Counting the Cost in Construction Accounting

Counting the cost in construction accounting.

Counting the Cost in Construction Accounting

Counting the Cost in Flood Waters

There is an interesting law here in Arizona which is known by the name, “Stupid Motorist Law.” It says something to the effect of “any motorist who becomes stranded after driving around barricades to enter a flooded stretch of roadway may be charged for the cost of their rescue.” Apparently, the law can be found in Arizona Revised Statutes section 28-910. Also, just as apparently, the law isn’t regularly enforced.

So, for those of us who don’t drive around barricades when the summer rains create raging rivers where before there were only dry creek beds (or simply dips in the road) it doesn’t mean much one way or the other. For those who do, it only means they won’t be charged by the state for their stupidity. Yet, they will still likely be “taxed” because of their poor decision.

  • Towing
  • Repair
  • Beyond repair
  • Missed time at work
  • Lost opportunities

And, don’t forget all that schplainen’ they’ll have to do with rescue workers. Not to mention spouses, parents, children, friends, insurance companies, and so on.

Counting the Cost in Words

Yet, being wise to the way of words, I would replace “stupid” with the word, “ignorant.” Here’s why – being stupid means you don’t have the brain cells to get the job done. Being ignorant means you haven’t as yet learned.

See the difference?

This article will help you understand it better if you’re ignorant of how the two are different.

Counting the Cost of Ignorance

And, just like the wayward, water plunging drivers there are some who are guilty of breaking the “Accounting Ignorance Law.”

And, what that looks like is, they don’t yet understand how they can be aided in growing their construction contracting business through correct use of their financials – and it is going to cost them.

Here is the deal. Average Joe Contractor isn’t the competition they need to be concerned about. It is the up and moving commercial construction contractor who has gotten savvier and more sophisticated. It also means the General Contractors (who are also more savvy) expect their subs to bring a better level of efficiency and expertise not only in the field, but also in the office.

This has led to higher expectations which makes the cost of not knowing what you’re doing with the financials much higher these days.

And its not just the competition or the GCs.

Counting the Cost in Construction Accounting

It’s the complexity of software, SaaS, apps, construction bookkeeping nuances, and so on.

One of the huge benefits of QuickBooks and integrated apps is how much information you can obtain from having all the correct input in all the correct places. Its job costing, bidding, accounts receivable management (with or without AIA style billings,) estimating, invoicing, timesheet data, reconciliation of balance sheets, WIP reports and supporting documentation, making appropriate bill payments, certificate of insurance management, project close-out documents management, and on and on.

What that leaves us with is that understanding (and using) all the great benefits you can get from QuickBooks and the supporting apps is more complex these days, and even more so now that you’re ready to Run With the Big Dogs.

So, my advice?

Don’t drive around the barricades!

And don’t leave your construction business accounting needs to wishful thinking or chance. It will cost you.

You can get in touch with us here or give us a call Toll Free: 866-629-7735.

3 Reasons You Should NOT Work with Schulte and Schulte

Reasons for working with Schulte and Schulte lead to excellence

3 Reasons You Should NOT Work with Schulte and Schulte

Reason 1 – you have it under control

You have your accounting under control. Your contract management goes off without a hitch. And, your company systems are top notch.

It’s understandable, you run a tight ship. You stay up to date with the latest strategies and available tech support in all accounting functions. Plus, you attend accounting conferences, take systemization classes, and understand all the features of your office tech devices.

You have several hours a day to devote to data entry, preparing and understanding financial reports, and dealing with the nuances of contract management.

And, to top it all off, all your company systems and processes are documented, stored, and easily accessed.

Best of all, your spouse, or your neighbor, or your second cousin’s ex-wife’s mother-in-law just finished a course in QuickBooks and he or she now knows exactly what job costing, quarterly taxes, payroll, change order, progress billing, and WIP reports are all about. Not to mention, he or she produces the financial reports your lending officer is likely to ask for – or the “tax man” demands.

