Preparing for the Tax Man: Tips for Architects, Engineers, and other small business owners (guest post)
Miss me yet? No, I’m “not dead yet” (for you Monty Python fans). Nor have I fled to Hong Kong (a la Edward Snowden). And no, contrary to rumors, I am not working on a Middle Eastern documentary with Jon Stewart. Ahem. My MIA status was simply due to too much work. Good problem to have, right?
Regular posting will resume next week. In the meantime, since it is, once again, tax time for quarterly filers, I thought this guest post on tax issues particularly appropriate. Even if you don’t file quarterlies, pay attention now to save heart ache at the end of the year!
Looking for a few small-business tax tips? Consider this shortlist to help streamline your process:
1. Proper record-keeping: Year-round record keeping ensures that come tax time, your paperwork will be in order. Make sure that you save all documents relating to deductions in case your business is audited. Because tax credits and deductions change from year-to-year, keeping excellent records allows you to adapt while being able to reference previous years simply by checking your filing.
2. Keep two Acts in mind: Both the Small Business Jobs Act and the Patient Protection and Affordable Care Act (aka “Obamacare”) help you manage your tax burden. The first has over 17 tax provisions that decrease taxes for small businesses, all of which can win your business great savings. The Affordable Care Act allows small businesses to cover 35 percent of the health care premiums that they pay to provide health insurance to employees. In 2014, the amount will increase to 50 percent.
3. Avoid an audit: Audit traps are indicators to the IRS that they need to investigate your business dealings further. Avoid this scenario by keeping the following details straight:
Home Office Deduction rules: Know what qualifies a home office and make sure yours abides by the IRS definition before claiming one. Not all home-based businesses qualify for this deduction.
Properly classify your employees: Independent contractors and employees are not one and the same from an IRS perspective and should not be treated as such. Non-compliance with proper classification is a red flag to the IRS that your business may be attempting to avoid payroll taxes and can result in back taxes and penalties.
Miscellaneous deductions: Be cautious with your deductions, as a large amount of itemized deductions can raise suspicion. Be sure that you have all of your paperwork to support any deductions and claim them in a clear and specific manner.
Business and personal expenses do not mix: While Turbotax encourages freelancers to combine business with pleasure and write off the expenses, the IRS does not welcome this blended method and will scrutinize individuals who combine their business and personal expenses too often. Maintain separate bank accounts for your personal life and business and maintain meticulous records to ensure that your actions do not require further attention.
Whether you have an accountant or do your business taxes yourself, knowing the proper way to file is an excellent policy for a small and growing business. By maintaining clean records and staying aware of IRS policies, you can make the most of business deductions and enjoy a penalty-free tax season.
Chelsea Terris provides online content for Meticulous Plumbing, a family owned company located in Portland, OR. Chelsea is passionate about helping small businesses thrive.
Thanks Chelsea for the tax tips!
Today’s guest post is by David Morrison. David has worked on both sides of the construction site during his time in renovation. Having stepped from the gravel pit into the office a few years ago, David currently now works with UK Tool Centre, liaising with the industry on their behalf.
Working as a site engineer or lead architect has many challenges and is undoubtedly one of the toughest roles, interwoven around effective communication skills with the clients as well as the site contractors, subcontractors and suppliers.
Since maintaining discipline and accountability is at the core of any successful venture, the same is true for a construction site also. The site engineer plays the “unwanted” role of implementing carrot and stick policy, awarding the effective contractor and dealing with the laggard.
For those beginning their engineering and architectural careers, or for those who still struggle to maintain a tight ship when dealing with contractors, there are a number of things to keep in mind.
a.) Organizing Self - The way a site engineer organizes his work plays a very important role in meeting the final objective and let the workplace run as a team. The first and most important thing is to set an example by doing things in the same manner as you are requiring and expecting from the contractors.
b.) Be Clear - A site engineer must ensure that the contractors have clear instructions, drawings and specifications related to their work. Otherwise the “garbage in; garbage out” rule shall be applicable to the final outcome.
c.) Work Milestones - A site engineer should coordinate with the general contractor, who in turn should use professional project management tools, define work milestones and interact with the subcontractors to keep an eye on their timely completion. If any issues arise, they must be addressed quickly, so that the contractor or subcontractor’s work is not delayed.
d.) Performance Appraisal - Informing a contractor of his performance quality is only half the job; informing him in a timely manner is the remaining half. The site engineer should develop methods of regular assessment of work of each prime contractor, and should include this information in regular project meetings. This allows the site contractor to timely identify the gaps (both related to man and machine) in his work and to take action to complete the work successfully.
e.) Teamwork, Motivation and Inspiration - To foster teamwork among various site contractors, a site engineer should know how to dig into his own experience of similar works. He should always work to motivate them by giving good and bad examples out of his experience. A well experienced site engineer always have lots of good advice from his earlier encounters to inspire the contractors and give them potential solutions to difficult tasks and situations.
f.) Prompt Payments - A site engineer must always ensure that as per contractual terms with contractors the payment for the various milestones must be promptly processed and done without any delay. This is of utmost importance in getting the work done from contractors on a construction site.
g.) Safety - A site engineer must always ensure that contractors shall never compromise on safety and security rules to expedite the work. A bad accident can be devastating, to the individuals involved and also to the project schedule.
h.) Friendship, Philosophy and Guidance - A site engineer should know how to work as a friend-philosopher and guide to the contractors and must not always act as bully. After all, the contractor may have some genuine issues with the design team’s performance as well.
