, Vice President of Worldpay

For more information or to register, please contact us at [email protected]" target="_self">[email protected] or by calling (717) 761-7910.

Repatriation Tax Holiday: Job Creator or Huge Tax Break for Corporations?

McKonly & Asbury — 2011-08-14T09:18:49-04:00

What if I told you I knew a way for the government to provide a $1 trillion stimulus to our economy and it would not cost taxpayers a penny (in fact, it would create a huge windfall of new tax revenue) – would you be interested in learning more?

It sounds too good to be true, right? Well, actually no, it is available to us right now, but it has become very political (hard to imagine anything in Washington DC becoming politicized).

U.S. companies have over $1 trillion of offshore earnings that have never been taxed in this country. Nearly all industrialized nations apply a "territorial tax system" in which companies with operations or affiliates abroad pay only the taxes imposed on profits by the host country. So in Sweden, England, and China multinational companies can, in most cases, ship earnings home with little or no extra tax imposed.

American companies pay foreign taxes, some of which they can offset against their U.S. tax liability. But any funds they return (i.e. repatriate) - to buy back stock, build a plant, pay a dividend - get hit with U.S. corporate taxes, which reach as high as 35% at the federal level, the second highest in the developed world.

This additional tax is a tremendous disincentive for these corporations to bring this money back to our country. Every member of congress would love to have this money pour into our country to boast our economy. The $1 trillion question is – do we give these corporations a tax break to return this capital and if so, how much?

There have been discussions on Capitol Hill to allow a one year “tax break” to allow those profits to come back and be taxed at 5.25% as opposed to the normal 35%. Of course, those on the right think this is good policy and would love to see this repatriation tax holiday made permanent, while those on the left hate the idea of giving another huge tax break to big business.

What do you think? Should we be giving a repatriation tax holiday or make it permanent?

IRS to Require Manual Entry of Tax ID Numbers on W-2 Forms

McKonly & Asbury — 2011-08-09T11:55:40-04:00

With all the hoopla over the debt ceiling debate and the stock market drop, few people noticed last week that the IRS just added more work for payroll departments.

The IRS said last week that it would require employers to manually enter the Taxpayer Identification Number (TIN) shown on W-2 forms for all taxpayers with Individual Taxpayer Identification Numbers (ITIN) who are reporting wages for tax year 2011.

They also stated that no software package should use an auto-population feature, regardless of the presence of an override feature, to populate the TIN on Forms W-2 for ITIN filers. Failure to comply with the new rules could result in a written reprimand, suspension, or even expulsion from the e-filing program.

An ITIN is a 9-digit number that always begins with 9 and has a range of 70-88 in the fourth and fifth digits. The IRS issues ITINs to individuals who are required to have a TIN, but who do not have, and are not eligible to obtain, a Social Security number (SSN).

Who needs an ITIN?

IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for Social Security numbers. A non-resident alien individual not eligible for a SSN who is required to file a U.S. tax return only to claim a refund of tax under the provisions of a U.S. tax treaty needs an ITIN.

Other examples of individuals who need ITINs include:

• A nonresident alien required to file a U.S. tax return.

• A U.S. resident alien (based on days present in the United States) filing a U.S. tax return.

• A dependent or spouse of a U.S. citizen/resident alien.

• A dependent or spouse of a nonresident alien visa holder.

While this change does seem to lack some common sense, it is part of an ongoing IRS effort to crack down on taxpayer and tax return preparer fraud.

You can read the IRS announcement about verifying Taxpayer Identification Numbers at this link.

Unemployment Report, S&P Downgrade, Debt Ceiling, Stock Market...

McKonly & Asbury — 2011-08-07T14:24:40-04:00

Wow, what a difficult period of economic information. I have been thinking all week just how I would try and summarize the events of the past several days and each day seemed to bring more news (mostly bad).

As I posted last week, the debt ceiling compromise did indeed get done and with no tax increases. Of course, the ratings agencies have weighed in and did not think the spending cuts (if you really want to call a reduction from 8% spending increase to a 6% spending increase a cut) went far enough.

The stock market has been nervous and dropping with a threat of a downgrade looming. Then the government released news that the second quarter growth was only at 1.3 percent annual rate and the first quarter was sharply revised down to 0.4 percent pace from 1.9 percent.

That news was followed by the unemployment report...which was not good. Here is now what is being called “The Brand New Scariest Jobs Chart Ever” (compliments of Chart of the Day):

We used to say that the chart showing the pace of this jobs "recovery" vs. all other jobs recoveries was the scariest jobs chart ever (see here for example). But we've since changed our mind.

This new chart shows the average duration of unemployment -- which surges without any sign of slowing down -- that's really scary right now. Not only is this number taking off like a rocket, but it potentially represents people permanently and structurally kept out of the jobs market.

