Turning Trash into Cash |
Construction sites generate large amounts of waste material. Typically, contractors end up paying to have this construction debris hauled away and dumped. However, by reusing, recycling, or reselling materials you might typically discard, you can add to your company's bottom line.
Why Recycle?
When your firm recycles construction and demolition materials, it can:
- Reduce the costs that typically come with hiring a haulage company to remove and dispose of work site scrap materials, such as metal, concrete, wood, gypsum drywall, and asphalt shingles.
- Minimize the burden on local landfills and help reduce the environmental impact that results from creating new construction materials.
- Attain points toward the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) certification. LEED certification points may be earned for using recycled materials (or those with recycled content).
- A 2014 white paper prepared for the Construction & Demolition Recycling Association estimates that the annual revenue generated by the construction and demolition materials recycling industry was approximately $7.4 billion.
Getting Started
Start by contacting your local builders association, your county solid waste department, or your state environmental agency. They can provide contact information for licensed recyclers in your area and explain what is recyclable and what is not. For example, recycled aggregates can be used as road base, as general fill for drainage, and for soil stabilization. Recycled asphalt shingles can be used as aggregate for new asphalt hot mixes and for dust suppression mixes. Drywall scraps can even be ground up for use on site as a soil amendment.
The Environmental Protection Agency's website, www3.epa.gov, provides information on ways to reduce and recycle construction and demolition materials. The C&D Waste Reduction and Recycling Series fact sheets, produced by EPA Region Nine, offer helpful advice and information for contractors who are looking into starting their own recycling efforts.
In addition, The National Association of Home Builders Research Center has prepared A Field Guide for Residential Remodelers that provides information on cost-effective and voluntary construction waste management. It addresses the unique aspects of remodeling, including differences in waste generation and site and work characteristics.
Contractors should be aware that some construction and demolition materials may contain
hazardous chemicals and other solvents and that these require specific handling. Your state environmental agency can provide guidance on this issue.
Recycling, reusing, and selling construction waste materials can improve your company's bottom line.  Contact: Greg Kenworthy, CPA
gkenworthy@hawkinsashcpas.com
608.793.3141
|
Does Your Company Have a Document Retention Policy?
|
Every company generates business documents. Cataloging and storing paper files, electronic documents, correspondence, and data used in business applications and databases takes time, effort, and money. However, not all business records are of equal value - some can be safely discarded in time while others must be retained.
Federal, state, and local laws and regulations - tax, employee benefit, occupational safety, wage and hour, etc. - require businesses to hold on to various documents for specific periods. Beyond these requirements, it makes sense to retain other records that help document and support management decisions and actions should they ever be the subject of a lawsuit. Moreover, accurate records can be very helpful to prospective buyers or investors as you prepare to expand your business. Benefits A document retention policy can streamline the process of choosing documents for retention or destruction and minimize the risk that important documents will be inadvertently destroyed. A good record retention policy can:
- Reduce legal risks, discovery costs, and recovery effort time associated with lawsuits.
- Minimize rental or lease expenses for storage space, utilities, and maintenance.
- Reduce the risk of destruction of physical and electronic records due to natural disasters.
- Minimize the labor costs associated with cataloging and maintaining records.
Creating a Policy Here are some suggestions for creating and implementing an effective document retention policy. Develop a List. Identify the documents that you should consider and draw up the reasons why these documents should be retained or destroyed. Consider and review employee records, employment tax records, training manuals, safety documents, maintenance records, product manuals, travel and delivery schedules, accounting and corporate tax records, legal documents, real estate records, contracts, records of administrative penalties, litigation-related documents, insurance policies, licenses and permits, government paperwork, and vehicle registrations. Don't forget to include electronic records, such as hard drives, discs, emails, and other forms of electronic correspondence. Determine Retention Periods. Consider federal, state, and local laws and regulations when deciding how long your business should keep documents and records. In addition, identify those records you may need to keep indefinitely to support your business in case of a lawsuit, explain business decisions, and assist your business in case of a sale. Evaluate Storage Options. When you are deciding how and where to store documents, weigh issues such as the expense of storage, security, and the ease of retrieving documents. Enforce the Policy. All employees should read, understand, and apply the parts of the document retention policy that affect them. The policy should be followed consistently and enforced at every level of your company. Consistent adherence to a written document retention policy can provide protection in the event of a lawsuit.
Contact: Debbie Denny, Advanced Certified QuickBooks ProAdvisor
ddenny@hawkinsashcpas.com
920.337.4558
|
| New Lease Accounting Standards |
A new Accounting Standards Update (ASU) recently issued by the Financial Accounting Standards Board (FASB) will affect many construction industry contractors. The update is intended to improve financial reporting about leasing transactions.
