From Construction Business Owner.com
– written by Russ Roy – February 2oo9 edition
Note from Nancy Smyth: Monte TenEyek, the consultant noted in this article, obviously didn’t do his homework regarding QuickBooks. QuickBooks Pro/Premier has the ability to handle 25 active payroll wage items per employee and the Enterprise Solutions version can handle 100 per employee. If you add QuickBooks Enhanced Payroll you can track worker’s compensation.
Read our own article on “Making the Move to Public Works Construction” from our December 2008 QuickBooks for Contractors Newsletter, by clicking here.
With the burst housing bubble and tighter private financing guidelines, more and more contractors are considering public works projects as a new source of revenue. On the surface, this seems like a great idea. Talks of a possible federal stimulus package aimed at public works and infrastructure development means there could soon be more government work to go around.
But making the shift to prevailing wage jobs takes preparation. Without proper planning, contractors run the risk of underbidding jobs-and, subsequently, losing money-or getting slapped with steep penalties for improper recording keeping. Establishing protocols for certified payroll and AIA progress billings and having solid audit trails for each transaction are vital if you want to succeed in the government-financed construction market.
There are many things you can do to prepare your company for a shift to government work. Following, three key steps are outlined to prepare your company for prevailing wage work. By following these initial first steps, and building on them as you grow your public works portfolio, you will position your company to not only survive the current economic downturn, but thrive when the market conditions improve.
Step No. 1: Get Educated
The first thing you should do is get educated about prevailing wage law. Find out what payroll, accounting and reporting requirements are necessary to meet state and federal regulations. Most states have some information posted on their website, which is a great place to start. But taking a class or workshop from your local industry association or CPA may provide more detailed how-to information.
Don’t be hesitate to hire a consultant to show you the ropes. An up-front consulting investment will often deliver a high return on investment by shortening the learning curve and saving you money down the road. A financial services firm with construction experience, for instance, can assist you in establishing things like a bona-fide fringe benefits program that lowers your taxable employee wages. This can help you control cash flow, lower your bid rate and increase your profit margin.
Your accounting software vendor can also provide a wealth of knowledge and experience around meeting your prevailing wage requirements and should be an integral part of your public works transition team. If the products (or support professionals) can’t address your questions, it’s probably time to upgrade to a more complete, construction-specific solution.
Step No. 2: Automate Your Accounting Processes
Managing prevailing wage jobs using generic accounting software and spreadsheets requires multiple data entry that is both time-consuming and at-risk for human error. “Programs like QuickBooks may be adequate when contractors have a single pay rate and no need for actual labor burden, but if you want to compete for prevailing wage work, you’ll need a more robust accounting program,” said financial consultant, Monte TenEyek. “When you perform public works projects you need to have payroll software that supports multi-rate capabilities and different worker’s compensation rates for different jobs.”
Veronica Calderon, office manager for Ro’s Precise Painting, a commercial painting contractor in California, knows first-hand how challenging it is to stay in compliance without the right software tools. “This seems crazy now,” said Calderon, “but our old software couldn’t handle multiple pay rates. For each employee we would cut a separate paycheck for each job so that our certified payroll report would be accurate. One employee might get five or six paychecks each pay period!”
After upgrading to software with strong certified payroll tools, Calderon couldn’t believe the difference. “We were in shock because certified payroll reporting was so easy and accurate. Plus, we gained checks and balances that keep us from making mistakes. Having the right software makes a world of difference when you’re doing government work.”
TenEyck couldn’t agree more. “Make the decision to put procedures in place before going after prevailing wage work,” he recommends. “If you get solid advice up front, and have construction-specific software in place to automate prevailing wage processes and establish compliance consistency, you’ll have the peace of mind to focus on securing government work.”
Step No. 3: Bid on Projects Based on Your Strengths
On public works projects, the job is awarded to the lowest qualified bidder. And the competition can be tough. Bid too low and you might win the work-but bankrupt your business. Bid too high and you’re wasting your time. “It’s not uncommon to see twenty or thirty contractors bidding on the same public works job,” says TenEyck, “and according to contractors I’ve talked to, they estimate that it costs them $3,000 to bid on a single job.”
