Posts Tagged ‘intellectual property’

28 Suggestions to Save Small Companies

June 17, 2012

In my dialog with the White House and Congress about the burden of Government on my small business, the following proposals will “go out” next week. These proposals would save my company up to 300 staff hours and up to $18,500 annually. Acting on the intellectual property and immigration proposals would open doors of opportunity for my company that are currently too time-consuming, costly or risky for me to open. For a small company like mine, addressing these proposals makes the difference between growing and floundering.

Define a “Small Company” for Simpler Government Processes

PROPOSAL #1 – Establish Small Company Size Guidelines to Qualify for Simpler Government Processes

A Small Company shall have simpler processes to follow to reduce the burden to comply with the law if it meets the following criterion:

  • Fewer than 50 employees.
  • Annual revenue less than $10,000,000.

The following are proposed new, formal IRS size classifications for a company:

SOHO 1 to 4 employees – a “one or two-room” business;
Small 5 to 49 employees – a “one or two-building” business;
Medium 50 to 499 employees;
Large 500 to 4,999  employees;
X-Large 5,000 to 49,999 employees;
Giant 50,000 or more employees.

Assist Business Owners On-Line and by E-Mail

PROPOSAL #2 – Create an Interest Profile for News and RSS Feeds for Business Owners

Create and maintain interest profiles for business owners to facilitate announcements and news by automatic e-mail and RSS feeds from from every Federal government department, agency, organization and Congressional representative.

PROPOSAL #3 – Develop an On-Line “Assistant” to Walk a Conventional Taxpayer through the Reporting Process

Create a profile of the taxpayer with a basic series of questions to establish most of the required complement of forms, the deposit process and the filing process from answers to a series of basic questions.

Identify nuances and special circumstances to address with a more detailed series of questions for the user to answer that have been tailored for the taxpayer.

Create a custom webpage for the user with a hot-linked library of all of the directly applicable publications, instructions, forms, worksheets, opinions and applicable IRS code.  Add hot links to on-line and e-filie processes for the required forms.

Create a a standard .ics calendar event file for each filing deadline, and e-mail them to the user.

PROPOSAL #4 – Confirm On-Line Deposits and Form Filings by E-Mail

Confirm successful on-line deposit transactions by e-mail from systems such as EFTPS.

Confirm successful on-line form filings by e-mail.

Attach PDF copies of all electronically filed forms to the confirmation e-mails.

Write Instructions to be Readable by a Non-Tax Professional

PROPOSAL #5 – Write IRS Form Instructions in “Plain English”

PROPOSAL #6 – Adopt Uniform Style and Organization for IRS Form Instructions

The following “style” and organization would significantly improve the ability of the taxpayer to read and understand form-specific instructions:

  • What this form accomplishes – the most common uses for this form (the 80% of cases).
  • When and where to file this form.
  • Who completes this form.  Who does not complete this form.  Exceptions.
  • Who receives this form.  Who does not receive this form.  Exceptions.
  • Transactions that are reported by this form.  Transactions that are not reported by this form.  Exceptions.
  • Industry-specific considerations.
  • Special circumstances that this form addresses, and how they are addressed.
  • The most common errors applying this form.
  • The most common mistakes made completing this form.
  • Where to go for further information.
  • How to complete the form, line-by-line and box-by-box.

PROPOSAL #7 – Develop Rich, “Wiki” Hot-Linking for IRS Form Instructions

“Hot-linking” terms and definitions would be extremely helpful.  Throughout an on-line or PDF Instruction, terms and phrases are used that the reader may not understand.

“Hot-linking” references would be extremely helpful.  Throughout an on-line or PDF Instruction, many references are given to IRS Code, IRS Forms, opinions and documents from other organizations.

Hot-linking techniques such as these are the basis of the Wikipedia.

Enhance On-Line Systems to Retain and Share Data

PROPOSAL #8 – Pre-populated Forms and Windows with Information from Previous Sessions and from Other Systems

Retain information from session to session and from year to year to pre-populate forms and windows for all electronic form filing and deposit systems.

The following are the most beneficial opportunities to retain data in systems:

  • Session data that does not change such as Company information.
  • Employee information previously entered for W2’s such as names, addresses and SSN.

