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Avalara Inc., a leading provider of tax compliance automation for businesses of all sizes, today announced it has entered into a definitive agreement to be acquired by Vista Equity Partners, a leading global investment firm focused exclusively on enterprise software, data, and technology-enabled businesses, in partnership with institutional co-investors.
Under the terms of the agreement, Vista will acquire all outstanding shares of Avalara common stock for $93.50 per share in an all-cash transaction valued at $8.4 billion, inclusive of Avalara’s net debt. The per share purchase price represents a premium of 27 percent over the Company’s closing share price as of July 6, 2022, the last trading day prior to media reports regarding a potential transaction.
Founded in 2004, Avalara’s success is built up on an extensive partner network; large tax content data and repository to help customers stay up to date on dynamic tax rules and regulations; and its cloud-native, end-to-end multi-product tax compliance portfolio. In partnering with Vista, Avalara will look to build on its successful platform by refining its go-to-market strategy, expanding its international workforce, streamlining its systems architecture, and continuing to pursue value-accretive M&A opportunities.
“For nearly two decades, Avalara has ambitiously pursued its vision to automate global compliance, making tax less taxing for businesses and governments around the world. As a leader in this category, we believe our continued investment in innovation and experience is exciting for our customers, partners, and employees. We are pleased to partner with Vista and will benefit from their expertise in enterprise software as we build and improve upon our cloud compliance platform,” said Scott McFarlane, co-founder and CEO of Avalara.
“Vista has built a reputation as a preferred partner for founder-led, next-generation software companies,” said Monti Saroya, co-head of Vista’s Flagship Fund and senior managing director. “We look forward to working with Scott and the entire Avalara team to advance their vision and continue delivering innovative solutions to customers.”
“Avalara is a mission-critical platform serving customers in a variety of end-markets, including retail, manufacturing, hospitality, and software,” said Adrian Alonso, managing director at Vista. “Avalara’s solutions, its commitment to product innovation, and its network of extensive partner integrations, resellers, and accountants make it a true leader in the space.”
The transaction, which was unanimously approved by the Avalara Board of Directors, is expected to close in the second half of 2022, subject to customary closing conditions, including approval by Avalara shareholders and receipt of regulatory approval. Closing of the transaction is not subject to a financing condition.
Upon completion of the transaction, Avalara’s shares will no longer trade on the New York Stock Exchange, and Avalara will become a private company. The company will continue to operate under the Avalara name and brand.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Avalara, and Simpson Thacher & Bartlett LLP and Perkins Coie LLP are acting as legal counsel.
Kirkland & Ellis LLP is acting as legal counsel for Vista.
There’s one type of tax-qualified retirement plan designed especially for self-employed individuals. The Keogh plan—named for the Congressman who spearheaded the legislation approving the plan—isn’t the hot commodity it was back in the day. But this is still a viable option for sole proprietors to consider.
Compare the benefits of a Keogh plan to other alternatives like SIMPLEs, SEPs and solo 401(k) plans.
Background: You can adopt either a defined contribution Keogh plan or a defined benefit Keogh plan. As you might expect, the rules for these variations generally mirror those of traditional defined contribution and defined benefit plans, including annual limits on contributions. Let’s take a closer look.
Defined contribution Keogh: You have plenty of leeway. The maximum contribution for 2022 is equal to the lesser of $61,000 or 20% of earned income (more on this later).
Defined benefit Keogh: The plan may provide an annual retirement benefit, based on actuarial computations, up to the lesser of 100% of earned income for the three highest-paid years or a specific dollar amount adjusted for inflation. The dollar limit for 2022 is $245,000.
However, watch out for a couple of tax twists. When you compute “earned income” for this purpose, your earnings from self-employment must be reduced by your contributions and one-half of the self- employment tax paid. In addition, the maximum amount of compensation taken into account can’t exceed an indexed annual amount. It’s $305,000 in 2022.
That’s the hard part. Otherwise, most of the other rules for qualified retirement plans are extended to Keogh plans. For example, early withdrawals made prior to age 59½ are hit with a 10% tax penalty on top of regular income tax, unless one of several special exceptions applies. Similarly, you must begin taking required minimum distributions (RMDs) in the year after the year in which you attain age 72 (recently increased from age 70½).
Suppose you have other employees on your staff. In that case, you’re required to cover them under the Keogh plan in the same percentage proportion as you do for yourself. Accordingly, the actual dollars allocated to yourself can exceed the amounts contributed for other staff members. This may appeal to you as opposed to some other qualified plans like a SIMPLE or a SEP.
Also, if a Keogh plan is found to be “top-heavy,” certain minimum contributions must be made for employees. A plan is considered top-heavy if more than 60% of contributions or benefits go to key employees. These rules are complex, so consult your professional tax advisors for more details.
Last point: The deadline for contributions to a Keogh plan for 2022 is your tax return due date, plus extensions, as long as the plan is set up before January 1, 2023. This provides a unique year planning opportunity for self-employed individuals. Do your due diligence if a Keogh makes sense for you.
A Top Technology Initiative Article.
As discussed in last month’s column, the opportunity to connect with many of you at live conferences this year was valuable and insightful. It made me think about your firm’s strategy and technology stacks. While I could have done without the gift of COVID (the gift that keeps on giving), the downtime was valuable.
I could reflect on your sincere questions that were looking for independent guidance. Your questions have reminded me that many of the problems you are trying to solve now are like the problems of the past. And one of the most significant issues is that you can’t find vendors or products that meet your expectations or your fundamental needs. One of my favorite clients is looking for a stack of solutions that will meet the needs of a tax and accounting practice.