Reason 2 – you like things the way they are

You don’t want no dumb girl telling ya “You can do this and that to make your commercial construction company more profitable and easier to run.”

Reason 3 – you can’t afford us

While the first two reasons were written tongue-in-cheek, this is indeed a real reason some must consider. We aren’t cheap. And, the reason we aren’t cheap is we are quite valuable!

Our clients remind us all the time of how glad they are that we work with them. We straighten up long miss-managed books as well as answer small questions concerning software nuances.  And, we work out the data entry solutions and develop entire systems to manage their construction business processes. Plus, we can take over the contract management duties as well as find one-on-one solutions to accounting dilemmas. We are the go-to partners for all things accounting and many things back office related.

“Thank you so much! Our CPA told us he had never seen a more complete and nicer set of books from any of his construction customers.” – a client who had been with us only 4 months when he told us this

“When we first decided to go with you, I told the other gals in the office, ‘This girl knows what she is talking about, she is good.’ I was right!” – a client who has been with us almost from the time we first opened our doors

“Having you be on our team has already gotten us through a lot of issues I wouldn’t have known how to deal with. Thanks for getting this one straightened out too.” – a client who has been with us for about 6 months

The reason to outsource

Schulte and Schulte is the “corporate accounting department” for small to medium commercial construction contractors. We are their outsourced partner.

An article from the archives of the New York Times is enlightening concerning the benefits of outsourcing.

And, this article from Inc. says outsourcing certain tasks can be cost-effective for businesses of all sizes.

3 Reasons you Should work with Schulte and Schulte

  1. We understand well the junction between Construction Contracting Street and Accounting Avenue.
  2. Our company culture means we work hard to see to it that our clients run with the big dogs.
  3. We’re not cheap – because we’re worth it.

 

Now that you’re ready to see how we can add value to your commercial construction business give us a call Toll Free: 866-629-7735 or get in touch here.  

It Costs to Live with the Lost Cost Fallacy

Lost Cost Fallacy can slow down the growth of your business

Cost is something we can all understand – or not

There is this interesting mindset we humans get caught up in known as the Lost Cost Fallacy, otherwise known as Honoring a Sunk Cost. David McRaney at You Are Not So Smart goes into detail concerning what is entailed in Lost Cost Fallacy.

What it boils down to is, it’s hard to abandon a person, a product, or a process once you’ve invested time or money into any of them. It is hard to give-up when you’ve spent so much. You don’t want to think that you wasted all that time or effort. Weird thing is, it’s hard to abandon some things even when the investment is minor.

Cost is cost, yet it can be funny

Here’s an example. A while back I went to breakfast with some family members. After eating most of my food, I decided it was time to call it quits. There were mostly just bits and pieces scattered on my almost empty plate. Yet, one of the breakfast party was horrified that I was leaving two intact pieces of bacon. She explained that the meat was the most expensive part of the meal and I was therefore under obligation to eat it.

Even when I explained to her that the cost of my meal didn’t vary depending on what or how much of it I ate (or didn’t eat,) she was insistent that I was making a huge mistake. No thanks, she didn’t want my bacon, she had eaten her fill from her own plate on which she “wisely” left only the toast. 😵

Lost cost fallacy in the construction industry

There are three major categories in construction which present temptation for holding tight to the Lost Cost. They are people, products, and processes.

People

Let’s say you have an out of town division led by a hand you’ve had around for quite a while. Suppose you think there is a possibility he isn’t pulling his rightful share of work. There even seem to be things happening which are not a part of the company culture you’ve worked hard to build and reinforce. Perhaps he tells you there are clients onboard because he brought them on. It could be you let yourself worry over the loss of clients as well as workers if you terminate this fellow.

Besides all that, you’ve spent a great deal of time and money getting this guy into the position he presently holds. Could you be honoring a sunk cost?

Overcome this lost cost fallacy. Think, “Am I sacrificing the opportunity to hire someone better because I am stuck with the sunk cost?”  Are you giving up the possibility of better relationships by sticking with something that is leading nowhere? What is the actual cost of your commitment to a past decision?