Share information between systems to further reduce manual information entry and assist in tailoring form flows and information entry demands.

The following are the most beneficial opportunities to share data between systems:

  • A Company’s gross employee tax withholdings and withholding deposits between systems processing 941 reports and W3 reports.
  • Employee information including wages between systems processing 940 (FUTA) reports, systems processing W2 reports, and systems processing State unemployment insurance reports such as TWC.

Currently, on-line systems “stand alone”, and no data is retained.  Instances of redundant data entry requirements are numerous.

Streamline and Consolidate Forms 940 and 941 for On-Line Filing

PROPOSAL #9 – File Form 940 and Form 941 On-Line

Eliminate paper Form 940 for small companies, and build reporting functionality for Form 940 into an on-line system such as the EFTPS system.

Eliminate paper Form 941 for small companies, and build reporting functionality for Form 941 into an on-line system such as the EFTPS system.

Currently, the EFTPS system requires entry of information that is also entered onto Form 941; however, the EFTPS system makes no use of this information except to detect addition errors by the user.

PROPOSAL #10 – Increase the Form 940 Deposit Obligation Threshold

Until Form 940 and Form 941 deposit processes are consolidate, increase the Form 940 deposit obligation threshold amount from $500 to $2,500.  This change would require most small companies to make only one annual deposit for FUTA Federal unemployment taxes at the time of annual form fling.

PROPOSAL #11 – Simplify the Form 941 Deposit Rule for Small Companies

Until Form 940 and Form 941 deposit processes are consolidate, simplify Form 941 deposit rules for payroll-related tax deposits including IRS withholdings, social security taxes and medicare taxes. With regard to small company treatment, the following would be sensible:

  • You do not have an obligation to make a deposit if your accumulated tax deposit obligations for the current quarter and all previous quarters since your last deposit are less than $2,500.  However, you must eliminate any accumulated tax deposit obligation for the 4th quarter of the tax year by making an end-of-year tax deposit.
  • You are a quarterly depositor if you are obligated to make a deposit, and your tax deposit obligation for the current quarter and also the previous quarter are each less than $7,500.
  • You are a monthly depositor if you are obligated to make a deposit, and your tax deposit obligation for the current month and previous two months combined are $7,500 or more, but less than $50,000.

Currently, the Form 941 deposit rules require complicated quarterly and annual loopback considerations to establish the appropriate deposit rule for a company.

PROPOSAL #12 – Consolidate Form 940 and Form 941 into One On-Line Process

Consolidate Form 940 and Form 941 into one combined on-line process.

Update the proposed Form 941 deposit rules applied with thresholds of $3,000 to establish a deposit obligation and $10,000 for quarterly-monthly deposit rule decisions.

Streamline Form 1099 for On-Line Filing

PROPOSAL #13 – Rewrite All Specific Form 1099  Instructions

Rewrite all specific Form 1099 and other information form instructions to use plain english for better readability.

Current Form 1099 instructions are consistently difficult to read and understand.

PROPOSAL #14 – Accept Printed “Fill-in” PDF Paper Form 1099 and other Information Forms

Update the information form processing systems to accept printed fill-in pdf paper Form 1099 and other information form submissions.

Currently, the majority of paper information forms are “red forms” that cannot be printed from a “fill-in” PDF form and submitted.

PROPOSAL #15 – File Form 1099 and other Information Forms On-Line

Eliminate paper Form 1099 for small companies, and build reporting functionality for Form 1099 into an on-line system such as the EFTPS system.

Currently, the IRS “FIRE” online system that accepts information form submissions requires specialized software to create a uniquely formatted file to upload.

PROPOSAL #16 – Increase the Form 1099 Payment Reporting Threshold to $2,500

Increase the common $600 payment threshold for Form 1099 information filings to $2,500.

PROPOSAL #17 – Increase the Form 1099-MISC Payment Reporting Threshold to $25,000 for Payments to Attorneys

Increase the Form 1099-MISC payment reporting threshold to $25,000 for payments to attorneys.

Streamline Form 1120S for On-Line Filing

PROPOSAL #18 – File Form 1120S and Companion Forms, Schedules and Statements On-Line

Eliminate paper Form 1120S for small companies, and build reporting functionality for Form 1120S into an online system such as the EFTPS system.

