The CPA Desk

A Thought Leader Production by PKFTexas

Economic Climate in Texas Drives Growth

In the past few weeks, there have been two excellent articles in the Wall Street Journal about how Texas and Houston’s growth friendly attitudes and regulatory environments have played a role in attracting talent and companies from other states.

Success and the City” focuses on Houston and what sets it apart from other major metropolitan areas. The article states, “Houston’s growth is more than oil-industry luck; it reflects a unique policy environment. The city and its unincorporated areas have no formal zoning, so land use is flexible and can readily meet demand.”

A Texas Guide to the Economy” compares the economic policies in Texas to those in other states, notably California. The author says, “If states are truly laboratories of democracy, Texas’ pro-growth policies serve as an example of the way forward in a slow recovery for…California and the country as a whole.”

We’ve seen these pro-growth trends in action with our clients at PKF Texas. Many are in growth mode and are the benefiting from our strong economy.

Factors Impacting Your Decision to Export

Russ: This is PKF Texas Entrepreneur’s Playbook. I’m Russ Capper. This week’s guest host and our topic once again is continuing on port advisory services, and I’m here with Keith Miceli, the international business advisor at PKF Texas. Welcome back to the Playbook, Keith.

Keith: Russ, nice to be back.

Russ: You bet. Okay, we sort of set the stage talking about the volume of business that’s taking place at the port now, which is incredible. And then we talked about the basic steps that somebody needs to go to in considering and deciding to get into the exporting business. What are the next steps?

Keith: Well, exporting as you know can be both very rewarding, but also extremely challenging. So we here at PKF Texas have launched a port-related advisory service which can provide value added for companies that are just starting up in the export business.

Russ: That sounds good.

Keith: We believe in the old adage that information is power, so we can provide information on logistics providers, free trade zones, freight forwarders, and warehouse operators, also information on investment-grade properties in and around the ship channel that can be leased or purchased for warehousing, distribution, and/or manufacturing. In fact, since 2006 nearly 13 million square feet has been developed and currently there’s 2.5 million square feet available.

Russ: My goodness. I agree, information is power. It seems like it’s almost essential in this business for sure.

Keith: It is. In the final stages of committing to launching an export business PKF Texas can assist in setting up mechanisms to take advantage of tax incentives to lower the effective tax rate on export earnings and discuss establishment rules for exporters using agents to distribute their products overseas.

Russ: Sounds comprehensive to me.

Keith: Yes.

Russ: All right. Thanks a lot, Keith. I really appreciate it.

Keith: My pleasure.

Russ: You bet. And this has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook. Tune in next week for another chapter.

Tax Consequences of Selling Your House

If you’ve put your home on the market, you need to know the tax consequences of a sale

Summer is a common time to put a home on the market. If you’re among those who are following this trend, it’s important to be aware of the tax consequences.

If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain — as long as you meet certain tests. Gain that qualifies for exclusion also is excluded from the Affordable Care Act’s 3.8% net investment income tax.

A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.

If you’re selling a second home, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss.

If you have a home on the market, please contact us to learn more about the potential tax consequences of a sale.

Exporting in the Global Consumer Market Helps Grow Your Business

Russ: This is PKF Texas, Entrepreneurs Playbook. I’m Russ Capper, this week’s guest host. And we’re continuing on the topic of Port Advisory services. And I’m here with Keith Miceli, International Business Advisor at PKF Texas. Welcome back to the Playbook, Keith.

Keith: Nice to be back!

Russ: With all of the exporting that’s taking place from Houston, Texas, I would think, Keith, that there’s a lot of businesses actually considering now, maybe, exporting their product or services. What would you tell them?

Keith: Well, Russ, I think it’s important to note that 95 percent of the world’s population live outside of the United States. So, Houston companies have an opportunity to tap into that very large consuming market. And, in doing so, they can grow their business and create opportunities to diversify their income and revenues. And, generally speaking, companies need to do, at least, four basic things. They need to create an export plan, conduct market research, identify buyers and learn a lot more about export financing, insurance and shipping.