Another is looking for solutions for a tax and advisory practice. A new client wanted to discuss the needs of a tax and growing CAS (Client Accounting Services) practice. Consulting engagements have been in larger firms that needed guidance on Tax, Audit, and growing CAS practices. When economic pressures mount, businesses, including CPA firms, look for a better, more profitable, and more efficient & effective way to deliver products and services.
My latest wake-up call hit during the Independence Day weekend. After setting up to play in our town’s parade with the Hutchinson Municipal Band, we were sitting in the sun waiting for the parade to start, and I watched families and groups of all kinds organize at the start of the parade. While we rehearsed our patriotic numbers to play in the parade, I had enjoyed playing traditional favorites.
Then, I started thinking about other favorite songs. Oddly, a 1983 song from the Eurythmics became an earworm. “Sweet dreams are made of this, Who am I to disagree? I travel the world And the seven seas, Everybody’s looking for something.” And then I realized that each of you is looking for your “something.” Some of you have found it, but many have not. Some of us have become very professional at helping clients and managing our practices, and some have not.
A few of you have focused on the client experience, and most have not. Some of you have learned how to manage a practice effectively, enjoy business development, understand business operations management, or manage personnel well, but many have not. We have been watching the fundamentals of business being lost by your clients. Have you lost sight of the fundamentals, too?
What are Fundamentals?
What do I mean by the fundamentals? Try a few of these on for size. For example, hiring and terminating the right people, truly providing excellent client service, managing day-to-day costs for profitability, getting processes (workflow) right to optimize operations, spending the time on personal relationships inside your firm and with your clients, staying informed on regulatory & technical changes, and innovating your delivery models to minimize wasted effort.
It is easy to get caught up doing things the same way, but life and business are changing all around us. So while we can continue doing the same thing, and you’ll likely get better at it, your comfort level will eventually lull you into performing below your optimum level.
A few famous sports stars understood the value of fundamentals. For example, Larry Bird of basketball fame said, “I wasn’t real quick, and I wasn’t real strong. Some guys will just take off, and it’s like, whoa. So I beat them with my mind and my fundamentals.” Michael Jordon said, “Get the fundamentals down, and the level of everything you do will rise.” Vince Lombardi noted, “Excellence is achieved by the mastery of the fundamentals.”
Earl Weaver, coach of the Baltimore Orioles, stated that “the key to winning baseball games is pitching, fundamentals, and three run homers.” Certainly, skill combined with luck doesn’t hurt, but do you note how many successful athletes understand the importance of fundamentals? Fundamentals help us plan our next move. Two of my favorite golf quotes are from Arnold Palmer “Golf is a game of inches. The most important are the six inches between your ears,” and from Ben Hogan, “the most important shot in golf is the next one.” What is your next shot?
Do you have your firm fundamentals right?
It has become apparent (again) to me that you must think about the fundamentals you want for your clients, your team, and your firm in every functional area, from tax to audit to practice management to Client Accounting Services (CAS) to Advisory.
What does it take to prepare and deliver tax returns effectively?
What should the end-to-end experience be for your clients and your firm? Can you describe it?
Have you got a workflow diagram that shows the process?
Have you reviewed your tools and technology stack?
Are there better options in the market?
Where are you wasting time?
What are the bottlenecks when you are in the thick of tax season?
What are recurring issues that you can address?
This year I’ve had many discussions about end-to-end tax workflow. Automating and enabling business development, engagement letters, PBC requests, organizer completion, business trial balances, 1040 workpapers, tax preparation software, review, assembly, delivery, and payment (plus more like extensions and estimates) are steps that all tax practices take. How can you make the steps easier and faster while maintaining quality and accuracy? Are there processes and tools that can help? Yes!
Likewise, for practice management, there are steps that firms have in common. Typical issues include engagement/project progress, due date monitoring, scheduling, time tracking for cost or billing purposes, reporting, profitability, expense management, workflow, document management, eSignature, portals, business development, CPE Tracking, and many more issues are everyday needs. Are there processes and tools that can help? Yes!
By the way, we’ve seen the same thing in audit, CAS, Advisory, wealth management, litigation support, and every other niche offering we have reviewed. Are there processes and tools that can help? Yes!
We’ve found in each practice area that we have reviewed that there are similar needs among firms with no solution able to satisfy everyone’s needs. And what continues to happen is that you are looking for solutions, perhaps an ideal solution, and there is so much inaccurate market noise that it is hard to pick a viable, long-term solution. There is no “silver bullet” to solve the problems, but you can improve the situation.
Brian Tankersley and I are pleased to produce our weekly podcast, The Technology Lab, to cover the numerous available tools. But point solutions, sometimes called best-of-breed, must be integrated into a larger framework or technology stack. It also became obvious (again) this past month that it was time to revise our stack recommendations. While Brian and I have helped many organizations develop their stack offerings, it has become clear that several approaches offered by organizations and consultants are long in the tooth. While they were fine in 2000 or 2010, they don’t fit the 2020s very well. And this realization was a great reminder that innovation must continue, but we must get the fundamentals right.
So, What Do I Do Now?
As I’ve pointed out in prior articles, the teams at Liscio and Suralink have repeatedly taught me about this client experience thinking. Your technology stack (= choices of tools) PLUS workflow procedures make all the difference in everyone’s experience. And as I noted in last month’s column and above, there does not seem to be a magic solution that works for every firm. While there are many good products in the market, you must look for tools and products that fit your firm’s fundamental needs. You don’t want to overbuy or underbuy the capabilities needed.
