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Are you managing project scope – or is it managing you?

Contractors by their nature and occupation have a need to be in control. Nearly every project includes a struggle to maintain control of costs, safety and quality.

 
To put it a different way, what you’re trying to manage on every job is its scope. When you can keep the project confined to its contractual parameters, the job will likely turn out fine. Unfortunately, the scope often has a funny way of expanding its reach, pushing you aside and taking over a job. The results usually aren’t very positive.
 

3 parts to the story

Every contractor needs to stay on top of his or her scope management procedures to prevent the job from getting out of hand. These are active and ongoing steps to monitor a project and to keep the job within reasonable limits. They should ensure that, if the scope does significantly expand, you get paid for it. Think of scope management as three parts of a story:

  1. The beginning. During the planning phase, you need to comprehensively define the scope you’ll undertake and be sure it’s clearly stated in the contract. For example, if the plans show 25 windows in a building, the contract should say that you’ll install any extra windows at a specified additional cost.

    This is where experience and keeping historical job data can be really beneficial. If you’ve worked on a similar project and the scope seems untenable, raise this issue with the owner and give yourself a chance to settle on reasonable guidelines for the project.

  2. The middle. As the job gets started, your scope management efforts should involve applying a systematic, consistent approach to managing the work. Financially speaking, this means continually evaluating what you’re doing to ensure it’ s within the parameters -and price-of the contract. 

    Train your project managers to submit regular reports to you regarding job costs to determine whether overruns are imminent. Today’s mobile technology can make doing so much more efficient. Integrate job costing into your accounting system or simply download an app that enables easier field reporting.

  3. The end. Scope management is perhaps the most important at completion. When that punch list materializes, it’s all too easy to get dragged into an endless series of extra tasks.

    One savvy scope management rule of thumb: Identify the people responsible for closing out the job up front. Doing so will prevent new faces from joining the project at the last minute, which could slash profitability as these individuals eat up valuable time getting up to speed.

    Also, make sure your punch list is truly universal. Today’s cloud-based technology should allow everyone on the job – from the general contractor to subcontractors to inspectors and engineers – to look at the same document and update it in real time.

Additional thoughts

When many contractors first discover scope management, they immediately clamp down on even the slightest aberration to a contract. Sometimes they’re too rigid in their approach, which could rub an owner the wrong way or cause them to miss out on a profitable change order.
 
This brings to mind an important catch about scope management: It’s not so much about limiting the amount of work you perform on a project as it is about assessing opportunities and making the most of them.
 
When a prospective job revision arises, immediately call a meeting with the project manager and any other necessary parties. If it’s a nonessential change, determine whether, though potentially profitable, it drives you too far out of the scope of the contract. If it’s an essential revision, decide whether it’s far enough outside the scope to warrant additional negotiation. Having a formalized and effective change order process is essential.
 

On the lookout

Being in control is a badge of honor in the construction business. Don’t leave your scope management procedures to chance. Put them in writing, discuss them with your project managers and advisors, and always be on the lookout for ways to improve them. •

FLSA Overtime Rule Blocked

On November 22, a federal judge in Texas blocked the Obama administration’s  rule that would extend overtime eligibility to over 4 million Americans. This follows 21 states who sued to block the rule before it went into effect.

This new overtime rule was announced by the Department of Labor on May 18, 2016; it stated that any salaried employee earning less than $47,476 annually would qualify for overtime pay when they worked over 40 hours a week. The current threshold is $23,660.

The rule was to go in affect on December 1, 2016. The Department of Labor is weighing options; but, for now, employers can continue to use the $23,660 threshold.

Read more about the announcement.

Tax Planning Guide

Tax PlanningPlanning for taxes makes good financial sense. When you take the time to plan, you know you are doing what you can to minimize your tax burden.

Everyday financial decisions and transactions can affect your taxes more than you may realize. This 2016 Tax Planning Guide explains how taxes fit into your financial picture and suggests strategies that can help lower your federal income-tax liability. The Guide includes helpful explanations of important individual and business tax provisions along with examples of how the rules work.

As you read the Guide, please keep in mind that everyone’s tax situation is different. Before implementing any of the strategies discussed here, you will want to secure professional advice.

2016 Tax Planning Guide

 

Misleading Annual Records Solicitation Form

We would like to bring to your attention a misleading “Annual Records Solicitation Form” targeted at businesses.

This document is not an official government form, although it is made to look that way. This form is a solicitation of services from a private company. When reviewing the document, an indicator that it is not an official government form is that it states “Michigan Council for Corporations is not a government agency…”.

If you receive such a form, you do not need to complete the form and send in the $150 dollars, unless their services are wanted/needed.

If you have any questions, please contact Brian McFarren at bmcfarren@brickleydelong.com or (231) 726-5815.

