Here's a very useful How-to video by Bill Detwiler, the Head Technology Editor for TechRepublic.
Tuesday, November 24, 2009
Wednesday, October 14, 2009
Value Added Tax for the United States?
The possibility of the United States adopting a Value Added Tax is in the news as of late. Here's something from Reuters. Excerpt:
Of course, my focus on the VAT has to do with selling consulting services. Obviously I haven't had to collect sales tax on my services since they are not taxable. I'm not sure this is the case with a value-added tax. Because I'm incorporated and have my corporation pay me for services, won't I have to pay VAT on the difference between my W2 compensation and what I bill per hour? In which case it would seem like increasing my W2 wages would be a good idea to avoid a large VAT. But that would naturally raise income taxes.
So I guess I'll go back to the old standby of raising my rates in case of a VAT. That ought to work. I guess that guy was right about death and taxes. Can't avoid either.
Here's an interesting paragraph from the somewhat shoddy yet nevertheless very informative VAT page on Wikipedia.
The page also discusses how massive accounting efforts are expended on enforcing a value-added tax, so net revenues from VATs are often lower than projected. Big surprise there. Also the regressive nature of the VAT is criticized, but it notes that the burden of any tax is shouldered most by the consumer except for a progressive income tax.
Hank Gutman, KPMG tax principal, director of the Tax Governance Institute, and former chief of staff of the U.S. Congressional Joint Committee on Taxation,will serve as moderator of the panel discussion.
"The realities of the U.S. fiscal situation—including an estimated $1.4 trillion deficit for Fiscal Year 09, projected deficits in excess of 5 percent of Gross Domestic Product and rising demands from entitlement programs—are leading tax policy makers to consider additional revenue sources," said Gutman. "A value-added tax, which taxes the transfer of goods and services, will clearly be on the table as a topic of increasing discussion," he added, pointing out that VAT is one of the world's most popular taxes and is in use in more than 130 countries.
Of course, my focus on the VAT has to do with selling consulting services. Obviously I haven't had to collect sales tax on my services since they are not taxable. I'm not sure this is the case with a value-added tax. Because I'm incorporated and have my corporation pay me for services, won't I have to pay VAT on the difference between my W2 compensation and what I bill per hour? In which case it would seem like increasing my W2 wages would be a good idea to avoid a large VAT. But that would naturally raise income taxes.
So I guess I'll go back to the old standby of raising my rates in case of a VAT. That ought to work. I guess that guy was right about death and taxes. Can't avoid either.
Here's an interesting paragraph from the somewhat shoddy yet nevertheless very informative VAT page on Wikipedia.
Revenues from a value added tax are frequently lower than expected because they are difficult and costly to administer and collect. In many countries, however, where collection of personal income taxes and corporate profit taxes has been historically weak, VAT collection has been more successful than other types of taxes. VAT has become more important in many jurisdictions as tariff levels have fallen worldwide due to trade liberalization, as VAT has essentially replaced lost tariff revenues. Whether the costs and distortions of value added taxes are lower than the economic inefficiencies and enforcement issues (e.g. smuggling) from high import tariffs is debated, but theory suggests value added taxes are far more efficient.
The page also discusses how massive accounting efforts are expended on enforcing a value-added tax, so net revenues from VATs are often lower than projected. Big surprise there. Also the regressive nature of the VAT is criticized, but it notes that the burden of any tax is shouldered most by the consumer except for a progressive income tax.
Wednesday, February 04, 2009
Third party deals are a mixed bag
I'm working through a consulting company right now and it has been a great experience so far. The staff is professional, they don't micromanage and they can deal with my rates, about which they never complain.
I received a call the other day from another consulting company and if my initial read is correct, dealing with them would be lousy. The account manager called me and talked to me for 20 minutes straight about how tough the sell was going to be to the particular customer. The entire conversation on his part was obliquely related to the expectation of hourly rates and how mine were higher than what they were hoping for.
My reaction to this is always the same: "OK. So?" In other words, what's the problem? If the number is too high, find somebody else. Well there's the problem. It's hard to find an independent consultant specializing in this particular niche technology. You can always call the software company who owns the technology we're talking about—they have consultants, too. Here's the catch: they want to score over 200% of my rate for their consultants.
So it's all relative to the market just like every service for sale. Here's the bottom line question for third parties: are they willing to tell the end client the "bad news"? Because I never hesitate.
I received a call the other day from another consulting company and if my initial read is correct, dealing with them would be lousy. The account manager called me and talked to me for 20 minutes straight about how tough the sell was going to be to the particular customer. The entire conversation on his part was obliquely related to the expectation of hourly rates and how mine were higher than what they were hoping for.
My reaction to this is always the same: "OK. So?" In other words, what's the problem? If the number is too high, find somebody else. Well there's the problem. It's hard to find an independent consultant specializing in this particular niche technology. You can always call the software company who owns the technology we're talking about—they have consultants, too. Here's the catch: they want to score over 200% of my rate for their consultants.
