RAINMAKING – Are you being SMART? Medical Device Companies & Multi-State Tax Issues
As you know, at Miles Consulting Group we’re all about helping companies approach multi-state tax issues such as defining nexus, determining the taxability of various products and services, and complying with state income tax and sales tax regulations and more. State tax legislation affects companies in a wide variety of ways, which is part of what makes the topic so complex.
In this brand new series, we’re going to explore the nuances of state taxes as they apply to various technology industry niches. After all, we are based in Silicon Valley, and have had the privilege to work with some of the nation’s most innovative companies. Today’s focus is medical device companies!
An Overview of Medical Device Companies
This subset of the technology industry actually covers a fairly large spectrum. The FDA defines a medical device as, “An instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent or other similar or related article, including a component part, or accessory, which is:
- Recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
- Intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
- Intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.”
Rainmaking – And the Elephant in the Room
Happy New Year! Hopefully my readers are in full swing thinking about their revenue goals and rainmaking plans for 2016. Many of you in the tax preparation world are taking those last few deep breaths, doing a little networking and getting prepared for the busy season onslaught. Those of you not in tax are also busy with year-end financial reporting and possible new projects for the new year. Unfortunately, busy season and busy season mindset is not conducive to consistently generating revenue and staying on a plan for rainmaking in the upcoming months. I’ve talked before about a consistent plan. And coming off of that plan for 2 ½ months isn’t a great option.
The Elephant
The elephant in the room around this is our time restraints. It just stands to reason that during busy times we are not as focused on generating more revenue. Our mindset is that we barely have bandwidth to do the work in front of us in the next few weeks – let alone taking on additional work. But, it’s also important to remember that the work we do today on rainmaking activity will bring us revenue down the road. And, consequently, if we don’t engage in some outreach activities, we may be short of our revenue goals later in the year. Good rainmakers are always looking out for the next project, because it’ll be nice to have some revenue in June and July too! But that hourglass sits there with its sand draining, and you let yourself off the hook regarding your outreach activities because it is busy season.
Think Differently
If you want to be a rainmaker today and in the future, you have to think differently. Once you’ve practiced it and you’re really at the rainmaker level, you’ll be bringing in business and delegating it. Obviously there’s a balance, but you will be viewed differently within the firm if you are generating sales rather than simply doing work. If you are a sole proprietor (and not reporting to someone else about your Rainmaking prowess), and you have more work than you can do – think about hiring someone. This is really where you need to ask yourself about your motivation. Do you want to take the next step and be viewed as a Rainmaker in your firm or for yourself? This is where the rubber meets the road.
So, yes, I’m suggesting that even when you’re at your busiest – carve out some time to intentionally go to meetings and do some networking. Pick your events carefully so you don’t waste your valuable time. If you are a tax person, sure, you’ll go to fewer events in February and March than you will in May or June, but enough to keep the networking touches going. Also, keep in mind that you can do some networking with existing clients during your one-on-one tax return planning meetings and begin planting the seeds for follow up projects in a few months. The key is, don’t take a complete break from rainmaking activities during busy season because you’ll find yourself behind in May and June. You might even find that getting out of the office a little bit during your craziest time gives you some needed energy from some people that are NOT in “busy season mode”.
In short, as you think about your Rainmaking strategy for 2016, make sure you build in small chunks of networking time even during your busy season so that you don’t get too far behind. That elephant is going to continue to take up space if you let him.
Permanent R&D Credit
It’s nice to start 2016 with some good tax news. Right before 2015 ended, the US Congress passed a significant bill that seeks to help American taxpayers keep their money and grow our economy. Last December, Congress passed a bill, referred to as “Protecting Americans from Tax Hikes Act of 2015” (PATH). For many years, there have been essential tax credits and benefits that expired every year with no certainty of extension. With PATH, that uncertainty goes away as it permanently extends more than 20 tax relief provisions.
The bill includes provisions for individuals, families, and businesses. A major provision that we want to focus on is the extension and modification of the R&D credit which is stated in section 121 of the bill. To see the entire bill, click here.