We will continue to share our evolving understanding of solutions, stacks, and best practices for CPA firms in this column, in our podcasts, and at every CPE event where we speak. Striving for the best client experience, team experience, and firm experience with quality is a fundamental we always try to get right.
The summer is an excellent time to reflect on Ecclesiastes 3:1-8 “For everything there is a season, and a time for every purpose under heaven…” The season is right to return to the fundamentals. Now is “a time to seek, and a time to lose; a time to keep, and a time to cast away.” What is best to keep in your practice, and what needs to go away? For many firms, getting the fundamentals right will help you pick the right platforms, products, and tools to serve your clients best.
Randy Johnston and Brian Tankersley, CPA.CITP, CGMA review OnceAccounting a single hub for accounting firms to manage all of their clients’ books, even on different systems.
By now, your firm is likely feeling the effects of the Great Resignation (or the Great Reshuffle). Many baby boomers are retiring, and millennials and Gen Zers are looking for jobs with more flexibility and work/life balance. While every industry is being impacted, the accounting profession faces a dire talent shortage when the need for solid talent is steadily increasing.
Increasing compensation, focusing on employee well-being, and filling gaps with outsourcing and automation are strategies for overcoming the talent shortage. But have you considered how inefficient processes are impacting your talent?
Let’s look at nine wasteful activities your firm needs to address to improve your odds of attracting and retaining top talent.
Defects include mistakes like transposing numbers, entering incorrect information or not following procedures and quality guidelines. When people enter the wrong information and get the wrong product back, it takes a morale toll.
Using technology to auto-populate trial balances, financial statements, tax returns and other elements of client engagements reduces such errors.
Overproduction happens when people do more work than necessary. Examples include spending significant time on tax returns that will be extended anyway or prioritizing the wrong projects.
Overproduction usually leads to people picking up and putting down work repeatedly, duplication of efforts and frustration.
Waiting is any non-value-added time during which your team members aren’t performing value-added productive work. This could involve waiting on client information or waiting on reviewers.
When people must stop work to wait on a client or things sent to reviewers take forever to come back, people have to waste time relearning or researching where they were when they last worked on the project.
This might take a tiny amount of time on an individual project level, but it wastes a lot of time collectively.
Not utilizing people’s talents
We waste resources when higher-skilled people perform lower-skilled work. This might happen due to poor training, hoarding work or not leveraging technology.
Whatever the root causes, you’ll struggle to retain talent when people want to grow but are forced to do the same low-level tasks repeatedly.
Transporting is waste from passing around paper files and information from person to person instead of utilizing technology to automate workflows and share information.
It’s 2022—new college graduates don’t want to step back in time 20 years to deal with piles of paperwork when they start a new job. That misalignment with everyday life will send them to competitors who invest in modern tech.
Inventory sounds like terminology for the retail industry, but it also applies to a firm’s client engagements. Work-in-process and backlogs in email inboxes create bottlenecks and make it tough to get client engagements across the finish line.
Being pulled in a dozen different directions and dealing with competing priorities due to misalignment at the partner and manager level on what needs to be done and when creates stale inventory. This also negatively impacts the firm because that’s how we get paid.
Motion is the result of going on scavenger hunts for information. People waste time and effort searching through poorly named digital files or digging through poorly organized or overfilled physical files.
All of this leads to wasted time people could spend doing the work instead of searching.
Excess processing is doing more work than the client values or is willing to pay for. Examples include over-auditing or navigating multiple personal preferences of partners.
Spending time managing how people do the work takes a toll because it puts undue pressure on team members to keep it straight and compounds waste.
Negative attitudes, poor morale and refusal to follow firm processes impede progress. If the prevailing mindset across the firm, especially amongst leadership, is “this is how we’ve always done it,” you won’t be able to keep people.
People aren’t interested in being in a firm where they aren’t growing, so you need to cultivate a growth mindset.
Do any of these wasteful activities sound familiar? If so, they’re a big part of why your firm is having trouble attracting and retaining talent. Each of these wasteful activities has a people impact, so solve your process issues and you’ll be well on the way to solving your people issues.
Is your firm ready to stop wasting time on inconsistent and bloated processes?
One doesn’t have to be the loneliest number anymore. For years, sole proprietors weren’t able to choose from as wide a range of retirement plan options as bigger operations could. Or, in the case of a 401(k) plan, the administrative costs would outweigh the potential benefits in the business owner’s eyes.
But the landscape has changed dramatically over time. Currently, you have a myriad of choices at your disposal, including setting up and maintaining a “solo 401(k)” for you—and just you alone—at a reasonable cost.
Basic premise: A solo 401(k) plan works pretty much like a traditional 401(k). For starters, you can elect to defer part of your salary to your account within generous annual limits. For 2022, the maximum deferral is generally $20,500, plus you can tack on a catch-up contribution of up to $6,500 if you’re age 50 or over, for a grand total of $27,000.
This money contributed to the plan is then invested and can grow and compound within your account on a tax-deferred basis.
But there’s more: A business owner may add matching contributions as the employer up to the current tax law limits for defined contribution plans. The total deductible contributions for 2022 can’t exceed the lesser of 25% of compensation or $61,000, increased to $67,500 if you’re age 50 or over. The maximum compensation taken into account for these purposes in 2022 is $305,000.
This unique combination enables you build up a nest egg retirement even if you are getting a late start.
