This is a guest contribution from Randal DeHart of FastEasyAccounting.com.

I have been involved with construction beginning in the mid 1960’s as a kid working in the family construction company through the present time.

Over the decades I have gathered and documented a comprehensive list of terms that describe construction. Some of them are meant to bring a smile to your face, some are serious and the rest I hope are simply entertaining.

This Article Contains Definitions That Begin With The Letter “G,H,I,J,K,L”

Green Growing Contractor Vs. Ripe Rotting Contractor – Green growing contractors continue learning, questioning and discerning. Ripe contractors have a hardening of the attitudes, know everything and are rotting. Age is not a factor.

Hard Work – Expressway to Retired

Hustle – The expectation of getting 40 hour of work done in 20 hours

If You Know The Answers The Questions Will Not Bother You – In school when you sat for an exam or a test and you knew the material forwards and backwards it was fast and easy. The exams and tests for the classes you struggled with were the opposite. Having a Business Process Management Plan provided you with the answers for the questions about how to run your business because it is something you developed. Not something someone else did and handed to you.

Income – Working for daily money

Insanity – Hiring and firing cheap in-house bookkeepers over and over and over expecting useful reports

Inexpensive – Goods or services that do work beyond the warranty period

It’s Not What You Know, It’s Not Who You Know That Counts, It’s Who Knows You – The value you bring to your network is directly related to who will take your phone call or return your email

KPI – Key Performance Indicators if viewed daily and understood leads to wealth

Lawyer – Person who goes in after the auditors to strip the bodies

Leveling – When two or more people spend time together the group will level to the strongest personality

Listening – Contractor who asks their client what materials and results they want and give it to them

Little Leaks – Sink the construction business because they are easy to ignore like what ten minutes is costing your company

LMOS – The four big cost buckets,　 Labor, Material, Other Costs and Subcontractors, used by Fast Easy Accounting to assist construction contractors in determining Job Costing, Job Profitability and Job Costing Services Reports.

Liquidated Damages – A penalty for failing to achieve the impossible

Low Bidder – A contractor who is wondering what he left out

 

About The Author:

Randal DeHart, PMP, QPA The Construction Accountant. Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington and Fast Easy Accounting. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. Visit http://www.fasteasyaccounting.com/ to learn more. Follow Randal on Google+

For some people, choosing a checking account for their personal needs can be as simple as going to the nearest branch and signing up. But when it comes to choosing a bank for your business checking account, the search can and should take some thoughtful research and consideration. Even if all you’re looking to do (for now) is deposit/withdraw money, don’t just choose the nearest bank. I’ve seen too many contractors settle for the first bank they come across, only to realize a) the bank’s fees are too high, and/or b) the bank doesn’t offer solutions for their long-term needs. That means they’ve wasted time establishing a history with the bank and are left in the same predicament in which they started.

To help you avoid that situation and find a bank that will be a great long-term partner, here are a few considerations to keep in mind and a look at four banks that offer free business checking accounts:

Why Do You Need a Checking Account?

Before you even start researching banks, you should first consider why your business needs a checking account now. Do you just need a place to manage money transactions? Are you looking for more specialized investment advice? Maybe it’s time to expand your business and you’re looking for an institution that also offers equipment leasing programs or small business loans. No matter your needs, many independent contractors find it’s easier to work with one bank that can accommodate all their needs as opposed to parceling out their business to several different banks. So as you dive into your search for the right bank, keep your list of needs nearby and ensure the bank can help you with all of them.

Don’t limit your horizons to just your current business needs, either. Start planning for the years ahead so you can pinpoint a bank that can grow with you. The time you spend researching now will pay off when you’re able to use the same bank for years to come.

Consider the Costs

As a business owner, every dollar counts. The last thing you need is a bank charging you every month just for having an account with them. Unfortunately, that’s what some of the more money-hungry banks are gravitating toward these days. If you’re not careful, monthly checking account fees can range from $10 to upwards of $50 per month (that’s between $120 – $600 per year).

However, by doing your research ahead of time and being diligent about your banking practices, there are steps you can take to avoid banking fees. For example, some banks offer free business checking accounts as long as you don’t go over a certain number of transactions per month (ranging from 150 transactions to more than 500). Other banks will waive monthly fees if you maintain a minimum balance at all times. To determine if you can meet the minimum requirements, start taking stock of your business’ regular transactions and cash flow now to tally your monthly averages. The last thing you want is to sign up for an account only to find a few months later you’ve been charged monthly fees all along as you haven’t met the minimums.