Product

You had a great project in the pipeline and at the last minute it fell through. In the meantime, you had ordered product for that “great project” and it doesn’t work on any of your real projects. Or, some excellent salesman convinced you to order a stockpile of the latest and greatest fixtures (or what-have-you) to have on hand for your service clients. And, a year later you still have most of that stock taking up room in your warehouse or yard. You can’t find the things you really want and need because that “stuff” is always in the way.

Time to liquidate the unused product. The cost of keeping it is too great. Think, “If I had the same opportunity to buy this product again (knowing what I know now) would I do it?” If something catastrophic happened and you lost that product would you go out and buy it again? Could it be that the benefits of your choice (it was on sale) decreased over time while the costs (storing it and searching past it) increased? Could it be that you didn’t have all the information when you made the initial decision, but now (with new information) it is clear this product is not serving you in any way? You aren’t saving money, you’re losing money in storage and wasted time searching for what you actually need.

Process

You know and understand that when you put together a process or a system it takes time, money, and effort. Perhaps someone talked you into purchasing and using their system for maintaining the tools and supplies on your service vehicles.

And. It. Doesn’t. Work. It just sort of limps along. No matter how hard you try.

You bought the software, you spent countless hours training your technicians, you spent even more hours on the phone trying to figure out why it wasn’t working.

Does the word, “groan” come to mind? Think, “My goal is to have a great process, not to own a dysfunctional piece of software.” Is it possible abandoning a sunk cost is a sign of good decision making? Are you over-estimating the importance of the sunk cost? Is it possible the lessons you learned while using the dysfunctional process will come into play as you move in a new direction?

Overcome Lost Cost Fallacy

Here are some ideas concerning how you can deal with the Lost Cost Fallacy which crops up in your life and business.

  • Are you trying to prove you made the right decision in the first place? Is being “right” more important than your business and your bottom line?

 

  • Realize that dumping a Lost Cost is in reality a sign of good decision making. It shows you’re good at knowing when to say no and when to move on.

 

  • Reflect on things from your past. Did you give up an item of Lost Cost? Aren’t you glad you got out while you could? What good things eventually came from dumping the Lost Cost item?

 

  • Ask others. Seek help from your mentors, colleagues, friends, and trusted advisors. People are usually much better at seeing the Lost Cost items owned by others. And some, like your lawyer, insurance agent, and accounting advisor (that’s us) are trained to see items you’re missing when it comes to lost costs and lost causes.

Here at Schulte and Schulte we specialize in accounting for construction subcontractors. We’ve seen a few people limping in with the Lost Cost Fallacy hanging on to them like a child wrapped around and clutching onto his daddy’s leg. When we show our clients that’s not their kid, but rather a naughty dog they learn how to “shake it off.”

Hubdoc Explained for Subcontractors

Hubdoc saves time and makes your accounting more efficient.

Hubdoc pulls your bank statements, recurring bills, and uploaded receipts into one hub. Yet, that is just the beginning. Using Hubdoc means you can reduce the need for manual data entry and paper filing. Time to get rid of that ugly file cabinet? Your “stuff” is stored in the cloud. And, this is a biggy – you can get to what you need in one place. That means you no longer need to log into multiple sites to retrieve the information you’re after.

Hubdoc is set up by us, for you

We set up the Hubdoc account and then work with you to get all of your documents flowing into it auto-magically!

What we ask of you is:

  1. Set up view only user access to your bank accounts

 

  1. Make an accounting email address on your email domain

 

  1. Create your User ID and Password through the link we send you

What we do on our end

After we’ve gotten the initial stages set up, we configure your Hubdoc account to sync with your QuickBooks system. This allows you to publish your bills and receipts right from Hubdoc into QuickBooks.*

3 ways to get your docs into Hubdoc

  1. The phone app allows you to use your phone’s camera as the means of entry

 

  1. From the web-based app you can drag and drop the documents where they belong

 

  1. With the custom email you’re provided you can email them into the system

The magic behind the system

The magic is called Optical Character Recognition (OCR.) It “reads” receipts and creates transactions that will export to QuickBooks where a match is created in the bank feeds.

