Why You Should Use Subcontractors On Your Classic Car

When making a decision to perform restoration on a car, many hobbyists ask themselves whether they should do all of the restoration and repair work themselves or whether they should farm it out to subcontractors. The benefits of restoring a vehicle by yourself is attractive for many reasons. From a financial standpoint, you will save a lot of money by doing the work yourself. Ego enters into the decision also. You will be able to point with pride to your restored auto and take the entire credit for rebuilding it. Doing the work yourself also lets you do the work exactly the way you want it done. You know that you won't be taking any shortcuts to get the work done and can be assured that the work quality will be of the highest caliber.

But, realistically, the great majority of us do not possess all of the skills necessary to perform each restoration task that may be required on a restoration job. How many of us can perform with expert skill the upholstery, welding, painting, or mechanical work that needs to be done? At some point most restorations will require an expert's touch that is beyond your level of expertise.

So what do you do? What most amateur restorers do, more than will admit, is to outsource some of the more specialty work to a subcontractor. And if you do it correctly, it's an investment and tradeoff well worth making.

There are certain guidelines you should use in selecting a subcontractor if you want to get the best work possible from them.

If at all possible, avoid hiring a subcontractor out of his area of expertise. If you need an expert on 1940 Ford engines, don't hire a general mechanic who dabbles in engines. Instead, look for a subcontractor that is an expert in working with Ford engines from that general era. Can't find one? Then look for a subcontractor in Ford engines overall. The bottom line is try to find a subcontractor who is used to working with components on the specific classic car that you own.

If you have not previously worked with a subcontractor, you will want to see actual examples of his work. Photographic can be doctored and are therefore not reliable. If you're not satisfied with the quality, continue your search.

Get 5 or more references from satisfied customers. Call them and talk to them. Ask about the timeliness and quality of the work they received and any other concerns that you may have.

Once you find and decide upon a subcontractor, ask him for a written detailed work, price, and time estimate of the work that you are asking to be done. If he is not willing to give you a "written" estimate, you should probably pass on having him do the work.

Be sure to ask about warranties on their work. You may or may not be able to get a warranty on parts. But a confident subcontractor will have no problem guaranteeing his level of work.

Don't look at subcontractors as a necessary evil. Instead look at them as partners. Subcontractors can be a great asset to you and potentially save you loads of time. And in many cases the use of subcontractors may be the only way you can get your auto restoration finished.

Carl Phllips writes car restorations articles such as classic car pricing and classic car value. Please visit his site for additional contributions.

It's That Time of Year Again!

And no I am not referring to holiday cheer, parties, gifts and the like. And not even ringing in the New Year with its associated celebrations and resolutions. But, as all you bookkeepers and accountants are aware, year end for most companies is right around the corner.

One of the first issues to be deal with no matter the timing of your fiscal year end is all those pesky payroll chores. W2's to be prepared, proved and mailed. And let's not forget our favorite year end chore - preparation of 1099's. If you have been keeping on top of things through out the year, then these processes should not be too onerous.

One thing you should know if you are not using a payroll service, but preparing your W2's in house is that on the W2 form Box 12 has new two codes this year. Code AA is for Roth Contributions to a 401k plan. And Code BB is to be used for Roth Contributions to a 403 (b) plan.

And don't forget to report fringe benefits such as cash which includes bonus, severance, vacation or sick pay, and non-cash gifts. These might include concert or sporting event tickets, meals, gift certificates or cards. Remember these benefits are subject to Income, FICA and FUTA taxes. Check with your accountant for the laws in your state as well. You do not need to report employee discounts, working condition fringes or use of employer owned or leased athletic facilities or what are termed as de minimus fringes (you know that free turkey the company gave to everyone). If you have any situation that might be unusual or that you don't know whether it should fall into the reportable fringe benefit category, then do check with your accountant.

This is also a good time to have your employees review their withholding requirements and to supply W4 forms to them should they need to make changes.

