Donald Sauder, CPA

Preface: The day Ray Kroc watched the “Michael Process” at a level unparalleled in all his years of visiting customers as a salesman, (two industrious restaurant entrepreneurs from New Hampshire, who thought they could strike it big in California,) he could see plainly his “Michael Process” opportunity too. The “Michael Process” – A Case Study (Segment IV) Simple, effective and powerful, now for an analysis case study of the three step “Michael Process” A) passion for a marketplace, B) a concisely defined problem(s) the marketplace needs (re)solved, and C) providing an effective solution to the marketplace problem(s) defined in step B. Ray Kroc watched the “Michael Process” firsthand in 1954. In preparation for his big day, he also invested decades of effort and work before he became an entrepreneur. As a fifty-two year old milk shake machine salesmen, Ray was performing his duties earning a fading yet comfortable $12,000 a year working as a Multimixer salesman, in an industry heading towards obsolesces from heavy competition. “That evening Ray Kroc, a connoisseur of restaurant kitchens, saw the business potential…… he felt the McDonald brother’s business model was uniquely designed to succeed beyond their wildest dreams”. One month he took a business trip to meet his biggest clients. One of those clients was a restaurant in San Bernardino, CA, that needed 8 Prince Castle Multimixers to churn out 40 milkshakes at a time. As Ray stood looking at his client Richard and Maurice McDonald’s restaurant, with lines of customers waiting to order from the low priced nine item menu, with the two golden arches lighting up the night sky, he envisioned the future career possibilities. As he watched “Michael Process” lifting those two local entrepreneurs, his saw opportunity to apply the process too. That evening Ray Kroc, a connoisseur of restaurant kitchens,…

The “Michael Process” (Segment III) Preface: When strategizing with the “Michael Process” the greater the number of marketplace participants who will benefit from the (re)solution your business provides, the greater the latitude of your entrepreneurial endeavors potential platinum success. The Concisely Defined Problem(s) the Marketplace Needs (Re)Solved What is the value of a problem solved? Truly, the greater a problem, the greater the value of a (re)solution. Yet more importantly, you need an awareness that there is [a] problem requiring a (re)solution, before the problem can be (re)solved. That is the “Michel Process” purpose, to encourage (increased) business value creation through a simple process of concisely analyzing and understanding an industry problem, and then effectively (re)solving the problem with a business motive. “Two business examples: Grocery stores help solve the universal problem of hunger, generally; and residential construction companies help solve the continuing problem of living with changing weather conditions, etc”. That is how entrepreneurs succeed — when marketplace problems that are clearly defined, analyzed, and understood as applicable business value drivers, are (re)solved, in an industry (marketplace) thee entrepreneur is passionate to serve, with a business purpose. Two business examples: Grocery stores help solve the universal problem of hunger, generally; and residential construction companies help solve the continuing problem of living with changing weather conditions, etc. One of the most significant and historical globally documented problems solved, according to Biblical records, involved Noah and his family’s construction of the Ark. Supposedly tsunami rains had never occurred prior to the Flood. The “Michael Process” applied to the Ark exemplified as a business, (was Noah an entrepreneur), involved a solution to a future problem, e.g. build an Ark, the problem was clearly defined, e.g. a flood, for a marketplace. Like the MasterCard ads say, the Ark was “Priceless” …..and for everything…

Preface: A passion for the business marketplace in entrepreneurship ultimately creates a golden advantage with navigating an intrinsic vessel from the persistent “heartbeat” to continuously leverage with improved skills and expertise, keep focused, and gain and develop key resources that the competition lacks, or is lethargically skipping. The “Michael Process” (Segment II) A Passion for the Marketplace Talk with any entrepreneur who has built a business working banker hours, or without adhering to the “Michael Process”– they’re few and far between. You need to ultimately be passionate about your business marketplace to truly succeed in entrepreneurship with the necessary purposeful ambition and tireless motivation required to persistently invest the necessary hours and effort. This is the effort to initially keep the bills paid, be resilient with business challenges, and then ambitiously and eventually soar through business ceilings. You need a “heartbeat” to play entrepreneurial Monopoly successfully. A great example of marketplace passion in business is the history of Milton Hershey — fired from an apprenticeship, continued on to incorporate three candy business startups that all unfortunately became defunct; then persisted passionately onto “sweet” success with the Lancaster Carmel Company. After earning enough to retire with LCC, he sold the venture, and invested the proceeds to incorporate the Hershey Company. “Throughout all the trials and tribulations, entrepreneurs reward themselves internally by realizing that they’re on a mission for the greater good” – John Rampton. “For those uninitiated, entrepreneurs are not in it for the money. While there have been some icons who have made more cash than most of us we’ll dream of, think Bill Gates or Steve Jobs, the reality is that most entrepreneurs work an insane amount of hours for little or nothing. Why would they put themselves through this? Because they are driven to either solve a problem…