Side note: Once you’ve chosen your bank and have your checking account in place, be sure to keep track of your transactions and monthly statements. Some banks have been known to tack on fees that may not apply to you, so it’s important to correct any errors as soon as possible.

Regional vs. National Banks

This is a choice that all comes down to your personal preference in dealing with banks. If face-to-face interactions and developing a relationship with your banker(s) is what you’re looking for, a local, community bank may be the way to go. Local institutions may offer more free or lower cost checking accounts and will probably be more willing to work with you in the case of overdrafts or other issues that can arise with your business. However, these small banks may not offer all of the perks of larger institutions. Case-in-point: technology. Many local banks don’t have the resources to develop online banking features or mobile banking apps.

On the other hand, larger banks may have more additional services to offer you as your business grows, and they may be better equipped to loan you money should you ever have the need. Figure out which benefits are most important to you.

Documents You’ll Need to Open a Checking Account

Once you’re ready to open your business checking account, you’ll need to make sure you’ve got a few documents in order first. Banks need to ensure not only you are who you say you are, but that your business is set up properly. Documents you’ll need include:

• Personal identification
• Tax identification number (EIN)
• Doing Business As (DBA) registration (if applicable)
• Articles of Incorporation (if you are an LLC, corporation, etc.)
• Optional: Cash flow estimates (The more specific information you’re able to supply to your bank initially, the better advice they’ll be able to give you.)

For a complete list of application documents needed, contact your bank directly.

Four Of The Best Banks For Free Small Business Checking

Here are just a few of the banks that offer free business checking accounts (I have personal experience with U.S. Bank and found them to be quite impressive):

U.S. Bank Silver Business Package*
• 150 free transactions
• Online & mobile banking and bill pay
• Free first year of overdraft protection

Chase Total Business Checking*
• $10 monthly fee waived if you maintain a daily balance of at least $1,500
• 200 free transactions
• 24/7 access to chase.com and telephone banking

First Citizens Bank Basic Business Checking* (branch locations are not in every state)
• No minimum balance
• No monthly maintenance fee (must be enrolled in e-statements)
• Up to 175 free transactions

BECU Basic Checking*
• No monthly fee
• 50 free transactions
• Online & mobile banking and bill pay

Yes, that last one is a credit union.  Some people won’t even consider this option for some reason, but it’s foolish to not even explore it as a possibility.  Credit union business checking can often times come with outstanding service and benefits (and their rates for loans are often lower than traditional banks, too).

*Please note these lists are not comprehensive. Visit each bank’s website for more information.

I have been involved with construction beginning in the mid 1960’s as a kid working in the family construction company through the present time.

Over the decades I have gathered and documented a comprehensive list of terms that describe construction. Some of them are meant to bring a smile to your face, some are serious and the rest I hope are simply entertaining.

This Article Contains Definitions That Begin With The Letter “DEF”

Deflect-O-Matic Skin – Contractors learn quickly not to take anything personally because whatever someone else says is more about them than about you. This is especially true for remodel contractors when a homeowner has just given them a big deposit check and the contractor is in the middle of demolition

Delayed Payment – A tourniquet applied at the bank balance of any contractor who will allow it

Delusional – Contractor going to learn to use QuickBooks effectively in a few months

Developer – Company looking for a few, good, low priced, high volume contractors they can school

Displaced Aggression – Being angry at someone because of past events or circumstances which are resulting in ongoing issues. In some cases contractors have hired Cheap or Bad Bookkeepers without realizing the consequences of not having useful financial and job reports

Dog And Pickup Truck – Contractor with a dog and a pickup truck one of the Four Types Of Contractors

Emergency Accounting – When taxes, payroll or paperwork piling up causes contractor to seek help from someone to get the “books” caught up, tax reports prepared, payroll processed or other issues

Emergency Bookkeeping – When taxes, payroll or paperwork piling up causes contractor to seek help from someone to get the “books” caught up, tax reports prepared, payroll processed or other issues

Emerging Contractor – Someone who is moving to a little less hands-on role in their contracting company you could be an Emerging Contractor.

