Construction Companies and Today's Economy

Through the second quarter of 2012, economic symptoms are still indicating weakness rather than health, and the symptoms are basically the same as the past two summers.  Europe is in default, and the question, is how much forgiveness is needed to keep the EU together.  Employment growth has halted, with more than half the jobs lost in the recession still unrecovered.  Action on the debt ceiling appears to be another half-year away, but in its place is a bigger question mark: the presidential election.  Like the previous two summers, the real drag on the economic recovery is more emotional than economic.  It is uncertainty. 

Uncertainty, however, should not be used as an excuse not to plan.  Contractors must still develop short-term and long-term strategic plans for their business.  These plans may need to be revised as events unfold, but the having an initial structure in place to work off of is critical.  Many of today’s most successful contractors took advantage of previous recessions with a strategic plan to emerge better positioned and stronger than the competition.

Some things to consider when developing your strategic plans:

1.  Focus on the balance sheet

• Set benchmarks and financial goals to improve key ratios and measurements such as Debt to Equity and Working Capital.
• Eliminate significant under-billings – under-billings are bad for cash flow, and at times, are an indicator of profit fade.
• Manage accounts receivables and retainages – focus on collecting retainages when job is complete; avoid claims and unapproved change orders.

2.  Keep overhead costs in check

• Prepare a budget and monitor frequently.
• Be prepared to take quick action to reduce and keep in line with revenue.
• Eliminate unallocated job costs.

3.  Assess your business mix

• Prepare a five-year schedule segregating contracts by customer, type, location, project manager, estimator, etc.
• Identify what segment of work is profitable – focus on this work.
• Identify what segment of work is not profitable – discontinue this work.
• Analyze the profit gain or fade from original bid to final profit.

4.  Focus on profit, not revenue volume

• At the end of the day, the bottom line pays the bills, not the top line.

5.  Keep succession in mind

• Identify key employees and individuals being developed to fill those key positions.
• Are there merger or acquisition opportunities?

6.  Manage labor

• Improve phase-code labor input.
• Provide weekly detailed labor reports to PM.
• Use field reporting technology – scanner, smart card, remote access, etc.

7.  Review internal controls

• Ensure proper checks and balances are in place.
• Controls over contract costs - daily time reporting, equipment, tools, fuel usage, etc.
• Claims and change order processes – ensure all costs are getting properly captured.
• Bidding and estimating – bid reviews, estimator/supplier relationships, use of current standard unit prices and labor burden rates, etc.

Machinery & Equipment Sales and Use Tax Exemptions Related to Production Agriculture

Sales and use tax is often complicated and ever changing.  To complicate matters, each state has its own regulations and definitions.  In an effort to simplify the complicated, we’ve outlined the basics of some Midwestern state’s requirements.  If you have any questions about your organization and state, please contact us so we can offer information specific to your situation. 

Iowa
“Production of agricultural products" begins with the cultivation of land previously cleared for planting crops or with the purchase or breeding of livestock and ceases when a product has been transported to the point where it will be sold by the producer or processed.

• Exempt
• Machinery and equipment used directly and primarily in the production of agricultural products or in a manufacturing process.
• Replacement parts for exempt machinery and equipment.
• Computers used in processing or storage of data by a commercial enterprise (farmers cannot purchase computers tax free, but an agribusiness may be eligible for exemption).
• Taxable
• All vehicles subject to registration and all equipment attached to a vehicle subject to registration.
• Labor to repair exempt machinery and equipment or parts not separately itemized from taxable labor.
• Grain testing and grain storage.

Illinois

• Sales of new or used farm machinery and equipment certified by the purchaser to be used primarily for production agriculture and replacement parts for such machinery and equipment are exempt from sales tax.
• "Farm machinery” includes tractors, combines, balers, irrigation equipment, cattle and poultry feeders, tools, registered nurse wagons, and fertilizer and chemical spreaders, but not improvements to real estate such as fences, barns, roads, grain bins, silos, and confinement buildings. However, the exemption applies to certain machines purchased by farmers from retailers and installed as realty improvements, such as augers, grain dryers, automated livestock feeder bunks, automatic stock waterers, water pumps, specialty heating or lighting equipment.
• Production agriculture includes the raising of livestock, growing of crops for feed or food products, and the growing of seed stock.  Growing of crops is limited to activities necessary in tilling the soil, planting, irrigating, cultivating, applying herbicide, insecticide, or fertilizer, and harvesting and drying of crops. 

