AZ CPA July/August 2014 by ASCPA

CPA JULY august 2014

The Arizona Society of Certified Public Accountants

ASCPA Political Contributions Report Practice Continuation for Small Firms Performance Reviews International Tax Tactics www.ascpa.com

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CPA

JULY/AUGUST 2014

Volume 30 Number 6

Practice Continuation for Small Firms

Performance Reviews: Itâ&#x20AC;&#x2122;s Time for Feedback

Develop a contingency plan now to help guide the future of your firm. by Suzanne M. Holl

Steps to help make your performance evaluation process smoother and less stressful for everyone involved. by Karen Mattull, SPHR

Features

Expanding Abroad, Now What?

ASCPA Political Contributions Report 2013-14

ASCPA members contribute money to our political efforts in order to make sure we can represent the more than 5,500 CPAs who care about their profession.

Columns & Departments 6

Chairâ&#x20AC;&#x2122;s Message by Anita Baker, CPA

Focus on Members

A Dash of SALT by James Busby, Jr., CPA

22 Classifieds Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, Arizona 85034-2021 www.ascpa.com

4 AZ CPA y JULY/AUGUST 2014

International tax tactics for businesses who are expanding across the border. by Stu Myhill

In the Black ... Adventures in Accounting

CPA

The Arizona Society of Certified Public Accountants

President & CEO

Cindie Hubiak

Editor

Patricia Gannon

Copy & Advertising Deadline The first of the month one month prior to publication date. Board of Directors Chair Chair-Elect Secretary/Treasurer Directors

Anita Baker Rob Dubberly Greg Nelson Gary Fleming Randy Fletchall Diane Groover Sandra Hieb Mike Holt Bill Judge Adam Miller Molly Montgomery Jennifer Nordstrom Vanesa Romero Jared W. Van Arsdale Craig Van Slyke

Immediate Past Chair Karen Abraham AICPA Council Members Jim Buhr Rick Goldenson Chapter Presidents Southern Chapter Northern Chapter Southwest Chapter North-Central Chapter

Flo Zenblu Kay McConagha Jayne Wright Richard Joliet

AZ CPA is published by the Arizona Society of Certified Public

Accountants (ASCPA) to provide information, news and trends in the profession of accounting. It is distributed 10 times a year as a regular service to members of the Society. The ASCPA, its members, board of directors and administrative staff assume no responsibility for advertisements herein. The ASCPA and the above people also assume no liability for business decisions made by readers in reference to statements and/or claims in advertisements within this publication. Opinions expressed by correspondents and contributors are not necessarily those of the ASCPA.

Arizona Society of CPAs 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034-2021 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 Fax (602) 252-1511

www.ascpa.com

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Chair’s Message

by Anita Baker, CPA

Ignite Your Passion I hope you enjoyed the Ignite CPA program at the ASCPA Annual Meeting. I was so impressed by the enthusiasm, dedication and professionalism of the presenters. I know that it inspired me to ignite my passion for my career in public accounting. We will certainly look for more of our members to participate in Ignite CPA events in the future. The following week, I attended the AICPA Council meeting and was introduced to the AICPA Task Force on the Future of Learning, a broad group of public accounting firm leaders, industry CPAs, leaders from the Chartered Institute of Management Accountants, regulators, association leaders and educators. The task force spent the past year discussing major trends in education, reviewing promising innovations, and determining which changes might best apply to CPA professional development. The task force’s recommendations centered around these main themes: Innovate and Experiment. Leverage technology to enhance learning experiences. Implement small changes for a huge impact. Ignite a Passion for Learning. Start with the learner’s needs. Make learning engaging and relevant. Make Learning Personal. Filter content and focus resources that address individuals’ knowledge and competency needs. Deliver any topic, anywhere, any way. Measure What Matters. Rethink compliance to measure learning competency, development, or performance. Create and leverage a unified, global competency framework. Develop one uniform, global compliance standard. The theme that resonated with me was “Ignite a Passion for Learning.” As I look back at the learning experiences over the years, I remember those that were engaging and relevant to where I was in my career. About 20 years ago, I decided to pursue the designation of Certified Em-

6 AZ CPA y JULY/AUGUST 2014

ployee Benefit Specialist, a certification through the International Foundation of Employee Benefit Plans and the Wharton School of Finance. This certification process involved 10 exams over a three-year period. At the time, I had small children at home and remember studying in the evenings after the kids were sleeping. You may wonder what motivated me to subject myself to this rigorous schedule. The only explanation is that I had a passion to learn the industry and wanted to have the credibility to consult with our clients. I also started attending the AICPA Employee Benefit Plan (EBP) conference early in my career and was encouraged to learn with hundreds of other practitioners who were focused on the EBP industry. The conference is very relevant to what I do every day and makes me want to learn new areas and improve my technical skills. I really enjoy hearing about current issues from the leaders in the profession and the regulators. After being involved with the EBP Audit Quality Center, I was able to chair the conference and participate as a speaker. My most recent opportunity for learning involves the Affordable Care Act (ACA). When the legislation was passed, our firm recognized a need for our professionals to consult with clients regarding the financial impact of the ACA. Although I am not a tax practitioner, I realized that this was a very important issue for our clients. This passion for learning about the ACA allows me opportunities for national speaking engagements, publishing articles, and most recently participating on the AICPA