Since every contractor bidding on a prevailing wage job has to pay their employees the same rate of pay, the wage itself can’t be your competitive edge. Because of this, it makes sense to identify your strengths before going after projects. What types of projects do you excel at? What’s more, which of your crews perform the fastest? When making the shift to government work, identify the projects that, based on your strengths, will most likely put you in the lowest bidder spot while still turning a profit.
Moving Forward: Cultivating Relationships
After getting educated, automating your accounting processes and modifying your bidding process based on your strengths, you should have a solid foundation for making the shift to public works projects. The next thing you should focus on is building relationships with the people in charge of awarding you jobs.
“Unanswered questions are a barrier to public works projects,” states TenEyck. “If you have lingering questions about a job, you’re probably not going to submit a bid.” Getting to know the director of facilities management at your local university, for example, can be very advantageous. Not only will you have an “in” to discover what work is coming up, but you’ll have a specific contact to call if you have questions about the bidding process.
In the competitive world of public works construction, prevailing wage planning isn’t an option-it’s a necessity. Even if you already perform government work, it’s not a bad idea to revisit your software solution and processes, and consult with a financial planner to modify your fringe benefits structure to take advantage of every possible tax incentive.
Dear Valued Staff Member
It has come to our attention recently that many of you have been turning in time sheets that specify large amounts of Miscellaneous Unproductive Time (Code 5309). To our department, unproductive time is not a problem.
What is a problem, however, is not knowing exactly what you are doing with your unproductive time. The newly installed Activity Based Costing Financial System requires additional information to achieve its’ goals. Attached below is a sheet specifying a tentative extended job code list based on our observation of of employee activities. The list will allow you to specify with better precision what you are doing during your unproductive time.
Please begin using this job code list immediately and let us know about any difficulties you may encounter.
Many Thanks
Human Resources.
Extended Task Code List Explanation:
5000 Surfing the Net.
5001 Read/Writing social E-Mail
5002 Sharing social E-Mail (see codes #5003, #504)
5003 Collecting jokes and other humourous material via E-Mail
5004 Forwarding jokes and other humourous materials via E-Mail
5005 Faxing jokes and other humourous material to friends not on E-Mail
5316 Meeting
5317 Obstructing communications at meeting
5318 Trying to sound knowledgeable while in meeting
5319 Waiting for break
5320 Waiting for lunch
5321 Waiting for end of day
5322 Vicious verbal attacks directed at co-worker
5323 Vicious verbal attacks directed at co-worker while co-worker is not present
5393 Covering for incompetence of co-worker friend
5400 Trying to explain concept to co-worker who is stupid
5401 Trying to explain concept to co-worker who is not interested in learning
5402 Trying to explain concept to co-worker who hates me
5481 Buying snack
5482 Eating snack
5500 Filling out time sheet
5501 Inventing time sheet entries
5502 Waiting for something to happen
5503 Scratching oneself
5504 Sleeping
5505 Feeling bored
5600 Bitching about lousy job (see code #5610)
5601 Bitching about low pay (see code #5610)
5602 Bitching about long hours (see code #5610)
5603 Bitching about Boss (see code #5610)
5604 Bitching about co-worker (see codes #5322, #5323)
5605 Bitching about personal problems
5610 Searching for new job
5640 Miscellaneous unproductive bitching
5701 Not actually present at job
5702 Suffering from eight hour flu
6102 Ordering out
6103 Waiting for food delivery to arrive
6104 Taking it easy while digesting food
6200 Using company resources for personal profit
6201 Stealing company good
6202 Making excuses after accidentally destroying company goods
6203 Using company phone to make long distance personal calls
6206 Gossiping
6207 Planning a social event
6210 Feeling sorry for myself
6221 Pretending to work while boss is watching
6222 Pretending to enjoy my job
6223 Pretending I like my co-workers
6224 Pretending I like important people when in reality they’re jerks
6238 Miscellaneous unproductive fantasising
6601 Running my own business on company time
6602 Complaining
6603 Writing a book on company time
6604 Planning a holiday on company time
6611 Staring into space
6612 Staring at computer screen
6613 Transcendental meditation
7281 Extended trip to bathroom (at least 10 Min.)
7400 Talking with divorce lawyer on phone
7401 Talking with plumber on phone
7402 Talking with dentist on phone
7403 Talking with doctor on phone
7404 Talking with masseuse on phone
7405 Talking with house painter on phone
7406 Talking with personal therapist on phone
7407 Talking with miscellaneous paid professional on phone
7408 Talking with mistress/toyboy on phone (see code #7400)
7931 asking co-worker to aid in an illicit activity
8000 Recreational drug use
The “QuickBooks Client Data Review Tool”, introduced and available directly from the Accountant Menu in both the QuickBooks Premier Accountant Edition 2009 and the Enterprise Solutions Accountant Edition 9.0 isn’t just for Accountants – (in my opinion, anyway).
NOTE: This feature is also available in QuickBooks Premier Accountant Editions 2010 and Enterprise Solutions Accountant Edition 10.0.
As a business owner with multiple employee’s working with your company data file, you should have the ability to “know” what these employees are doing and how they are recording the daily transactions of your company.
As a business owner, you too can access an use the QuickBooks “Client Data Review Tool” and take ownership of your company transactions that make up your QuickBooks company file. The QuickBooks Client Data Review Tool can be “enabled” in any version of QuickBooks (Pro, Premier, and Enterprise), something that’s not highly advertised by Intuit, by setting up the also new, External Accountant User.
How to set up the QuickBooks External Accountant User:
Setting up an “External Accountant User” is a easy as logging into QuickBooks in single-user mode as the QuickBooks Administrator. You then access the Company Menu -> Setup Users and Passwords -> Setup Users -> Add User. Create a new username (something like Boss) and password and in the Access for User window choose External Accountant. Now Exit QuickBooks, re-open your company file and log in as the new “Boss” user. You’ll see a “Client Review” button in the top icon bar section.
What Is the Client Data Review Tool and What Does It Allow Me To Do?
Excellant question!
The Client Data Review Tool:
- was designed to help Accountants detect and correct data entry errors
- is most beneficial when used with the “External Accoutant” user
- provides the best troubleshooting information when each of your employees has their own QuickBooks Username and password
- access all Client Data Review Tools & Tasks when working in the actual QuickBooks company data file (.QBW)
- access partial Client Data Review Tools & Tasks when working in an “Accountants Copy” file
- review company data in Cash or Accrual reporting
- easily modify review period
- Client Data Review Tools and Reports are not available in standard QuickBooks reports
- real-time data “refresh” as corrections are made
- track status of individual review steps
- document review notes
Client Data Review Sections & Tasks
Account Balances
- Troubleshoot Account balances
- Open Working Trial Balance
Review List Changes for added, deleted, merged, or edited elements in:
- Chart of Accounts
- Items List
- Fixed Asset Items
- Payroll Items
- Customer List
- Vendor List
Accounts Receivable
- Fix unapplied customer payments and credits
- Clear up Undeposited Funds Accounts
- Review Accounts Receivable Aging Detail Report
Accounts Payable
- Fix unapplied vendor payments and credits
- Evaluate and correct 1099 account mappings
- Review Accounts Payable Aging Detail Report
Sales Tax
- Find incorrectly paid sales tax
- Adjust Sales Tax Payable
Inventory
- Adjust Inventory Quantity/Values on hand
Payroll
- Find incorrectly paid payroll liabilities
- Run payroll check up
- Review Employee Default settings
- Enter After-the-Fact payroll
Bank Reconciliations
- Reconcile accounts
- Locate discrepancies in bank reconciliations
- Review missing checks
Miscellaneous
- Set a closing date and password
- Review QuickBooks Preferences
Now that I’ve provided you with a brief overview of what you can do with the Client Data Review Tool, let’s talk about some specifics.
