TAG Presents "Seven Tasks for your Year-End Accounting Review". Specifically highlighting the construction industry, including contractors, sub-contractors, developers and residential builders. Presentation is geared towards an audience of owners, controllers, CFOs, accounting managers and bookkeepers. Seven Tasks: Tax Planning Budgeting for the New Year Banking Relationship Collections Close your Books Bonding Relationship Software System Review

1. Construction Industry: Seven Tasks for your Year-End Accounting Review
Topics:
1. Tax Planning
2. Budgeting
3. Banking Relationship
4. Collections
5. Close your Books
6. Bonding Planning
7. Software System Updates
Presented By: Rob Scherer, President, TAG

2. Beyond the Numbers
TAG provides valued financial and business resources for
companies and individuals on the move.
TAG supports and strengthens your company’s accounting department and
management with outsourced bookkeeping, controller, and CFO services.
Whether you are a CFO who could use a quality controller once a week, a
controller who needs bookkeeping assistance, or an office manager looking for
higher level finance and accounting oversight, TAG can fill the need.
From sales to implementation, training to consulting, TAG’s team of certified
consultants work to improve your efficiency and reporting capabilities with the
best accounting software for the building industry. TAG is an Authorized
Partner with a team of certified consultants:
• Sage 300 Construction and Real Estate (Timberline)
• Sage 100 Contractor (Master Builder)
• Sage Estimating
• Contractor V Software

3. Task #1
TAX PLANNING
Timeline: November mid-month
Who: Owner, Accounting, CPA

4. Task #1
TAX PLANNING
• When you close your October financials, send a copy to your CPA, along
with a revenue and net income projection for November and December.
• Set up tax planning meeting after CPA reviewed your information and
forecast out your personal and company tax forecast. This meeting may give
you some more work to do, like taking a hard look and getting a good cost-to-
complete on some of your bigger projects as of December 31st, so you
can better assess where you are at and what your tax position will be.
• Set a reminder to set aside a couple of checks (typically just AP), in case you
need to cut a few last minute expenses and you want them to be in
numerical order of the other checks.
• Reassess year-end projections after November closing and communicate to
CPA if we are going to miss our previous projection by a significant amount.

5. Task #2
BUDGET FOR THE NEW YEAR
Timeline: November - December
Who: Owner, Accounting, Manager

6. Task #2
BUDGET FOR THE NEW YEAR
Start the budget process:
• Revenue forecast (see attached worksheet)
• COGS forecast (blend the gross profit margin on your existing backlog and
expected new work)
• Indirect Cost forecast (What is variable? What is fixed?)
• SG&A forecast (zero-based, or just a review of fixed vs. variable costs)
• Set goals with managers (revenue, safety, operations, etc.)
• Think the year through; if we grow by X% does that mean we will need to
add some more people in certain functional positions? Think through your
expected hiring demands now so if/when you hit your revenue goals in the
New Year, you’ve already planned for it.

7. Revenue Projection Worksheet
For more information, Contact TAG
http://www.teamtag.net/contact-us/

8. Task #3
BANKING RELATIONSHIP
Timeline: November
Who: Owner, Accounting, Banker

9. Task #3
BANKING RELATIONSHIP
• Prior to the year coming to an end, take a look at your banking covenants,
will you be in compliance? If you’re going to be out of compliance, figure out
reasons why and how quickly you will be back in compliance.
• Prep your banker if you are going to be temporarily exceeding the covenants
due to year-end distributions. Are this year’s distributions going to be typical
with previous years?
• Will a projected distribution force your balance sheet out of compliance?
• What are you cash needs projected to be over the next twelve months?
Many times as you prepare your budget for the New Year, it is a good time to
do a proforma cash flow forecast.
• What type of jobs will you be doing in the New Year? Will they be bonded
jobs? If so, how does that work with your existing banking relationship?

10. Task #4
COLLECTIONS
Timeline: December – January
Who: Accounting, Customers

11. Task #4
COLLECTIONS REVIEW
• Take a hard look at collections, starting in November if you are going to have
a chance to collect anything by the end of the year.
• You don’t want to pay taxes on money you may not collect.
• It may be time to stop #%cking around with a non-paying account and just
send them to collections.
• Look at your lien rights if you haven’t already done so…file if it’s time.
• Look at your jobs and change orders. This can be done in this category or
when you close out your books.

12. Task #4
COLLECTIONS REVIEW
• For Change Orders, take this opportunity to:
 Make sure you are carrying companies correctly on the books (proposed,
approved, pending, disputed).
 Make sure you know all pending companies and/or back-charges
 If companies are being negotiated establish a “best guess” for their
outcome.
 Book accordingly.

13. Task #5
CLOSE YOUR BOOKS
Timeline: January
Who: Accounting

14. Task #5
CLOSE YOUR BOOKS
• Just like a monthly close, but even more work!
• Some of those accounts that we put recurring journal entries in need to be
tied out (i.e. depreciation – book/not tax, prepaid insurance, petty cash,
inventory, loan schedules, bad debt allowance, etc.)
• Review bad debt allowance for extra adjustment. Hold open AP for a week
in January to capture any December invoices that should be posted to
December.
• Accrue expenses through year-end that may not have been accrued in other
months (i.e. payroll and related payroll expenses, interest income or
expense, incentives and bonuses).
• Jobs! Take a HARD, HARD look at jobs! Get a handle on change orders
and estimated cost at complete for the jobs.

15. Task #5
CLOSE YOUR BOOKS
3 Quick Reasons:
1. Tax
2. Bonus payout
3. Leave some gas for next year if you don’t need it this year

16. Task #6
BONDING RELATIONSHIP
Timeline: January
Who: Owner, Accounting, Bonding

17. Task #6
BONDING RELATIONSHIP
• Don’t forget about your bonding planning (January). Your bonding
relationship is an ongoing balancing act with your banking and tax planning:
a) Evaluate your year-end working capital position. How does this compare with last
year-end?
b) Evaluate your debt/equity position and your tangible net worth (TNW) position. How are
these used by your surety in determining your bonding capacity?
c) If you are looking to increase your bonding capacity for the New Year will your banker
be stepping up with a larger line of credit (LOC)?
d) Will your surety demand a higher level (Audited or Reviewed) Financial Statement due
to your future bonding needs? (Careful here, slippery slope). Can you forego this
requirement by providing accurate and timely quarterly financial statements instead?
e) “S” Corp vs. “C” Corp retained earnings issues.

18. Task #7
SOFTWARE SYSTEM REVIEW
Timeline: January – February
Who: Accounting, Software Consultant

19. Task #7
SOFTWARE SYSTEM REVIEW
• Software System Review (January – February):
a) Close out the year: Depending on your software program(s), this entails closing out the
various modules and typically performing a year-end close to make 2015 your new
“current” year. This usually doesn’t have to happen immediately and you usually want
to wait for any year-end adjusting journal entries if possible.
b) Archive: This may or may not be a part of your year-end procedure.
c) Transfer balances forward: If not done automatically, you need to bring forward all of
your balance sheet balances to the New Year. All of your income/expense accounts
should be zeroed out as of January 1st.
d) Setup new periods and budgets: if you have established a budget and would like to
track against it in your software, now is the time to input it. Most companies that do this
typically use a “straight-line” approach to their proforma for the year unless there are
significant swings in volume and/or seasonality that they would like to track against.

20. Task #7
SOFTWARE SYSTEM
REVIEW
For more information, Contact TAG
http://www.teamtag.net/contact-us/

21. Thank you!
Presented By: Rob Scherer, President, TAG