Note that a self-employed individual must make a special computation to find the maximum amount of elective deferrals and nonelective contributions. In figuring the contribution, your compensation is your “earned income.” This is defined as net earnings from self-employment after deducting one-half of your self-employment tax and contributions for yourself. Rely on your professional advisors for guidance.
Of course, strict testing requirements can be a headache for traditional 401(k) plans, but it is usually less of a hassle for solo plans. Notably, a business owner with no other employees doesn’t need to perform any nondiscrimination testing for the plan. Reason: There are no employees who might be receiving disproportionately high benefits.
Typically, a solo 401(k) plan may offer other advantages, such as the ability to borrow from your account or to take hardship withdrawals under extenuating circumstances. If you’ve worked somewhere else and built up savings in a 401(k) or other qualified retirement plan, you can generally roll over those funds tax-free into your solo 401(k). And contributions to the plan are discretionary, so you have more leeway in a year in which the business is struggling.
Finally, be aware you can use a Roth version of a solo 401(k). With this setup, you contribute after-tax proceeds to your account but you’ve secured the ability to take tax-free payouts in the future. Otherwise, distributions from a solo 401(k) plan are subject to ordinary income and the 10% penalty for early withdrawals, the same as a regular 401(k).
The choice is yours: Consider all the possibilities.
LendingClub Corp. released findings from the 12th edition of the Reality Check: Paycheck-To-Paycheck research series, conducted in partnership with PYMNTS.com, on Aug. 1. The Consumer Savings Edition examines the financial lifestyle of U.S. consumers who live paycheck to paycheck, the factors that cause financial distress, and the impact of financial stressors on their ability to manage expenses and put aside savings.
In June 2022, 61% of Americans were living paycheck to paycheck, up from a low of 52% in April 2021 and 55% in June 2021.
Average savings dropped $517 from $11,724 in May 2022 to $10,757 in June 2022.
The biggest rise in paycheck-to-paycheck consumers was in consumers earning between $100,000 and $150,000, up 11 percentage points from May 2022 to 52% in June 2022.
The average consumer stores 11% of their savings in either stocks or bonds, yet half of all stockholders reported that their portfolios recently lost value in the last three months.
An estimated 33.5 million—or 13%—of U.S. consumers spent more than they earned in the past six months.
“What a difference a year makes. Last summer we were all worried about how quickly the economy would recover. Now, as inflation continues its upwards swing, consumers are finding it more difficult to manage spending and are eating into their savings as financial pressures mount,” said Anuj Nayar, LendingClub’s financial health officer. “That said, consumers are not yet slowing down their spending habits, despite the rise in the cost of living. Not only is it going to be difficult for them to handle future emergency expenses, but even foreseen payments like education, student loans, or housing expenses may be harder to balance for the everyday American consumer.”
Today’s Paycheck-To-Paycheck Landscape
Living paycheck to paycheck is the most common financial lifestyle in the U.S., with increasing numbers of high-income consumers now living paycheck to paycheck. In June 2022, 61% of Americans were living paycheck to paycheck, up from a low of 52% in April 2021 and 55% in June 2021.
The highest income brackets have experienced significant upswings in the share living paycheck to paycheck from May to June 2022. The biggest rise in paycheck-to-paycheck consumers was for those earning between $100,000 and $150,000, up 11 percentage points since May 2022 to 52%. Forty-one percent of those earning between $150,000 and $200,000 annually lived paycheck to paycheck in June 2022, up six percentage points from 35% in May. Furthermore, the share of consumers earning more than $200,000 who lived paycheck to paycheck rose 6 percentage points from 30% in May to 36% in June 2022.
How Inflationary Pressures Impact Savings
An estimated 33.5 million—or 13%—of U.S. consumers spent more than they earned in the past six months. Among all U.S. consumers, average savings dropped from $11,274 in May to $10,757 in June, an indication that inflation has had an impact on all consumers’ ability to save.
Paycheck-to-paycheck consumers are more likely to prioritize easy access to funds when choosing where to hold their savings, keeping an average of 70% of their money in banks, digital wallets, or cash. Preference for more diversified portfolios increases significantly among high-income consumers.
When choosing how to save, the average consumer has half of their available savings stored in a bank or digital wallet such as PayPal or Venmo. The average consumer also keeps 11% of their savings in either stocks or bonds, and 20% in education or retirement accounts. Meanwhile, consumers in the highest income bracket allocate an average of 58% of their savings to assets other than cash or funds in a financial institution. Consumers earning more than $200,000 per year invested 28% of their available savings in stocks and bonds, while consumers earning between $100,000 and $200,000 invested 14% of their available savings in stocks and bonds.
The most cited factor influencing how consumers store their savings is ease of access to their money, cited by 46% of consumers who have savings. While quick access is the dominant factor influencing savings preferences among paycheck-to-paycheck consumers and lower income consumers, the preference for diversified portfolios increases significantly among high-income consumers: 31% of consumers earning more than $200,000 annually said having a diversified portfolio is the most important reason for choosing how they store their savings, compared to just 8.7% of those earning less than $50,000 per year.
Recent stock market volatility and inflation have made ease of access to funds more of a priority for financially struggling consumers than for those with higher incomes who may be more able to have a longer-term horizon on their savings portfolios.
New Reality Check: The Paycheck-To-Paycheck Report: The Consumer Savings Edition is based on a census-balanced survey of 3,583 U.S. consumers conducted from June 8 to June 27. The Paycheck-To-Paycheck series expands on existing data published by government agencies such as the Federal Reserve System and the Bureau of Labor Statistics to provide a deep look into the elements that lie at the backbone of the American consumer’s financial wellness: income, savings, debt and spending choices. Our sample was balanced to match the U.S. adult population in a set of key demographic variables: 51% of respondents identified as female, 31% were college-educated and 35% declared incomes of over $100,000 per year.
