Are Leading Entrepreneurs Considering the Ants?

Preface: The lazy should learn a lesson from the way ants live. They have no leader, chief, or ruler, but they store up their food during the summer, getting ready for winter.  Paraphrase of Proverb 6:6-8

Are Leading Entrepreneurs Considering the Ants?

Credit: Donald J. Sauder, CPA | CVA

Ants colonies are a great case study for entrepreneurial and organizational success. The nation of the Ants really can teach great lessons mostly applicable to business and entrepreneurship. In this blog, we intend to gain simple insights and profound, systematic principles from these quiet “social entrepreneurs” to help the entrepreneurial communities to flourish with a greater appreciation for the vibrancy of the freedoms of our culture and thee privileged opportunities to pass the time with holidays.  


One of the most significant challenges in entrepreneurship is keeping focused on the right business opportunities, highest value tasks, and keystone priorities. Ants are exceptional at this. They can seemingly focus effectively on a task or project and see it through successfully to completion. They don’t procrastinate, complain, or wince at the perceived work or effort that may be required. Instead, they diligently and quietly get to work.

Likewise, star baseball players keep their “eye on the ball” and connect successfully. That’s how they win the game. That’s how they hit home runs right, focusing on the right opportunity to connect. Entrepreneurs likewise must also value continual focus day after day.  

Entrepreneurial success is obtained with a single-minded focus on serving customers, delighting customers, and satisfying customers. While this may seem to be conventional advice, it is easy to get distracted, in many moments, not only from business priorities, and not only individually but as a team or organization.

Ants seemingly don’t expect to be applauded at an awards ceremony or receive graduate honors, or other honorary recognition. Yet our expectation as we consider these social entrepreneurs is that they will give the responsibility of each task an award level commitment and focus. What do ants do for leisure?

A business can be only as successful as its systems of service, satisfaction, and delight of customers. Would you trust an ant to do what it says it will do regarding an order? A business that has a thriving and vibrant focus will have an outperforming team that is trusted, keeps its word, and delivers on consistently on time and budget. Do this, and the rest will take of its self.

Every incredible journey started with the first metric length. Goal setting with a plan will help you more easily measure and keep focus. Achieve your vision in incremental segments that are concise, understood, and realistic. Then accurately measure the success of your focus as you complete each step of the plan. This provides clear goal-posts to measure the yardage gained and progress with chronological steps.

A business with a focus will listen to its customers and provide staff training to develop the expertise to deliver an exceptional experience with every sale. While this is not easy to achieve and easier to talk about, it pays big dividends. Imaging what customer service would be like from an ant may seem similar to a robot – quiet, ambitious, and with a dedicated effort to complete the task to the best of expectations and highest standards. Giving 100% and knowing that is all that is required. Ants focus most effectively, and effectual entrepreneurs focus too. If focusing on entrepreneurship with the high-standards exhibited from the ants, it is likely good to great things will most certainly happen. 

To be continued….

Webinar On “Great by Choice!”

Webinar On “Great by Choice!”

This webinar is intended to provide valuable business insights to successfully navigate the challenges of any business climate for both clients and others from the entrepreneurial business community.

“Great by Choice!” arrived from the quill of Morten Hansen and renowned author Jim Collins.

One of our CPAs, Jacob Dietz, presents this webinar on “Great by Choice!”  Jake brings years of CPA experience to our clients. This expertise includes but is not limited to tax return preparation, tax advising, and CPA advising and financial analysis.

Diligently applying the principals from this book will pay you back in multiples. Our firm is committed to continually helping the entrepreneurial community to learn, grow, and ultimately flourish. We have benefited from the insights in this book, and we want to give you an opportunity to benefit from the knowledge and business wisdom in the content of this book.

The grade of learning from experience is more challenging than college. Although we can all learn valuable lessons from this book, we believe the preparation of preparing for business challenges; just like the prudent see danger ahead of time and avoid it, is prudent. Other companies have gone before us, some have thrived, while on the contrast some have not. This book looks at some of these companies and gleans insights from them.

We live in uncertain times, and this book also exemplifies how some companies have thrived in uncertainty. Stay tuned to this presentation to learn from these great companies to minimize barren fields of wasted resources. After this webinar, you should have specific business tips on adequate preparation, fanatic discipline, the 20-mile march, firing the right bullets, and more.

Productive Foresight

Preface:  “A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” Proverbs 22:3

Productive Foresight

Credit: Jacob M. Dietz, CPA

Have you ever heard someone say “I wish I had seen that coming” after a bad experience? If we knew the future, then we could act accordingly. If we knew that the bull in the pasture would charge us ferociously next Monday but not the rest of the week, then we could avoid the pasture next Monday. Every other day we could walk carefree through the pasture.

For better or for worse, we do not know the future. We encounter risk every day. Thus, we can know that there is the possibility of catastrophe, but we may not know when it will hit. Not all risks, however, are equal.   In Great by Choice, Authors Jim Collins and Morten Hansen explain 3 types of dangerous risk. Minimize and avoid death line risk, asymmetric risk, and uncontrollable risk.

Death Line Risk

In business and in life, know the risks that face you. Some risks are mild, some are deadly. If the snorting bull kills us on Monday, then we cannot learn our lesson and stay out of the bullpen on Tuesday. It is too late.