By now you should have reviewed your vendor list and made sure that all subcontractors are marked to receive 1099's. Your software program should be set to print a 1099 for each marked vendor that has earned $600 or more during the calendar year. You also should have already checked that you have entered the correct addresses and EIN's for each company/person receiving a 1099. Make sure you verify with the company that the name registered with the IRS for the EIN you have in your files is the same name you will be issuing the 1099 to. For example, if you have been making checks out to John Smith he might have an EIN in his dba (doing business as) name. Or maybe you have been issuing checks to the dba and he is using his personal social security number as his EIN in which case his 1099 must be issued in his name. It is very important to use the matching name and EIN number when issuing 1099's. Otherwise you will be receiving a letter from the IRS requesting you to verify the information and even perhaps asked to withhold backup taxes from your vendor to be submitted to the IRS. Having each vendor make out and sign a W9 form when they begin doing business with you and also at the beginning of each new year will help insure you have the right information. You can get these forms at any IRS office or online at http://www.IRS.gov. They do not have to be submitted to the IRS as they are for your records only.

The filing dates for W2's is February 28th however you are required to have mailed the forms to your employee no later than January 31, 2007. These dates are also in effect for filing of 1099's.

So enjoy your holidays while they are here, for come January 2nd you will be quite busy.

You will be quite busy.

Copyright all rights reserved D. L. MacMillan

Donna MacMillan, Advanced Certified QuickBooks consultant and president/founder of D. L. MacMillan & Associates offers a unique set of services covering all aspects of successful business growth and financial health for all business types and sizes. Offering comprehensive, confidential, and professional services, D. L. MacMillan & Associates can analyze, design or redesign your current systems to maximize productivity, cash flow and solidify your bottom line.

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How to Assure Quality Imports From China - Part One - Inspecting Subcontractor Factories

As you visit each of your factory's various departments, you may learn a portion of the production is subcontracted to other factories. Unless special circumstances apply, the subcontractors are usually near by.

The factories find this to be a sensitive issue and may be reluctant to disclose it.

They may try pretending the other factory belongs to them and is an extension of the production of the factory you are in. There is probably nothing further from the truth. Often, relatives of your factory's owner run the other factories and they doing each other favors. It is very common in China.

The problem you are looking to uncover is if the subcontractor has a totally different quality standard (if they have one at all). That means whatever quality assurance the factory has given to you may be contradicted or jeopardized through their cooperation with subcontractors.

The main reasons factories use subcontractors are:

To save money by squeezing the subcontractor to accept lower prices than they are capable of achieving themselves
To overcome a temporary production capacity shortage
To do a favor for a friend or relative that does not have enough orders to run their factory efficiently
Cover-up labor rights violations
Access to production equipment such as injection machines, spray-painting, and mold shops that they do not have

The problem is you have no idea how well or poorly the subcontractor's factory is managed without visiting. Your factory might not make this visit easy but you should insist.

Possibly your factory has several subcontractors. The more subcontractors, the more risk you will be taking that some of them have quality problems. This is a very good reason to insist on visiting them.

You cannot simply go wandering into the subcontractor's factory. You are going to need cooperation from your factory. Most likely one of the staff will accompany you and your visit will probably be limited to the area of the subcontractor's factory that is performing work for your factory.

Be sure to apply the same stringent quality and performance requirements as you did to your own factory. It is the only way you can protect your own business interests and to assure the quality of your imports from China.

Klaus-Dieter Hanke is a professional exporter/importer for more than 2 decades. He is the author of a successful eight ebook series "Importing from China".
His company WebMediaBiz provides consultancy services to worldwide importers.
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Home Building - What Every Smart Home Owner Builder Must Know About Subcontractors

When building or remodeling, you need professional help. Rarely does an Owner Builder go it alone. The subcontractor could be the single most indispensable building professional for the homeowner builder.

What is a Subcontractor?

Subcontractors are not builders. They are trades people. They specialize in their craft. They do not manage your entire project nor should they be counted upon to coordinate their efforts with other subcontractors. Whether a plumber, framer, electrician, excavator, roofer, carpenter or other trade, a subcontractor simply provides his unique service.

When you build or remodel, you use whichever tradespersons you need to complete the task at hand. These professionals must be evaluated, hired, and managed throughout the building or remodeling process.

When evaluating your potential hire, consider and determine the following:

They should be licensed and bonded/insured
Experienced in your market and knowledgeable about local codes
Have references that you can easily verify
You must get at least three competing bids for each trade
You should evaluate the quality of building materials they use
Inquire about their availability and time for your project

Homeowner builders can elect to provide some of their own labor to reduce the overall cost of labor or they can hire these subs for every aspect of the job. Either way, someone has to manage and coordinate their efforts.

Managing Your Subcontractors

In a traditional building environment, the General Contractor (GC) hires and supervises the work of the subcontractors. A GC can also be referred to as a builder. You, as an Owner Builder, may or may not be using a GC to help you. If you have not hired a GC for your project, you will be in charge. This can present a challenge to the average owner builder.