The provision permanently extends the research and development (R&D) tax credit. For years, the R&D credit had to be renewed by Congress annually (and some years wasn’t at all). Read more
Conducting Business in the Golden State [California State Tax Woes]
Do you conduct business is California? The state is known for a less-than-friendly atmosphere for clients, yet the economy is responsible for $2 trillion in business annually. With 1.37 million businesses and 17 million workers, many companies are choosing to maintain a presence despite California’s state tax system scaring many others away. In fact, another article recently concluded that California is one of the best places for new business. So what’s the real story? It’s probably something in between! The truth is, as the nation’s largest state, California is a hub for commerce, and many businesses can’t afford NOT to be here.
Why do businesses stay?
In a recent article, Joe Vranich, a corporate relocation specialist and harsh critic of the Golden State’s business climate, still says, “This is the single most beautiful state I’ve ever lived in…I have the best quality of life I’ve ever had here. And the weather, I tell people I think this is the weather we’ll find when we get to heaven.”
As a resident myself, I have to agree the state does have an appealing draw. It’s not all weather and beauty, either. There are particular fields California has a stronghold on, such as technology and entertainment. And, the state has started doing what it can to try to entice companies to stay too, by providing some credits and incentives to offset the hefty California state tax costs (see our recent blog about the state’s California Competes Tax Credit). Of course, other states offer credits and incentives as well, so some of that is just California trying to keep up.Read more
Happy New Year!
It’s the time of year to reflect on the past year, and then to make resolutions for the upcoming year. I’m working on those resolutions (aka "the plan for 2016") right now and hopefully it’ll be final in a few days. In January 2016 and beyond, stay tuned for continued blogs around multi-state tax issues affecting our clients (as we’ve always done), as well as Rainmaking topics for those of you interested in building your consulting revenues (a new venture for us in 2015).
But in the meantime, I’d like to thank all of the readers of this blog, and my clients and colleagues for your support during 2015. I couldn’t do it without you! And I’d especially like to thank my support team that helps to make Miles Consulting Group successful in so many ways. As so many of you know, when you own a small business, it’s difficult to have all the right resources in-house and so it’s important to build a great team of consultants to support you! I’m very grateful to all of you and want to thank you from the bottom of my heart. Let’s make 2016 one of the best years ever.
Thank you to my….
- Publicity team, Erika Taylor Montgomery and Emily Sidley at Three Girls Media
- Web designer Robin Fisher at Take Flight Graphics
- Logo designer, since forever, Rob Henslin at Robert Henslin Designs
- Administrative support, Marit Fox at Abundant Administrative
- IT Tech support, Ryan, Ryan, Harish, Jon and Adrienne at Team Logic IT
- Video creative director, Buddy Saupe at YourBizVid
- Coach and confidante, Barbara Mencer
- Fellow women business owners and support group at NAWBO-Silicon Valley
- Colleagues at Vistage, ProVisors and AFWA for years of leadership skills and networking opportunities
And for those of you that might be reading this – check out these folks (and organizations) in 2016! I highly recommend them all! And as business owners, let’s stick together and support one another!
Here’s wishing you all a wonderful 2016! To your prosperity!!
Fondly,
Monika
New Laws for 2016
Every year state legislatures enact a number of interesting laws. We thought we’d recap a few just to ring out 2015 and ring in 2016. Here are some changes to expect in 2016 in California, and a “feel good” favorite in Illinois – just because we love our animals in every state!
CALIFORNIA
Vaccination (S.B. 277): The amendment to the vaccination law removes the immunization exemption for personal belief for children attending public or private elementary or secondary school, day care, nursery, or development center. In response to recent disease outbreaks in the country, the legislation imposes stricter guidelines and immunization requirements for people in in a classroom setting where there is a lot of human interaction.Read more
How California's Like Scrooge: Extending Sales Tax to Services
It’s no secret California is constantly looking for new ways to increase its revenue. This past year alone, residents have seen a call for higher soda, insurance, energy, income and property taxes. It doesn’t end there, though. State Senator Bob Hertzberg also proposed extending sales tax to include services as well.