In business, death line risks could literally kill you or an employee. Although death may ultimately be unavoidable on this earth, there are steps businesses can take to avoid various kinds of unnecessary death. First, practice safety to avoid physical death. If an employee falls a very small distance, they might hurt their back. A hurt back is no fun, but at least they have a chance to learn a lesson. If they fall 30 feet, they may not recover to learn a lesson. When analyzing safety, consider how close you are to the death line. If you employ workers, consider their lives a top priority in your operation. An employer will not know when the accident will happen, but with foresight the employer may be able to prevent an accident.

Secondly, watch out for financial death. When doing a business transaction, ask yourself if it would take you out of business if the transaction went south. For example, what would happen if you cannot pay back a large loan? Would the lender pursue some type of peaceful arbitration and resolution, or would the lender sue you to recover every possible penny?

Suppose that you are taking a new product to market. What happens if the product fails to perform? Know your customers and the uses of your product. If it is a very important product that would be costly if it broke, then ask yourself if you can remain in business if the product fails.

Thirdly, avoid risks that cause spiritual death. Mark says it well. “For what shall it profit a man, if he shall gain the whole world, and lose his own soul?”

Asymmetric Risk

If the potential downside is significantly greater than the upside of a decision, then you have an asymmetric, or unequal, risk.

Be careful when you see asymmetric risks. If an entrepreneur sees a large opportunity, perhaps they will risk a lot for that opportunity. If they see a small opportunity, perhaps they will risk a little for that opportunity. Taking an asymmetric risk, unfortunately, involves risking a lot to get a little.

When making decisions, ask what the upside and downside is. If only the upside is focused on, then the business may take on an asymmetric risk unwittingly. On the other hand, if only the downside is considered, then a business may miss a good opportunity.

Imagine a business owner that wants to acquire another company and consolidate it with his company. He calculates that adding the new company could give him an additional $40,000 of net income per year. While doing due diligence before purchasing, the owner realizes that there is a $1,000,000 lawsuit pending against the company he wants to purchase. His attorney looks at the circumstances, and indicates that the lawsuit, if successful, could hurt him if he purchases the company. In this situation, the upside of an additional $40,000 of net income per year pales in comparison to a $1,000,000 legal judgment.

Think back to the last contract you signed. What was the upside, and what was the downside? If you are thinking of acquiring some new equipment, consider what is the upside and what is the downside.

Uncontrollable Risk

There are many things which a business owner cannot control. Entrepreneurs may not be able to control the weather, other people, public health, civil elections, gravity, inspectors, and the list could go on.

Be aware of these risks and focus on what can be controlled. For example, a construction crew cannot control the wind. They can control, to a certain extent, which day to set trusses. If the wind will cause a huge risk, it may be better to wait. On the other hand, if the entrepreneur is running a restaurant, then it may be safe to operate the restaurant in the wind. The food inspectors may be what worries the restaurant owner. Again, the restaurant cannot control the food inspectors. The restaurant can, however, take steps to implement safe food policies to minimize the risk that the food inspectors will cause problems.

Use caution when the risk is out of your control. Is there a way to bring the risk into your control, or take steps to alleviate it? For example, dairy cows may not do well in certain weather. The weather cannot be changed. The environment of the cows, however, can be changed by building a barn. For another example, consider the squirrel. The squirrel cannot control when the nuts will be ready on the tree, and when they will not be ready. When they are ready, however, the squirrel can minimize the risk of starving by storing up some walnuts for the winter.

For your business, what are the risks that you cannot control? What can you control to alleviate or lessen these risks?

Productive Foresight or Worry?

Proverbs explains that not only does the prudent man see the evil, but he does something about it. Entrepreneurs could put themselves to sleep reading about all the risks in business that are stalking through the land, or else they could keep themselves up at night worrying. Worrying does not help. A reason business owners should be considering the risks is to take action to hide themselves from the risk.

First, how can a business owner have foresight? Does that mean they can see into the future? No, business leaders do not need prophetic insight into the future. Careful study, however, can give them clues about the future. Reading good material, asking good questions, and associating with good people may give business owners insight into what might be coming, although they do not know exactly what the future holds. For example, a business owner may be able to learn from other owners that certain problems tend to arise, such as with the weather or taxes or some other area. If the business owner feels the risk is substantial enough, then they might take steps to mitigate the risk.

After identifying the risk, what can be done to mitigate and lessen the risk? The simple pass on and suffer, but the prudent take steps to avoid unnecessary suffering. The reason to identify and discuss risks is not to be a doomsayer but to find solutions. In meetings were risks are identified and talked about, do not forget to come up with an action plan to mitigate the risk.

Although a farmer does not know that the bull will charge next Monday, a farmer can realize that the bull might charge someday. Therefore, the farmer might avoid being in the pen, or make sure the bull has a ring in the nose, or he might implement some other feature to protect himself from the bull.

Do Your Part and then Trust

Even the prudent will not always avoid catastrophe. Surprise events, such as unexpected weather events, changes in a bull’s temperament, etc. can harm the prudent. For these unpredictable events, let them go and trust God.

For other events, the prudent can take steps to protect themselves even though they do not know all the danger that is out there. Read good literature related to your industry and talk with the wise people in your industry. Through diligent study the prudent can foresee possible problems and take steps to alleviate them.


This article is general in nature, and it does not contain legal advice. Contact your advisors to discuss your specific situation.