What we are seeing is that the recession maybe never ended and if it did, we might be going back to a double dip. This of course had a huge impact on the market meltdown, where $2.5 trillion was wiped off global markets. Other factors that help cause last week’s downturn:

1. Meltdown in European sovereign debt.

2. The dysfunction in Washington

3. Unemployment staying high

4. GDP revisions and projections.

Now enter Standard and Poor’s rating Friday night, when they downgraded the US from top-tier AAA to one level lower AA-plus. What impact this has going forward is not certain. Many mutual funds do require only AAA grade bonds and now that US Treasuries are below that level, will there be a short term sell off?

On Saturday, China (one of our largest creditors) scolds us on the world stage stating the following:

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone."

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets."

"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

If we do not cut spending and raise revenue (which I prefer we do by growing our economy), we will end up like Greece and be forced to make drastic cuts. Likewise, if we do not stop this continual money printing, we could end up like Argentina of 1989 (when they saw inflation reach 200% in one month).

It looks like a bumpy ride ahead, hang on tight.

Truth Telling as a Business Asset?

McKonly & Asbury — 2011-08-03T11:14:23-04:00

Every business is looking for a competitive advantage and some are finding that being truthful with customers is paying dividends (while some are turning to deceitful ways to gain a short term advantage).

It is sad, but being honest and truthful is becoming more uncommon in the business world. Conversely, being truthful in all business dealings serves as a refreshing, competitive advantage. We all like to do business with someone we like and trust; customers will return and bring repeat business (and tell friends) to those that honor their commitments.

Read what my friend Phil Clemens (CEO of Clemens Family Corporation (i.e. Hatfield Meats) has to say about truth in his most recent monthly email.

“Anyone who doesn’t take truth seriously in small matters cannot be trusted in large ones either.” - Albert Einstein

Great leaders know it is never right to tell a lie. Society tells us – it was just a “little white lie,” it didn’t hurt anything or anybody and after all – everyone does it. (Isn’t this the very excuse that makes us, as parents, cringe when used by our children? We don’t allow them to use this excuse, so why would we tolerate it from our business associates?) Einstein reminds us that truth is truth and if you aren’t truthful in small things, you will never be truthful in large ones – in fact, you can’t be trusted with large ones.

Our Core Values at The Clemens Family Corporation go right to the heart of what Einstein reminds us about. Two of our Core Values are Integrity (which we define as I’ll do what I say) and Ethics (I’ll do the right thing) – which means truth is serious whether it is a small matter or a large one. When I say I will tell the truth and don’t, I violate both of these key core values.

At times I get tempted to “stretch the truth.” It’s not really a lie, but it really isn’t quite the truth either. Again, Einstein reminds us that “stretching the truth” really isn’t taking truth seriously and like it or not, if it’s not the truth (the whole truth and nothing but the truth) it really is a lie and you can’t be trusted in the big issues.

This is tough talk that I need to hear. There is no excuse not to be honest and truthful. Just none! I can try to wiggle and squirm and justify why it may seem right – but I really know it isn’t right.

Join with me to be known as TRUTH TELLERS. Commit to tell the truth, even if it hurts (but do it in a loving way). Telling the truth at all times might not be easy – but it is the right thing. Remember when you learn to tell the truth in small matters, you will be trusted with much greater matters. Trust is earned from others when we tell the truth.

Speaking at The Evangelical Theological Seminaries Center for Leadership Impact

McKonly & Asbury — 2011-08-01T14:07:18-04:00

I will be speaking on Thursday, September 29^th at Evangelical’s quarterly leadership seminar called “Faith in the Marketplace.” This breakfast series is designed to help us see that our vocation is more than a profession, it is a calling of God.

I am humbled to have this opportunity to share and I plan to talk about what I call “The Power of One.”

If you are interested in attending, this link has more details.

I hope to see you there.

The Debt Ceiling — Tax Increases Off The Table

McKonly & Asbury — 2011-07-26T10:57:13-04:00

When I want to know what is happening behind the political rhetoric in Washington DC, I turn to Dean Zerbe aka The Dean of Tax. This former Tax Counsel and Sr. Counsel for the Senate Finance Committee (and now the National Managing Director of The alliantgroup) writes a blog that is picked up by Forbes and his recent post was very insightful about what is happening with the debt talks and what impact these may have on small business. Here is the entire post with permission:

As we head into the final turn of the debt discussion – while there is uncertainty about the final result (and when that result will take place) – there is growing clarity on the issue of taxes. What is the clarity on taxes? There will be no increase of taxes above current tax policy as part of the debt deal.

Despite abuse from much of the press, demands from the administration and the threat of withholding cocktail party invitations from the chattering classes in Georgetown — the House Republicans have shocked Washington by ultimately holding firm against any tax increase above current tax policy as part of the debt ceiling.

Why do I say current tax policy? Because there has been a significant amount of hide-the-ball in discussions of tax policy with some – the Six Senators Proposal comes to mind — with discussions of a tax cut but within the framework of current tax law. Recall that under current tax law almost all the Bush/Obama tax cuts expire (yes, Obama added a fair amount to the Bush tax cuts when he came into office). So the proposals of cutting taxes from current law means in reality a result of hundreds of billions of dollars in tax increases over what individuals and businesses are paying today – current tax policy. I don’t know why people don’t trust Washington.