Financial advisors are starting to be big fans of artificial intelligence (AI)—not only because it can automate administrative tasks like data entry but also because it is starting to have a significant impact on the client-advisor relationship.
“Against increasingly challenging market conditions, AI has the potential to help wealth managers sustain and drive new growth, create operating efficiencies, and transform the customer experience through more hyper-personalized insights and products,” said Scott Reddel, who leads the North American wealth management practice at consulting firm Accenture. “Now isn’t the time to take your foot off the pedal. Firms can overcome adoption speedbumps with continued commitment from management, focused applications that deliver business value, and—perhaps most critically—collaboration across business lines.”
Accenture recently released new research, “AI in Wealth Management: A Financial Advisor Study,” after surveying 500 licensed financial advisors in the United States and Canada earlier this year who work at major wealth managers, banks, insurers, and independent wealth firms.
It revealed that 98 percent of respondents believe that AI is transforming how advice is created for, delivered to, and consumed by clients, and 97 percent believe that AI can help grow their book of business organically by more than 20 percent.
In addition, 83 percent of advisors believe AI will have a direct, measurable, and consistent impact on the client-advisor relationship by early 2024, and that same percentage believe that within the next 18 months, “AI can achieve a level of sophisticated advice and planning that will ultimately leave financial advisors competing with an algorithm for clients,” the study said.
“Ensuring that financial advisors are onboard with using AI-driven insights is a critical ingredient for wealth managers as they explore using AI to transform the client experience,” Keri Smith, who leads Accenture’s Applied Intelligence practice for the U.S. Northeast, said recently in a post on LinkedIn.
Other key findings of the study include:
87 percent of financial advisors would use more AI tools day-to-day and are willing to spend time to learn an AI-based process and tool if there is a clear benefit to them.
More than eight out of 10 advisors believe AI-powered notifications of client life events in real-time would be one of its clearest and measurable benefits; prefer to use AI tools to automate time-consuming and manual tasks; and say AI’s greatest benefit is translating clients’ data into actionable insight for their benefit.
One in five advisors believe AI can help to segment clients to further understand acquisition, growth, and retention goals. They also believe AI can help identify proactive cross-selling opportunities.
But there are some wealth management firms that have not fully jumped on the AI bandwagon.
“Financial advisors are reliant on their firms for technology that allows them to best serve their clients wherever they may physically be and whatever market conditions are like that day,” said Michael Alexander, president of wealth management at global fintech company Broadridge Financial Solutions. “In the fallout from the pandemic, wealth firms are going to face increased pressures to invest in modernizing their advisor technology or risk losing their advisors to firms that already have next-generation wealth platforms.”
A June 2020 survey of 254 financial advisors and planners from the U.S. and Canada found that 51 percent of respondents often think of leaving their current firm for one with better technology tools, according to fintech solution provider Broadridge. In addition, 74 percent of financial advisors wish their firm had access to better technology tools, and 82 percent admit that paperwork detracts them from time spent working with clients.
But even those firms that have taken some steps to act on their AI strategies—from proof of concepts to deploying AI within targeted business units to even scaling it across the entire organization—have encountered challenges, according to the Accenture study.
“For example, half (50 percent) said that their wealth management firms are challenged to act on their AI vision, 55 percent said that their firms’ AI tools and insights are too complicated to use, and more than six in 10 (64 percent) said their firm is taking on too many AI pilots (work-in-progress initiatives) at once in its push to adopt the technology,” Accenture said. “Aim for an approach driven by a clearly defined business strategy, not by the technology. Too many pilots or work-in-progress initiatives could cause financial advisors confusion and frustration. Undertake a single-use case or program to demonstrate the value that could be built to a point of providing real value to the advisor.”
The pace of an AI roll-out should be done in lockstep with a firm’s business goals and with buy-in from their financial advisors, the consulting firm added.
“We recommend multidisciplinary teams to be created and assigned to coordinating the roll-out for their particular work area to seek best results,” Accenture said in the study. “Wealth management firms need a ‘smart deployment’ model so there is alignment between the firm’s pace of innovation using AI in relation to the rate of adoption, use, and value they aim to realize across their business operations. Multidisciplinary, in-house teams are likely to be more familiar with these specifics and, therefore, best suited to manage this work.”
You’ve been looking at your firm’s website for years. You’re tired of it. But do you simply redesign it to a more current look and feel, or do you rebuild it? Here are the pros and cons of each. Plus, a series of questions you can use to determine which strategy you should undertake.
Website Redesign Pros and Cons
A website redesign keeps the site’s fundamental elements in place and simply changes the look and feel. You may choose to do this when you’ve undergone a brand change. Or it may require a more current look and feel to avoid looking dated when compared to competitors.
Communicates your firm’s brand, values, and mission clearly
Uses current design trends, demonstrating attention to target-market requirements
Increases usability for visitors
Showcases new products, services, and industries in a new way
Upgrades tech to increase site ranking
Improves site reach to new visitors
Costs less than and requires a shorter timeframe than a rebuild
Poor content structure and organization will still exist
SEO performance may not increase
Another redesign needed again in a year or two
Doesn’t improve functionality, but may enhance the user experience
Limited project scope
Website Rebuild Pros and Cons
When rebuilding a site, you’re not confined to look and feel. It often requires a review of existing technology, databases, code, and user experience. If you were to redraw your website’s marketing strategy, would it look different than the one you have today? If so, a redesign is in your near future.