PROPOSAL #19 – Form 1120S Statement for Other Deductions – Not Required if Less than $100,000

A statement supporting Other Deductions on Form 1120S Line 19 should not be required from a small company if Other Deductions falls below a threshold value such as $$100,000.

PROPOSAL #20 – Form 1120S Schedule M2 – Not Required for only One Shareholder

Form 1120S Schedule M2 should not be required from a small company with only one shareholder.

PROPOSAL #21 – Form 1125A – Not Required if Cost of Goods Sold Less than $100,000

Form 1125A reporting Cost of Goods Sold and changes to inventory valuation should not be required from a small company with a cost of goods sold corresponding to line 8 of the form that is less than a threshold value such as $100,000.

PROPOSAL #22 – Form 4562 – Computers and Cellphones No Longer Considered to be Listed Property

Listed property in the context of Form 4562 should not include equipment that is essential for every small company.  Computers and cellphones should no longer be considered listed property.  Part V of Form 4562 should not need to be completed to report the depreciation or the Section 179 expensing of computers and cellphones.

PROPOSAL #23 – Form 4797 – Not Required for Gain or Loss on Sale is Less than $2,500

Form 4797 report gains and losses on the sale of company assets should not be required from a small company if the gain or loss is less than a threshold amount such as $2,500.

Assist Small Companies to Patent and Use Intellectual Property

PROPOSAL #24 – Permit Provisional Patent Application Renewals by a Small Company

Permit a small company to renew a provisional patent application twice to preserve the opportunity to file a conventional application within three years instead of only one year according to current law.

A small company that files a provisional patent application may not be able to complete an invention disclosure and drawings before the provisional application expires.  Further, a small company may not be able to afford legal costs to complete and file the most prudent patent application before the provisional application expires.  The ability to renew a provisional application would be a tremendous benefit.

PROPOSAL #25 – Shield Small Companies form IP Litigation Costs and Ruinous Settlements

Shield small companies from intellectual property litigation costs that might be ruinous.  Provide mandatory pro bono arbitration services for a small company to address infringement in lieu of courtroom litigation.

Shield small companies from adverse settlements that might be ruinous.  Defer settlement from a small company until revenue derived from the sale of infringing products or services exceeds a threshold annual amount or until total company revenue exceeds a threshold amount.

These considerations reward a small company that might make the best use of intellect property as well as the company that owns the intellectual property.

Streamline the H1B Visa Process for Small Companies

PROPOSAL #26 – Waive H1B Visa Premium Processing Fee for a Small Company

Waive the Premium Processing fee for an H1B visa for a small company.  A small company can not afford the time to wait for the conventional H1B process or the money to pay for expediting the application.

PROPOSAL #27 – Remove Dept of Labor from H1B Process for a Small Company

Waive the requirement for a Department of Labor Prevailing Wage or PW Determination in the H1B process for a small company.

Waive the requirement for a Labor Condition Application or LCA in the H1B process for a small company.

Waive the requirement to recruit from current workers in the industry in the H1B process for a small company.

This relief of burden allows the small company to act quickly (in as few as two months instead of nine months currently) to hire the most talented staff possible in the shortest timeframe possible for the least cost possible.

Relax DCAA Compliance for Small Companies

PROPOSAL #28 – Relax DCAA Timekeeping Requirements for a Small Company

Relax the DCAA requirement to maintain timekeeping and time sheet processes for small companies to allow weekly routine e-mail submission of time sheets in lieu of more stringent systems that require hand and ink time sheet completion or a secure electronic time entry system.

The Defense Contract Audit Agency (DCAA) regulation section 2.302 require any company that seeks to qualify or actually engage with the government for a contract of any kind including a grant for $250,000 or more to adopt stringent timekeeping processes.  The timekeeping process is highly burdensome for a small business.

What do you think?  Stay tuned for news!