Optical Character Recognition is a technology that enables you to convert different types of documents, such as scanned paper documents, PDF files, or images captured by a digital camera into editable and searchable data.

If you’re interested in the technology behind the magic, this article from lifewire is enlightening. From the article: “OCR, also referred to as text recognition, is software technology that transforms characters such as numbers, letters, and punctuation (also called glyphs) from printed or written documents into an electronic form more easily recognized and read by computers and other software programs.”

What we like best about Hubdoc

Hubdoc saves you time and all the while it is building a digital archive of your business documents.

Yeah, but what about security?

Take a moment to look at the layers of security provided by Hubdoc.  They even offer a guide to the user concerning practices which will help you protect your Hubdoc account from your end.

*Publishing to QuickBooks is a feature available only to QuickBooks Online users. But don’t despair we have solutions for you QuickBooks desktop users also.

Your call to action

Tell us today you want to take your place on our waiting list. Call us 480-442-4032 or Toll Free at 866-629-7735. Or use the form found here.

Work in Progress Accounting

Tonya Schulte – Construction Accounting Specialist

Recently Tonya, one of our founders, was asked by CCAN (Construction Company Advisor Network) and Knowify to present a webinar on the basics of Percentage of Completion Accounting. The webinar is for those who need to understand the concepts behind the method, whether they are contractors or accounting advisors to contractors.

It all boils down to . . . well that is what the webinar is all about.

Before you jump in, I want to alert you to the fact that shortly into the webinar (at about 4:23) there starts to be a little bit of technical difficulty. Tonya’s voice is sketchy and cuts out a bit here and there. Hang tight – the slides are still there and quickly enough the voice issues are straightened out.

You’ll be able to hear her just fine before she gets to the deep dive of explaining how to use the principles involved in Percentage of Completion Accounting.

Now you can see why this method of accounting can be so useful for construction contractors.

The team here at Schulte and Schulte are trained in using this method for our construction contractor clients. If you’re interested in joining our successful contractor clientele, be sure to get your place in line on our waiting list by calling 480-442-4032 or Toll Free: 866-629-7735.  Simply let the person answering the phone know you would like to be added to the waiting list.

Developing Accounting Systems That Work

Through the gate to running a profitable construction company

Through the gate to running a profitable construction company

You need an accounting system for your construction contracting or service business because you need data. There are three basic reasons you need data.

  • Because the federal as well as state and local governmental entities require it. And, let’s face it, running your construction contracting business from a prison cell would be much harder than any issues you’re currently facing.

 

  • Because banks or lending institutions, as well as bonding businesses require it. Loan officers have a certain protocol for approving a loan and without accurate, current records getting a loan could be like trying to find a warm, sunny beach at the north pole.

 

  • Because growing or scaling your business depends on how accurate your financial information is. Knowing the financial position of your construction business, what some call understanding “the language of business,” sets you apart from the large number of construction business owners who fail.

 

Having accurate information, things like cost and earnings, liabilities and assets, profit and loss gives you the business guidance you need to either stay the course or take corrective measures. Well, sort of.

When records and reports aren’t enough

We’ve found that many construction contractors know well the systems required in their select industry, yet when they begin dealing with the systems necessary to manage their financial data, they feel as if they’ve run into a brick wall.

Even those who’ve managed to chip away at the brick wall creating windows of financial understanding have usually only gotten to “records” and occasionally “reports,” thus they’re lacking the “analysis” portion of the financially healthy equation.

Crunching the numbers

That’s when including a professional from the accounting world becomes necessary for the welfare of your business.

These pros make sure you understand the meaning of the financial information. They’re interpreters of a sort. They help you learn “the language of business.” They’re great at helping you develop the systems which are necessary to put you in the driver’s seat.