Update on PPP Relief Loan Forgiveness and COVID-19 Business Planning

Preface: Sometimes the best business counsel is right in front of us, and we are so very unaware. So that “they may indeed see but not perceive, and may indeed hear but not understand, lest they should turn and be forgiven.” Mark 4:12

Update on PPP Relief Loan Forgiveness and COVID-19 Business Planning

Credit: Donald J. Sauder, CPA | CVA

The small business relief measures with the Payroll Protection Program (PPP) loans are scheduled for the long-anticipated forgiveness approvals within the week. These outstanding loans for an extraordinary era as part of the 2020 CARES Act were designed to help with workers paycheck assurance, from a $669.0 Billion business loan program.

For businesses that participated in these stimulus measures, none have received forgiveness as of October 1st. With 96,000+ applications submitted for forgiveness since the initial filing seats opened on August 10th, borrowers began to look for guidance on the forgiveness process’s complexity. Some financial institutions are suggesting that PPP loan borrowers await further pending legislative changes to this forgiveness process. The possible revisions are automatic forgiveness on loans below certain thresholds of say $50,000 or $150,000 and simplified paperwork and documentation. Of note is Treasury Secretary Steven Mnuchin’s support for this automatic forgiveness feature, although final approvals are subject to further committee discussions.

Under the current laws, the Payroll Protection Loans principal will be either partially or fully forgiven if the borrower meets the forgiveness application’s stipulations. This includes expenditures of the loan proceeds, the extent of employees kept on payroll or rehired, and employee paychecks’ stability. Certain exemptions features are also applicable.

The application process, subject to future legislative revisions, provides two options on PPP loan forgiveness applications that can be submitted to lenders. The lender then has 60 days to obtain a decision on request payment from the SBA. The SBA then has 90 days to make the payment with interest after reviewing the loan terms and conditions on what ought was owed.

Each business participating in the PPP loan relief measures must keep documentation on the PPP loan for a minimum of six years after the forgiveness date or payment date of forgiveness, whichever is later, for purposes of future SBA and inspector general review.

A business may also not deduct expenses paid with the PPP loan proceeds from loan forgiveness for tax purposes, increasing taxable income with a quasi-reimbursement feature. Furthermore, current legislation does not permit double-dipping with PPP loans and other CARES Act tax provisions such as the employee retention credit. Therefore, businesses that participated in the PPP loan relief are limited to PPP loan benefits solely for Covid-19 relief measures.

All terms and conditions of current PPP loan forgiveness are subject to legislative changes. Revisions and businesses seeking forgiveness should consult with their tax advisor and banker before making any forgiveness decisions.

COVID-19 Business Planning

Resilience amid crisis and preparing for new uncertainties of the future will help bolster expectations for the journey ahead. Appropriate insights for short-term business decisions will lead towards the right longer-term successes of your endeavors, i.e., we should work to successfully navigate Q4 2020 before we plan to arrive at any destination in Q1 2021 or say Q4 2021. Is this a foothill, and there, more monumental economic surprises ahead?

Sometimes the best business counsel is right in front of us, and we are looking at it naively and unaware.

Sharing from experience on how this relevant, I was invited to a Sight and Sound performance at Lancaster Bible College, in January of this year.

It was a fantastic presentation on the Biblical Book of “Ruth,” and a production exemplifying God’s redemption of the lost and a testament of a Biblical account of God’s tremendous power. The point of mentioning this it characterized Elimelech’s pursuit of regaining “lifestyle” in Moab vs. a dedicated trust and faith in God’s ethical power and provision to meet his family’s needs “In the Fold” right where they were, in the Land of Promise.  

For those unfamiliar with the historical record, it is about a family living in Judah’s area. Elimelech, the father, with his wife, Naomi, and his two sons, Mahlon and Chilion, left the country in time of famine and moved to the foreign land of Moab . There Elimelech died, and his two sons married. Mahlon taking Ruth as his wife, and Chilion taking Orpah. Both women were Moabites. Then, both Mahlon and Chilion, likewise eventually died. Naomi received news that the famine in Judah had lifted, and decided prudently to travel back to the Promised Land. Ruth did not heed the words of dissuasion from Naomi, accompanied her mother-in-law to Bethlehem. The two women arrived in Bethlehem in early harvest season in a state of desperate poverty…and the story continues with nothing less than God’s miraculous redemption of the families lost estate. 

This story exemplifies a worst-case scenario of the COVID-19 ear, a financial famine, resulting in its significant decisions for sake of lifestyle, work, and family. Boaz, the successful redeeming kinsman, supposedly staying in Judah, didn’t perish during the famine, nor lose his estate.

Perhaps, Elimelech didn’t need to immerse his family in the Moabite culture to prevent his families complete devastation? Or maybe Elimelech was of the persuasion his perfect insight foresaw accurately the foothills leading towards more enormous mountains on the journey with famine in Judah and that his community was about to perish forsaken from living history, requiring immediate, necessary, and substantial departure actions on behalf of saving his families estate?

Keep in the Fold

We’ll conclude concisely with this summary. Whatsoever you envision as a “Keep in the Fold” business strategy will likely help you more successfully navigate the COVID-19 business climate with the short-term decisions leading to your endeavors’ desired longer-term successes.   


Key Principles of Successful Partnerships

Key Principles of Successful Partnerships

By Nevin Beiler, Attorney

We all know people who are partners in businesses. Maybe you are a partner in a business, or you work for a partnership. Maybe your experience with partnerships has been good, maybe it has been bad. In my work as an attorney I see it all—good, bad, and ugly.

