Are you putting yourself at risk for an IRS audit? What kind of things do the IRS target for contractors? We're breaking it down on the podcast this week. Topics we cover in this episode include: Accounting method rules based on the type of contractor you areContract-related services and advanced paymentsThings on the expense side that can trigger an auditUnreasonable compensationCharitable contributionsMisclassification of workersUnusual transactionsDrastic changes in expense...

Retainage. If you deal with it, is that job holding your company back? Are you being the bank for your job owner? Does it stunt your cashflow and growth? What can you do about it? Find out on this week's episode. Topics we cover in this episode include: What is retainage?Retainage can sunt your company's growth if you don't bid jobs properlyA retainage case studyRetainage can cause problems when you're in growth modeMany contractors do not account for retanage properlyHow to mitigate or...

Safety and workers comp insurance have several challenges, but what are the best solutions? Stephen brings his insight to this week's episode. Here's what you need to know about what Workers Comp can do for you, the most common type of claims, when to file a claim, experience mods, and more. Topics we cover in this episode include: What Workers Comp is and how it startedHow experience mods work for workers compensationUse your workers comp carrier for good loss control servicesWhen to file a...

If you've been here a while, you know we preach job costing and how it can help a contractor be more profitable. One of the challenges of implementing a job costing system is figuring out costing your labor. Where do you start? Let's talk about it. Topics we cover in this episode include: Challenges with getting information for the payroll systemThree ways job costing labor might work in your businessHow to get started with job costing laborLINKS Visit the episode page at...

One of the biggest stumbling blocks with contractors getting their job costing system set up properly is the cost code structure. There are several moving parts and it can be overwhelming. Where do you start? We're showing you on this week's episode. Make sure to check it out on the Carpenter CPAs YouTube channel. Topics we cover in this episode include: Reasons contractors fail at creating cost code structures\The Job Costing HierarchyCost codes mapping to Chart of AccountsHow to start...

Have you ever felt like the world is ending because your bank balance is low and you don't know how you're going to pay your people or your bills? Or you're on top of the world because your bank balance is high, but the next day the cash disappears? Let's talk about the psychology of money and how you can use your innate habits to control your construction company's success. Topics we cover in this episode include: The Gathering PrincipleThe Principle of Designated SpacesThe Principle of...

Starting a construction business? Wanting to get off on the right foot? Getting the foundation right from the start can spell the difference between success and failure. Let's talk about how to successfully plan, launch, manage, and grow a new construction business. Topics we cover in this episode include: Starting a business with the right mindsetBe careful about business costs and debt when you're getting startedEstablish your financial board of directorsAvoid these common mistakes...

In an industry where having solid financial backing and trust is crucial, getting these relationships right is not just a bonus, it's a necessity. This week, let's discuss how to build relationships that will last and support your business over the years. Topics we cover in this episode include: How to find the right partners for your businessBuild the relationship before you need the help of a bonding agent or bankerMake your banker and bond agent feel valuedIntroduce your banker and bond...

The foundation of any robust construction accounting system lies in a well structured chart of accounts. But building one can be tricky. Let's walk through it. Topics we cover in this episode include: Walking through the Chart of AccountsHow to treat retainage properly in your Chart of AccountsCost of revenue categoriesLINKS Visit the episode page at https://carpentercpas.com/chartofaccounts for more details and a transcript of the show. Find all episodes and related links at...

It's winter right now, and if you're in construction, this may be a slower time of year for you. It's a great time to create a strategic plan for your company for the coming year. How do you do it? We'll walk you through it. Topics we cover in this episode include: Why now is a good time to think about your strategic planGround rules for your strategic planWhat should be included in your strategic plan?The importance of a good budgetAnalyze your riskHow to use KPIs for strategic planningNote...

Full-kitting is a term most often associated with manufacturing. What does it mean and how can we use that concept in construction to maximize our profits? Let's talk about it. Topics we cover in this episode include: Full Kitting from a Subcontractor StandpointCommunicate potential problems beforehandStart with project planning and pinpointing common delaysHow to implement full kitting LINKS Visit the episode page at https://carpentercpas.com/fullkit for more details and a transcript of...

Many contractors aren't making what they should on their jobs. Even if you've got your bidding down, you may still be bleeding profits. What are the things to look for and what can we do about it? Find out on this week's episode. Topics we cover in this episode include: Don't get burned by change ordersMake sure you're billing everything you have the right to billDouble check the math on your bidsGet on top of your job costing and make it as real time as possible Streamline and actively...