ACA Task Force. I am looking forward to the last 10 years of my career and will continue to improve my knowledge and competency in the accounting profession. Please check out the interactive AICPA website, set to launch in June 2014, which explores some strategies for professionals, such as: Just-in-time learning, which provides information quickly to enable specific solutions on demand. Gamification, which inserts gaming components such as rewards, competition and feedback into learning to increase learners’ engagement. Nano-learning, which is personalized, subject-specific information supplied in small doses. Blended learning, which combines classroom work and homework. An example is the “flipped classroom,” where learners may watch videos or read information before class, and then spend class time in a lively discussion of the material. Join me in igniting your lifelong passion for learning by attending the learning events sponsored by the ASCPA. We are interested in your ideas on how to embrace new approaches, leverage technology and think creatively to help our members develop AZ CPA new skills.

Focus on Members Michael Hawthorne, CPA, has been appointed CFO at the Arizona Department of Corrections. BeachFleischman has been named one of 2014 Best Public Accounting Firms for Women by the Accounting & Financial Women’s Alliance and American Woman’s Society of Certified Public Accountants (AWSCPA). Heinfeld, Meech & Co., P.C. recently announced the following promotions: Joshua Jumper, CPA, and Christopher A. Goeman, CPA, to audit manager; Anthony St. George to senior associate; and Kenneth McGovern to staff associate II. Pat Elder, CPA, was elected to the board of the Banner Federal Credit Union.

Henry & Horne, LLP team members recently “Hiked for Hunger” to benefit United Food Bank.

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A Dash of SALT

How Arizona Sales Tax Reform Will Affect Contractors This month’s state and local tax (SALT) column focuses on how Arizona’s transaction privilege (“sales”) tax reform efforts will affect construction contractors. In 2013, Arizona Governor Jan Brewer successfully pushed for sales tax reform. Most of the changes, which will be effective on January 1, 2015, simplify the way businesses in Arizona report and pay their sales taxes and the way sales tax audits will be conducted and resolved. However, the changes also will substantively affect some construction contractors’ sales tax obligations.

How Construction Contractors Currently Are Taxed in Arizona In most states, contractors simply pay sales tax on building materials when they purchase them. However, in Arizona, contractors currently are entitled to purchase building materials tax free because they are subject to a separate, “prime contracting,” sales tax on 65% of their gross receipts from supervising, performing, or coordinating construction or demolition activities instead. So, for example, an Arizona contractor who is paid $1,000,000 to construct a building is able to purchase the building materials used to construct the building tax free but is subject to Arizona sales tax on 65% of its gross receipts, or $650,000. Under these existing rules, a plumbing company or another trade contractor that performs hundreds of small jobs all over the state in a particular month would have to keep track of where each job was performed, file a sales tax return to the state and,

perhaps, multiple sales tax returns to different municipalities to account for its monthly sales tax obligations.

Governor Brewer’s Proposal During the 2013 legislative session, Governor Brewer encouraged Arizona’s legislature to repeal Arizona’s separate prime contracting sales tax and just have contractors pay sales tax on the building materials they purchase instead, like contractors do in most other states. However, Arizona municipalities successfully lobbied against this proposal because they were concerned about the fiscal impact of this change (prime contracting taxes are paid to the city where the construction is performed, while retail sales taxes are paid to the city where the retailer is located).

The Compromise Accordingly, Gov. Brewer and Arizona’s legislature agreed to a compromise with the cities under which: (1) new construction will continue to be taxed under Arizona’s existing rules (i.e., no tax on building materials when the contractor purchases them because the contractor is subject to Arizona’s separate prime contracting tax on 65% of their gross receipts instead), but (2) contractors who enter into a contract with an owner of real property only to maintain, repair, replace, or alter that property are subject to tax on building

materials when they purchase them, but they are not subject to Arizona’s separate prime contracting tax.