Business partnerships play an important role in our families and communities. They represent jobs and income to owners and employees, and they provide products and services to the community. The success or failure of these partnerships can significantly impact not just our personal finances, but also our relationships and community connections. Success in business involves much more than the financial bottom line, and when we partner with others in business, this becomes very evident.

In this article I will share a few things I have learned and observed about what makes partnerships successful. The three key areas I will cover are Compatibility of the Partners, Defining Roles and Expectations, and Preventing and Resolving Conflict. But first, a quick story to provide context for my discussion of these areas.

Paul and Mark (names changed to protect privacy) were a father and son with a successful service business. Paul (the father) had started the business on his own, and Mark joined a few later just as the business was getting off the ground. They worked together for about 15 years, and the business eventually became very successful.

Unfortunately, Paul and Mark’s relationship started to get rocky. They had different ideas about how to manage the business. Paul was focused on things that increased customer satisfaction, but wasn’t as concerned about employee satisfaction. Mark would have liked to focus on employee satisfaction as much or more than customer satisfaction. Paul tended to be more frugal minded, while Mark was quicker to spend money.

Somewhere along the line Paul decided that he wanted to share profits 50/50 with his son Mark, so he gave him 50% of the business. Paul’s expectation was that he would still be considered the boss, but eventually Mark began to assume and expect that he and Paul had equal authority (as 50/50 owners).

Unfortunately, neither Paul nor Mark were natural communicators. Their failure to communicate regularly and maintain clear expectations began to create more and more conflict. The most difficult conflict arose when Mark, who was expecting to completely take over the business from Paul in one or two years, realized that Paul did not want to sell out for another three to five years. Mark felt that he could not continue with the way things were going for that long, so he ended up selling out of the business. This was not what either of them wanted, but Mark felt like he had no choice.

With this story in mind, let’s think about some principles that would have helped Paul and Mark be more successful at working together.

Compatibility of the Partners

For partners to work well together, they need to have at least some level of compatibility. This does not mean that they do everything the same way, or always think the same. It does mean, however, that they know each other well and are able to work together towards common goals.

The Purpose of the Partnership: The partners should agree on the purpose of the partnership. Why does it exist? What is it trying to accomplish? What are its core values? One obvious goal of a business is to financially support its owners, but the mission and purpose should be bigger than that. The bigger purpose might be to provide good jobs with a good work environment. Or to provide a needed product and service to the community. Or to generate financial resources to support Christian ministries. Core values might include things such as integrity and innovation. When partners have a shared sense of purpose for their business, it can help keep them headed in the same direction.

Complimentary Skills and Personalities: Different personalities can bring balance to a partnership. For example, one partner might be a visionary while the other is an implementer. The visionary can see opportunities and come up with ideas for how to grow and improve the business. The implementer is the person who is good at consistently getting things done and implementing ideas. These two types of people need each other to reach their full potential.

Ability to Communicate: Partners must be able to maintain open and healthy communication. Otherwise, it will probably be just a matter of time before serious conflict arises. Partners that are communicating regularly will probably still experience some conflict. But by maintaining open communication, it is more likely that they will be able to resolve conflict in healthy ways, which will make their business relationships stronger.

Paul and Mark may have had a vague sense of business purpose that they shared, but they also had different ideas about how important it was to care for customers vs. employees, which sometimes caused friction. Their personalities were somewhat complimentary, with Paul being more of a visionary type and Mark being more of an implementer. But where they really struggled was with a lack of communication. This allowed small conflicts to fester and grow larger, and resulted in unmet expectations that eventually caused Mark to leave the business.

One good way to get to know your partners (or your employees) and improve communication is by taking a DISC assessment (or another type of personality evaluation) together with your partners and/or employees. I have taken the DISC assessment myself, and I have heard good things from other business owners who have taken it. DISC stands for Dominance, Influence, Steadiness, and Conscientiousness. Taking this evaluation, and then reviewing it together with your partners (or employees), can teach you a lot about each other (and yourself!).

Defining Roles and Expectations

For a partnership to function effectively, each partner needs to understand both his (or her) authority and responsibilities.

Some partnerships have two equal partners (50/50), like Paul and Mark. Some have majority partners and minority partners (such as 70/20/10). Whatever the case, each partner should know the extent of his authority. This is usually determined primarily by the partnership agreement, which may state that all partners will act together to manage the partnership or that the partners must appoint a managing partner to manage the partnership. The partnership agreement should clarify what actions require approval by more than one of the partners (usually by a majority or unanimous vote of the partners).

When a partnership is managed by all the partners without clarity about who has what authority, things can get difficult. This is especially true when the partnership is 50/50, because any time the partners don’t agree they are essentially stuck until they compromise or one of them changes his mind. This was the difficulty Paul and Mark found themselves in. For this reason, it is generally wise to avoid 50/50 partnerships, unless the partners agree on a way to get unstuck when they don’t agree on a decision. It is best if this agreement is in writing, ideally in the partnership agreement.

In addition to clarifying how the partnership will be managed, the responsibilities of each partner should be clarified. Many partners have both management responsibilities and production responsibilities. Taking the time to write out a job description for each partner, especially each partner’s management responsibilities, can help avoid power struggles or frustration among the partners when things do not get done.