Missouri

• Farm machinery and equipment are exempt from tax if:
• Used exclusively in agricultural purposes.
• Used on land owned or leased for the purpose of producing farm products.
• Used directly in the production of farm products to be ultimately sold at retail.
• Replacement machinery and equipment:
• An exemption from sales and use taxes is provided for replacement machinery, equipment, and parts used directly for manufacturing, mining, fabricating, or producing a product intended to be sold for final use or consumption.
• The exemption also includes materials, supplies, and parts required solely for the installation or construction of the machinery and equipment.
• Replacement machinery and equipment does not have to be identical to items being replaced, but may qualify for exemptions as improvements or modifications.

Minnesota

• If you buy or lease qualifying capital equipment for use in Minnesota, you are eligible for a refund of the Minnesota and local sales or use tax you paid.
• Capital equipment means machinery and equipment purchased or leased, and used in Minnesota by the purchaser or lessee primarily for manufacturing, fabricating, mining, or refining tangible personal property to be sold ultimately at retail if the machinery and equipment are essential to the integrated production process of manufacturing, fabricating, mining, or refining.  For example, agribusiness may qualify if the equipment is used in the manufacturing of grain products.
• Sold ultimately at retail means that the product being produced must be intended for sale at retail, but does not mean that the producer must make the retail sale.

Wisconsin

• A sales and use tax exemption is available for machines and specific processing equipment and repair parts or replacements thereof, exclusively and directly used by a manufacturer in manufacturing tangible personal property.
• Types of businesses which are usually considered to be manufacturers include:
• Fertilizer plants.
• Flour and feed mills including mobile units.
• Grain dryers.
• The Manufacturing and Agriculture Credit is available to individuals and businesses for taxable years that begin on or after January 1, 2013.
• An individual, estate, trust, partnership, LLC, or corporation can claim the credit if the claimant owns or rents and uses in Wisconsin real property and improvements assessed as agriculture property, or owns and rents and uses in Wisconsin real and personal manufacturing property.

Please contact Bergan Paulsen at 800.741.7087 or www.berganpaulsen.com with any questions.  We can assist in performing a sales and use tax analysis or to review whether your organization is eligible to obtain refund claims on prior year’s sales and use tax paid.

GET MORE – Something of Greater Importance

We recently asked you to take a few minutes to tell us how we are doing, and we thank you for your time in filling out our survey.  What we want you to know is that we truly listened to what you had to say and are taking a look at how we can better our business so you can continue to better yours.

First, we have to agree with the 100% of you who said our people are friendly (we’re Iowans after all!).  They are the people who come to work early and stay at the office late so we can continue to live our mission – to provide timely, quality services which exceed the expectations of our clients. Their technical expertise is unmatched (and you agreed!), but more than that, their passion for your businesses is something of greater importance.  We believe our people define what it means to GET MORE. 

In today’s changing business environment, we believe in having partners that you trust to look at all aspects of your business.  This is exactly what you should expect from us.  You should expect to hear from us as we continue to work together to help you meet your goals.  Because your success is of the greatest importance, and we believe you deserve MORE.

If, at any time, you do not feel that our service or people define what is MORE, please let us know.  You can contact any of our people or just shoot us an email at feedback@berganpaulsen.com.

THANK YOU.

A Day in the Life: Client Accounting Services Edition

A day in Client Accounting Services (CAS) is difficult to describe because every day is very different.  Of course, I drink my fair share of coffee, have multiple Spotify playlists to fit my mood, and, like any accountant, I have a list of projects and clients that require my attention.  For me, client contact is the spice of life.  Each client’s rich history with their small business requires CAS team members to form a relationship with their clients, and to be able to adapt our skills and knowledge to their differing needs.