One of the bigger challenges you, as an owner builder may face, is the reluctance of a subcontractor to work directly for you. They worry about your ability to pay them, coordinate the efforts of all the trades, evaluate their work, and keep the project going.

These are legitimate concerns and you, as an owner builder should prepare properly to dispel these concerns. I typically advise you to utilize one of the following suggestions:

Hire a GC to be your Construction Manager
Implement a good building Process Management software program
Retain an experienced home building coach

Most of my clients have utilized the second and third suggestions combined. A good home building coach with a proven process management system provides an excellent and low cost solution.

Successful Home Owner Builders

A smart homeowner and home builder will always use talented professionals where it makes most sense. Regardless of the time and experience you may have, subcontractors will likely play a big role in your success.

Take the time to analyze them carefully and always get all agreements in writing.

You can learn so much more about home building and remodeling online. One great option is to take advantage of a very informative yet simple to follow *free* e-course that you can find by clicking here http://www.DreamHomeCreation.com You will also find other tips and tools, surveys, videos, and additional articles by Mel Inglima.

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A Database Driven Business Management System Is Right for All Businesses

A database driven business could be traditional or web-based. A lot of designers are focusing solely on web-based businesses in their advertising and marketing strategies. The message sent to traditional businesses might not be the right one. Here is the correct message.

Regardless of the type of company you own, you can implement the latest technological advancements to reduce costs, generate profits, do research, invent new products and develop new procedures.

You can use computer programs for creating marketing strategies, to find out where your customers are likely to be and how best to reach them. Your system can be used to evaluate the effectiveness of your advertising campaigns.

Designers working as contractors or subcontractors for your company can evaluate your needs, give advice and develop the programs. They can also help with implementation and train your employees if necessary.

You might need several databases to provide the necessary storage for files. You will definitely need a backup system to prevent loss of information, which is equivalent to lost money.

With all of the industrial espionage going on today, your computer files need to be secured. You need protection from worms and viruses. A good database driven business management system will provide all of those things.

Designers can use a number of different models and languages. XML is a popular model right now. If you are like some owners, you really do not care as long as the system works. But it is a question that your contractors or subcontractors might ask. Even some of your current employees could be interested.

If much of what your employees do every day is computer-related, they will almost certainly be concerned. It is a good idea to discuss the new system with them, as well as any contractors or subcontractors currently working with you. They may have ideas you never thought of.

The language used to create a database driven business management system matters more in terms of future problems than daily use. If you need help with your program in years to come, you may need to know what language was used when the program was developed. A designer that chooses a rarely used language could cause you problems, if he or she does not provide on-going support.

Since designers are contractors or subcontractors, they only work for you until the database driven business management system is installed or up and running. There's no long-term commitment unless you ask for it.

Tom Gruich promotes business interests. For more business opportunities in software and database design and for some of the better money-making affiliate markets, visit A Cornucopia of Articles and Videos or the Smart Database website at => http://www.adaptcode.com

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Subcontractors: Pros and Cons

I had lately some discussions about subcontracting with people featuring different points of view. I believe there’s no single universal answer to a question whether to use subcontractors. It all depends on a situation you’re in. When you’re a decision-maker you should always weigh both pros and cons of having a subcontractor in a project -- even in two similar situations, but happening in two different moments of time a result can differ.

Pros

1. Costs. When you have a task for fixed amount of time (no matter if it’s a week or a couple of months) it’s usually cheaper to find someone who’d do the work on contract basis. You don’t need to spend money on recruitment and sometimes it can be really expensive. The shorter or more shattered the work time is the bigger are your savings. When you need few hours of consulting every fortnight, it’s a perfect example. When you don’t know how often you’d need help, it’s probably good case to think about subcontracting.

2. Competence. You can’t specialize in everything. When you work on complex projects it’s likely you have some components to develop in areas where you have little knowledge. If you do it once and don’t plan to have them in your standard portfolio it’s good idea to find competent subcontractor who’d do it for you.

3. Flexibility. The bigger your organization is the less flexible you are. The more projects you do simultaneously the less flexible you are. The more serious commitments you’ve done the less flexible are. It’s because there’s a lot of actual work to do with the highest possible priority, where you can’t fail and it’s hard to find new hands to help. The answer is “subcontractor.” You can find one for whom new task will be the highest priority and he’ll do it be Monday overworking himself during whole weekend. Your team won’t do it. Maybe because during the weekend they struggle to finish another highest-possible-ever priority project. Or maybe because you just don’t want to have overworked the team. With the subcontractor you don’t really care if he’s overworked or not -- he isn’t your employee, so I guess he won’t quit.