Equipment is a major part of some contractors' job costs. Should you lease it, or should you buy it? Which is better for you? The answer is, it depends. We're helping you decipher the question and sharing some additional equipment considerations on this week's episode. Topics we cover in this episode include: Operating Lease vs. Capital LeaseConsider the costs associated with maintaining the equipment you ownInsurance costs and considerations for equipmentEquipment and vandalismHow to...

What happens to your company when you die? Making sure you have a continuity plan in place can ensure you have a smooth transition and ease the burden on your family. Life insurance can be a big part of that plan. Here's what you need to know when looking for a policy. Topics we cover in this episode include: Why you should start thinking about life insurance when you're youngTax considerations for key person life insuranceHow a buy-sell agreement can help pass the company onHow to keep...

We haven't met a contractor who likes to pay taxes, but many take avoiding taxes to the extreme. What are the true implications of making it your goal to pay no taxes every year? Let's talk about it. Topics we cover in this episode include: Four ways contractors can be taxedAn example of an extreme outcome of tax avoidanceThe purchases and tax choices that get many contractors in troubleHow Profit First can help you save enough for taxes and remain profitableLINKS Visit the episode page at...

There have been rumors about QuickBooks Desktop being retired for many years, yet QuickBooks Online still isn't the same capability level as Intuit's older software for contractors. Some recent announcements from them give us more of a direction, and these announcements weren't given to the general public. We're sharing what you need to know this week. Topics we cover in this episode include: Recent announcements from Intuit on QuickBooks Online QuickBooks Desktop became a subscription model...

Can increasing expenses also increase your net income? Can profitable jobs bankrupt a company? Today, we are exploring more unconventional wisdom in construction that you may not have ever considered. Topics we cover in this episode include: How adding expenses helps your bottom lineHow a profitable job could bankrupt your companyWhy an LLC is not always the right choice for setting up a construction companyLINKS Visit the episode page at https://carpentercpas.com/unconventional for more...

When do you need a construction attorney, and how can you find a good one? Should you be amending contracts, and how can you protect your lien rights? Construction attorney Alex Barthet joins us this week to answer these questions and more. He pinpoints the main things you need to focus on and what resources are available to help guide you. Listen in and make sure you implement his two action items in January to protect yourself in 2024! Topics we cover in this episode include: The best...

In a traditional business, there is conventional wisdom that generally holds true no matter what. Construction is an industry with several of its own differences that defy a traditional solution. Today we are exploring some of those things and why you shouldn't always listen to the common answer, because it might not all be true. Topics we cover in this episode include: Myth: If I get to X dollars in reenue, life will be easierMyth: Accounting is the same for construction as it is for other...

Most contractors want better cost information about their jobs. They need it timely, they need it accurate, and they need it relevant to managing their jobs properly. Unfortunately, many contractors struggle in this area. How do you get it set up right so that you get what you need? We're sharing our tips on this week's episode. Topics we cover in this episode include: The main categories to consider in a job cost accounting systemThe benefits of job costing for your businessCommon headaches...

You got that dream job, but it needs be bonded. Can you get it bonded? Are you over your bonding capacity? Is there anything you can do to increase your bonding credit? Find out this week. Topics we cover in this episode include: Draft and interim financial statementsCash, character, and capacityHow to get bonding credit as a new contractorBonds and personal collateralStart your relationship with a bonding company before you need a bondLINKS Visit the episode page at...

It can be challenging to get banks and bonding companies to want to work with contractors. What can you do about it? Can you stack the deck in your favor? Can you dress up your financial picture? Find out on this week's episode. Topics we cover in this episode include: Why a good year-end  financial statement is important to bonding companies and banksPay back Officer Loans  at the end of the yearInject capital at the end of the yearImprove your working capital ratioExtend the terms of your...

On a recent episode, we talked about working with a construction CFO. This week, we dive deeper into how to find the right person. We help you define what the CFO's job role is and get the maximum benefit out of the person who fills it. Topics we cover in this episode include: How to know if you've hired a bad CFOTracking cash flow problems Optimizing existing low gross margins Reducing high expensesUpgrading and automating your financial statementsIdentifying and executing cost...

You may have heard the term real revenue, but how do you define it? In construction, it's a powerful concept worth knowing, but what can you do with it and how can you use it to run your construction company? Let's talk about it. Topics we cover in this episode include: What is real revenue and where does the term come from?Real revenue avoids confusion around job cost vs. overheadHow real revenue lets you know if you're using the right overhead rateReal revenue and cash flow...