Preventing and Resolving Conflict

Business partners are likely to encounter conflict at some point. But the conflict they encounter does not need to be bad or harmful. A certain level of conflict can actually be healthy for a business—if it promotes good discussion and improvements in how the business is operated. When partners can share and discuss different perspectives, it often leads to better results than if everyone thinks the same way. But too much conflict, or conflict that is not properly handled, can be very harmful for a business.

We can reduce the amount of unhealthy conflict in our businesses by clarifying expectations. This requires regular and frequent communication. If Paul and Mark had done this, they might still be working together today.

Decide ahead of time what process you will use to resolve conflict. This might involve the assistance of a third party to help resolve the conflict, or even a committee that can give counsel or binding direction. I shared some recommendations about this in my article “The Importance of a Good Partnership Agreement,” which was published in the September 2018 edition of the PCBE. When we don’t know how to address conflict it is even more tempting to just avoid it, so it can be very helpful to have a conflict resolution plan in place before you need it. I suggest that you include this plan in your partnership agreement.

Avoiding conflict, perhaps in the hope it will go away on its own, is usually a big mistake. Just like in marriage and other close relationships, conflict that is ignored just gets bigger and creates wounds that go deeper. When we can confront and effectively deal with conflict, we can experience freedom. And we will develop deeper and more trusting relationships with our business partners when we can successfully work through difficult issues and disagreements. If you need help to do this, ask a trusted friend, business advisor, or church leader for help.

When you encounter conflict, whether at home or in your business, remember this important principle: “Seek first to understand, then to be understood.” This is a concept that Stephen Covey talks about in his book The Seven Habits of Highly Effective People. While it is natural to want to give our opinion when we are experiencing conflict, it usually works better if we approach the person with whom we are disagreeing with a willingness to first listen to them. There are two sides to every story, and hearing their side of the story can help us understand the full picture. Once we understand them, we can better share our side of the story, and they will probably be more willing to listen if they feel heard and understood.


Partnerships can be a great blessing, but they can also be a source of great difficulty. To a large extent, our words and actions will determine which we experience. Know your partners, clarify your roles, and communicate well.

Nevin Beiler is an attorney licensed to practice law in Pennsylvania (no other states). He practices primarily in the areas of wills & trusts, settling estates, and business formations & agreements. Nevin and his wife Nancy are part of the conservative Anabaptist community, and Nevin served as the in-house accountant for Anabaptist Financial before becoming an attorney. Nevin’s office is in New Holland, PA, and he can be contacted by email at or by phone at 717-287-1688. More information can be found at This article was originally printed in the Plain Communities Business Exchange.

Disclaimer: This article is general in nature and is not intended to provide specific legal or tax advice. Please contact Nevin or another attorney licensed in your state to discuss your specific legal questions.

Tax Planning for the 2020 Year

Preface: We are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly.” B. Franklin

Tax Planning for the 2020 Year

Credit: Donald J. Sauder, CPA | CVA

Tax planning time is never wasted, and this year that tax planning has a chance to be more pertinent than in recent years. With 2020 being a presidential election year and therefore, an increased variable for the 2021-year tax rates with a shift in Presidential legislation, getting your tax planning right for the 2020 tax year is pertinent. Income taxes are often one of the most substantial costs annual recurring costs for entrepreneurs and households alike.

The bottom line, this may again be perhaps the year to pay as much income tax as possible. Pay tax, buildup equity, and pay down debt. Then reserve deductions for the new year when tax rates have a material risk of shifting higher.

For the 2020 year, married filing joint tax payers are in a 10% rate up $19,750 in earnings, 12% up to $80,250, 22% to $171,050, 24% to $326,600, 32% to $414,700 with a maximum rate of 37%. Single tax filers are in a 10% bracket to $9,875 in taxable income, 12% to $40,125; 22% to $85,525; and 24% to $163,300, and 32% up to 207,350 with tax maximum rate of 37%.

For the 2020 tax year, decisive tax planning strategies could include accelerating taxable income recognition to capitalize on the lower Trump Legislation tax rates before any new Legislative changes could risk a shake-up in either capital gains, corporation rates, or ordinary tax rates. This could encompass converting traditional IRA’s to Roth IRA’s or taking larger distributions to shield capital from higher taxes on taxable distributions. Also pertinent is considering harvesting capital gains on investment assets to protect both investable capital or higher taxable gain rates. Or simply reshuffling your investment portfolio to increase lower future tax costs should the market continue to climb and a potential capital gain tax rate increase.

Step two in tax planning considerations for 2020 incorporate deferring tax deductions and expenses. The tax strategies could include deferring major capital expenditures on either equipment, accelerated build-outs, or vehicles for your business until January 1, 2021, to manage any variables on tax rates in the new year, and deferring one-time charitable donation pledges until 2021. Another significant tax variable is the risk in a possible change to the current transfer-friendly estate and gift tax exclusions. If you are planning substantial gifts of assets, you may want to talk with your tax advisor on the potential benefits of accelerating those gifts of assets in the 2020 year to avoid the risk of higher costs in the future from changes in tax laws.

Scheduling a meeting with an experienced estate attorney to plan your will to enable your executor or heirs to assign assets with highest the tax liabilities to charities if you’re planning to gift. Specifically, it doesn’t make sense to donate assets from your estate with lower tax implications and burden heirs with higher tax burdens assets, i.e., some retirement accounts. Besides, if you have a trust or plans to organize a trust to minimize estate taxes, you are advised to talk with your estate planning expert on the potential planning variables with a change in the tax laws.