4. Access time. It’s faster to subcontract another company than to recruit some new developers. You craft some standard agreement and start working. Recruitment takes more time and you have probably higher standards then for subcontractors. I’d think ten times before taking a primaballerina developer into my development team. I wouldn’t think more than a minute before taking a primaballerina developer as a subcontractor. It’s also tricky when you have a task for a dozen of people. While finding single, competent person in very short time is sometimes possible, I wouldn’t take the task to find a dozen of them unless I have “demigod” title on my card. On the other hand finding a subcontractor with a dozen of competent people in short amount of time isn’t extremely hard.

5. Equipment. You just don’t need it in the case of working with subcontractors. You don’t buy a computer, a desk, a chair; you don’t look for a room or something. You just don’t care about the equipment. Subcontractor cares.

Cons

1. Knowledge outsourced. When you outsourced a task you don’t learn anything about it. You won’t know what issues appear and how to deal with them. You won’t know all tricks and hooks implemented to make it working. You won’t go through documentations, RFCs, news groups’ posts and so on. You won’t learn the technology on the very low level, what gives you real understanding of what is actually done under the hood. It’s OK when you don’t plan doing anything in that specific area. However if you can think about another projects requiring the same knowledge I wouldn’t pay external company to learn something *you* need know.

2. Support level. That’s not true in every situation but is oh, so very common. You subcontracted something and cooperation was cool during design, development and implementation stages. But now it’s a maintenance time. Your subcontractor won’t earn a lot on support agreement, at least not as much to keep the level of financing he had earlier from you. Their motivation to cooperate with you, counted in bucks to earn, is much lower. So is the level of support. And that’s the case if you’re lucky. Sometimes ex-subcontractor doesn’t care any more if you have a problem -- their role ended with having an invoice paid. It’s your customer, not theirs. It’s you who care, not they. You pay forfeits for being late with bug-fixes? Ouch. It’s *you* who has a problem I guess.

3. Quality. There’re many extrinsic factors which improve a quality: tests on different levels, code reviews, statistics, etc. On the other hand I can think of only two important intrinsic factors to keep high quality: will to get things done well (which is a character feature so it’s rather not controllable) and perspective of maintaining the code in a long run. When working with subcontractors you can deliver some extrinsic quality-boosters, but they all vastly increases your own effort to have project completed. On the other hand it’s hard to deliver any intrinsic quality-booster, because you don’t manage subcontractors in a way you do it with your own developers. Unless you find reliable subcontractor I would be really afraid of poor quality of delivered code. Unfortunately, experience suggests that it’s really hard to find reliable subcontractor and vast majority of code produced that way is poor quality. Remember you’ll have to support it.

4. Other contracts. Does your contract with a subcontractor pay her rent? And is it true in the long run? In most cases the answer is negative. She’ll have almost for sure other projects to do. They’ll become more prior to yours. Don’t expect you’ll be treated in a way you treat your biggest customers than.

5. Lack of control and influence. Compare level of control and ability to influence work of your team and some external company which does something for you. You don’t control subcontractors well. You have to trust that anything they say is true. Sure, you can employ a complex system of controlling the work, but it won’t ever work superbly and you’ll spend a lot of time checking other’s work. Wouldn’t be wiser just to do the work?

6. Organizational effort. Preparing and signing an agreement. Double-checking specifications. Checking status on a regular basis. Registering all tasks, features and bugs submitted to do by the subcontractor. Managing formal communication. Losing time for pushing phones and e-mails from the customer to the subcontractor. You don’t need to do most of that when you don’t have the subcontractor. And it’s still easier to find a bunch of good developers than a good project manager, who has to deal with all those subcontracting things.

7. Costs. Yes, I know I mentioned costs on pros side. Subcontracting can be cheaper, but it can be more expensive too. Generally, an hour of work of subcontractor is more expensive than an hour of work of your colleague. You save the money during the time when the subcontractor doesn’t work for you. However, if the task is rather constant and long subcontracting will be probably more expensive. And one more thing -- usually official time and cost estimates are bigger than the reality. With subcontractors you pay for estimates now matter how easy (or how hard) the task was.