By taking care of the so-called necessary evils of owning a business – the financials, payroll, and sales tax – I allow my clients to focus on what they love to do, be it plumbing, flower arranging, construction or dentistry.  Client Accounting Services aims to make these overwhelming, but necessary, pieces of business ownership effortless.  I address clients’ questions and concerns through phone calls and email throughout the day.  Sometimes they receive correspondence from one of many business-related tax agencies, and their first phone call is to me to help them “translate government speak.”  Sometimes they are venturing into a new part of QuickBooks and want to check in before they “mess something up.”  And, still other times their QuickBooks or tax website is acting in an unexpected manner and they want to tap into our expertise to finish their task with confidence.

Another big part of my day at Bergan Paulsen is collaboration.  Each staff member has their own area of expertise so we are always working together to make sure all of the bases are covered for a client.  If a client asks a question outside of my expertise, I’m encouraged to say, “I don’t know the answer to that, but will talk to one of my colleagues and someone will get back to you with an answer.”  Because we have 100+ team members, our clients know they have access to 100+ big brains attached to 100+ big hearts.  We all want what’s best for our clients, and there is a lot of satisfaction in unraveling a financial mystery – with the help of everyone at BPC.

There are days when I wonder “where did that 8 hours go?!”  When I’m entering my time into our billing software I can see that even if I didn’t get through my to-do list, I did a lot of good work helping our clients.  I’m a nerdy accountant to the core and love crunching numbers, but knowing that I spend my days  helping clients realize their small business dreams is why I keep coming back every day!

For more information on our other offices, check out these links:

• Virtual Tour of our Waterloo Office
• Virtual Tour of our Cedar Rapids Office
• A Day in the Life of a Staff Accountant in our Coralville Office  

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Erin Bockoven, Client Accounting Services | ebockoven@berganpauslen.com
LinkedIn | QuickBooks ProAdvisor
Erin is a Beloit, Wisconsin native. She attended Luther College, where she received her B.A. in Accounting. Erin works hard to understand her clients’ individual needs so they can focus on doing what they love.  Read more about Erin on our website.

A Dozen Interview Tips from the desk of an HR Director…

Interviewing with a potential employer can be nerve racking.  Here are a few tips to help prepare yourself for your interview and land your dream job with Bergan Paulsen:

1.    Show up early, but not too early

• Believe it or not, you can arrive too early to an interview.  If you show up too early to an interview this can pressure your interviewer to be ready for your meeting sooner than they were prepared for.  Often, interviewers are on a tight schedule and this can throw off their day.  Give yourself enough time to get to your interview location between 5-10 minutes early. 

2.    Dress to impress

• When interviewing with a CPA firm for a professional position, it’s almost always appropriate to wear a suit (and tie for men). 

3.    Do your research

• On the company – You should know the background of the firm, services offered and any specialties they have.
• On the industry – Familiarize yourself with the latest trends in the accounting industry prior to your interview.
• On the interviewer – If you know your interviewer, take some time to research them as well.  (We recommend looking on LinkedIn to better understand their position in the firm, community involvement, etc.)

4.    Prepare your answers to frequently asked interview questions

• There are a slew of websites out there that provide examples of interview questions.  Pull one or two of these lists and have an idea of how you would answer the questions.

5.    A confident (but not bone crushing) handshake and a smile go a long way

• A confident handshake says a lot about a person.  However, be sure that that you’re not squeezing too hard – especially if you’re interviewing with a woman.
• A friendly smile can help set the tone for a friendly interview.  This will also let your interviewer know how you will greet your clients in the future.

6.    Relax

• While you may be shaking on the inside, try to appear as relaxed as possible during the interview.  Be careful not to cross the line of over familiarity, however.

7.    Be aware of your body language

• Often, body language speaks louder than words.  If you’re saying “Yes, I’m really interested in working for your firm,” but you’re slouching in your chair, what you’re really saying is, “I find you and your firm very boring.”  You want to sit up straight, keep your arms uncrossed and maintain good eye contact. 

8.    Focus!

• You’ve come to interview, now it’s time to focus on that interview.  Put your phone away and on silent.  Better yet, don’t bring your phone inside with you.  Don’t bring anything with you but your portfolio, extra copies of your resume, references, and your list of questions.