Putting a gate in the wall

Guiding you to create a system for measuring and summarizing business activities, interpreting financial information, and communicating the results is how your professional accounting team puts a gate in that brick wall. A few of the things you can expect to gain from a capable accounting pro are:

  • Guiding you through the SaaS options
  • Developing a tech stack best suited to your needs
  • Determining where you may be losing money
  • Showing you which types of clients are offering the biggest returns on your efforts
  • Enhancing your decision-making capabilities through better understanding of the numbers

Going beyond the brick wall

Because Schulte and Schulte, LLC is a professional accounting service specializing in working with construction contractors, we help our clients develop and use accounting systems which serve both their legal and their managerial needs in the wild and wooly world of construction contracting. And, because we’re a Profit First certified firm we take them beyond having a nice set of records and put them on the path to having a vibrant and profitable business.

You can reach us Toll Free: 866-629-7735 or get in touch the easy way right here.

Penny Pinching is Good for Your Construction Business

Becoming profitable through saving money

Becoming profitable through saving money

You’ve moved up from “Have hammer, or wrench, or paintbrush – will travel,” to running a construction contracting business. Now, you have much more to be concerned with than simply finding a project, doing it, and getting paid for your effort. You have a business to run, one which should be profitable.

And in the construction business, just as in other businesses, cash in king. That is simply how it is. To run a profitable construction contracting business you must learn how to master the cash, how to make decisions concerning the cash, and how to prudently use the cash.

Are you making a profit?

While there are a number of things which you can change concerning how your numbers are adding up (or not adding up,) in this article the subject will center on ways you, a construction contractor can tighten the belt, can be more frugal, can pinch a few more pennies on your way to making a profit.

And while we’re on the subject of decisions, let’s back up a minute and understand that those expenses in your accounting records represents a decision you’ve already made. It takes fortitude to look at a particular expense, challenge yourself, and think about the decision you made, then perhaps taking steps to change or improve it.

First things first

When you first started out you had ways to “get by,” to make ends meet, to keep going while you looked for that next job. Now, you have people working for you, running crews, driving your vehicles, using your tools, performing the back-office duties. You have jobs back to back or over-lapping and you have lots of expenses.

It is time to revisit your ability to “get by.” It is time to be innovative and to grow your ability to solve problems rather than throwing money at them.

Get out of the rut!

In some ways, this is a call to reduce inefficiencies in your own as well as your employee’s work habits. In other ways it’s a challenge to see if there are better, less expensive ways to get things done. It’s easy to get stuck in a rut. Yet, once you know you’re in a rut, you can take specific measures to get out of it.

Top 5 ruts to jump  

Vehicle or fleet

Whether you have only one business truck or an entire fleet of vehicles there are likely ways to reduce your expenses. One major way to save money here is to be cautious and certain before signing on the dotted line for that beautiful new pickup you’ve had your eye on for a few weeks. Do you really need it right now? We can help you determine whether or not your business can really afford that shiny new toy. Also, when it comes to vehicles, there are other ways to save, for example, in this article from Construction Executive, there is a list of 5 simple changes you can make to help control fuel costs.

Office tools and supplies

Whether you need to complete an RFP (Request for Proposal) with a few of the top suppliers, or you simply need to keep an eye on the cost comparisons of a few local office supply stores along with membership stores, get out of the rut of always buying supplies from the same place. One simple method you may choose is to maintain relationships with two providers that are competitive on price. And, because the ordering process is easy online you can switch providers quickly and easily. Check out these tips and tricks from Grainger concerning managing your office supply inventory.

Construction supplies and materials

Your particular trade will often dictate your choice of suppliers. Yet, just as in the office supply providers in the above section, you will do well to maintain relationships with more than one supplier. And, you already know who the heavy hitters are in the overall construction supply industry. Are you taking advantage of all they have to offer? While it may take some of your upfront time delving into all the benefits they offer to the pros, it will pay off in both time and finances to become familiar with and take advantage of their programs. You can start by getting to know your Pro Account Representative at Home Depot and checking out Lowe’s ProServices.