The Taxation of Contractors in Arizona, as of Jan. 1, 2015 Under the terms of this compromise, it will be business as usual for contractors who only engage in new construction activities (i.e., they will be subject to Arizona’s prime contracting sales tax on 65% of their gross proceeds from new construction projects). And, contractors who only enter into contracts with owners of real property to maintain, repair, replace, or alter their property will only be subject to sales tax under the new rules (i.e., they will pay tax on building materials when they purchase them, but they are not subject to Arizona’s separate prime contracting tax). The compromise should make it easier for trade contractors who perform hundreds of small jobs all over the state in a given month to comply with their sales tax obligations. However, contractors who both engage in projects involving new construction and enter into contracts with owners of real property to maintain, repair, replace, or alter their existing property will have to comply with both

JULY/AUGUST 2014 y AZ CPA

Problem with the Board? Contact: Former Accountancy Board Member

D. Jay Ryan Attorney at Law City North 5415 E. High St., #200 Phoenix, AZ 85054 (623) 937-3737 or (602)840-8075 (fax) Free Telephone Consult Mr. Ryan is a former Assistant Attorney General who represented the Board. The Board’s first lay member/ President Law Committee Member ASCPA Honorary Member

Arizona’s old sales tax rules for projects involving new construction and with Arizona’s new sales tax rules for projects involving contracts with owners of real property to maintain, repair, replace, or alter their existing property. Some issues to grapple with for contractors subject to tax under both the old and the new rules: How to separately account for and pay tax on building materials used on projects that fall under the new rules, but not on projects that fall under the old rules; and Distinguishing between projects that fall under the old rules versus the new rules (e.g., what is the dividing line between maintaining, repairing, replacing, or altering existing property versus new construction? And, the new rules may not apply to construction contracts with lessees versus owners).

ize themselves with how Arizona sales tax reform will affect contractors by attending the ASCPA’s Arizona Tax Luncheon on December 11, 2014. The ADOR employee responsible for implementing the new rules will make a presentation and answer our AZ CPA questions. James G. Busby, Jr., is a state and local tax attorney and CPA at The Cavanagh Law Firm. Busby previously worked in the SALT departments at Arthur Andersen and Deloitte & Touche. Before entering private practice, Busby was in charge of all transaction privilege (sales) tax audits at the Arizona Department of Revenue. A Dash of SALT ™ is provided for informational purposes only and does not constitute legal counseling. Contact the author at (602) 322-4146 or jbusby@ cavanaghlaw.com.

Practice Tip! – CPAs who work with or for contractors may want to familiar-

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Arizona Society of CPAs

Political Contributions Report 2013-14 The ASCPA PAC has your back! When it comes to being successful as a CPA, youâ&#x20AC;&#x2122;re covered. The ASCPA PAC is the voice of the CPA profession in Arizona. Lawmakers listen when we speak and initiate conversations with us to improve their decisions. Guided by our lobbyists of more than 20 years, DeMenna & Associates, the ASCPA PAC and ASCPA leaders contribute money to a wide variety of candidates, current lawmakers and both major political parties. We make sure those who impact the CPA profession know we represent more than 5,500 CPAs who care about their credential and Arizona. The CPA voice is heard loudest when we combine our resources, both knowledge and financial. Our members contributed more than $50,000 last fiscal year to open doors, share ideas and make sure the CPA voice was heard. Please make sure this continues by contributing to the PAC today at www.ascpa.com. JULY/AUGUST 2014 y AZ CPA

ascpa POLITICAL CONTRIBUTIONS REPORT 2013-14 The ASCPA Making an Impact Even though both my wife, Sue, and I are retired CPAs, we both still

Total Political Contributions for 2013-2014

believe it is not only important, but a responsibility to our profession, to contribute to the ASCPA PAC. During my tenures as chair of the ASCPA, and president of the Arizona State Board of Accountancy, I was able to experience firsthand the positive impact contributions to the ASCPA PAC have had on our profession. Making a contribution to the PAC provides the Society with the financial resources to positively impact the legislative process on a statewide level for issues affecting

$ 51,400 Amount contributed to candidates/causes $46,450

the accounting profession. — Mark Landy, CPA I would like to thank Ryan and Kevin DeMenna for all they do behind the scenes to make our PAC dollars work effectively. The most important thing to remember about the ASCPA PAC is what you do not see. We are often protected from bad legislation ever seeing the light of day. Because of the PAC, when the ASCPA talks – the legislature listens. I am not sure any of us wants to risk what would happen if the DeMenna’s stopped doing their job or if we stopped writing the checks. — Rick Goldenson, CPA The ASCPA PAC is the voice of the Society in Arizona politics. In an environment where PACs come and go, the Society’s PAC has become a fixture on Arizona’s political landscape. Elected officials recognize the Society as a critical source of information in the development of Arizona tax policy and appreciate the Society’s guidance in crafting legislation. The PAC’s contribution to the profession should never be overlooked. — DeMenna & Associates

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The ASCPA PAC gives money to both Democrat and Republican leadership and candidates supporting the CPA profession and our mission.