For a useful discussion of the difference between current tax law and current tax policy and a general distillation of the Six Senators proposal, I suggest reading the following from Keith Hennessey: http://keithhennessey.com/2011/07/20/understanding-the-gang-of-six-plan/. Regardless, the Six Senators proposal is going nowhere.

So what is going to happen? The tea leaves are still stirring in the cup but both Speaker Boehner and Leader Reid are now drafting proposals that will reduce spending and with no tax increases above current tax policy (with a big dollop of the savings probably coming from assumptions on ending/drawing down military actions in Afghanistan and Iraq). The symmetry of a debt ceiling increase equal to the spending reduction (i.e. reduce spending by a trillion, get a trillion dollar increase in the debt ceiling) has a good deal of appeal and salability. The administration is keen not to repeat this joyous exercise of the debt ceiling prior to the election but it is difficult to say the sky will fall if the debt isn’t increased and then refuse to sign legislation because it only delays the sky falling for a few months.

However, it seems that Reid/Boehner should be able to find savings that will get everyone through the next 17 months (the election) and put the debt ceiling to bed until then. Look for how much savings will be in year 1 – I’m always impressed by the mindset of Washington – “why do something today when you can do it tomorrow.”

Don’t forget – after the debt ceiling is over Washington then comes back in September to another joy – the continuing resolution for spending which will basically take up most of the Fall. Look for House Republicans to make a strong push for immediate reductions in discretionary spending. Perhaps somewhere in there the Congress and the White House can look at doing a jobs bill – the tax provisions in the small business jobs bill passed in the Fall of 2010 would be a good starting point.

Some tax issues of particular interest:

LIFO. I had thought the LIFO (last in first out accounting) proposal would have been considered last Congress given the administration’s support for it in the budget and the feeling of inevitability with the international accounting standards and conformity. Given the administration’s hard push for LIFO reform, I would expect it to be part of future discussion – perhaps in tax reform or as a revenue raiser to offset a jobs bill. If the small and medium businesses press, it may be possible to have the LIFO repeal provision limited to just C Corporations – or perhaps provide a longer phase-out period for pass-thrus.

Carried Interest. As Eliza Doolittle would say: “Show me.” When the Democrats in the Senate and White House can actually agree on a carried interest provision I will believe something is going to happen on carried interest. Despite what you may read in the press, the key roadblock on carried interest is not the Republicans, it is Northeast Democratic Senators (and why it didn’t pass last Congress). Perhaps the Show Me moment will finally happen for carried interest as part of tax reform or as a revenue raiser for a jobs bill – but until then look for speechwriters at the White House typing about stars burning above and carried interest.

Tax Reform. There was actually a moment in the sun about three weeks ago when reform was being seriously discussed – this was the Speaker Boehner/President Obama “go big” discussion. However, the sun of tax reform was soon eclipsed by a moon called “House Republicans.” The reality finally hit that tax reform that was really a stalking horse for a net tax increase over current tax policy (and/or allowing the Bush tax cuts to expire for the 200/250k crowd) was going to be a nonstarter with House Republicans.

To be clear, most Republicans in the House and Senate are quite comfortable with revenue increases, loophole closers (whatever you want to call them) to offset tax cuts – yes even regarding corporate jets (note: the Jobs Bill in 2004 drafted by Republicans and signed into law by Bush included a tax hit on executive use of corporate jets). However, revenue increases for the sake of revenue increases is a nonstarter for most House and Senate Republicans. Yes, many Republicans supported eliminating ethanol tax subsidies but that is to focus on a small one-time hole instead of the much larger doughnut.

Tax reform remains something that is going to take leadership from the White House or a Republican Presidential nominee. The Treasury Department needs to put forward a detailed plan to get this discussion going in earnest – but I fear the window is just about closed for this Congress. The idea that sweeping tax reform would come out of a small meeting between the Speaker and the President and be accepted by everyone else is eye-blinking.

As I mentioned in my previous column, I remain extremely concerned that those in Washington who talk about tax reform in the context of getting rid of business incentives, credits and deductions to lower the corporate rate are still failing to understand that if that is “tax reform” it will mean an increase of billions of dollars in taxes for millions of small and medium businesses that are overwhelmingly organized as pass-thru entities (LLC’s, S Corp. etc.). Under this idea of tax reform, the small and medium businesses will no longer receive the benefit of the business credits and incentives and will therefore shoulder a greater tax burden – all to make life easier for the Fortune 500.

Another tax reform proposal that is being bandied about is to impose a vast new increase in taxes on successful small and medium businesses by requiring them to pay the corporate tax. I am at a loss to understand how a huge increase in taxes on that part of the economy that employs over 50% of Americans is going to create jobs.

The S Corp. Association has a very thoughtful piece on this whole issue of tax reform and how it can mean a tax hike for pass-thrus that you can find here: http://www.s-corp.org/2011/04/13/links-to-s-corp-study-and-press/. For now tax reform remains something talked about on cocktail napkins.

I appreciate your thoughts and views and especially welcome your ideas for tax policy to move the economy forward and create jobs.