Tools and equipment

Determining whether you need to purchase or lease particular tools and equipment and the cost saving factors of either choice will have an impact on your ability to save pennies now and dollars down the road. This article from Construction Marketing Association will give you information you can use in the decision-making process.

Also, when you make the determination that you will purchase tools, be cautious about quality. Invest in the best quality tools you need and can afford rather than trying to get by with cheap substitutes. Just be sure you remember the need factor.

Credit card processing fees

Shop around. One of the first places you may want to check is with your trade organization many of which have an agreement with credit card processors to provide lower rates. Be cautious, some companies will try to lock you in for a long period of time in order to receive a better rate. Also, look for rates concerning leasing the equipment. When you use QuickBooks Online you are able to take advantage of their bank transfer processing through ACH (Automated Clearing House) payments. You may choose to accept only ACH payments at no charge, or to also accept Credit Card payments (with percentage fees) based on your needs.

More ruts to consider

Insurance

Be sure you’re getting the best rates for each of your insurance needs. Check around, look for providers that know and understand the construction industry. For example take the time to shop around for the best workers’ compensation prices you can find, especially if your company has a low accident rate that you can use to negotiate with carriers and agencies.

Marketing

When you’re low on money, marketing is one of the last things you should cut totally out of your thoughts or your budget. Yet, by being creative and using many of the options for marketing which are no or low cost you can remain in the game getting the word out. This article from Forbes gives you four creative and useful ways to save money on marketing.

Rent or mortgage on office and shop locations

Again, creativity is your best friend. Would you benefit by moving your operation to a different (less expensive) location? If your construction business doesn’t depend on walk-in-traffic why pay more for a location which touts traffic as a rental perk?

Temporary office structures and/or sanitary utilities

Should you own or rent your on-location structures? Is there a better rate for the portable toilet from a different vendor than you normally choose?

More money saving tactics to scrutinize

  • Determine if selling or leasing underutilized equipment will be of benefit.
  • Reexam your need for company owned vehicles.
  • Review your entertainment costs. (This is no longer an expense which can be deducted on your tax reports.)
  • Look for free or low-cost training for yourself and your employees. If you belong to a trade association take advantage of what they offer.
  • Adopt a just-in-time philosophy of material staging in order to deter waste as well as keep the money flow in check.
  • Save money by outsourcing your accounting and some other office tasks.

 Get in touch here, or give us a call 866-629-7735.

Employee or Independent Contractor? Recommendations for Compliance

The following is a guest post courtesy of Lynda McKay owner of HRextension.

The construction industry has been and continues to be under the microscope when it concerns how employers pay workers: as employees (W4) or as independent contractors (W9 or 1099ers).  The two governing entities that regulate and monitor this are the Department of Labor (DOL)/Wage & Labor/Fair Labor Standards Act (FLSA) and the Internal Revenue Service (IRS).  Both federal agencies only provide ‘guidance’ to employers in making this very important determination, leaving employers at risk for non-compliance and potential costly fees.

While an employee (EE) and independent contractor (IC) ‘look’ the same in the workplace or on the worksite, classification of each is very different.

Roles Defined

EMPLOYEE: An employer must be accountable for overtime pay, unemployment compensation, workers compensation, income tax, Medicare, Social Security deductions, eligibility verification to be employed in the US, minimum wage requirements, providing resources to do the job and potentially, paid time off, paid sick time and/or health care and retirement benefits.

INDEPENDENT CONTRACTOR:  An employer is not accountable for any of the above listed under ‘Employee’.  Instead the employer processes payment via a W9 and a signed Independent Contractor Agreement.

Thus, there is no mystery, considering the numerous many reasons, why an employer might lean toward the independent classification.  And there are true benefits when utilizing an IC specifically when the work is truly a short-term project that could transition to current staff employees.