ascpa POLITICAL CONTRIBUTIONS REPORT 2013-14 The ASCPA is one of the most powerful political action groups in Arizona — thanks to you! We want to thank every one of our members who helped advance the CPA profession with their contributions this year. Listed here are the people who donated $250 or more to our legislative efforts. Sandra A. Abalos Karen M. Abraham Sandra Akmon Michael T. Allen Mark M Anderson Cord Armstrong Corey Arvizu Frank Auletta Anita F. Baker Connie Baker Steve Bandler Bruce Beach Peter Beahan Lawrence Bello Brenda A. Blunt Francis Brady Brenda Brandt Christine Brueser Jay Buck James J. Buhr Ron Butler Debra Callicutt Brian Campbell George Cohen Diane Costantino Andreas Coumides David Damron Lisa Daniels Benjamin Darwin Deloitte Federal PAC Craig Desnoyer Bradley S. Dimond Scott Donaldson Robert E. Dubberly

Mary Duffy Mark Eberle Jacqueline Eckman Michael A. Fahlman William Farrow Kathryn Ferron Fester & Chapman P.C. Lawrence Field Michael Finnegan Marc Fleischman Gary W. Fleming Michael I. Fleming Thomas L. Friend David Gifford Rufus Glasper Richard H. Goldenson Charles Goodmiller Diane Groover Darlene Hagan Anthony Hakes Sean Hales Robert Harbour Stephen T. Harris Joshua P. Hayes William Heimerdinger George Henderson Dale Hensley Sandra L. Hieb Herbert Hoffman David Hopkins Cindie Hubiak Daniel Hughes Marla Hummel Debra Hunter

Kenneth Husband Charles Inderieden Janis Isaacson Craig Isakson Debra T. Johnson Thomas Johnson Richard Kalenka Colette Kamps Julie Klewer Joel B Kramer Chad Kunze Mark Landy Sue Landy Donna Laubscher Michael Lemme Robert J. Leslie Eric Lewis Jimmy J. Lovelace Chris Ludwig Christopher Lutes Johannes Marais Thomas Marin Marilyn Mays Jeffrey McClain Karen McCloskey Kevin McHolland Charles McLane Pamela Michaud David Miller, Jr. Adam J. Miller Dennis Mitchem Bryan Mogensen Molly Montgomery Allen Nahrwold

Ralph Nefdt Bruce Nordstrom Zandra O’Keefe Dennis Osuch CW Payne Connie Peters Bridget Phillips David Phillips Bradley Preber John Prenzno Victor Puchi Stephen Ralbovsky W. A. Ray George J. Raysik Armando G. Roman Eric Rudner LeAnn Rudolph Cynthia Schroeder Richard Schultz Robert Shanley Lisa Shepard Jennifer Shields Gary W. Smith Jeremy Smith

Andrew Spillum Leslie B. Stackpole Ronald Stearns Tracy Stone Michael Straneva Joseph Tameron Laurie Taylor Philip W. Taylor David Toler Candace Tooke Peggy Ullmann Jared W. Van Arsdale Craig Van Slyke Carlos Wagner Scott Wallace David Walser Pamela Wheeler Corrine G. Wilson G. James Wright Robert Wyndelts Melinda Xanthos Bryan Zall Edward Zollars

In 2013-14, every member of the ASCPA Board of Directors contributed at least $500 toward the ASCPA’s legislative efforts. You can make a difference as well. Contribute to the ASCPA PAC here: https://www.ascpa.com/ about/contribute_to_pac

JULY/AUGUST 2014 y AZ CPA

Practice Continuation for Small Firms by Suzanne M. Holl

No one likes to think about it, but as we age, some of us will become critically ill or injured, and some of us may experience a long-term disability. Family emergencies and obligations can also call CPAs away from their businesses for long periods of time. What would happen to our clients in such a scenario? When a client needs attestation services to obtain financing or satisfy loan covenants, or another client needs to have a tax return prepared by a certain deadline, who will complete the work? Potentially negative effects, such as missed opportunities or damage to a client’s business, are risk exposures that can come into play when a CPA becomes ill or disabled. CPAs who have not yet taken the time to develop a continuation plan may be: 1) inviting future lawsuits against themselves or their estates; and 2) leaving their spouses, families and heirs with the daunting task of trying to figure out what to do.

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What kind of contingency plan do you have in place in the event of an emergency? If the answer is “none,” what can you do now to get a plan in development and underway? The best time to plan for a crisis is before it happens. Just taking the first steps in the planning process will go a long way toward facilitating the continuation of your practice, making sure clients are taken care of, and preserving the value of the practice. Here are some basic tips on how to get a plan started:

Create a checklist of important resources and phone numbers Keep important numbers such as your professional liability insurance carrier, state board of accountancy, and your state and local CPA societies. Other important resources may include your office building manager, computer technical help, telephone service, and other utilities.