Russ: Sounds wise to me. I think there’s just gonna be a lot of activity and you’re probably gonna be involved in a lot of it.

Keith: Yes, sir!

Russ: Alright. There we go. This has been another Thought Leader Production brought to you by PKF Texas, Entrepreneurs Playbook. Tune in, next week, for another chapter.

New IRA for Small Employers

The Department of Treasury is working on a program for employee retirement savings for small employers and employers with no retirement plan.

“The U.S. Department of the Treasury will develop the myRA (“My Retirement Account”) program, offering a new retirement savings account for individuals looking for a simple, safe, and affordable way to start saving.”

The biggest difference between this program and others is the deposited funds will be backed by the U.S. Treasury. myRA will also earn interest at the same rate as government securities in the Thrift Savings Plan for federal employees.

Even though deposits will be made through the employer, this account “belongs” to the individual employee. Thus it “moves” with the employee if he/she goes to a different employer.

The plan is limited to annual income limitations: $129,000 for individuals and $191,000 for joint filers. The account can open with as little as $25, and deposits amounts start at $5.00 a payday.

For more information see:

Port of Houston as an Economic Driver

Russ: This is PKF Texas’ Entrepreneur’s Playbook. I’m Russ Capper, this weeks’ guest host. And continuing on the topic of port advisory services, I’m here with Keith Miceli, International Business Advisor at PKF Texas. Keith, welcome back to the Playbook.

Keith: Nice to be back. Thank you.

Russ: Okay. So the volume that’s taking place at the Houston port is just incredible. I’m sure a lot of it is attributable to just the booming economy around here. But it just seems like there’s more that’s happening right out there that helps this happen.

Keith: Well, you need to have a state of the art facilities, terminals. You need an enlightened Houston Port Authority Commission to make the capital expenditures, which they’re doing. And you have to have the ships come in. You have to have the steamship lines make a commitment to come in to reach the hundred countries that we’re now reaching out of Houston. And you have to have a good backhaul option for these shipping companies.

Russ: Okay. What’s backhaul option mean?

Keith: It means not only are you bringing products into Houston, but you’re taking products out.

Russ: Oh, okay. So it helps to attract a shipping line to bring something here if they know they can take something back out.

Keith: Exactly.

Russ: Do we have anything that falls in that category?

Keith: Houston is unique because the mix of imports and exports is about 50/50. And -

Russ: Wow. So they’re taking back out oil maybe?

Keith: Well, by-products. Which are the resins and chemicals in plastics.

Russ: Really? Cool. So we really do have that happening here.

Keith: We certainly do.

Russ: All right. That’s great. This has been another thought leader production brought to you by PKF Texas Entrepreneur’s Playbook. Tune in next week for another chapter.

What Can Exports do for Your Business?

Russ: Hi this is PKF Texas Entrepreneur’s Playbook. I’m Russ Capper. This week’s guest host, and today’s topic is port advisory services, and I’m here with Keith Miceli, international business advisor at PKF Texas. Welcome to the Playbook Keith.

Keith: Nice to be here.

Russ: You about understand the 12th year in a row Texas leads the nation in export business. What role has Houston played in that?

Keith: Not only is Texas the largest exporting state with $280 billion last year, but also last year for the first time Houston became the number one exporting city with a $140 billion dollars, and as you can imagine the overwhelming majority of those exports go on ships from our terminals to over 100 countries around the world. While Houston is considered the energy capital of the world, and the Texas medical center is the largest of its kind in the world, the port of Houston is the largest Gulf port handling 2 million containers last year, and is the largest U.S. great gulf port handling over 65 percent of all project cargo in the United States.

Russ: Wow that’s a business happening out there. Did I hear it right? $140 billion puts Houston as the number one exporting city in the country?

Keith: Yes and that’s about 45 percent of all Texas exports.

Russ: Wow really impressive. Well, Keith I really appreciate you sharing that with us. We want to talk about this topic some more later. Can you come back?

Keith: Yes sir.