Further Thoughts on the Economy

November 19, 2010

THE CHINA PLAYBOOK

– A Ten-Year Agenda for a Basis to Compete Head-On

How is the US going to compete with China and prosper in the future global economy? The US may have to play a new game with new rules put forward by China as they ascend the ladder to become the next great, global economic superpower. Our standard of living depends on working with new concepts of economy management to optimize growth, new concepts of intellectual property rights to improve the rate and scope of innovation of products and services, and new approaches to taxation. The US government must abandon the “old-world” rulebook and adopt a “New-World” framework – a ‘new “Playbook” for global competition and economic survival.

A Conversation

I asked a long-standing client these questions a few days ago – the questions weren’t quite as specific, but the train of the conversation was centered on these questions:

  • Is your company investing enough in new product development? How do you know?
  • Is your company investing in new products that meet global requirements broadly enough, or are you more focused on domestic requirements?
  • Are your company’s foreign markets expanding more rapidly than your domestic market? Is your domestic market contracting, and if so, why?
  • Where is your company deriving more profit from, foreign markets or your domestic market?
  • Are your manufacturing assets fully deployed or nearly so? If not, is unused capacity growing or shrinking?

The answers were simply vague.

I was looking for a clear sense of current strategy, and I was looking for statistics and measures that would support a rational and defensible strategy. I was also looking for evidence of a sustainable strategy. What I heard from my client is that the future is not sufficiently stable or secure enough to plan confidently. Before I take a step forward on the pressing micro issues for my client, I think we will take one step backward together to understand some macro issues and how they drive the micro issues my client is asking about…

As I was about to turn the conversation to less “heady” topics over a beer, my client asked me, “Brian, how am I going to compete with China? They play by different rules…”, and that set my brain to think…

The Economy Mission of a Government

My client’s company is confronting much the same conundrum of macro issues that face national economies such as the US economy. Substitute “country” for “company” and “industry” for “product” in the questions I asked my client, and you have significant questions for a National economic policy to address. Unlike my client, I think I can clearly discern the answers to some of the questions as they pertain to the US economy today. To a great extent, I think that the US economy is stuck in an “old-world”. I wish I had more facts to support my casual observations, but facts are hard to find – I will endeavor to look harder! And this is a “fuzzy” observation. Let me draw some conclusions and propose some new strategies for a ten year agenda for modernization of the US economic system to compete in the “New-World” marketplace with new superpower economic players.

With China’s emergence as an economic superpower, it becomes critically important to evaluate how “the rules of the game” are changing, and to recast strategies, competitive tools and expectations. There are seven frameworks or “eco-pillars” for a more modern US economy to compete head-on in a “New-World”. On the surface, they are all familiar. Currently cast in the “old-world”, though, these frameworks require substantial revision.

1) Investors, enterprises and consumers must all be “willing and able” to participate in the economy.

2) Investors, enterprises and consumers must expect a “square deal” in an efficient market.

3) The economy must grow for investors, enterprises and consumers, and the growth must be sustainable.

4) Essential infrastructures and services must be accessible, reliable and effective for every economy participant.

5) Ownership and control of intellectual property must allow for easy access and efficient exploitation by all economy participants; exploitation of private information must allow for control by the individual owner.

6) Investors, enterprises and consumers must pay the Government for the benefits they derive from the Government.

7) The workforce must be adequately and suitably skilled and continuously trained.

Is Less Government Better?

I have wondered this for decades: “Is less governmental participation in the economy better than more?” Like the three bowls of porridge, the challenge is to find the bowl that is “just right.” The lawless tendency of opportunists in the “Wild West” demanded a host of new laws and measures to enforce those laws. Things haven’t changed, really. The irresponsible risk taking that created the mortgage debt crisis is a good example of reckless speculation and profiteering and how it is harmful – the “Wild West” has simply been recast in the modern-day world. It is clear to me that there is a mandatory economic regulatory and management role for the Government to play in the “New-World”. In this sense, more is better – but it must be a much more wisely crafted role for the Government than currently exists today.

See this blog by Dr. Robert Reich, past Secretary of Labor for President Clinton:

Robert Reich

See also in one of his books: Aftershock, Knopf, 2010.

Dr. Reich is demanding change, and I think he “gets it” like few others do.

I am reminded of an observation many, many years ago in elementary school:

“Too many rules, and you can’t play the game.”