Assemble a set of practice and operating documents These documents can be divided into sections, such as: • A profile of the proprietorship, including types of services offered, names of key employees, location of accounting records, bank account information, and location of contracts and lease agreements. • A client list, including key contacts, services provided and important deadlines. (This will need to be much more detailed if you are interested in the option of negotiating a buy/sell agreement as part of a contingency plan.) • Procedures used to monitor work in progress. This will enable others to

determine the status of uncompleted work. • A guide to using the firm’s computers. • Location of work papers. • Description of filing system. • Office procedures for handling the receipt and return of client information. • Billing schedules and collection policies. • Procedures for identifying and paying accounts payable. • Location of personnel files.

Decide on a continuation arrangement/agreement There are three basic types: • A one-to-one agreement with a local CPA firm that you have identified as a good fit/culture for your firm. The agreement established between the firms should cover the critical areas that are necessary to ensure a smooth transition (both short-term and long-term) if it becomes necessary. The agreement usually has a buy/sell component with a clear formula for calculating the sales price of the firm, along with payment period and terms in the event of the CPA’s permanent disability or death. • A group agreement, in which several CPAs may act as successors/partners to each other’s firms. CPA firm alliances or associations generally serve this purpose, among other purposes. • A CPA society group that will assist the member, spouse or heirs in finding a successor/partner. A variety of elements can be addressed in a practice continuation agreement, providing for a number of conditions and terms. It’s prudent to consult with an attorney when drafting a formal agreement or contract. A formal agreement can:

• Define the circumstances under which assistance will be triggered (e.g., long-term or permanent disability, or leave of absence). • Specify a temporary timeframe. If the agreement addresses temporary disability versus permanent disability, definitions of the covered disabilities under the agreement should be included. Other applicable provisions, including client transition requirements, should also be addressed in the event that a permanent replacement of the CPA who is unable to work is required. Keep in mind, though, that people can be disabled for several months and still make a return to full-time work. Therefore, you might want to consider also including a buy-back provision in the agreement. • Specify responsibilities to be performed by the assisting party, including financial terms or compensation for assistance, and provisions for billing, collection, record retention, confidentiality, and non-compete and restrictive covenants.

What kind of contingency plan do you have in place in the event of an emergency? If the answer is “none,” what can you do now to get a plan in development and underway?

Identify, approach and partner with a suitable firm(s) Network among sources of referrals. The best organization for such networking is often the local CPA society. Other sources include bankers, attorneys, and community groups. Alliances among CPA firms are active in some regions. Some are formal associations, others informal, but one of the benefits is that they can help facilitate practice continuation planning. Some CPA sole practitioner groups will regularly meet to discuss their businesses and get to know each other. Some groups work together over a period of many years, enabling members

JULY/AUGUST 2014 y AZ CPA

The worst time to craft notifications to clients is during a crisis. Prepare template notifications to clients and referral sources ahead of time.

16 AZ CPA y JULY/AUGUST 2014

to develop a high level of trust with each other and with their firms’ employees in case one of the CPAs needs to temporarily take over for another. Practical matters are also covered during the meetings, such as office procedures, billing rates, records, passwords, and other important details. Practices that have certain niches or practice specialties will need a potential replacement CPA to have similar competencies, which may include special licenses. Another factor is whether the replacement CPA will be able to dedicate enough time to performing the role that the absent CPA performed. Some groups strategize business plans for the next five or 10 years, asking each other what they can do to make things better for their clients and themselves. In the event of a long-term disability or death, the members can act as an agent for the other’s business and help spouses negotiate what to do with the practice. The planning process can also address retirements, exit strategies, buysell agreements, and firm succession in case CPAs need to leave their practice altogether for health or other reasons.

Implement the plan Contact your attorney to draft any agreements required by the plan. Discuss the plan with your spouse and successor/partner. Communicate in writing the instructions for all parties, and set up dates for annual reviews of the plan. The worst time to craft notifications to clients is during a crisis. Prepare tem-

plate notifications to clients and referral sources ahead of time. There’s a chance that the CPA being replaced will not be available for guidance during a crisis, so the CPA who is stepping in should be well apprised of as much information as possible. Major goals for practice continuation planning include avoiding losses of clients, keeping them happy, and allaying their fears about changes in service and operations. An organized transition that is well communicated to clients is a big step toward attaining those goals. AZ CPA

Resources CPAs interested in detailed guidance for developing practice continuation plans may want to consult “Practice Continuation Agreements: A Practice Survival Kit, Second Edition,” by John A. Eads, CPA (AICPA). Additional articles on the topic are also available online, such as, “Who Would Run Your Firm?” and “CPAs Share Continuation Strategies.” Suzanne M. Holl is a CPA and is senior vice president of loss prevention services with CAMICO (www.camico. com). With more than 18 years of experience in accounting, she draws on her Big Four public accounting and private industry background to provide CAMICO’s policyholders with information on a wide variety of loss prevention and accounting issues.