Preface: The “Michael Process“ is globally powerful in business, effective, and simple; it is a strategic element in the fields of entrepreneurial success. If you’re an entrepreneur today, you’re advised to ponder strategically how your business adheres to the “Michael Process.” The “Michael Process” Well said Michael. “Real entrepreneurs have a passion for what they’re doing, a problem to be solved, and a purpose that drives them forward” – quote from Michael Dell. Exuberant business successes can be simplified to adherence with the three step “Michael Process.” A) passion for a marketplace, B) a concisely defined problem(s) the marketplace needs (re)solved, and C) providing an effective solution to the marketplace problem(s) defined in step B. Your business purpose must fit the third step in the “Michael Process” to generate relevant and powerful business achievements, socially, and, or financially. Entrepreneurial accomplishment in business is a derivative of effectively following either strategically or intuitively, the “Michael Process.” Your business purpose must fit the third step in this process to generate relevant and powerful business achievements, socially, financially, or both. That is your business purpose – provide an effective solution to a marketplace problem that you’ve concisely defined, with a passion for the marketplace, i.e. customers or clients. Say: “More people fail through lack of purpose than lack of talent” — quote from Billy Sunday. Let’s consider for a moment, a recent business case study from gofundme.com, that demonstrates simply and effectively the “Michael Process”. Ever since she was a toddler, Mikayla Rydzeski dreamed of running her own lemonade stand. And last year, on the hottest day of summer, her dream finally came true. In just a few hours, she made over $1,000. But rather than keep the money for herself, she gave every single penny she earned to kids in her community…

Preface: In a era where productivity is no longer a differentiator, the role of IT leaders is changing, argues Seth Godin. Their remit: enable valuable connections within and across the business environment.  

Preface: How can your organization build morale, gain higher productivity and keep people engaged? Grab a chair at Peasant restaurant in New York City and join the conversation. Do you realize the continued importance of purpose? KPMG’s support of business developments, isa appreciated and respected, yesterday, today and tomorrow, as a purpose driven business leader.    

A Summary of the New Tax Laws For Section 199A (Segment III) Tax Implications and Planning Features with the Qualified Business Income Deductions Tax Planning Features When assisting taxpayers with business asset purchases, it is well advised to apply a Class V category on the Form 8594 to the greatest segment of asset transactions as realistic, because this class increases the capital base of the business property when computing application of a Section 199A threshold limit. Since depreciation rules permit accelerated expense rates, the tax benefit is optimized with Class V because the acquirer can still deduct the purchase in the year of acquisition, and obtain a greater 2.5% of property threshold advantage. Correspondingly, individual losses in QBI for businesses, are aggregated with combined business activities. Secondly, if there is a loss for QBI in the current year, it is carried forward to future years to reduce QBI, and therefore the benefit the Section 199A deduction. For example, say Bob owns two businesses, a convenience store with $35,000 of QBI earnings, and wholesale supplies business with a QBI loss of $40,000. Bob cannot apply a Section 199A deduction on his tax filing, and has a carryover of $5,000 to the subsequent year QBI calculation. Tax planning factors are now most unique in that individual optimization of each business tax variables is required to minimize tax expenses, i.e. income and expenses and W-2 wages, and property in service, must be considered individually per business for multiple business activity taxpayers. Generally, a taxpayer in specified trade or business can claim a modified business deduction if their individual income is less than $415,000 MFJ or $207,500 for all other taxpayers. In addition, 1231 gains have tax characteristics specific to Section 199A, because the 1231 gains are deducted from the activities QBI since they…

Preface: Ocado’s new warehouse has thousands of robots zooming around a grid system to pack groceries. The thousands of robots can process 65,000 orders every week. They communicate on a 4G network to avoid bumping into each other. Is this the future of grocery retail? I’d guess my Grandpa would’ve said to someone telling him about G4 technology replacing his produce stand customer service ” Oh yup?”    

Preface: This blog is for entrepreneurs who are hereby advised to apply appropriate tax planning for their businesses activities to optimize the tax benefits and nuances of the new Section 199A tax laws, beginning with the 2018 tax year. A Summary of the New Tax Laws For Section 199A (Segment II) Tax Implications and Planning Features with the Qualified Business Income Deductions Surpass the Threshold What if you surpass the $315,000 MFJ and $157,500 Section 199A threshold? Well, tax planning becomes more complex and is then subject to certain individual tax planning nuances. First, the service business deduction goes to zero when exceeding the threshold. Further, qualifying businesses have a separate individual limitation on two levels 1) applicable to W-2 wages amounts, or 2) the combined W-2 wages and a 2.5% capital factor. For example, the first step planning item nuance with the Section 199A threshold for high income entrepreneurs, is that tax planning must now occur on a business by business approach, with segregations of the individual business activities to determine (QBI) qualified business income optimization. Therefore, for entrepreneurs with multiple ownership interests e.g. Sch. C’s or K-1’s, the tax activity grouping features are now imperative. Secondly, tracking income and expense, and W-2 wages for each business, and the corresponding basis of fixed assets is an additional feature now of yearly tax planning. This planning is an advised tax accountant task. Tax Planning with Section 199A Threshold It appears that prior tax year groupings for net investment income tax provisions, will continue to work with Section 199A. However, groupings of business on W-2 wages and fixed assets are now aggregate considerations. In other words, the grouping features of an individual taxpayer have a new feature of consideration, and future aggregation will require specific individual tax planning. These groupings are…

Preface: Is manufacturing in this business serious! What’s your guess on the R&D timeframe?