And another reminder also from elementary school:

“When you can no longer play the game, it’s time to tip the board off the table and start over (press the reset button),” and that generally creates an ugly confrontation…

You can read my entire proposal for a ten-year agenda here if you are inclined:

7-Eco-Pillars

16 Questions – Answers, anyone?

February 18, 2010

The Economy – is there a paradigm shift happening that we don’t see, yet? One that will impact us in the future? One that gives us new opportunities?

1. Economic modeling – why did the economists miss the recent global economic crisis? What should the average person look for and change in their own mental models of the economy? What is changing at the macro level and the micro level that may not be apparent to the casual observer – or maybe it is apparent, but we don’t see it very well as individual participants in the economy? Can a major economy shed almost all manufacturing, retain managerial and oversight functions, add to the service sector, maintain the current standard of living and still be a sustainable economy? Does a vibrant economy have to manufacture?? Hyper-Inflation could cure this country’s debt load (but ruin the value of my savings) – is that likely? What will potentially high future inflation do to retirement planning, and how does one insure their future financial security today?

2. Workforce – is the US workforce transitioning from an army split between sole proprietors and “W2” corporate employees to an army of “1099 mercenaries”? How do you evolve from a “W2’er” to a “1099’er”? What will the workforce look like in 2025? How do you recast your career at mid-career? What is the risk to a company that sheds experienced staff and chooses to retain larger numbers of cheaper and less experienced skilled workers? Will mentoring return to professions as a new way to utilize experienced workers?

3. Geopolitics – is China a threat to the US? Will the US economy play very well/very happily as second fiddle to China? Will the US economy even play second fiddle? To China? To Europe? Will there be a new rise of Russia in the world economy? Does a capitalist system tend to decompose into a communist system just like a communist system tends to decompose into a capitalist system? Is China really communist? Russia really capitalist? What is the economic “steady state” – a socialist system of some kind? Are the Scandinavian countries at a real macroeconomic “stable point” compared to the rest of the world?

4. Global Warming – what is the real economic impact of global warming? The real social impact? To me? To my city or State and country? To the world? Where/when is the” tipping point”, and just what is the tipping point?? What is the real cost to curb global warming? How does curbing global warming impact my lifestyle today? Five years from now? Twenty years from now? Is there a net financial gain or loss due to the paradigm shift required to curb global warming? On a micro-scale and a macro-scale? Will it matter in our lifetime? Does it matter at all – in the big scheme of things (over eons)? Is Global Warming a real problem? Is attacking global warming like adding a stoplight to a busy intersection – you have to have a significant accident before you can justify acting to fix things?

5. Healthcare – roughly 1/6 of the US economy is in the health care sector forecast to grow to 1/3 of the US economy in the future – is this a realistic forecast? Is this an unhealthy concentration of industry in the economy? The healthcare industry wants every dollar in my pocket – and when it is all gone, then I can die, I guess… I want to spend zero dollars on healthcare, not 1/3 of my personal wealth (or more) – is a 1/3 concentration on healthcare in the future economy essential for a sustainable future economy? Do we have to adopt this spending habit at this level to be fiscally healthy in the future? I want this industry to treat me like a consumer – what will it cost (tell me beforehand) – if I am not satisfied, is there a guarantee or warranty? Why should I pay for ineffective treatments or medications? Should the compensation model for healthcare change – should we pay to stay healthy, and not to get better, for example? Should we tax consumption of unhealthy food ingredients such as saturated fats, sugar and salt and health-impacting products such as cigarettes and alcohol to pay for the medical cost to society that results from the consumption?

6. Taxes – what is the real impact of the average person being unable to do their own taxes? How many people do their own taxes by following the IRS publications that the IRS mails out? Should the taxpayer be able to allocate a portion of their taxes to specific programs? What are the real consequences of a consumption-based tax system or flat tax system compared to the current progressive tax system? What would be the “ripple effect” in the economy, in other words, with different tax systems – would spending habits change significantly with a different basis for taxation?