Paul Cookson’s quote summarizes it, “Great web design without functionality is like a sports car with no engine.”
Remedies poor site structure
Boosts SEO performance and overall site ranking
Improves user experience
Applies current technology integration
Reduces the need for a redesign for a few years
Enhances technology to meet client and industry needs
Limitless project scope
Takes longer than a redesign
Costs more than a redesign
Increases the chance for scope creep and a delayed launch
How to choose?
Consider these items to help you determine if you need a website redesign or a rebuild. You can download the chart for future reference.
Content conversion rates are dropping.
Reduces sales and leads.
Mobile visitors leave the site quickly.
Google ranking has gone down, consistently.
Adding new site content is cumbersome.
In the past, the site was attracting visitors, but not as much today.
The last website design update was over two years ago.
We have a limited budget.
You haven’t’ updated the site in more than a year.
Search engine optimization (SEO) needs have changed.
Undergoing a branding change.
Competitors’ sites are more attractive, drawing in more clients.
There are technical issues such as 404, 500, or 300 errors.
Information architecture (organization of navigation and pages) is outdated.
The business has outgrown the site’s current capabilities.
Website bounce rate and analytics are subpar.
You consistently get negative reviews about the site.
The marketing channels you’re using are incompatible.
Web server overload causes crashes, turning visitors away.
The site no longer supports the marketing and sales strategy.
The site doesn’t support current CMS and HTML5 integration.
Your site host is no longer able to support the site.
The current site no longer supports technology you want to integrate, i.e., Zapier, CMS, SalesForce, Portals, etc.
Remember to work with an experienced accounting website designer before making a move in either direction. Not all designers understand the nuances of accounting websites, nor their unique SEO and user needs. The Association for Accounting Marketing has several consultant members that specialize in this area.
Randy Johnston and Brian Tankersley, CPA.CITP, CGMA review Guilded, a platform to unify crypto financial operations.
The job market will remain strong for the latter part of 2022, research from talent solutions and business consulting firm Robert Half shows.
According to the company’s “State of U.S. Hiring Survey” of more than 1,500 managers, 46% of respondents anticipate adding new permanent positions during the second half of the year; another 46% expect to fill vacated positions and only 8% foresee hiring freezes or layoffs.
Increased Demand for Contract and Early-Career Talent
Forty-five percent of managers across practice areas plan to bring in more contract professionals by year-end—especially in technology (60%) and finance and accounting (54%). In addition, 72% of employers intend to hire more entry-level or early-career professionals.
“Despite talk of an economic slowdown, many companies remain in hiring mode—and professionals with in-demand skills continue to have options,” said Paul McDonald, senior executive director at Robert Half. “In addition to staffing critical functions, employers are increasingly turning to contract talent to stay nimble while keeping projects moving forward and productivity high.”
Top Hiring Challenges and Strategies
According to the research, 88% of managers said it’s challenging to find skilled professionals, primarily due to a lack of qualified talent (38%) and candidates’ salary expectations being higher than what their company is willing to offer (22%).
In turn, employers who have the resources are using a range of recruiting tactics to win over skilled workers:
46% are increasing starting salaries.
34% are providing signing bonuses.
33% are offering remote options.
31% are evaluating candidates outside of their company’s geography and allowing new hires to live anywhere.
28% are loosening education, skills, or experience requirements.
Employers Brace for More Quits
More than half of managers (51%) reported an increase in voluntary turnover within their department in the last year. And nearly eight in 10 (78%) are concerned about more employees quitting. Those in marketing and creative (84%) and finance and accounting (79%) are most likely to worry about resignations from their team.
McDonald noted, “As long as the job market favors workers, staff retention will continue to be a big concern for businesses. Doubling down on employee wellbeing, empowerment and development initiatives can go a long way toward building staff satisfaction and loyalty as the market fluctuates.”
The online survey was developed by Robert Half and conducted by an independent research firm from June 17 to July 14, 2022. It includes responses from more than 1,500 managers with hiring responsibilities in finance and accounting, technology, marketing and creative, legal, administrative and customer support, and human resources at companies with 20 or more employees in the U.S.
Moss Adams, one of the top 15 largest public accounting firms in the United States, said on Aug. 4 that it agreed to combine with Alexicon, a niche consulting firm specializing in rural telecommunications with offices located in Colorado Springs, CO, and Tulsa, OK.
The Alexicon team, including two principals, Doug Kitch and Rob Strait, along with 10 employees, will join Moss Adams, effective Sept. 1, 2022.
“We’ve worked with Moss Adams through the years and have been impressed with their commitment to serving clients with efficient, innovative solutions. Joining Moss Adams enhances our team with broader knowledge and expanded resources for our clients,” said Kitch. “We’re excited to bring our perspective, experience and knowledge to Moss Adams. Together, we create a better experience for clients.”
“Doug and I felt aligning with Moss Adams was a strategic next step for our firm growth,” said Strait. “Our industry has evolved dramatically in the past decade, and together our firms will be well-equipped to handle the increasing complexity of services our clients require. We’ve always viewed Moss Adams as a formidable and respected competitor in our industry. Now, we’re able to combine our companies’ strengths and move forward as one team.”
Both teams are similar in their industry specialization, people-first culture, and client centric-advisory focus. Since 2002, Alexicon has served clients in rural telecommunications by providing specialized industry solutions to navigate a highly regulated, complex industry sector. Alexicon has also established a set of niche consulting services across rural telecommunications and built strong advocacy relationships with leading associations.
