WEAKENED U.S. DOLLAR IS LEADING TO MORE "INSOURCING" OF JOBS
"A Good Perfect Storm in the Making," says respected financial advisor Alan Olsen.
FREMONT, California, June 13, 2007 - While the US continues to lose jobs
overseas, a well known advisor to an impressive group of Silicon Valley technology
entrepreneurs is predicting a perfect storm, only this time a gathering of forces
that will be good for the jobs picture in the United States. At the same time, he
also worries that an inadequate understanding of U.S. rules may be hurting the entrepreneurs
that are driving a countervailing trend, the "insourcing" of new jobs here by foreign
investors.
"India has run into some management problems and even emerging technology worker
shortages. France, Germany and now China are facing the same problems. Meanwhile
the Euro continues to strengthen against a weakening dollar which is in turn is
encouraging European entrepreneurs to start businesses here. It's like a perfect
good storm for us, especially for technology-related companies in Northern California,"
says accounting and financial advisor, Alan Olsen,
Managing Partner at Greenstein,
Rogoff, Olsen & Co. From his base in Fremont, CA, Olsen advises some of the
most successful and recognizable U.S. entrepreneurs in Silicon Valley.
Olsen's value-driven storm may also have another element that is helping to create
a backlash against the recent wave of jobs outsourcing here in the US. "Although
many governments have policies that discourage offshore investors, the largest economy
in the world still remains relatively open, and a growing bargain to foreign investment.
We're counseling a growing number of offshore entrepreneurs from China and Europe
who have started new U.S. businesses, especially start-ups in the technology sectors,"
said Olsen. "They are creating jobs, and that is helping to address the deficit
created by the outsourcing of jobs by larger companies in recent years."
He also feels that whether it's language barriers, unfamiliarity with U.S. laws
and customs, or any number of other reasons, many of these new businesspeople are
making mistakes that will shorten their reach for the American Dream. The advisor
notes a growing body of research, such as the recent report entitled "A World of
Opportunity Understanding & Tapping the Economic Potential if Immigrant Entrepreneurs"
by New York-based think-tank, Center for An Urban Future (www.nycfuture.org)
The report found that immigrants have become the major driving force behind job
creation in America's largest cities, and are more likely to be the "entrepreneurial
sparkplugs of regenerating cities."
But, there are problems emerging as well. Many times these highly motivated new
U.S. business owners are less wise to the ways of doing business here, and may not
spend the proper time thinking out issues that can affect their future financial
success. Even seemingly obvious issues such as whether or not to set up residency
here in the US can present taxing problems.
Henry Yin, a successful Northern California-based entrepreneur who has become a
citizen since coming to the U.S. thirty years ago, says that part of the problem
may also be one where passion clouds the need to prioritize. "Many times business
entrepreneurs are driven by their product, their service or their idea. The energy
becomes focused on that part of the challenge instead of being spread around, and
that can shortchange equally important issues like setting up proper business models
and positioning systems to fit in well within tax laws," says Yin.
In his recent client handbook, "DOING BUSINESS IN THE UNITED STATES: Foreign Corporations,
Individuals and Trusts,", Olsen suggests several common mistakes that have become
far too common for foreign entrepreneurs when they set up shop in the U.S.
One mistake is a failure to understand tax treaties between countries. Underestimating
the effects of cross-border transactions and transfer pricing rules can cause delayed
taxation by authorities on either side of the borders. Also, the U.S. government
requires multinational companies and individuals doing business around the world
to disclose all of their activities on special reporting forms. Failure to file
the proper forms could subject taxpayers to penalties ranging as high as $60,000.
Another mistake is failing to consider becoming a U.S. resident. If immigrant entrepreneurs
do eventually choose to become residents, transferring their assets makes them subject
to gift and estate taxes, says the former IRS agent.
Neglecting to set up a proper business structure is another. "The wrong corporate
structure could make the business subject to unnecessary tax withholdings or even
double taxation on assets," according Olsen. He adds that all offshore-owned companies
need to be especially aware of the differences in individual state tax laws, and
what activities might make them subject to specific taxes.
Olsen says that the most common -- but also most devastating effect -- can be an
inadequate understanding of the U.S. tax structure. "Even seemingly inconsequential
issues such as those surrounding payroll taxes, income taxes, and very specific
excise taxes carry heavy fines if ignored,” says Olsen. On the plus side, Olsen
says businesses need to be aware that there are also special tax credits available
for them, if they know where to look.
"It is common knowledge smaller businesses provide the great majority of the jobs
in this country. In our business we also know that, for many, the traditional American
Dream, home ownership, is no longer enough. They want to create a new business here,
and along with it, jobs and financial success. We just have to make sure they understand
the rules and build companies with a better chance at long term success, both for
their sake and for the benefit of the American economy."
Note: To obtain the new Greenstein, Rogoff, Olsen & Co handbook,
"DOING BUSINESS IN THE UNITED STATES: Foreign Corporations, Individuals and Trusts,"
access http://www.groco.com/media/bookstore.aspx.
For more information on issues relating to estate and tax planning, please access
www.groco.com or call 877-CPA-2006.
About Greenstein Rogoff Olsen & Co., LLP
Greenstein Rogoff Olsen & Co. are the CPAs for Silicon Valley's most successful
people. Consistently ranked as one of the top accounting firms in the San Francisco
Bay Area, Greenstein, Rogoff, Olsen & Co is a full service CPA firm providing
accounting, tax, financial, and strategic planning for the highly successful. In
business since 1964, GROCO has offices in Fremont, Palo Alto and San Francisco,
California. We provide consulting services
to high net-worth individuals and closely held businesses and have special expertise
in providing accounting services to the
leading Venture Capital partners in the Silicon Valley.
Our primary services include income tax planning,
income tax preparation, strategic business consulting,
business valuations, bill paying, estate planning, estate administration,
trustee services, and financial statement preparation. Our clients have participated
in building companies like Google, Skype, America Online, Oracle, Sun Microsystems,
Compaq, Macromedia, Ebay, and Genentech. Access www.groco.com
for more information.
GROCO: Trusted Advisors to the Highly Successful - Since 1964.
FOR IMMEDIATE RELEASE
Media Contact:
Dennis Wolfe
P: 510.797.8661
F: 510.797.1791
dwolfe@groco.com
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