Decide who will be providing feedback Most public accounting firms and businesses have many layers of management and review. Notify the person who will be delivering the review at the beginning of the review cycle about who they will be reviewing so they can be sure to pay close attention to the performance of that employee.

Train staff and management

Performance Reviews: It’s Time For Feedback by Karen Mattull, SPHR

For many of us, it’s time to provide feedback to our staff members about their performance. Conducting performance evaluations is an integral part of a staff member’s professional development and helps to define a company’s culture of communication and learning. When preparing to provide performance evaluations, it’s important to have a plan that ensures evaluations are provided in a respectful manner that allows staff members to learn which parts of their performance and behaviors are meeting or exceeding expectations. Additionally, performance reviews should touch upon which parts of their performance and behaviors need to be improved in order to achieve future success. Communicating feedback and expectations with staff members allows them to know where they stand and how their performance impacts the firm or business. The steps listed below will help to make the performance evaluation process smoother and less stressful for everyone involved.

Set clear expectations Have your staff members review their job description. Be sure that all of your employees have an understanding of what is expected of them in their role prior to evaluating their performance.

Be sure to coach or train staff and management on how to give valuable evaluations. Reviewers should be trained on the following to ensure a successful evaluation meeting: Leniency/Strictness Tendency — It’s important not to be too lenient or not too hard on an employee. Employees want to hear the truth about their performance, so be careful not to gloss over issues or focus too much on problems. Halo/Horn Effect — This is when reviewers rate a staff member good or bad on all characteristics based on an experience or knowledge involving only one situation, or in comparison with others rather than against the standards of the job. Legal Topics Only — Avoid topics with potential legal liability, such as race, color, creed, religion, gender, sexual orientation, age, family status, national or ethnic origin, disabilities, workers’ compensation injuries, leaves of absence, or military service. Recency Error — This is the tendency of minor events that have happened recently to have more influence on the rating than major events of many months ago. Favoritism — Reviewing certain staff members more favorably than others due to the nature of your positive working relationship. Allow employees to review their evaluation before delivery — Most people appreciate the opportunity to read their performance evaluation before the evaluation meeting. This will allow the staff member to gather any thoughts or questions to be discussed with their reviewer.

JULY/AUGUST 2014 y AZ CPA

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Be factual — Performance evaluations should be documentation based on fact/observable behavior and not someone’s opinion. Maintain a record for each employee including accomplishments, awards, counseling forms, trouble areas that have been discussed, suggestions for improvement, training and notes of appreciation. Evaluations can be helpful tools for the future when an employee is being considered for promotion, but also can be documentation for when an employee in not performing and ending their employment becomes necessary. Be timely — Performance evaluations can be delivered annually, semiannually, quarterly or more often if you choose. Whatever frequency your firm chooses, be sure to focus on feedback that is recent and not feedback that is outside of the review period or too old to be relevant.

to move in a positive direction. You may want to encourage employees to work with their mentor, Human Resources, or a member of management on steps necessary for improving their behavior. Coaching and training is often needed to assist employees with performing at an appropriate level. Working together with an employee to take appropriate action to improve behavior may help prevent an employee from quitting out of frustration or the firm ending the employees’ employment.

No surprises

Involving staff members in determining their own career goals will allow them to be more motivated and committed to the firm. Both the employee and the reviewer should sign and date the performance evaluation. A copy of the signed performance evaluation should be kept in the employees’ personnel file for future reference. Providing feedback and communicating expectations with staff members plays a valuable part of your businesses’ success. As managers of employees, think strategically about how you want to communicate with them so they understand you care and your goal is to help make them be successful. As a leader, you understand that no one is perfect, but high-functioning employees will welcome your feedback and appreciate the time you spend committed to their career development. AZ CPA

Performance evaluations should be used as a tool to review a staff member’s performance and shouldn’t be a document full of surprise comments about poor performance. Employees will know prior to an evaluation if they are performing well, or in need of improvement, if managers are providing them with timely feedback throughout the year. This type of frequent communication is helpful in making the evaluation process less stressful.

Focus on patterns, not one time events Everyone makes mistakes. Performance evaluations are not a record of everything right or wrong that a staff member does. Recognize consistent positive patterns of performance or behavior that you want repeated. If a staff member makes an error once, but never again, you may decide not to comment on it in their review. Leave out issues that have already been resolved.

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Employees who receive feedback for improvement, will need time to correct their performance or behavior. Areas for improvement should be phrased in a forward looking manner to allow employees

Use active listening skills During the review meeting, the staff member may need to express their concerns about content listed in their evaluation. Be sure to give the employee your full attention and listen to understand their concerns.