“We’re excited to welcome Doug, Rob and their talented team to Moss Adams,” said Clay Sturgis, leader of the Communications & Media Practice at Moss Adams. “Through the years, Alexicon has provided an exceptional client experience in the rural telecommunications space with insights for clients to navigate a complex set of regulatory hierarchy. We look forward to integrating our teams and expanding our telecommunications consulting platform together.”
“For the past 10 years, Moss Adams has seen organic growth in our Communications & Media Practice. Enhancing our service capacity is critical as we look at new avenues for continued growth and adding to our client service value,” said Eric Miles, chairman and CEO, Moss Adams. “Adding the Alexicon team strengthens that client service value with expanded expertise to meet client needs across the industry spectrum.”
The Alexicon team will remain based in Colorado Springs and Tulsa, working with professionals across the national Communications & Media Practice at Moss Adams.
A June 2022 survey of 130 CFOs and CEOs showed that 51% of organizations favor salary adjustments for only top performing employees as an employee compensation strategy, according to Gartner, Inc. Survey respondents indicated that employee performance will be a key determinant in awarding pay rises to both salaried and hourly employees as a response to cost of living increases from ongoing high levels of inflation.
“Rising labor costs are among the most negatively impactful to operating cash flow, and it follows that we see a more limited approach to pay rises either by performance or in select markets for now,” said Randeep Rathindran, vice president, research in the Gartner Finance practice. “Organizations will continue to look at benefits beyond compensation as an approach to fight employee attrition and keep costs across the labor force as balanced as possible.”
Despite a tight labor market, and high attrition risk, CEOs and CFOs are attempting to limit expectations for across-the-board pay hikes. Seventy percent of those polled indicated that pay rises would only be forthcoming either to top performing employees or those located in select markets. Nearly one in four respondents favored the most restrictive approach, offering pay increases to only top performers within selected geographic markets where inflation was the most severe.
“The data shows that for now, executive leaders intend to hold the line against large-scale pay increases, and many employees expecting pay adjustments that fully compensate for cost-of-living increase may be disappointed,” said Rathindran. “It’s clear that organizations are attempting to buy more time to read the tea leaves between persistently high inflation, the threat of recession and the state of the labor market before making significant strategic shifts.”
Rathindran said that while CEOs and CFOs are resisting across the board salary increases in the near term, additional survey data indicates that they are planning for heavier compensation investments in the future. A majority of respondents see permanent pay adjustments as a primary tactic for retaining talent, with 43% of respondents indicating they plan to deploy one-time bonuses to employees in addition to regular pay adjustments to retain talent, while an additional 39% of respondents indicated they plan to fully or partially index pay adjustments to inflation.
The National Federation of Independent Business (NFIB) Small Business Optimism Index dropped 3.6 points in June to 89.5, marking the sixth consecutive month below the 48-year average of 98. Small business owners expecting better business conditions over the next six months decreased seven points to a net negative 61%, the lowest level recorded in the 48-year survey. Expectations for better conditions have worsened every month this year.
Inflation continues to be a top problem for small businesses with 34% of owners reporting it was their single most important problem in operating their business, an increase of six points from May and the highest level since quarter four in 1980.
“As inflation continues to dominate business decisions, small business owners’ expectations for better business conditions have reached a new low,” said NFIB Chief Economist Bill Dunkelberg. “On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations.”
Key findings include:
The net percent of owners who expect real sales to be higher decreased 13 points from May to a net negative 28%, a severe decline.
Fifty percent of owners reported job openings that could not be filled, down one point from May, but historically very high.
The net percent of owners raising average selling prices decreased three points to a net 69% seasonally adjusted, following May’s record high reading.
As reported in NFIB’s monthly jobs report, owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 19% planning to create new jobs in the next three months, but down seven points from May. Ninety-four percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill.
Fifty-one percent of owners reported capital outlays in the last six months, down two points from May. Of those making expenditures, 37% reported spending on new equipment, 23% acquired vehicles, and 14% improved or expanded facilities. Five percent acquired new buildings or land for expansion and 13% spent money for new fixtures and furniture. Twenty-three percent of owners plan capital outlays in the next few months, down two points from May.
A net negative 2% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down three points from May. The net percent of owners expecting real sales volumes decreased 13 points to a net negative 28%.
The net percent of owners reporting inventory increases fell three points to a net negative 4%. Thirty-nine percent reported that supply chain disruptions have had a significant impact on their business. Another 30% report a moderate impact and 23% report a mild impact. Only 6% report no impact from recent supply chain disruptions.
A net 5% of owners viewed current inventory stocks as “too low” in June, down three points from May and still surprisingly high. By industry, shortages are reported most frequently in manufacturing (19%), retail (18%), agriculture (18%), construction (16%), and non-professional services (15%). A net negative 2% of owners plan inventory investment in the coming months.
The net percent of owners raising average selling prices decreased three points from May to a net 69% (seasonally adjusted). Price raising activity over the past 12 months has escalated, reaching levels not seen since the early 1980s when prices were rising at double digit rates.
Unadjusted, 4% of owners reported lower average selling prices and 69% reported higher average prices. Price hikes were the most frequent in retail trades (80% higher, 3% lower), transportation (78% higher, 0% lower), construction (75% higher, 4% lower), and wholesale (69% higher, 7% lower). Seasonally adjusted, a net 44% plan price hikes.
A net 48% (seasonally adjusted) reported raising compensation, down one point from May. A net 28% of owners plan to raise compensation in the next three months, up three points from May and historically very high. Eight percent of owners cited labor costs as their top business problem and 23% said that labor quality was their top business problem.