The bright-line great news is that all the above tax factors and likelihoods should be known before early December on whether the Trump-friendly business tax legislation is intact per the November Presidential election results. Hence, a real possibility and probability continue that tax planning could again be straightforward and uncomplicated, perhaps for the 2020 year.

Once again, we remind readers that debt is paid with after-tax dollars. For example, if you borrow $100,000 for business or personal, you will pay it back with $100,000 plus the cost of taxes, i.e., say $130,000. Therefore, the lower tax rates decrease, the more affordable debt financing and repayment are obtained. This wind in the sails has powered the craft well in recent years, but this leverages words both ways; hence a word of caution should tax rates increase on income taxes.

In contrast to the sunny economic climate of 2019, according to Jeffery Gundlach, 24% of income in the US is now from the government. As this trend builds in government payments that gain more market share in the economy, taxpayers will eventually pick-up the expenses. Secondly, approximately Fifty+ million Americans have lost their jobs since the Covid-19 pandemic began, and over 50% of households in major cities are financially distressed. In contrast, one in five children doesn’t have enough to eat.

Summary: If you are concerned about tax planning for the 2020 year, firstly, you’re advised to quietly “ponder” optimal steps with the sunrise to manage 2020 tax attributes, and then speak with your trusted tax advisor.

This article is general in nature, and it does not contain legal or tax advice, nor is it to be construed as tax or legal advice.  Contact your trusted advisors to discuss your specific situation.


Managing Euroclydon Risks with Corporate “Tax Shelters”

Preface: Tax shelters are financial vehicles individuals and corporations incorporate to minimize tax liabilities. Shelters range from employer-sponsored 401(k) programs to overseas bank accounts. The phrase “tax shelter” is often used as a pejorative phrase, but a “tax shelter” can be also be a uniquely legal way to permissibly reduce tax liabilities.

Managing Euroclydon Risks with Corporate “Tax Shelters”

This blog is posted to address corporate concerns regarding the IRS’s continuing campaign to identify and shut down abusive corporate tax shelters, many of which involve transfers of rights or property to foreign entities.

In recent years, offshore asset reporting has become one of the IRS’s primary areas of focus as it seeks to increase tax revenue. In 2010 Congress addressed the significant issue of international tax compliance, enacting the Foreign Account Tax Compliance Act (FATCA). FATCA imposes more stringent reporting requirements and, in many cases, increased tax liability on U.S. taxpayers—many of whom are corporations—with investments in offshore accounts. Since then, the Treasury Department and the IRS have issued new regulations to implement FATCA and its reporting and disclosure regime.

The IRS is cracking down on tax shelters in other ways as well. Many employees of publicly traded companies are taking advantage of the tax whistleblower provisions of the Tax Relief and Health Care Act of 2006, which often enable the IRS to provide a hefty reward to those who report tax evasion. Additionally, the Treasury Inspector General for Tax Administration has recommended that the IRS improve its audits of small corporations, meaning that corporations with assets of $10 million or less may begin to feel a squeeze from examiners in upcoming tax years.

Large Business & International

As part of its initiative to increase international corporate tax compliance, the IRS has reorganized its 600-employee Large and Mid-Size Division (LMSB) into the Large Business & International Division (LB&I). The IRS more than doubled the number of employees, many of them industry experts and practitioners, and made in-roads to improving employee education and skill sets. LB&I’s expanded purview includes LMSB’s original jurisdiction over corporations, S corporations, and partnerships with assets of $10 million or more and also the implementation of the FATCA provisions.

Annual Reporting for Reportable Transaction Disclosure

Any taxpayer, including an individual, trust, estate, partnership, S corporation, or other corporation, that participates in a reportable transaction and is required to file a federal tax return or information return must file Form 8886 disclosing the transaction. The IRS maintains a list of the abusive transactions which must be reviewed annually by the taxpayers. The taxpayer must attach a Form 8886 disclosure statement to each tax return reflecting participation in the reportable transaction. The taxpayer must also send a copy of the Form 8886 to the Office of Tax Shelter Analysis (OTSA).

Offshore Voluntary Disclosure Program

In 2011, the IRS relaunched its Offshore Voluntary Disclosure Program (OVDP), which rewards taxpayers who disclose unreported foreign accounts with a reduced penalty framework. The revived OVDP has no official end date but the IRS has cautioned that it may terminate the program at anytime.


In addition to requiring certain U.S. taxpayers holding financial assets outside the United States to report them to the IRS, FATCA generally require foreign financial institutions to report certain information about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. Non-compliant foreign financial institutions could be subject to a 30% withholding tax on all U.S. sourced payments.

The IRS has stressed its intent that FATCA be a reporting regime rather than a penalty regime, and that it is eager to work with industry professionals and experts into ease the law into implementation. Nevertheless, the effect of FATCA on corporate offshore tax shelters is meant to be severe on the numerous abusive tax shelters that take advantage of lower or non-existent corporate income tax rates abroad through the dubious transfer or licensing of assets.

Small Business/Self-Employed

IRS’s Small Business/Self-Employed division, which holds in its jurisdiction all small businesses with assets of less than $10 million, plans to be more proactive in its field audits this year, concentrating in particular on stopping line-item schemes such as inflated business deductions or false earned income credit claims. SB/SE is currently at work expanding the knowledge and skill set of its examiners, matching exams to those examiners with the greatest knowledge of the subject matter involved, and producing online materials that will better educated taxpayers on their responsibilities. For the long-term, the SB/SE may update the index by which it selects tax returns for audit so that exams are targeted to returns likely to contain underreported tax.