Agree on goals for the future

Karen Mattull, SPHR, is director of Human Resources for BeachFleischman PC. Mattull is responsible for managing the firm’s internal training and development program, benefits, recruiting, performance management and wellness programs. She also oversees the firm’s external Human Resources Consulting practice. She can be reached at kmattull@beachfleischman.com.

Entity Selection Available legal forms of registration vary by country and may include branch, partnership, LLC, or corporate structures. Three tax factors to consider when selecting the right entity are: Local taxes. Foreign countries may tax types of investment forms in different ways. Take advantage of the best local tax rates by analyzing how the foreign country taxes each type of investment vehicle separately. Foreign payment treatment. How does each foreign country look at payments coming out of their country? Assess the different tax ramifications of how funds are paid out of the country in the form of dividends, interest, royalties, management fees or a return of capital. Non-tax items. Tax compliance, minimum capital levels, and statutory reports or audits may lead your business to favor one foreign investment vehicle over another.

U.S. tax strategies

Expanding Abroad, Now What?

Tax tips and tactics for slashing international tax bills and improving the success of overseas ventures. by Stu Myhill

Taxes factor heavily into the profitability of global operations. Businesses expanding across borders can slash tax bills by as much as 20 percent as well as curtail tax compliance burdens by taking the time to prepare for international tax regimes before stepping across the border. Everything from entity selection, managing global tax footprints, strategic transfer pricing and profit repatriation comes into play for companies with global operations.

A company’s tax position in the United States is affected by both the type of foreign investment vehicle selected as well as the legal structure of the U.S. company. Foreign investments are taxed in two ways in the U.S. depending on whether the investment vehicle is treated as a corporation or a flow-through entity for U.S. purposes. Generally, earnings of a foreign corporation are not subject to U.S. tax until they are repatriated to the U.S. in the form of a dividend. As a result, corporate U.S. shareholders may prefer to have foreign investments set up as corporations so earnings can be deferred. Flow-through U.S. shareholders, however, are subject to immediate taxation and may prefer their foreign investment be in the form of a flowthrough entity to offset costs with available foreign tax credits. Access to these credits is achieved by structuring the foreign investment in the form of a flow-through entity or a corporation that is eligible to be treated as a flowthrough entity for U.S. purposes under what are called “check-the-box” rules.

JULY/AUGUST 2014 y AZ CPA

ASCPA Conferences

Emerging Leaders Conference— Aug. 15 Take your leadership skills to the next level and network with other leaders in the CPA community. Conference topics include: Guiding the Rookie & Contending the Manager: Leading through Conflict Making Your Miracle Matter, It’s in Your Hands Executive Panel on Leadership Economic Outlook Setting Goals Personally and Professionally Networking: Influence with Style

Business & Industry Conference — Aug. 21 Please join us for the first industry conference planned by your peers. Topics include: Arizona economic update; leadership; changes in technology; healthcare; working styles and generational differences; ethics; and more.

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Transfer pricing strategy How a company chooses to split profits and losses between related parties for the transfer of services, sale of tangible property or the use of intangible assets can be subjective. Tax authorities on the prowl for revenue may dispute a company’s transfer pricing policies, resulting in price adjustments, tax increases, and penalties for pricing deficiencies. All global businesses should properly structure transfer pricing practices on the front-end of transaction arrangements to significantly reduce global tax and audit risk from competing tax authorities.

Deferred taxation strategy The concept of “deferral” is fundamental to international tax planning. Businesses can time profit repatriation and country-by-country profit allocations with a carefully thought deferred taxation strategy that optimizes tax savings and addresses shareholder preferences for earnings recognition. This final piece of planning is integral to balancing treasury needs and global tax minimization; a deferred tax strategy should be high on the list of tax planning considerations for businesses expanding overseas. With taxes a top three expense for most companies, successful efforts to slash the size of international tax obligations directly supports business value. Savvy tax planning around these four tax strategies can significantly help lower tax bills and exposure for companies with global expansion plans. Stu Myhill is a leading expert in the field of international tax. He collaborates with businesses to achieve efficient tax functions and planning strategies. He can be reached at SMyhill@TaxOps.com or (720) 227.0422. TaxOps is an tax specialty firm founded by former Big Four tax executives around best practices for AZ CPA clients and employees.

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Special pricing may be available for society members.** To learn more, visit becker.com or call 877.CPA.EXAM.

JULY/AUGUST 2014 y AZ CPA

Classifieds Business Opportunities/ Practices for Sale Flagstaff CPA looking to expand. Established CPA in Flagstaff interested in purchasing clients or will work with in a transition plan. Business tax work preferred. Contact flagcpa@ yahoo.com OUR CPA FIRM IS LOOKING TO BUY BUSINESS CLIENTS — With 30 years in the valley, we are a wellestablished and growing practice who seeks business clients of every level. While our main firm is in Scottsdale, we have satellite offices in Phoenix and Glendale. Our firm is experienced at transitioning new clients after a sale and welcome CPAs looking to retire. Contact craig@awcpas.com or call (480) 990-2727 with any questions about how we can help you.