2016 Annual Records Soliciation Form

Due Dates: Forms W-2, W-3, & 1099-MISC

New Due Dates

Forms W-2 and W-3

The due date for filing 2016 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA is now January 31, 2017, whether you file using paper forms or electronically.

General Instructions for Forms W-2 and W-3 

1099-MISC

Public Law 114-113, Division Q, section 201, requires Form 1099-MISC to be filed on or before January 31, 2017, when you are reporting nonemployee compensation payments in box 7. Otherwise, file by February 28, 2017, if you file on paper, or by March 31, 2017, if you file electronically. The due dates for furnishing payee statements remain the same.

Exceptions to reporting.

New exceptions to reporting were added by P.L. 114-14 (compensation for disability or survivor’s benefits for public safety officers) and P.L. 114-113 (compensation for wrongful incarceration).

See Instructions for Form 1099-MISC

IRS Warns of Fake Tax Bill Notices

The Internal Revenue Service and its Security Summit partners issued a warning to taxpayers and tax professions of fake IRS tax bills related to the Affordable Care Act.

The warning states that the IRS has received numerous reports of scammers sending a fraudulent version of a notice- labeled CP2000 – for tax year 2015. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

According to the IRS, this scam may arrive by email, as an attachment, or by mail. It has many signs of being a fake:

  • The CP2000 notices appear to be issued from an Austin, Texas, address;
  • The letter says the issue is related to the Affordable Care Act  and requests information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C;
  • Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a post office box.

 An authentic CP2000 notice is used when income reported from third-party sources such as an employer does not match the income reported on the tax return. Unlike the fake, it provides extensive instructions to taxpayers about what to do if they agree or disagree that additional tax is owed. A real notice requests that checks be made out to “United States Treasury.”

For more information, please contact our office or read the announcement on the IRS website.

11 Back to School Tax Tips

Back to School.

Like many parents, you may be anticipating this time of year. After weeks of summer vacation, it is time to get back to a routine. You cannot wait for scheduled bedtimes and less “I’m bored” pleas.

However, for others, back to school means back to work, tuition payments, or expensive school supplies.

Whether you are excited or not, Back to School time is here. The CPA Practice Advisor discusses that now is the time to starting thinking about back to school tax breaks and deductions available for qualifying expenses.

The article offers 11 Back to School tax tips for parents.

    • Private school tuition and school uniforms are not deductible.
    • Before and after school childcare, for a child under 13, may qualify for a tax credit.
    • Tax deductions for school fundraisers are limited to the amount over market value of the goods or services received.
    • Moving expenses to go to college are not deductible.
    • Earnings in 529 plans are not federally taxable. The money grows tax free and withdrawals used for eligible college expenses are not taxable.
    • Tax-deferred accounts can be used to pay for educational expenses (e.g. Coverdell Educational Savings Accounts).
    • Student loan interest is deductible above the line.
    • American Opportunity Credit (AOC) can amount to $2,500 in tax credits per eligible student and is available for the first four years of post-secondary education.
    • Lifetime Learning Credit provides up to $2,000 credit per year for qualified education expenses for a student enrolled in an eligible educational institution. As of now, there is not limit to the amount of years this may be claimed.

  • Tuition and Fees Deduction is an above the line adjustment that applies to qualified educational expenses for an eligible student.

  • A Roth IRA can be used for student’s income earned. Up to $5,5000 of income earned can be contributed to a Roth IRA, which grows tax-free.  

To read the full article, click here. For more information back to school tax breaks, please contact Brian McFarren.

Learn about our individual tax services

Pathway to Partnership

Author: Jacob Barton, Staff Accountant

This spring, our staff, seniors, and supervisors had the opportunity to participate in a “Pathway to Partnership” information session. We had an outside facilitator help lead the meeting and two partners at the Firm sat in on a panel. This was an informative event that helped all levels of staff see the needed requirements to becoming a partner.

One of the great issues in public accounting is leadership development. It is anticipated that many young staff will advance quickly in their careers. This training was aimed at helping staff understand the expectations to advance in their careers and to get them excited to become a partner.

A few of my takeaways were:

  • Hours requirement
    One misconception was that there was a minimum requirement of hours to be worked in order to become a partner at Brickley DeLong. While hours worked may have a correlation to the knowledge of the job, this is not a requirement to become a partner. In fact, outside of tax season, many of the partners at our Firm do not work over 40 hours in a given week.
  • Compensation
    Another big takeaway from the pathway to partnership was the average compensation for partners in our market at a similar sized firm. Transparency was appreciated as it gave staff something to look forward to.
  • Benefits
    It was refreshing to hear from the partner’s perspective what they liked about becoming partner.  While the reasoning may have been different from person to person, it was refreshing to hear from the other side, what exactly they liked from their role.
  • Timeline
    Another topic that was touched on the pathway to partnership was the timeline to becoming a partner.   While there are expectations and minimum times required in certain staff roles before promotions, there was no limit on time to becoming a partner.

