Start of the Year for Your Construction Company
Are you ready to start the new year for your construction company? At the top of the list for the start of the year is getting the tax preparation done. If you have employees, you have additional tax deadlines.
Important Tax Deadlines
- 4th Estimated Tax Payment Due
- W-2’s, W-3’s Due
- Form 940 Due
- Form 945 Due
- 1099-NEC, Form 1096 Due
(March 31 for electronic filing)
- 1099-Misc, Form 1096 Due
- Partnership Returns Due
- S-Corporation Returns Due
- C-Corporation Returns Due
- 1st Estimated Tax Payment Due
At the start of the year, an accountant’s responsibility is to compile all of the company’s transactions for the year into reports for tax preparation. All of the income and expenses are reconciled to bank statements. Accountants have a tight timeline between when the statements are available and when taxes are filed.
The accountant is responsible for:
- Entering Transactions
- Reconciling Statements
- Making Adjusting Entries
- Closing out the Year
- Compiling Reports
- Payroll and Payroll Reports
After the accountant has made entries and reconciled statements, a review of the accuracy should occur before tax preparation.
There are many options for tax preparation. Tax preparation can be self-prepared, a tax service can be used, or a CPA can prepare taxes. Tax preparation software provides a reasonably priced option for a sole proprietor. However, construction involves complex tax issues, and construction companies will benefit from the expertise of a professional.
Most tax preparers provide a checklist of items needed to prepare the tax return. Here’s a general list:
- Previous Tax Return
- EIN, Social Security Numbers
- Year-End Income Statement and Balance Sheet
- Year-End Banking and Credit Card Account Statements
- Vehicle Information
- Business Use, Mileage Totals
- Loan Documents
- Equipment Information
- Loan Documents
- Prior Depreciation
- Sales of Assets
- Payroll Summary, Payroll Tax Forms
- Estimated Tax Payments Made
- Home Office Information
By now, the end-of-the-year tasks should be completed. Here’s a quick reminder of the tasks on the list.
- Review Accounts
- Set up Tax Appointment
- Make a Budget Projection
- Clean up Receivables
- Purge and File Paperwork
- Inventory Tools and Equipment
- Review Mileage Records
- Review Subcontractor Status and Insurance Certificates
- Clean up Punch Lists and Open Permits
- Touch Base with Clients
With those tasks out of the way, you can concentrate on the upcoming year.
Kick-off the New Year
The end of the year was about getting prepared for taxes. The beginning of the year is an excellent time to organize and prepare for the busy construction season.
- Review Contract Terms
- Update Employee Manual
- Perform Employee Reviews
- Hire Employees
- Improve Safety Program
- Line up Subcontractors
Review Contract Terms
Over time the size and type of projects may change, thus resulting in the need for revising contracts. It’s always important to watch for situations that may affect the terms of your agreements. Contracts are vital to construction companies. In case something was missed during the year, the start of the year for your construction company is a great time to review contracts to determine if the wording meets all the legal protections your company needs.
Update Employee Manual
The employee manual has policies and procedures that change because of how the company operates or law changes. Laws are constantly changing, and the start of the year is an excellent time to review the employee manual to reflect the changes.
If the company changes employee benefits or plans to make changes, revise the employee manual to reflect benefit changes.
Perform Employee Reviews
Employee reviews are typically done at specific milestones and anniversaries. Be sure to add the dates to your calendar for reviews. Provide the payroll manager with pay increases when they occur.
You celebrated the accomplishments, looked at the budget, and planned for the upcoming year at the end of the year. If your construction company is in a growth and expansion stage, start planning for the next hire. Along with the employee manual, update the employee welcome packet and onboarding materials.
Next comes recruiting and training. A successful recruiting effort is an ongoing process. Employee retention in the construction industry tends to look like a revolving door. Implement thoughtful recruiting programs and provide quality training. Offer a career path rather than “just a job.” Providing regular reviews and opportunities for career growth are valuable tools for retaining employees.
Improve Safety Program
Improve your safety program by making it a priority. While planning for the year ahead, lay out a calendar of toolbox talks, appoint a safety coordinator and implement the Safe + Sound program. Safe + Sound is a year-round program with week-long events in August.
Line Up Subcontractors
Many subcontractors and general contractors have worked well together for years, but change is inevitable. Sooner or later, the general contractor will need to widen the net and look for subcontractors.
Word spreads pretty quickly when a contractor is hiring subcontractors. Subcontractors often are the ones to make the call to the general contractor. Subcontractors can be found through online searches, trade organizations, or hosting an open house.
Develop a process for qualifying subcontractors. Consider compatibility for current projects and future projects.
- Does the subcontractor have the capacity to provide labor and equipment?
- Can the subcontractor schedule labor when your schedule needs it?
- Does the subcontractor have adequate experience?
- What is the quality of the subcontractor’s work?
- Has the subcontractor worked on similar projects?
- Does the subcontractor have recommendations?
- Has the subcontractor obtained proper licensing?
- Have there been any violations?
Insurance and Bonding
- Does the subcontractor have adequate liability insurance?
- Is the subcontractor bonded?
- Does the subcontractor have a safety program?
- Does the subcontractor carry worker’s compensation insurance?
- What is the accident history of the subcontractor?
Construction companies’ branding and marketing can be done on a reasonably low budget. Facebook and Instagram are perfect, as long as the pictures are good quality and captioned. Watch for comments and respond professionally. People love short videos.
A website is essential for high-end projects, and pictures must look professional. A website can be relatively simple as long as it has a gallery of projects and a well-written “about us.” It requires a description of the type of projects you work on and provides contact information.
Novelty items like pens, t-shirts, and stickers are fun to advertise. Yard signs and advertising on vehicles and trailers are also affordable ways to promote.
Before you know it, the start of the year will ramp up to a busy spring. Start now to plan for a successful building season. It won’t seem like a long time, and you’ll be looking back on this year, preparing for the next one.