9.    Listen to the interview question completely before answering

• Do not interrupt the interviewer while they are asking a question.  Your turn will come.  Also, make sure you understand the question fully before answering.  Don’t ramble along hoping that you’ll say the right thing.  Ask the interviewer to clarify the question if you’re unsure what they’re asking.

10.    Ask questions that you’re genuinely interested in knowing the answer to

• All too often candidates will ask questions that they think they should ask instead of the ones they really want the answer too.  Have a list of questions prepared prior to the meeting (or jot down questions throughout the meeting) to ask at the end of the interview.  Beware of irrelevant or inappropriate questions regarding, salary, paid time off, benefits or attractive co-workers.

11.    Thank the interviewer and find out the next step in the process

• You will want to know what the next step in the interview process is so you know whether you will need to contact the interviewer again. 

12.    Send a brief “Thank You” note to your interviewers

• It has become a common courtesy to send your interviewer(s) a “Thank You” note after your interview.  This doesn’t have to be lengthy or anything special – in fact, it’s better if it isn’t – just a simple note will do.  

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Cori Power, Human Resources Director | cpower@berganpauslen.com | LinkedIn
Cori handles all matters related to human resources including recruiting, on-boarding, benefit enrollment, performance/salary reviews, policy implementation, and MORE for Bergan Paulsen.  For Cori, the highlight of her role is the opportunity to help individuals grow into the professional they want to be.  Read more about Cori on our website.

Virtual Tour of our Waterloo Office

The team in our Waterloo, Iowa office recognizes the many perks of working at Bergan Paulsen.   Get an inside peek and hear from our CPAs and accountants what they do on a typical day.  As you will see, we enjoy a beautiful view and delicious food!

For more information on our other offices, check out these links:

• Virtual Tour of our Cedar Rapids Office
• A Day in the Life of a Staff Accountant in our Coralville Office
• A Day in the Life - Client Accounting Services in our Cedar Falls Office

A Day in the Life of a Staff Accountant in our Coralville Office

As a staff accountant at a public accounting firm, I was asked to write about my typical day at work.  Unfortunately, or fortunately, no day is quite “typical.”  I am writing this blog outside of "busy season” and life outside of tax season is a lot less stressful. While each day brings challenges and excitement, these days are more predictable than they are between January and April.

My day usually starts right at 8:00 am.  I start by logging into my computer, and pulling up my email. I read the Corridor Business Journal’s update email which fills me in on what is happening locally in the corridor (did you read about Bergan Paulsen’s recent merger?). I also check the CPA Letter Daily which keeps me current on what is happening in the CPA profession, the business world, and the economy (lots of tax changes around the corner!).

Upon checking my emails, I turn to my work pile which I refer to as my 'tab'. My omniscient boss keeps my tab full and prioritized. I usually give him a sigh or three when he puts work on my tab, but the truth is I don't mind staying busy.  The day goes by faster when I’m busy.  Well, as long as there aren't any TPS Reports to do.

My typical work outside of tax season includes, but is not limited to: payrolls, compilations, payroll tax returns, business and individual tax returns, and audits.  I currently have three bi-weekly or bi-monthly payrolls of various sizes. Each one has different complexities and issues to work through.  In addition, I have three monthly compilations that offer the same variety.  And, each quarter I work on payroll tax returns.  This quarterly work adds some welcome tasks that are easier to work through than the monthly work.

Between the reoccurring work, there are always tax returns to get done – as extension deadlines approach – in order to accommodate our clients’ needs.  Finally, I help out the Agriculture team with audits throughout the summer and early fall.  I go on about one audit per month and they typically last three to four days in length.

Before leaving for day (usually around 5:00), I record my time spent on each project in our time tracking system.  I then answer any last minute emails, and wave at my coworkers as I head out the door!

For more information on our other offices, check out these links:

• Virtual Tour of our Waterloo Office
• Virtual Tour of our Cedar Rapids Office
• A Day in the Life - Client Accounting Services in our Cedar Falls Office

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Steven Christopher, Staff Accountant | schristopher@berganpauslen.com
Steven is a staff accountant who focuses primarily on tax preparation and planning. He is passionate about building client relationships and learning about how to best improve business operations.  Read more about Steven on our website.