In April 2015, federal courts in Utah and Arizona approved consent judgments against 16 defendants operating construction businesses that misclassified employees as “member/owners.” These judgments awarded $600,000 in back pay and liquidated damages to affected construction workers, plus $100,000 in civil penalties.

Another issue in misclassifying construction workers, is recruitment and retention rates suffer. Top level candidates do not want to be cheated from all the employee status related benefits.

How can you tell if a worker should be an employee or an independent contractor?  The DOL Fact Sheet 13  provides six (6) factors to consider when determining if a worker should be compensated as an employee:

“While the factors considered can vary, and while no one set of factors is exclusive, the following factors are generally considered when determining whether an employment relationship exists under the FLSA (i.e., whether a worker is an employee, as opposed to an independent contractor):

  1. The extent to which the work performed is an integral part of the employer’s business.
  2. Whether the worker’s managerial skills affect his or her opportunity for profit and loss.
  3. The relative investments in facilities and equipment by the worker and the employer. 4) The worker’s skill and initiative.
  4. The permanency of the worker’s relationship with the employer.
  5. The nature and degree of control by the employer. “

What does all this mean?  Yes… it can be complicated.  The below table can serve as a ‘guide’ to assist.

If you have more Yes answers than No Answers, this is most likely an employee.  Not an independent contractor.

Additional resources can be located here.  

It is irrelevant if the worker wants to be an IC.  It is not an arbitrary decision for the worker to make.  Governing agencies do not care if employers have a signed contract where the IC agrees to be an independent contractor; even if the worker obtains a business licenses with a state or other local government entity.

The US DOL, IRS and courts do not care about ‘intentions’ of either the employer or the worker. Even despite a signed agreement, a worker who willfully and knowingly enters a working relationship as an independent contractor can claim misclassification later and collect damages from the employer.  

Potential Damages

If an employer is found guilty of misclassifying a worker as an independent contractor, the penalties can be steep.  Just some of the fines can contain any overtime worked, any unpaid wages if minimum wage rate was less than required, employment taxes.  Willful attempts to avoid minimum wage and overtime obligations, can be up to $10,000 per violation.  Do not forget the additional employment attorney costs

What Employers Can Do Now

    • Know the rules and document the firm’s relationship with an independent contractor.
    • Keep all documentation and review it annually to ensure that it is up-to-date.
    • Conduct internal audit of all employees and independent contractors with the help of qualified HR professionals.
    • Ask independent contractors to provide evidence of insurance, business location, business license and a list of other customers.

Help Needed?

The DOL and IRS are not slowing down on identifying misclassifications. Understanding the FLSA and IRS factors tests are not always clear.  If at any time you are unsure about your classification decisions, HRextension can provide the guidance and support you need.

Lynda’s expertise includes employment practices and policies administration,  job description review and development, employee performance development, compensation assessments and conflict resolution through mediation and training. Her ultimate goal is to assist her clients in maximizing their investment in the human capital component of their organizations.

You can get in touch with her here.

 

Not “If” – Rather “When” Something Goes Wrong on Your Construction Site

 

 

If you’re a construction contractor who hasn’t experienced anything go wrong on one of your projects, you’re either brand new to the biz or you’re not being honest with yourself. Things go wrong.

The wrong size gizmos were ordered. Your top hand falls and is injured. The weather is playing havoc with the job site. Your supplier is totally out of the widgets you must have today (and won’t be able to get them in anytime soon.) Change orders are raining down on you.

Turns out a mistake was made

For many mistakes made on a construction job what is often required is stepping to the plate and explaining any mistakes or delays to your customer. This gives you the added advantage of being able to tell what you plan to do to that will fix or make up for the problem area. Being upfront and honest concerning the problem adds to the ability your client has to put trust in you to complete the project for them.

Even when there has been a natural disaster you can stay ahead of the rebuild game through planning and preparation. Construction Executive offers these valuable tips concerning taking steps to minimize operational downtime after a natural disaster.

Still, there are ways you can help to avoid some of the common problems found on construction sites and in construction businesses.