Employment

$54,588- $75,250 Plus Excellent Benefit Package, Open until Filled.Please see the City of Maricopa website for full recruitment and application details http:// www.maricopa-az.gov/web/jobs-portal. Applications will only be accepted via the City of Maricopa website. Minimum Qualifications: Bachelor’s Degree in Accounting, Finance, Public or Business Administration or related field. Public sector experience preferred. Desired Qualifications: At least two (2) years of experience in performing citywide governmental accounting, research and/ or budgeting activities.

firms in the Phoenix metropolitan area, REDW provides a broad range of services to a diverse client base. Our rapid growth and increasing demands for our services has created a need for highly motivated tax and audit professionals to join our Phoenix team. Successful candidates will have the opportunity to enhance their technical and professional skills, build and expand client relationships, and learn from industry leaders. If you are looking for a career instead of job and have what it takes, apply at: redw.com/careers or contact Jessica Taylor at jtaylor@redw.com.

SENIOR TAX MANAGER — CPA required. Prepare and review complex business tax returns. Part time position. Dynamic firm. Paperless environment. Highly technical. Qbooks, Lacerte, RIA and Practice CS are utilized. Flexible hours are available. Attach resume in pdf to lams12@aol.com.

Tax Director—KeatsConnelly— The Tax Director will report to the CEO and will be part of the leadership team. All of the clients of the firm will have US-Canada tax issues, so some international knowledge is important, but being an expert is not required; we will train. What is required is a strong leader, coach, mentor, teacher, etc. The applicant will need to have hold a CPA license or have a JD; a Master’s degree in tax is preferable, with a minimum of

TAX AND AUDIT PROFESSIONALS – REDW — As one of the largest, fullAccountant — City1 of MarPAS Postcard Front r8.pdf 3/3/14 5:06 PM icopa — Annual Salary Range: service CPA and business consulting

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Office Space

10 years of tax experience. http://www. keatsconnelly.com TAX SENIOR OR MANAGER — Preston CPA, PC - East Valley CPA firm looking to hire tax senior or manager. CPA preferred with lacerate experience and excellent communication skills. Potential for ownership in the future. Send resume to dave@prestoncpa.biz or fax to Dave (480) 820-0116.

Misc. BUSINESS PROPERTY TAXES TOO HIGH? — I’ve been doing property tax appeals for over 15 years. Business (personal property) taxes are the least understood but have the potential for the largest refunds. Prior years refunds include interest. Arizona CPA. Contingency fee only. I’m on Linked In, Facebook and Twitter. Website: www. asmrconsulting.com. Call John at ASMR Consulting LLC, (480) 204-1289.

DOWNTOWN PHOENIX CPA ANNEX-DESIGNED BY A CPA FOR A CPA — nine were available, ONLY three left. Free Rent and Free Parking. Office Space $500 per month. Ideal for sole proprietor. Walk to Ball Park, Basketball Arena and great restaurants. Dynamic environment. Collaborate. Share resources. Class A Office. Call Lance at (602) 741-7876. www.office4cpa.com.

to share office space, administrative and professional staff with another CPA or larger CPA firm. Willing to merge or possibly purchase your practice in the future. If interested, please respond to scottsdalecpa123@gmail.com.

To place a classifed ad, visit www.ascpa.com and to go to marketplace. ••• For information regarding display advertising, contact advertise@ascpa.com.

Office Space & Cubicle for Lease at Shea Corporate Center — Professional office and cubicle for lease in Shea Corporate Center. Office is 140SF and cubicle is 65SF. Office rent $600/mo and cubicle $250/mo. Shared conference room and client entryway. Utilities and internet included. Please call Jill at (602) 283-2793. Share Space Or Merge—Established North Scottsdale CPA would like

In the Black ... Adventures in Accounting Will this make a good tax season soup?

What are you doing now that tax season is over?

Concept: Heidi Frei Illust.: Jack Gannon

What are you Which stapler will work with doing, Ira? this stack of paper?

While those are some great questions, you can also find answers to questions like these on Connect.

ad th ien ity l c My ident e. an t issu f ld the shou o h ? W call I

Do I ha ve to giv backup ea of a tax program file to a former client?

Are employers in compliance of ACA if they reimburse employees for buying insurance through the exchange?

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Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034

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Committed to a

strong and healthy ArizonA

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For 75 years, we have been helping take care of Arizonans. We focus on the health of our members and the well-being of the communities in which they live. That’s why we’re proud to support Arizona Society of CPAs and the work they do to foster a strong and thriving business climate now and far into the future.

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