No Time Sheets; No Hourly Rates

Photo of a man who might be a CPA I was trained in Public Accounting, as a CPA. I’m not sure that’s a good thing; I’m pretty sure it’s not a bad thing. Before you ask, I don’t do tax returns and I know very little about IFRS other than the acronym and that it’s important.

I do know, however, that time was important in public accounting. We lived and died (not literally, but in our careers) by the billable hour. More was better; too few and you’d find yourself in the unemployment line or looking for another job.

For management, it was an easy way to judge our contribution. Clients often didn’t receive it very well, particularly when the invoice was more than the “estimate.”

As of March 1, 2012, the only billable hours at DGG will be those we have to track because of existing contracts. Those contracts will end sometime in the next 8 or 10 months, and we will offer fixed prices to all of those customers.

Net results? (a) We can focus on delivering quality rather than billable hours. (b) We will manage delivery of a high quality product on time and on budget rather than managing the number of hours. (c) Customers will know exactly what the invoice will be at the end of the work. No surprises.

So, the billable hour is dead at DGG. Time sheets are dead. Hourly rates are no more.

From now on, we’ll use the time we save to help customers get more profit out of their existing systems. That was how I got into this business in the first place, and it’s what DGG is best at.

Payroll (Social Security) Tax Holiday Extended

Our friends at Ford & Harrison, LLP (labor attorneys) forwarded their newest newsletter with the information that Congress passed the 2% Social Security tax extension bill without waiting until the last minute. Ford & Harrison’s newsletter reads:

Executive Summary: On February 18, 2012, the Senate passed a bill that extends the tax break on the employee portion of the Social Security Old-Age, Survivor and Disability Insurance tax (OASDI) through the end of 2012. The House of Representatives had passed the bill earlier in the week, and it is now awaiting signature by President Obama.

Last week, the House of Representatives and the Senate passed The Middle Class Tax Relief and Job Creation Act of 2012, which extends, for the remainder of 2012, the 2% payroll tax cut that is otherwise scheduled to expire at the end of February. The bill has not yet been signed by President Obama, but he has said that he will sign it.

Thanks for the info, F&H. Very timely! I was concerned about doing another round of Payroll Tax updates to prepare for the end of the Social Security reduction only to go back in a week after they passed the bill and undo what we’d done.

As to Congress, maybe they are getting the idea that we’re tired of their shenanigans and posturing!

Business Update: The IRS Has an Official Email Address

The email address for the IRS isn’t Nor does the IRS have a website at address. I’m not pulling these from the air. They were actually in an email sent to me with From: IRS Tax Notification Department and Subject: Failure to file tax return on time.

The email body was gobbledygook about section this and subsection that. It indicated that I owed a $10,000 penalty which I could avoid by visiting the website.

If you get one of these, don’t fall for it.

IRS does not send notices via email. You get them in the mail.

And is the official website. Anything else is suspect.

Tax fraud is on the rise. Don’t be a victim!

Payroll Withholding Set to Increase March 1

Congress hasn’t seen fit to extend the payroll tax reduction (2% reduction in Social Security for employees) beyond February 29, 2012. Be ready to install another payroll tax table shortly before the deadline (and another one when they finally decide to do the extension). Intuit has already sent email notices to payroll subscribers indicating that their update is ready.

Focus on Business, Not on Technology

A business CEO sent me a report on their hardware and technology done by a consultant from another state. A quick scan of the proposals in the consulting report told me that there was virtually nothing in the infrastructure and hardware that the consultant didn’t recommend replacing. Everything from the cabling in the walls to the servers and the backup needed replacement, according to the report. The total cost was well above $100,000 (the cable alone was about $10,000 to $15,000).

“Could I ask you a few questions?” I asked.

“Sure,” he said.

“How many employees do you have?” Nineteen.

“What are your business goals for the next year or so?” I asked. Better service. More efficiency. Better ability to use our resources.

“So you’re trying to make your system more efficient in order to re-purpose staff to do more customer service and customer contact?”

“Yes,” he said.

“Tell me a little bit about the issues you’ve been having with your system,” I said.

He referred me to another employee who, “had a long list of things that were going wrong.” He said that the list was mostly little irritations. Things that went wrong over and over.

“Suppose that you did all of these suggestions. Spent all of the money. And suppose that spending the money solved all of the issues that you’re having. Would this move you closer to your goals? Would it automatically let you give better customer service?” I asked.

He was quiet.

Hardware and infrastructure are like a car (automobile). Software is the gas. A drivers license means you have the training you need to operate the car. Without gas and a driver’s license, the car does you little good.

Too many IT folk forget that the reason for technology in the first place is to make businesses more profitable. At Data Guidance Group, we specialize in business technology and business software. We know enough about business to make sure that you invest in technology that drives your business goals.

Sad State of SEO – Search Engine Optimization

There is a cottage industry that offers to increase your results on the search engines. Some people think it works, but there are many companies out there selling what amounts to garbage for SEO.

The general concept is using the key word (say “accounting software”) on a web page or blog article. Some of the companies that sell SEO services generate pages that make no sense. Here’s an example: If you can figure this gobbledygook out, let me know.