Overall, the pathway to partnership was a worthwhile experience. The pathway to partnership pointed out some misconceptions to become partner and gave staff a better idea of how they can advance in their careers.

5 Things I Learned in My Six Months at a CPA Firm

Author: Lannon Unick, Staff Accountant

I can easily look back and remember my interview with Brickley DeLong. I tried my best to smile the right way and hoped my palms were not sweaty as I shook hand after hand, names and faces blurring together.  The sharp spike of excitement when they made me an offer—I’d been working towards this moment for years and it seemed like my hard work was about to pay off.

In reality, the hard work was only just beginning.

Next week, I will have been here six months. I want to offer five words of wisdom for those starting, or looking to start their career in public accounting.

  1. Take notes.
    I cannot stress this enough.  Take notes… of everything, all of the time.  Don’t walk into a meeting, a training, or an informal “I want to go over X with you for just a moment” without having a binder, a note pad, post-its, or anything.  The early days will be a blur of training sessions, new computer systems, new co-workers, and new rules (both official and unwritten); and, unless you have a proper system in place for taking and referencing your notes on a subject, you’ll be stuck asking the same questions over and over again while you try to explain to a boss or a supervisor that you’re not normally this much of an idiot.
  2. Try to see the bigger picture.
    When you’re starting, you’ll probably be handed lots of little pieces of things to do.  This is to give you the ability to easy into your work, allow you to apply you studies to the real work, and to minimize too much confusion. In the middle of this, it’s very easy to only focus on the form or the documents directly in front of you as you struggle to remember that one class three years ago that discussed the finer points of a Schedule D.  However, you will be doing yourself a favor if you take a moment to step back and consider where this tiny piece of the financial puzzle fits into the bigger picture.  How does this item affect the overall tax form?  Why is this particular item tested in this particular audit?  If you allow the work in front of you to help you develop a more complete vision of all the moving parts involved in your specialty, it will help you predict next steps, identify potential problems, and make learning the next step of the process that much easier.  And along those lines . .  .
  3. Take your time.
    Your first weeks or months on the job you are allowed, or even encouraged, to work a little slower, just to make sure you understand what’s in front of you.  Learn how to do it correctly, push yourself for accuracy instead of time.
  4. Get to know your co-workers.
    These are the people down in the trenches with you.  Make friends, eat lunch with people, and get to know who to go to for help. Keep snacks in your desk and be willing to listen when the people around you are offering advice or bits of wisdom on easier or better ways to do the work or interact with a particular client.
  5. Remember to breathe.
    No, seriously.  Work is whirling around in your head and making you absolutely crazy?  Feel like you’re teetering on the edge of a nervous meltdown?  Stand up from your desk and go walk around the parking lot or find a quiet corner and put your head between your knees.  Take off your suit jacket and run up and down the stairs a few times.  It’s better to step away from your work for five whole minutes of “you” time than to sit staring at the computer screen while your mind races, your eyes cross, and absolutely zero work gets done.

These are just five of my takeaways. Public accounting is truly both a challenging and a rewarding field. For more information about working at Brickley DeLong, please visit our career pages.

Brickley DeLong Next Gen Conference

Author: Elizabeth Kramb

Following tax season, select Brickley DeLong employees had the opportunity to travel to Chicago for our second annual “Next Gen Conference”. The conference is held in conjunction with Mueller LLP, a fellow CPAmerica International firm. Our two firms have teamed together to create an annual conference to pave a path for future leaders through relationship building and continual leadership development.  The conference highlights each firm’s commitment to helping up-and-coming leaders grow independently and within the firms.

This year’s emphasis was on leadership and bridging the gap of generational difference. Some takeaway’s from this year’s conference:

  • “We have a great group of people who are really interested in pushing this conference to its limits”
  • “The Next Gen conference is a great opportunity to learn and develop my leadership skills so I can rise quickly within my firm”
  • “I really enjoyed attending the Next Gen conference this year.  It was an eye opening experience recognizing our subconscious thoughts about different generations and very helpful to learn how to conquer some of those pre conceived notions and really get work done”
  • “The Next Gen conference helped me identify how to better communicate with my peers in other generations than myself.  I learned that sometimes, I need to stop typing and pick up the phone, especially when working with Baby Boomers!”

The goal of this next gen initiative is to equip staff with the opportunity to advance in their careers, as well as promote a healthy firm culture. We are excited to see where this initiative will lead us!