The Troubleshooting Account Balances task will allow you to review any changes made to prior period dated data, including:
- “freeze” your prior period reviewed balances. The next time you review the file your stored balanced from the prior period will be stored and compared to the balances that currently reside in your QuickBooks file
- view Last Review balances and Balances that currently exist in QuickBooks
- Itemize in debit/credit format the “differences” detected between your Last Review balances and the current balances
- view a Transaction Change Report, listing those changes since the last review period. Drill down to the specific transaction(s) that create the difference
- if the Client Data Review Tool finds a difference, a “recommended” journal entry is displayed to restore your original balances. This eliminates the “guesswork” while allowing you to choose whether or not the suggested journal entry actually gets posted or not
- modify the display view to “Only show accounts with different balances”
Track Changes to QuickBooks Lists.
I cant tell you how many times we discover something “missing” in our QuickBooks lists, only to discover that Ben or I had changed “something”. With this Tool in the Client Data Review you can track changes, including added, deleted, merged, and edited elements in your
- Chart of Accounts
- Items List
- Fixed Asset Items
- Payroll Items
- Customers
- Vendors
Fix unapplied customer payments and credits.
Use this tool to detect if a credit memo or a “receive payment” transaction was created but not applied to the original open invoice, and then use the *Fix Unapplied Customer Payments & Credits “clean-up” tool to apply the open credit or unapplied payment to the open invoice.
Clear Up Undeposited Funds.
Used to correct balances in the Undeposited Funds account caused by creating a “Receive Payment” entry and not properly including that payment in a “Make Deposits” form.
The Client Data Review Tool displays a very simple window of all customer payments that are stored in the Undeposited Funds account and any Make Deposits transactions that were recorded and assigned to the customer(s) in question.
You can then quickly associate the Receive Payment transaction with the corresponding Make Deposits entry, and the result is that the customer payment is no longer included in the Undeposited Funds account and the overstatement in the account used in the Make Deposits form is reversed in one simple click of the mouse.
Fix Unapplied Vendor Payments & Credits
*Used to detect and correct instances of when a Vendor Bill is created but later a Write Checks form is used to pay the vendor.
A simple window is displayed allowing you to assign the Write Checks form to the corresponding open vendor bill, removing the open vendor bill from the Accounts Payable report.
Find Incorrectly Paid Sales Tax
Use the Client Data Review tool to run a report displaying “Incorrectly Recorded Sales Tax Payable Payments” by check or journal entry. If entries are found, you then make the necessary correcting entries by
- voiding the original check and re-creating the payment through the Pay Sales Tax function
- create a Sales Tax Adjustment
Find Incorrectly Paid Payroll Liabilities.
Use the Client Data Review Tool to run a report displaying “Payroll Liabilities Paid by Regular Check” report. These are entries that paid payroll liabilities that were not created using the Pay Liabilities form. You can then make the correcting entries by:
- voiding the original Check form and re-creating the payment through the Pay Scheduled Liabilities option
- use the Adjust Payroll Liabilities option to create the correcting adjustment
Marking A Review as Complete
After you have finished reviewing the entire data file; or even completed a portion of the tasks that are available in the Client Data Review Tool, for a specific time period you can mark your review as “complete”. Marking a review as complete will do the following:
- transfer your reviewed balances to the Last Review Balances column in the Troubleshooting Account Balances task
- when starting a new review, you can open the prior review or continue to a brand new review period
- print a report of the review
All of these tasks and items are equally important to the business owner as they are to the accountant who prepares your taxes, at least they are in my opinion.
Oh, one other thing that I want to mention, when using the Client Data Review you can access the Audit Trail and filter the Audit Trail Report to show only transactions added, deleted, merged, or otherwise modified by a specific user.
Download a copy of this article in PDF format for future use, by clicking here.
We hope you’ve found this post to be beneficial, please feel free to leave your comments.
Test your bookkeeping expertise with our “Bookkeeping Quiz” questions.
Q. An employer-provided loan that is interest free or at below-market rates is nontaxable to employees IF the daily aggregate loan balance does not exceed $____ and there is a bona fide agreement to repay the amount.
A. $10,000.00
How did you do?