So it's all relative to the market just like every service for sale. Here's the bottom line question for third parties: are they willing to tell the end client the "bad news"? Because I never hesitate.
Wednesday, March 07, 2007
Telecommuting Sensibilities
As the need for Progress and QAD professionals heats up – and it is heating up – contractors are once again trying to sell their services remotely, i.e., the "telecommuting" option. There are many facets to landing a telecommuting gig, and the biggest two are value and trust. Following is my advice to contractors in marketing their remote services based on my understanding of these two critical issues.
Many contractors are extremely poor sales people to begin with and their attempts to snag remote work are nothing short of laughable. One guy's pitch to me was that a stipulation of his joint custody agreement was that he remain within a certain geographic area. That alone does not merit throwing his résumé into the "when hell freezes over" pile, but it does earn a trip into my "don't call us, we'll call you" stack, maybe not at the bottom, but certainly not the top. It's simply too difficult to remarket skills when they are attended by certain kinds of baggage.
I usually try to explain to remote contractor hopefuls that trust is a big issue and that anything that might call said trust into question is a deal killer. It's different if you've already worked for the firm to whom you are marketing your remote services. But even then, there remains the expected and actual level of service and availability which is lower with a telecommuting professional by nature. This affects perceived value for the good reason that, for most consultants, working remotely usually impacts actual value. Even assuming absolute conscientiousness on the part of the consultant, usually he/she cannot react just as quickly to user demands nor contribute as effectively in meetings and conversations outside a facility. Simply put, there is a certain "X factor" missing where X can be loosely defined as "being there." This is true even if the firm is utilizing state of the art online meeting technology and the managers aren't shy about calling teleconferences and video conferences and the consultant is and extremely good communicator.
To make up for what is lacking in a telecommuter's virtual presence as opposed to his/her actual presence I've only heard one good recommendation. It came by way of a contractor and it is simply that he would be willing to accept a 25-35% rate discount for doing remote work. I didn't have an opportunity to place the consultant with the client, unfortunately, but I did notice that the proposal has a double-effect. First, his lower amount became competitive even with off-shore rates which gets the attention of the hiring firm very quickly. Offer someone an off-shore rate deal with no cultural or language barriers and you might be accused of selling a pipe-dream to an IT manager.
Secondly, it tacitly acknowledges the value/availability discrepancy and shows the willingness to adjust the rate accordingly. After all, the decrease in drive time, mileage and travel costs are lower for the contractor, sometimes markedly so.
The dramatic "off-shore" comparison will not always be there; the rate still may be higher than the client firm wants to pay, for senior consultants especially, and the price difference may have little effect in those cases. But regardless, when contractors learn to implicitly say "I want to add value to your IT department" rather than "I want to charge a market (read: high) rate" they will have more success at landing a remote gig.
Many contractors are extremely poor sales people to begin with and their attempts to snag remote work are nothing short of laughable. One guy's pitch to me was that a stipulation of his joint custody agreement was that he remain within a certain geographic area. That alone does not merit throwing his résumé into the "when hell freezes over" pile, but it does earn a trip into my "don't call us, we'll call you" stack, maybe not at the bottom, but certainly not the top. It's simply too difficult to remarket skills when they are attended by certain kinds of baggage.
I usually try to explain to remote contractor hopefuls that trust is a big issue and that anything that might call said trust into question is a deal killer. It's different if you've already worked for the firm to whom you are marketing your remote services. But even then, there remains the expected and actual level of service and availability which is lower with a telecommuting professional by nature. This affects perceived value for the good reason that, for most consultants, working remotely usually impacts actual value. Even assuming absolute conscientiousness on the part of the consultant, usually he/she cannot react just as quickly to user demands nor contribute as effectively in meetings and conversations outside a facility. Simply put, there is a certain "X factor" missing where X can be loosely defined as "being there." This is true even if the firm is utilizing state of the art online meeting technology and the managers aren't shy about calling teleconferences and video conferences and the consultant is and extremely good communicator.
To make up for what is lacking in a telecommuter's virtual presence as opposed to his/her actual presence I've only heard one good recommendation. It came by way of a contractor and it is simply that he would be willing to accept a 25-35% rate discount for doing remote work. I didn't have an opportunity to place the consultant with the client, unfortunately, but I did notice that the proposal has a double-effect. First, his lower amount became competitive even with off-shore rates which gets the attention of the hiring firm very quickly. Offer someone an off-shore rate deal with no cultural or language barriers and you might be accused of selling a pipe-dream to an IT manager.
Secondly, it tacitly acknowledges the value/availability discrepancy and shows the willingness to adjust the rate accordingly. After all, the decrease in drive time, mileage and travel costs are lower for the contractor, sometimes markedly so.
The dramatic "off-shore" comparison will not always be there; the rate still may be higher than the client firm wants to pay, for senior consultants especially, and the price difference may have little effect in those cases. But regardless, when contractors learn to implicitly say "I want to add value to your IT department" rather than "I want to charge a market (read: high) rate" they will have more success at landing a remote gig.
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