When you think about having a subcontractor in a project consider all those factors. Sometimes a single one of them can be a decision-maker -- e.g. when time is crucial and you don’t have enough your own developers it’s quite possible that nothing else matters. The thing, which is the most important here, is that there’s no universal answer. Subcontracting can’t be treated as a cure for all sicknesses, yet sometimes it works well.

Software Project Management is a blog where you can find observations, advices and thoughts about different IT projects - from micro-ISV's applications up to carrier grade solutions. Topics include but are not limited to software project management, software design, software development, team management and general ideas about software business.

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Home Improvement Contractors - How to Avoid a Love-Hate Relationship With Your General Contractor

It's no secret. Contractors don't always have the best reputations. Often, they are loved and hated at the same time. It's a bit like bitter-sweet candy that puckers your mouth when you eat it but you just gotta have some more. Should we simply accept that contractors are to be viewed as necessary evils? No, not at all. But, what do you do ensure a good experience?

 

What is a Building Contractor? 

First, I want to give some brief descriptions so we're on the same page. In basic terms, a contractor is a builder. These builders either provide specific and narrow services as "tradesmen" (or subcontractors) such as plumbers, framers, and electricians, or they can have broader duties and manage entire projects as a General Contractor. In most cases, contractors are licensed. There are different licenses for each. Some licenses provide for a broad range of duties and others are very specific.

 

In most home improvement projects, tradesmen/subcontractors are used to complete specific projects like framing an addition, adding plumbing, or installing more electrical wiring. A General Contractor can be used to hire and manage those subcontractors. If the project is small or simple, many homeowners will skip this step. Instead, they elect to find their own subs and manage the project themselves.

 

The Value of a Good Builder 

Let's refer to the General Contractor as your "Builder." A good builder brings a lot to the table. Hopefully there's a lot of knowledge and experience behind him/her. But, there's a lot more to it than just experience.

You hire a builder because you want someone to make sure that you get what you want. You want him (or her) to manage the process, hire the subcontractors, purchase the materials, get the proper permits, draw the plans, keep the job moving forward and keep you informed.

 

A good builder executes and communicates. Poor builders muddle through projects and hide from the homeowner. Good builders earn and maintain trust. Poor builders skirt the issue of trust from the beginning (often by making wild promises) and go downhill from there.

 

What Should You do as a Home Owner? 

Simply put, you want an excellent manager. One that executes and communicates. Every project has challenges and set backs. Do your research, check references, and find a builder that has these skills to go along with his knowledge and experience.

 

Your experience with the builder you choose is also up to you. Clearly state from the beginning just what you expect. Demand to be kept "in the loop" about what's going on ... especially when those challenges arise. Set communication schedules and keep them. Let the builder know that you want explanations for delays and plans on how they will be dealt with.

 

Remodeling Can Be a Great Adventure 

Love-hate is for the birds and it just doesn't have to be that way. You want a great result in your home improvement project but why go through hell getting there? I don't know about you, but I'd forget the bitter-sweets and start poppin' some chocolates.

You can learn so much more about home building and remodeling online. One great option is to take advantage of a very informative yet simple to follow *free* e-course that you can find by clicking here http://www.DreamHomeCreation.com You will also find other tips and tools, surveys, videos, and additional articles by Mel Inglima.

Building Your Dream Home - Part 2

Razing the Cottage

With new house plans and permits in hand, subcontractors hired and a Septic Design in process, it was now time to raze the existing cottage. I considered employing the local fire department to burn it down, however I chose the demolition route instead. Though I did not contact the Fire Department, I was convinced that this route would have led to multiple delays and pitfalls, as I would have been at the whim of several town employees and weather conditions. The demolition route required only the excavator subcontractor and had less weather related schedule risks. In addition, the demolition cost and effort was very reasonable. Within two days, it was as if the cottage never existed on the land. It is important to note, however, that the cottage was relatively small. It was 22' x 30'. If the cottage had been significantly larger, then the Fire Department route may have made more financial sense.

The demolition effort itself basically consisted of three parts. First, all of the furniture and appliances needed to be removed. Most of these items were old and musty and were not worth saving. Next, the excavator used a large backhoe and tore apart and crushed the building into small pieces. Finally, the excavator loaded the debris into several 20 cubic yard dumpsters, which were then hauled away by a dumpster company. Finding the appropriate dumpster company was a little bit of a challenge, as there are strict regulations on the disposing of certain home construction material. In addition, the dumpster costs can dramatically increase depending on how far away their facilities are from the construction/destruction site.