7. Disruptive technologies – where does future opportunity lie, and what current opportunities are in decline that will be replaced by these disruptive technologies? Will “Local” and community power generation (windmills and solar panels) actually replace centralized power generation on a large scale in the future? What about miniature nuclear reactors? What about backyard fuel cells? Will nanotechnology change “everything” – paper and pens, paint, medical instrumentation and medicine delivery, food production and processing, new pollutants and new approaches to pollution management?  When will homes become “super-efficient” and LEED-certified – how will “going green” affect established housing and new housing? Ubiquitous computing and “ad-hoc” computer networks – how will computers invade our clothing, appliances, cars, homes, businesses, bathrooms, grocery stores and workplaces? How do you “jump on the bandwagon” and pitch a business plan when banks are risk-averse and VC’s are reluctant to invest, too?  Who has been successful and how did they succeed – what was the nuance that they exploited and the critical difference they brought to the market? Social networking on-line – how do you build and manage an on-line presence? Are Internet-based social networks going to change the “face” of local, State and Federal governments? Of education? Does a Tweet deliver enough context and information, or is tweeting harmful because it stifles deeper thinking and communicating en-masse?

8. Intellectual Property – is there really value in patenting inventions? For the individual inventor? For the corporation? What are the flaws in the system that must be repaired? How does the individual best protect their intellectual property today and tomorrow? How does “open source” impact the future of intellectual property ownership and its exploitation by the creator? By others?

Odds and ends – a hodgepodge of curious mishmash – with tangible impact to our prosperity and well-being…

9. Education – is there a beter way to learn? The US spends more per student on public education than any other country in the world, but ranks in the middle ground on measures of success in the K-12 programs – why is that? How can schools better engage students? Parents? Teachers? What is the impact to the future economy of the US if our children are poorly educated compared to the rest of the world?

10. Privacy – do we actually have a Constitutional guarantee of privacy – a “real” right to privacy? Is privacy now a “thing of the past”? How do you protect your privacy? Should you even worry about it? Do you want to be bombarded my “meaningful” advertising and promotion in the future instead of the mass-mailings received today because a marketer knows more about you that you know about yourself? Do we need to sacrifice our privacy for the sake of our security? Is there a shifting balance in privacy vs. security that needs to be recognized and arrested or even reversed?

11. The law – I can’t read the law and understand it (and I am pretty smart) – is that ultimately damaging to a democratic society? There are so many laws – how do you remove from the body of law when the compulsion of legislators is to add to the body of law? Is it harmful to have laws that are inconsistently enforced, or laws that are unpopular or onerous and simply disregarded by the public? Why isn’t computer or network hacking treated like criminal trespassing, and identity theft treated like burglary? The law tends to focus on the tail-end (the consumer end) of an illicit “food chain” and not the head-end (the producer) or the middle (the distributor) – why this enforcement focus when it isn’t effective to stop the flow of illicit goods and the resulting profiteering?

12. Prisons – roughly 10% of the US lives has lived in prison at some time – what is the cost? What is the lost economic contribution of the prison population? What is the ability to constructively reintegrate convicts into society? The ability for a convict to be reformed? What is the opportunity cost of the “war on drugs”? What is the cost to incarcerate individual consumers for “victimless” crimes and “possession” crimes?

13. Terrorism – can technology ever really protect us effectively from terrorists? Full body scanners, ariel drones with cameras, particle detectors for bio/rad/chem threats? What’s next? How do you evacuate a city?  What is the real threat of “cyberterrorism” – what will it look like, and how would it impact us? What is being done about cyberterrorism, and how are we protected today? How will be better protected tomorrow? Is ID theft really a dimension of cyberterrorism – should it be considered as such?

14. Religion – has the notion of “separation of Church and State” disappeared from our culture? Is the US really a “Christian State” just like Iran is a “Muslim State”? What does the Declaration of Independence, the Constitution and the Bill of Rights really say about the separation between Church and State?

15. Media and creative self-expression – how do you self-publish a book or magazine or blog and make it a business? Amazon and Lulu publish individually generated physical media (paper, CD’s and DVD”s) on demand for anyone. WordPress and Blogspot publish on-line media on demand for anyone. How do you market and prosper with these relatively new capabilities? What is the business model? How do you get started?

16. The power of volunteering – is volunteering a new future wave of economic contribution for the individual? Has it ever been measured? What is the total economic value of volunteerism today locally? Nationally?Globally? Are some cultures reluctant to embrace volunteerism? Which, and why? How to “infect” uninterested individuals and cultures?

If you know the answers, please let me know…