Other Initiatives

The whistleblower rules encourage individuals to report any tax abuses or corporate fraud through generous reward offers. In 2012, the IRS paid out its largest award, more than $100 million, to an individual who disclosed tax evasion by a foreign bank.

The IRS has also maintained its campaign against accounting and law firms that design or promote tax shelters. The “anything goes” attitude of past years ago is a long faded memory. And while the IRS has been enforcing the law, Congress is looking to close as many loopholes as possible to prevent tax evasion. IRS examiners are still directed to look for the checklist of characteristics common in abusive corporate tax shelters. These include:

      • A reported transaction has no business purpose or economic substance other than to minimize taxes;
      • Investments made late in the tax year that indicate there may be deductions for prepaid expenses that are not allowable.
      • A large portion of the investment made in the first year indicates the transaction may have been entered into for tax purposes rather than economic motivation.
      • A loss exceeding a taxpayer’s investment indicates the possibility of a nonrecourse note.
      • If the burdens and benefits of ownership have not passed to the taxpayer, the parties have not intended for ownership of the property to pass at the time of the alleged sale.
      • A sales price that does not relate comparably to the fair market value of the property indicates the value of the property has been overstated.
      • If the estimated present value of all future income does not compare favorably with the present value of all the investment and associated costs of the shelter the economic reality of the investment may be questionable.

Some businesses are concerned that the IRS’s focus on tax shelters will mean increasing scrutiny of other aspects of their business operations as well. Others want to undertake internal protective audits to set up a strategy against IRS involvement before the IRS sends out audit letters.

If you would like a further analysis of how the IRS assault on tax shelters may affect you, directly or indirectly, please call your trusted tax advisor.

The Importance of a Good Partnership Agreement (Segment II of II)

The Importance of a Good Partnership Agreement (Segment II of II)

Credit: Nevin Beiler, Attorney

Segment II of II Continued

What We Can Learn From This Story

Unfortunately, disagreements among business partners are far too common, even among family members and Bible-believing Christians. As a result, some people refuse to enter a business partnership with anyone as a matter of principle, because they don’t want to risk the conflict. I personally don’t think that partnerships should be off limits for everyone, but I appreciate the concern that people have about the risks of entering a partnership. If you are a partner in a business, let’s think about what we can learn from the above story so that your partnership does not have the same problems.

In our story, Jake and Henry (and their father) failed to adopt a partnership agreement that could have helped them resolve management conflicts and have a pre-established buyout plan. The right time to adopt a partnership agreement is early on in the life of a partnership, ideally at the same time the business is formed. This agreement should be reviewed and revised periodically, especially if there are major changes in ownership. It is much easier for partners to agree on management and buy/sell provisions early on before disagreements arise. And if you cannot agree on management terms or buy/sell terms when you are entering a partnership, stay out of the partnership.

A well-written partnership agreement should specify which partner has the final say in management decisions, either by naming a managing partner or by specifying how the voting rights will work. If the partners have equal management and voting rights (which is not advisable, but is not uncommon) the partnership agreement should specify a process of breaking a deadlock if the partners cannot agree on any given issue. This could involve giving a trusted business advisor the ability to break a deadlock on management decisions, or any other approach that the partners are comfortable with.

Another key aspect of a partnership agreement is how a partner can or must be bought out if a partner wants to leave the partnership, dies, becomes mentally incapacitated, or needs to be bought out for other reasons. In addition to specifying who has the rights to buy the ownership share of the departing partner, the partnership agreement can specify how the buyout price will be established and paid if the buyer and seller of the ownership interest cannot agree on a price and payment terms. Two common methods of setting a buyout price are (1) having the partners agree in writing to a valuation of the business on an annual basis, with that value being the buyout price for the following year, and (2) hiring an independent appraiser to value the business periodically or at the time of the buyout.

A third key aspect of a partnership agreement is a dispute resolution provision that gives the partners a good way to address disagreements as they arise instead of letting the disagreements pile up. Good communication is critical to the success of a partnership. Having a plan for communicating about and resolving disagreements can make the difference between the success or failure of a partnership.

For example, I often write partnership agreements that require partners to work with a third-party mediator to resolve disputes. This could be a professional mediator or a trusted business advisor or church leader that both partners are comfortable working with. Mediation involves the partners meeting (perhaps several times) with one or more mediators to help them discuss the problem and hopefully reach a voluntary agreement on what to do.

If the disagreement is not resolved in mediation, I generally recommend that the partnership agreement require the appointment of a three-man team of impartial business advisors or a church committee to give binding direction to the partners. This is an informal method of what is called “arbitration.” (Professional arbitration services are also available if necessary, but they tend to be more expensive and adversarial.) The partnership agreement should require each partner to follow the decision of the arbitrators.

There are other important things to include in a partnership agreement, but clear management provisions, comprehensive buy/sell provisions, and good dispute resolution provisions are the most important things that are sometimes missing from partnership agreements.

Working through all these issues can take some time. But it is time well spent. Even if a partnership never has a full-blown dispute between the partners, taking the time to prepare or update a customized partnership agreement is a very good way to communicate about, and clarify, the expectations of all the partners. And having clear expectations is a benefit to any business.