Russ: Alright this has been another thought leader production brought to you by PKF Texas Entrepreneur’s Playbook. Tune in next week for another chapter.

Interview with Andrew Millar – Coffee with the Consuls UK

Russ: Hi I’m Russ Capper, this week’s guest host, and PKF Texas Entrepreneur’s Playbook. A follow up from this week’s Coffee with the Consuls with Great Britain, put together by PKF Texas and the Greater Houston Partnership, and I’m very pleased to have as my guest the British Consul General for Houston, Andrew Millar. Andrew, welcome to the Playbook.

Andrew: Russ it’s good to see you again.

Russ: Let’s start from the top. Share your perspective on the relationship, the commercial business relationship between Great Britain and the U.S., and then let’s get down specifically to Texas and Houston.

Andrew: Okay Russ. The UK and the U.S. are incredibly close partners in a whole range of issues, but in the trade and investment site I don’t think there is a closer relationship in the world. We are each other’s number one investor, foreign investors in each other’s country, and we’re major, major trading partners with each other. If I drilled down to take this in particular, and then we’re talking about the UK being Texas’s largest international investor. Not just Texas, Louisiana as well. We’re number one investor there, and in terms of employment, some 75,000 people every day go to work for British companies in this state. We have investments amounting to around about $20 billion dollars of foreign direct investment that’s here helping Texans go to work, helping Texas to build its economy.
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Using Failure Mode Effect Analysis to Assess Risk

Byron: Hi, my name is Byron Hebert, and this is a quick Tool Time Update brought to you by PKF Texas and The Entrepreneur’s Playbook. What I want to talk to you today about is FMEA, Failure Mode Effect Analysis. And the purpose of this tool is to help you detect risk areas in your processes in your business, and then maybe if you can detect where the risk areas are you can do something to reduce those risks. So let’s talk about how we would use this tool.

Say, in a sales process you’re going to change your sales process, and what are some of the ways that you could fail in that? Look at what could go wrong. We’re looking at the downside. So maybe we lose customers. They’ll be several of them. You would want to write down all of them, all of them you can think of. What would the effect of that be? Well, sales down. Potentially, sales down unless you lose the right kind of customers that are not good margin customers, and that’s maybe what you want to do.

So in this we want to say what’s the severity of that? Well, let’s just say, for instance, that we’ve got some large customers. If we lose those large customers, the severity could be pretty high. It could be an eight out of ten. The occurrence of that, maybe the occurrence isn’t so much so we’ll give that a five. And would we be able to detect that? Well, the detection on that, we weight that. If it’s easy to detect, we’re going to give it a low number. If it’s hard to detect something, we would give it a higher number. We would probably easily detect that. So we’ll give that, say, a three.

So then we want to multiply these across, give you your RPN number, which is your Risk Priority Number. Okay? So eight times five is 40 times three would be 120. Anything over a hundred, I’m concerned about. I want to get that risk factor down to a hundred. So what could we do?

If they’re an eight, we want to get that maybe to a six. How could we do that? Well, if we’ve got one large customer, we probably want to diversify. Maybe we could get a contract in place with that large customer to secure our position with them for the next few years. So we start thinking of some ideas, some things that we could do to get this severity down.

The occurrence? Well, maybe if we’re working with several departments within that large organization the effect of that occurrence would go down. Get some ideas how we could reduce the occurrence maybe down to a four. Okay? And then the detection of it. If we did customer surveys, things like that, maybe we could get it down to a two.

So then we’ve got four times two is four times four, 48. We’ve gotten that down below a hundred. So Failure Mode Effect Analysis is a good tool for you to use to go through a process, any process within your business to detect risk and maybe reduce the probability of those risks having a negative effect on your business. FMEA, Failure Mode Effect Analysis.

Thank you. My name is Byron Hebert. This has been another quick Tool Time Update brought to you by PKF Texas and the Entrepreneur’s Playbook.

For those of you who are listening in on the radio and would like to see the graphic form of this tool being demonstrated, you can go to and look for the videos under Entrepreneur’s Playbook.