Engineer’s Estimate – The cost of construction in heaven

Expensive – Goods or services that no matter how cheap they are; do not work

Experience – What you get, when you get, what you don’t want

Failure – A few errors in judgment repeated everyday

Fear – What initiates change or stops progress

Five At Five For Five – The five reports at five o’clock for five minutes that tells you how your business is doing

Fifteen Minutes Too Late – If you think you should fire somebody, you’re already 15 minutes too late

Fully Burdened Rate -Includes all the costs of keeping an employee on the payroll, not just wages

About The Author:

Randal DeHart, PMP, QPA The Construction Accountant. Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington and Fast Easy Accounting. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. Visit http://www.fasteasyaccounting.com/ to learn more. Follow Randal on Google+

So you’ve made the decision to become a contractor – congratulations! That first decision to make the leap and become your own boss can be one of the hardest choices you’ll make, but as a new business owner, it certainly won’t be your last. In fact, the next decision you’ll be faced with is another doozy: choosing a business model.
At first glance, a sole proprietorship may sound appealing because it’s easy to setup with little to no paperwork or fees (you typically just start working and pick up any income/losses on your personal taxes). But that doesn’t mean it’s the best business model for a general contractor. With a sole proprietorship, liability can come back to haunt you. Say someone gets hurt on a worksite or you default on a business loan. If someone comes after you, they can go after not only your business assets, but your personal assets as well, and that’s a situation no business owner would even want to think about.

That’s why so many contractors and home service providers choose a business model that protects them and their personal assets, acting as a shield between their business and their personal lives. In most cases, this divider comes in the form of a Limited Liability Company (LLC) or an S Corporation. Here are the differences to consider between the two, and how to tell which is best for you:

Limited Liability Company (LLC)

As the name implies, the biggest benefit of an LLC is that it shelters you personally from any liability for your business. So in the example above, if your business was sued, only your business assets would be vulnerable, not your personal assets. LLCs also offer the option of having an unlimited number of owners, referred to as “members,” if you don’t want to be the sole decision-maker. Because LLCs are pass-through entities when it comes to taxation, all gains and losses from the business flow through to each members’ individual tax return. This means you’re only paying taxes on the portion of profits you receive as opposed to all of the business’s earnings, as you would with a sole proprietorship.

LLCs do require more extensive paperwork in the setup phase because of the legal protection they offer. You’ll be required to choose and file a unique business name, as well as file Articles of Incorporation with your Secretary of State. Some states also require you to publish your Articles of Incorporation in a newspaper or legal journal at an additional expense. Of course, you can choose to work with a filing company who will take care of this paperwork for you, but that often costs more than doing the work yourself.

S Corporation

Corporations offer the same benefits as LLCs in that they protect owners from personally being held liable for their businesses. There are two main type of corporations: C Corporations and S Corporations. C Corporations tend to be reserved for much larger companies with unlimited shareholders, and their profits are subject to double taxation: once when earned at the business level, and once when passed along to shareholders. However, S Corps are much more attractive to businesses who have several years of experience under their belt and a larger number of shareholders than a startup but don’t want to deal with double taxation. Similar to LLCs, profits and losses from an S Corp pass-through to its stakeholders as dividends, thereby only being taxed once on individual tax returns. Another advantage of this is these dividends are taxed at a lower rate than normal income. However, it is important to note that shareholders must be paid “reasonable compensation” for their work. Unfairly limiting the amount of money given to a shareholder in hopes of reducing taxes won’t hold up legally.

To set up an S Corporation, you must first file your business as a corporation. Once you’ve ensured your corporation meets the criteria for an S Corp (be a domestic corporation, have no more than 100 shareholders, have only one type of stock, etc.), all owners must then sign an IRS Form 2553. Some states also require S Corps to establish their board of directors and issue stock certificates during the registration, so it’s wise to check with your individual Secretary of State for local rules.

Finding the right ownership structure for your general contracting business is a matter of your personal preference and how much experience you have. If this is your first time as a business owner, an LLC may be a better fit as it’s easier to setup than a corporation and still offers the separation needed to shield your personal property from business liability. However, if you’re more experienced and are ready for your business to expand to its fullest potential, an S Corp may be right for you.