If Jake and Henry (or their father) had taken the time to set clear expectations and adopt a good partnership agreement for their business, they likely could have avoided a great deal of heartache and expense. Take the opportunity to learn from their story, and consider whether reviewing and updating your partnership agreement would make your business stronger. Also, if you find yourself in the midst of partnership conflict, don’t be afraid to ask for help, especially if you and your partner(s) are having trouble communicating. Open and honest communication is the salve that can heal a broken relationship.

Nevin Beiler is an attorney licensed to practice law in Pennsylvania (no other states). He practices primarily in the areas of wills & trusts, estate administration, and business law. Nevin and his wife Nancy are part of the conservative Anabaptist community, and Nevin served as the in-house accountant for Anabaptist Financial before becoming an attorney. Nevin’s office is in New Holland, PA, and he can be contacted by email at or by phone at 717-287-1688. More information can be found at

The Importance of a Good Partnership Agreement (Segment I of II)

The Importance of a Good Partnership Agreement (Segment I of II)

Credit: Nevin Beiler, Attorney

In this article I will tell you about two business partners, who I will call Jake and Henry. The specific facts of this story are fictional, but the issues that are illustrated are ones that many partnerships have faced.

Jake and Henry were brothers. Jake was twelve years older than Henry, and when Jake finished school he started helping his father with the family hardware store. When Henry finished school, he also starting working full-time at the store.

When Jake turned 25 his father let him buy 10% of the business at a discounted price, and when Henry turned 25 he had the same option. When their father’s health declined to a point that he no longer could work at the store he offered to let Jake and Henry buy him out completely, again at a discounted price. This resulted in them being 50/50 owners with equal management rights. Jake would have rather purchased a larger share of the business, but he decided not to raise a fuss.

Jake and Henry’s working relationship slowly deteriorated over time. They had very different personalities, and they struggled to see eye to eye on many issues. Jake had a more careful and frugal personality, while Henry was more aggressive and liked to spend money to try to grow the business. Because they were 50/50 owners, and they had no partnership agreement stating who was in charge, they frequently disagreed about how to handle things. Their level of communication kept decreasing until they were hardly talking at all.

Eventually, things came to a point where they could no longer ignore their differences. This was mainly due to their lack of communication, but also partly due to the fact that some of Jake’s sons were interested in buying a share of the hardware store. Several of them had been working for the store for a while, and Jake wanted to give them a chance to become owners like his dad did for him. But neither Jake nor Henry wanted to sell any of their ownership shares because doing so would mean that the other brother would have more ownership percentage, and therefore more control over the business.

The bad feelings were beginning to make for strained interactions at family gatherings, and sometimes also between the uncles and their nephews during the workday. Henry finally decided that he could not continue on in the business because he didn’t see any way his family and Jake’s family would be able to work well together.

Henry offered that Jake could buy out his share of the store. Henry said that he could start his own separate hardware store in a different location that would not compete significantly with the existing store. Jake didn’t mind the idea of buying out Henry, or that Henry wanted to start another store in another location. This agreement was a great start!

But when they started talking about the buyout price for the store, their ability to agree abruptly ended. Each brother had vastly different opinions about what was a fair buyout price, based on what they had each paid for their shares of the store and the amount of years they had each invested in working there. Jake thought that because he had worked there longer than Henry and helped their father build up the business in its early years, he should get a significantly discounted price. Henry thought that because he was willing to sell out and let Jake have the business, he should get at least close to full price. They were not trying to be unfair to each other, they just had different ideas of what was fair, and their lack of communication prevented them from fully understanding the perspective of the other.

To complicate matters further, the eight-acre parcel of land on which the store was located was located in a rapidly-developing commercial area and had risen in value dramatically. It would have perhaps made financial sense for the existing business to sell the property for a high price and move to another location, but Jake was reluctant to sell the original business location as it had been in the family for many years and it was located just a short walk from his home.

After several months of fruitless and sometime tense negotiations, they both realized that they were not going to be able to resolve their disagreement on their own. Fortunately, they both knew that it was wrong to take their dispute to court. Based on the advice of their church leaders, they were both willing to work with a trained Christian mediator to help resolve their dispute. But even with the mediator’s assistance, the road to reaching an agreement was not easy. It required many meetings and long discussions, but in the end they were able to reach a resolution.

To be continued…. 

Nevin Beiler is an attorney licensed to practice law in Pennsylvania (no other states). He practices primarily in the areas of wills & trusts, estate administration, and business law. Nevin and his wife Nancy are part of the conservative Anabaptist community, and Nevin served as the in-house accountant for Anabaptist Financial before becoming an attorney. Nevin’s office is in New Holland, PA, and he can be contacted by email at or by phone at 717-287-1688. More information can be found at

Why Private Student Loan Borrowers Should Refinance Right Now

Why Private Student Loan Borrowers Should Refinance Right Now
Lixia Guo / Money; Getty Images

The rapid spread of coronavirus, and the fear that goes along with it, has driven the economy into a tail spin.

One small positive throughout all of the chaos is that interest rates have plummeted, helping some borrowers save money. Mortgage rates, for example, dropped to record lows earlier this month. And for the millions of borrowers dealing with student loan debt, this is a smart time to consider refinancing private loans to get a lower interest rate……

Why Private Student Loan Borrowers Should Refinance Right Now