You may think, “Well, California really needs the revenue, so maybe it’s worth it.” However, if you look at the numbers, California will end the current fiscal year with a $7.9 billion surplus, even after enacting the largest spending plan in state history, which included an increase on education, paying down debt, creating new programs for the poor and adding billions to a “rainy day” fund. The Legislative Analyst’s Office also anticipates the surplus will continue over the next several years.
About the New Bill
Like Scrooge, Sen. Hertzberg’s proposal increases taxes to literally nickel and dime residents in every means possible. Falling under Senate Bill 8 (or SB 8), the proposal would tax services like childcare, transportation, haircuts and more. The actual bill itself doesn’t include a lot of detail as to which services exactly would be included, but it does claim to raise at least $10 billion in new revenue each year. Chances are, this means a wide variety of services would fall under its umbrella.Read more
Rainmaking – Accountability: Keeping Yourself Honest
If you’ve been following my Rainmaking blogs in the last few weeks, you know that we’ve talked about identifying your target market, determining active and passive strategies for reaching out to that target market, and follow up strategies. We’ve talked about following up and saying “thank you”. And recently we featured a topic on the importance of setting SMART goals.
Goal-setting is so important! And writing those goals down is imperative. There are statistics upon statistics that will tell you the hugely increased likelihood of achieving your goals if you write them down. The other important part – after writing down the goals, is to revisit them periodically. How often is that? I recommend looking at your big goals at least once per month. And if you can’t commit to that, at least once per quarter. But your tasks to complete those annual goals (i.e.; the action items that you will commit to) should be reviewed much more frequently. I recommend to review them several times per month. Yes – this is where the commitment comes in. Rainmaking doesn’t happen overnight. It happens by building relationships and nurturing those relationships over time. In order to nurture a relationship, you must continue to connect with people on a regular basis.
Step 1: Goals as Swim Lanes
In my Rainmaking program, I refer to the annual goal setting process as developing your swimlanes for the year. What’s a swimlane? It’s simply a visual term to denote a spreadsheet, with goals down the left hand column and quarters listed across the top. Each quarter is a “lap” in your annual goal process.Read more
Focus on Alaska
As the holiday season, Christmas and a new year come our way, there has been the inevitable emergence of cold weather imagery in stores, restaurants, etc. The mascot of the season, of course, is none other than Santa Clause! Do you ever stop and think of where Santa Clause came from and lives? People say it’s the North Pole. But could that famous workshop maybe be in Alaska?
For our State of the Month, we decided to take a journey up north and show you our largest state. This might just be the place where Santa spends most of his days.
Business Climate
Alaska’s land area of 663,300 square miles is more than twice the size of Texas, yet despite its incredible land size, its population of 735, 601 (as of 2014), is one of lowest in the nation. A much smaller Rhode Island has a bigger population (1.055 million) than Alaska. Nonetheless, its lack of citizens does not speak poorly of its business environment.Read more
RAINMAKING – Are you being SMART?
As we find ourselves in the middle of a hectic holiday season with the year-end quickly approaching, I find that I’m juggling balls in the air more than ever. When it comes to running your business, many activities occur daily that need to get done but don’t necessarily provide measurable value. It can be overwhelming at times. So it’s important to regularly take a step back and refocus on your broader goals. We all want to be “successful” in our businesses. However, being successful can mean different things depending on each person’s perspective.
As I’ve developed the Jumpstart Your Rainmaking program, I’ve focused on providing the tools to be successful in the area of generating a steady flow of clients. And that starts by setting measurable goals so that throughout the hectic year we can regroup with ourselves and maintain focus on the bigger picture. The program encourages people to dream big and aim high. But we also encourage people to consider setting their goals under the SMART model. Many of you are already familiar with SMART goals – those that are Specific, Measurable, Attainable, Realistic/relevant, and Timely. I debated even talking about them because so many people think that just because they’ve heard of SMART goals they are actually setting them. And I didn’t want to have to be the one to tell you that you might not be setting the right kind of goals, particularly around Rainmaking! Here’s what that might look like as you do think of setting your revenue generation goals for the upcoming year.Read more