Steps to mitigating risk

Be certain your contract covers all the details including who is responsible for what

Be sure to include information concerning how change orders will affect both the dollar amount as well as the time frame for the project.

Purchase the best insurance

Some things to consider are, general liability, workers’ compensation, commercial auto insurance, business owners insurance, project specific coverage, environmental legal liability, contractors errors and omissions insurance.

Hire and train your staff well

Build safety training into the routine of how your construction company operates. You can’t tack on the idea of safety training as an afterthought or a “once in a while” meeting that takes place following an accident. Putting safety at the top of your list of ways your construction company benefits both your employees as well as your clients is a sound way to keep the risk factor in control.

Establish formal policies and procedures concerning risk management

Identify the hazard, assess the extent of the risk, provide measures to control the risk and manage any residual risk. This article from Capterra offers much information concerning the identification and control of risks.

Develop relationships with more than one supplier

Having an excellent relationship with your suppliers is very advantageous as this article from Entrepreneur points out. And as the saying goes, don’t put all your eggs in one basket. While you may get the best deals and the fastest service from one special supplier, having more than one source is an excellent step to avoiding the risk of supply failure.

Join industry related associations and build relationships with others in your trade

Knowing you have a trust-worthy fellow tradesman who can step into the gap when your job is at a breaking point is a balm worthy of taking time to achieve. Of course, you’ll be there for someone else when they need help also.

Establish an emergency fund

From natural disasters to broken down vehicles there is always something which hasn’t been anticipated and which will cause problems or delays on your jobs. Having funds reserved just for these types of emergencies can be the one thing that will save your construction contracting business from going under.

What now?

Considering all the above, it is understandable that construction risk management is a tough nut to crack. You need all the help you can get when you are dealing with risk in construction. We, at Schulte and Schulte are here to help you gain the traction you need and are prepared to help you take the necessary steps to establish and maintain the emergency fund you’ve always wished you had but didn’t think you had the dollars for. We’ll show you how.

Call today 866-629-7735 or get in touch here.

The Top 5 Critical Problems Schulte and Schulte Solves for Owners of Construction Contracting Companies

 

When you first became a construction contractor or construction service business owner it was pretty simple – get a job, do the job, get paid, see how much money you made. Now, things are different. You have people working for you, people who rely on you in order to make a living.

Knowing the whats, hows, and whys of construction accounting has become much more difficult.

Following are 5 critical problems Schulte and Schulte solves for clients on a regular basis.

Not knowing how to maintain cash flow

“Projecting future cash flow is something I’ve never understood how to do.”

Solution: Once the system is implemented you’re “in the know” daily concerning all the angles of cash flow.

Not having proper records for the IRS and for other potential needs – like proving credit worthiness

“I’m not even sure what I should keep, much less how to keep it.”

Solution: Your records are brought up-to-date and kept current so you’re always ready for both the IRS as well as for investors or loaning institutions.

Constantly having to chase work to build revenue

“It seems if I’m going to make money I always have to find new work (some I don’t even want to do) and it drains my time, energy, and capital. There’s got to be a better way.”

Solution: You’re taught smarter ways of maximizing revenue rather than the eternal work chase.

Not understanding their job costs

“I know it is more than just what I pay my people and how much I paid for supplies, but I’m not sure what all goes into job costing.”

Solution: You know what the job costs are for each job and for each type of job, giving you valuable insight concerning future jobs.

Not having enough time in the day to do it all as a small business owner

“I don’t hardly have time to breathe, much less time for figuring out all the ins and outs of construction business accounting.”

Solution: You’re relieved of trying to “figure it out.” The Schulte and Schulte pros take away much of the “drudge” of bookkeeping while informing you regularly about the financial health of your construction contracting or service business.

Solution: Maximizing Your Profits.

Now that you know we offer solutions for your critical problems, it is time to stop messing around and trying to figure it out yourself. Reach us through this number 480-442-4032 or get in touch here.