The ASU will require companies that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations those leases create. All leases with lease terms of more than 12 months, both finance and operating leases, will have to be recognized on the balance sheet. The new ASU also calls for certain disclosures to help investors and other financial statement users understand the amount, timing, and uncertainty of cash flows arising from leases. For public companies, the ASU is effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. The ASU is effective for all other organizations for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020.
Contact: Anne Wiekamp Leth, CPA
awiekampleth@hawkinsashcpas.com
507.252.6672
|
| Maximizing Your Firm's Bonding Capacity |
The information you present in your company's financial statements gives sureties a sense of your company's operating results and financial strength. You are more likely to get the bonding you want at a competitive rate when sureties believe that your company is financially sound and carefully managed.
Here are some steps you can take between now and year-end to highlight your company's strengths and make it more attractive to sureties.
Take Time To Plan Take the time necessary to present your surety with carefully prepared, accurate, and timely financial information. Typically, your surety will ask you to provide basic year-end financial statements, including a balance sheet, an income statement, and a cash flow statement. In addition, you should include information on accounts receivable, current inventory, and an explanation of overbillings and underbillings. Also include corporate tax returns for several years. Give your surety a listing of completed contracts and contracts in progress as well as data on general and administrative expenses. Boost Working Capital You can improve the chances of securing the bonding you need if you have a strong working capital position. Look to convert short-term debt into long-term debt through refinancing. Refinancing a loan can improve your current ratio and increase your working capital. Manage Overbillings and Underbillings Overbillings and underbillings send a red flag to sureties that something may be amiss with your financial controls and processes. Substantial underbillings, for instance, may point to potential losses, unreasonable profit estimates, inadequate estimating, and inaccurate billing systems. Large overbillings may indicate a future cash flow squeeze. Focus on Accounts Receivable Delays in getting receipts credited to your business account can weaken your working capital position. And without access to working capital, your company may be forced to resort to short-term borrowing. Sureties dislike seeing high levels of short-term debt and may be reluctant to provide bonding in the amount your company wants. To prevent this from happening, make sure you have appropriate collection procedures in place. Reduce Inventories Since many sureties discount the balance sheet value of inventory, it may be best to keep inventory levels down. Review Estimates Review contracts in progress to ensure that your estimates are accurate. Reduce Expenses Sureties like to know that your company is making an effort to hold the line on expenses. However, be careful that you don't cut costs so much that it impedes your ability to compete. Hold Off on Making Loans and Advances You could deplete your cash position by making large cash advances to employees or loans to shareholders. It is generally strategically smarter to postpone any such loans or advances while you are applying for bonding. Control Debt A low debt-to-equity ratio demonstrates financial prudence, a trait sureties like to see in contractors they work with. It can also help your standing with sureties if you hold off from tapping into your available line of credit. Review Planned Equipment Purchases Debt levels that are high relative to similarly sized contractors can make your company less attractive to sureties. If you have plans to buy equipment, it may be wise to review those plans. You do not want to deplete your cash reserves or increase the outstanding debt on your balance sheet at year-end. You may have to delay planned equipment purchases or investigate leasing options. Meet Obligations Sureties scrutinize your record of repaying debt and meeting the terms of other financial obligations. It is important that your company meets the terms and conditions of any loan covenants and other financial agreements it enters into.
 Contact: Conrad Schumitsch, CPA cschumitsch@hawkinsashcpas.com 920.337.4537
|
| Developments in Tax and Business |
Increase in De Minimis Safe Harbor Threshold
The tax law allows companies to make an election to expense certain "de minimis" purchases of equipment and other tangible property. The IRS recently announced an increase in the expensing threshold for taxpayers that don't have "applicable financial statements" - generally, financial statements audited by a CPA. For these taxpayers, the deductible amount is raised from $500 to $2,500 per invoice (or per item as substantiated by the invoice). For taxpayers with the applicable financial statements, the limit remains $5,000 per invoice or per item. The new $2,500 amount applies to costs for tax years beginning on or after January 1, 2016. Other requirements apply.
The Cost of Doing Business U.S. businesses spent an average of $31.70 an hour per employee in wages and benefits in December 2015, according to data released by the U.S. Department of Labor's Bureau of Labor Statistics. Wages and salaries accounted for 69.8% of total hourly compensation, while benefits accounted for 30.2% of the total. Benefits include paid leave, supplemental pay, insurance, retirement and savings, and legally required benefits.
 Contact: Jeff Tillema, CPA jtillema@hawkinsashcpas.com 608.793.3128
|
|