The frequency of reports of positive profit trends was a net negative 25%, down one point from May. Among the owners reporting lower profits, 30% blamed the rise in the cost of materials, 16% blamed weaker sales, 14% cited labor costs, 14% cited lower prices, 7% cited the usual seasonal change, and 2% cited higher taxes or regulatory costs. For owners reporting higher profits, 51% credited sales volumes, 19% cited higher prices, and 17% cited usual seasonal change.
One percent of owners reported that all their borrowing needs were not satisfied. Twenty-seven percent reported all credit needs met and 61% said they were not interested in a loan. A net 3% reported their last loan was harder to get than in previous attempts. Only 1% reported that financing was their top business problem.
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in June 2022.
The Securities and Exchange Commission (SEC) today charged Surgalign Holdings Inc., formerly RTI Surgical Holdings Inc., and former executives Brian Hutchison and Robert Jordheim for masking disappointing sales numbers by shipping future orders ahead of schedule to accelerate, or “pull forward,” revenue and then failing to disclose this practice to investors.
In June 2020, RTI restated its public financial statements from 2014 through 2019 to correct errors caused by this practice.
As alleged by the SEC, RTI’s reliance on pull-forwards cannibalized future revenue streams and damaged important customer relationships while the company reassured investors it was meeting revenue guidance. The SEC further alleged that RTI sometimes shipped orders early without customer approval and recognized revenue for those shipments prematurely, in violation of generally accepted accounting principles (GAAP), and that RTI’s former CEO, Hutchison, and former CFO, Jordheim, permitted RTI to recognize revenue for such shipments.
“We allege that RTI’s dependence on shipping future orders early concealed the company’s true financial performance from investors and in some instances violated GAAP,” said D. Mark Cave, associate director of the SEC’s Division of Enforcement. “This action arose out of our Earnings Per Share Initiative, which has been an important tool in our efforts to expose difficult-to-detect accounting improprieties and has enhanced our ability to hold companies and their executives accountable for misconduct.”
The SEC’s complaint against Hutchison charges him with violating antifraud and other provisions of the federal securities laws and seeks civil penalties and the return, pursuant to Section 304 of the Sarbanes-Oxley Act (SOX), of his bonuses and profits from sales of RTI stock, among other relief.
Without admitting or denying the SEC’s findings, Surgalign and Jordheim agreed to cease and desist from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 and other provisions of the securities laws and to pay civil penalties of $2 million and $75,000, respectively. Jordheim also agreed to return $206,831 to Surgalign pursuant to SOX Section 304 and to be suspended from appearing and practicing before the SEC as an accountant. The order permits Jordheim to apply for reinstatement after five years.
Separately, three other former RTI executives returned over $361,000 of incentive-based compensation to Surgalign. Their tenure as RTI executives post-dated Hutchison’s and Jordheim’s alleged violations of the antifraud and other provisions of the federal securities laws.
As the name implies, a SIMPLE—short for Savings Incentive Match Plan for Employees—is a simplified type of qualified retirement plan available to self-employed individuals and other small business owners. This type of plan has proven to be popular along with its close cousin, the Simplified Employee Pension (SEP), due to ease of administration.
Icing on the cake: The Setting Every Community Up for Retirement Enhancement
The (SECURE) Act provides extra tax incentives for using qualified plans like SIMPLEs. Notably, the SECURE Act increases the maximum available credit for starting a plan to $5,000 and creates a new credit of up to $500 per year for automatic enrollment plans.
Before we go any further, be aware that you can set up either one of two variations of a SIMPLE, the IRA version or the 401(k) version, but the IRA version is far more prevalent. For these purposes, we’ll refer to a SIMPLE as being synonymous with the SIMPLE-IRA version.
Basic premise: To qualify to use a SIMPLE, the business can’t employ more than 100 workers. This includes any employees who earned at least $5,000 in the previous year. An employee who has been paid at least $5,000 in compensation for any two previous years—and who expects to receive at least that amount in the current year— is also eligible to participate in the plan. If you choose, your business can implement less restrictive eligibility requirements.
The contribution limits for SIMPLEs are adjusted annually. For 2022, eligible employees may elect to contribute up to $14,000. Plus, an employee who is age 50 or older can add a “catch-up contribution” of $3,000, for a grand total of $17,000.
Generally, the employer must provide matching elective contributions of up to 3% of compensation (but not less than 1% in no more than two out of five years) or non-elective contributions of 2% of each eligible employee’s compensation (based on a maximum compensation of $305,000 in 2022). These contributions are deductible by the employer.
Like SEPs, contributions to a SIMPLE vest immediately. Thus, employees have the ability to withdraw funds from the plan anytime, but withdrawals made prior to age 59½ are hit with a tax penalty, in addition to regular income tax, unless a special tax law exception applies.
Tax alert: Usually, the penalty for early withdrawals from a qualified plan is 10%, but this penalty is multiplied to 25% during the first two years of participation in a SIMPLE. After two years have elapsed, early withdrawals will result in the standard 10% penalty.
Furthermore, the regular rules for required minimum distributions (RMDs) apply after a SIMPLE participant turns age 72 (increased from age 70½ by the SECURE Act), as with other qualified plans. To continue tax deferral, funds may be rolled over into a traditional IRA.
Be aware that time is on your side because a SIMPLE set up before October 1, 2022 is effective for the 2022 plan year. This gives a self-employed individual or other small business owner added flexibility. Finally, you don’t have to file an annual return for the plan. SIMPLE, right?