Advice for construction is ten to the dozen and there are a lot of potential misguiding mantras out there. One of the most useful to take into account has always been: “It may take a lifetime to learn the ways to deal with contractors on-site, and still a lot will be left to learn.”
Thanks David. Now it’s your turn. Thoughts, comments, questions? Share in the comment section below.
Photo courtesy Teaching Underground.
Today, we welcome back Christopher G. Hill as guest author. Chris is a LEED AP, Virginia Supreme Court certified mediator, lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC. Chris has been nominated and elected by his peers to Virginia’s Legal Elite in the Construction Law category on multiple occasions and is a member of the Virginia Super Lawyers “Rising Stars” for 2011 and 2012. He concentrates his practice on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.
Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. Additionally, Chris is active in the Associated General Contractors of Virginia and the Board of Governors of Construction Law and Public Contracts Section of the Virginia State Bar. Most importantly, Chris’ blog was a personal inspiration to me as I set about my own blog back in 2009. Welcome Chris!
First and foremost, thanks to my pal Melissa for the opportunity to post here at her great blog.
Now that the formalities are out of the way, I will explain the title of this guest offering. When Melissa first contacted me for my thoughts on poor project management from the contractor’s perspective, my first thought on how to avoid causing friction was “Don’t think like an architect.”
Before you flip the switch and head off for another post, possibly even another blog, hear me out. Yes, I know that much of the audience for this piece is likely to be architects and other design professionals. Yes, I know that all of you try hard. But no, not all of you can run a job smoothly when acting as an Owner’s representative on a project (as opposed to designing a great building). I’m here to help with my “musings” (see how I did that?) gained from years of representing the folks that you all seem to think are trying to ruin a project: contractors and subcontractors.
The main thing that both “sides” of this equation need to remember is that you are all in this together. Without your approval, the GC (and by extension the subcontractors and suppliers) on the project won’t get paid. Without the GC and its cohorts, you, the architect, will have to listen to an Owner complain about the pace of the project and the fact that you aren’t running the project how that Owner wants it run. See? All of us are in the same boat.
Failing to row in the same direction (to continue to beat this metaphor over the head) as the GC and seeing the GC as one that seeks to undermine your beautiful and artistic design sensibilities can only undermine those sensibilities. GC’s and subcontractors, if asked nicely early on, can give you great insights into the scheduling, proper materials, and even the best and most efficient building design.
For example, an HVAC subcontractor can help you with the ductwork design in the beginning so that later on you aren’t barking at the GC because the subcontractor requested a change order (now waiting on your desk for approval) due to the fact that a load bearing wall would have to be moved in order for the ducts to go where you wanted them. This minor bit of early discussion avoids the issue and keeps the GC and its subs happy, keeps the project on track and avoids messy things like liens and bond claims.
Failure to consult early and often, in a cooperative manner, leads to grumpy GC’s, ticked off subs, and a project that slows to a glacial pace. This keeps everyone, including you, from being paid.
I could continue to rant, but you are smart folks. You can do all of that engineering type math and all of that geometry and work with CAD that I decided was too hard so I went to law school. You get the point: you and those that perform the construction at your project are not adversaries. Yes, you represent the owner and want to make sure that the building is built right. However, the best way to do this is to consult early and often. Free information flow is the best way to keep everyone happy and everyone paid.
Thanks again to Melissa for letting me rant.
Thanks, Chris. Ranting with a purpose is always welcome on my blog! Readers, it is your turn. Questions, comments, or rants for Chris or me? Comment below.
Now that I have your attention: Have you followed the “cruise from hell” story, in which Carnival Cruise passengers were forced to make do on a ship with no working power or lavatory facilities for the better part of a week?
Think this has nothing to do with construction projects?
On the contrary, this story serves as a reminder that if something can go wrong, eventually, it WILL go wrong.
No where is this more true than on a construction project.
Read my guest post on today’s Construction Law Musings to find out how you can prepare for the unexpected on your construction projects. While you are there, browse around and check out the wealth of information on Chris Hill’s Virginia-based construction law blog.
PS: New to this blog? Please sign up for email delivery and your free white paper on 7 Critical Mistakes made by architects & engineers.
Photo: (c) Roger Wollstadt
I’m writing this post in advance of its publication, as I plan to be out of town when this post goes live. So today’s Tip will be short and sweet– but nevertheless extremely important. It comes to us from Audrey Thomas of LeanOffices.
Here’s Audrey’s “Etiquette Nugget: Listen to Your Gut”:
If you’ve ever found yourself about to press send, but you get a feeling in your gut that is telling you not to, listen to your gut. There’s a reason why it’s speaking to you.
Perhaps you find yourself thinking these thoughts:
“This is probably going to tick him off.”
“This will put her over the edge.”
“I hope my client doesn’t misinterpret the pricing I’ve laid out for them.”
“I hope they read through this twice before responding back to me.”
If you’ve ever had these or similar thoughts, don’t press send. Instead, have a voice-to-voice conversation regarding the matter by picking up the phone or visiting the person face-to-face.
Another option for those emails that might be a bit “edgy,” is to put them in your drafts folder overnight. It’s amazing what rest can do for your mind and your gut.
I whole-heartedly agree. I will add: never put anything in writing (including email) that you wouldn’t want your Grannie to read. Stay safe out there!
Photo (c) Greenbay.