Breaking Ground

After the cottage was razed, and the stakes were placed outlining the boundary of the new home, it was time to break ground. This was a very exciting time as my dream was about to begin to take shape. I was building a large contemporary home with a wall of windows facing the lake front. Admittedly it was only a hole in the ground, but this hole represented the rough footprint of my future house. Seeing the hole, I could begin to more easily visualize my future home.

Digging out the hole and preparing the site for a foundation is one of the most critical aspects of building a new home. As a result, I spent several occasions with both the Excavator and Foundation subcontractors reviewing the house plans and the site prior to, and during the excavation. It was imperative that all of us were on the same page to ensure that the foundation walls, with all its jogs and step ups/downs would be located and installed per the plans. During these meetings a few adjustments were necessary to the foundation plans, however with all the team members involved the changes were minor and absolutely necessary. The changes helped prevent more serious problems later on and ensured that the outside aesthetics of the home were maintained.

As I already indicated, the foundation is extremely important to any quality home. If the foundation is not built upon a solid footing, nor constructed of the appropriate concrete strength, the foundation walls will crack in short order. These cracks can lead to water in the basement, settling in the framing, and eventually cracks in the finished walls and ceilings. Consequently, it is imperative that the excavation site not only be properly dug out, but also backfilled with crushed stone and sand to provide for a stable base and to enable proper drainage underneath and around the home. In my case I had the excavator dig out sufficiently to enable 18" of crushed stone to be backfilled into the hole and still meet my foundation plan requirements.

Once the site was prepared for concrete, the foundation crew installed concrete footings 18" wide and 12" deep. In addition they installed several cement footings in the middle of the house footprint for lally columns. The footings represent the base of the home and support the concrete foundation walls and the home itself. Due to the fact that it was winter, Calcium Chloride was used as an accelerator to speed the curing time of the concrete. In addition water had pooled in a portion of the hole, so constant pumping was necessary during the curing time.

After a couple of days, the foundation crew installed forms for the concrete walls. A day later the foundation walls were poured. Three days later the forms were removed and the foundation walls were in. I then had my excavator subcontractor return. After tarring the outer walls, just up to the level of where the finished grade would be, he installed a perimeter drain around the foundation and then backfilled the foundation with clean sand and fill. It is important that boulders and clay not be used as backfill material. Boulders can crack the foundation walls while being pushed into place, and clay can lead to improper drainage around the home.

With the foundation in and backfilled I was ready for framers.

The Framing Stage

The framing stage is probably the most exciting part of building a home. In a relatively short period of time, literally days, a house begins to take real form. Within less than a week knee walls were up, floor joists were installed and a plywood sub-floor was down. After a couple of weeks, the first floor walls were up and ceiling joists were being installed. I was so impressed I was convinced my new home was a month ahead of schedule. Boy was I wrong.

Before I elaborate on my misconception I should jump back for a minute. While the excavation work went on, I was also engaged with the Framing subcontractor. The Framing subcontractor needed to order framing material including lumber, doors and windows, shingles and siding. Inevitably there were issues with the availability of material and delivery dates, and as a result, we spent a fair amount of time resolving these issues. Fortunately, due to constant communication and quick problem solving we were able to have the initial delivery of lumber arrive on the site within a day after the backfilling of the foundation.

It is important to note, that it is at this time of the project that the large outlays of money begin to occur. Lumber costs for a home construction are quite large, and final payments are due to the Excavator and Foundation subcontractors. Excavation/Sitework and Foundation installations are a significant portion of the cost of building a home. In addition, the Framing subcontractor requires a portion of his labor to be paid in advance.

Also, it is very important that Homeowner Construction Insurance be obtained prior to the construction phase. This insurance protects the Homeowner/Builder against material theft and job injuries. All of your subcontractors and their employees should be insured but don't count on it. During any building project, subcontractors are bound to hire extra help for short stints and I would be surprised if these temporary employees were added to the subcontractor's insurance policy. The homeowner/builder insurance policy is small change compared to the risk of theft or the threat of injury lawsuits.

As I indicated earlier, I was in for a surprise with the framing phase of my home. As mentioned, the initial framing moved quickly. However it was still winter and frequent snow storms and extremely cold weather began to hit. This dramatically slowed progress. In addition, with the fresh supply of snow it quickly became apparent that my framing crew had an affinity to snowmobiling. So even on the sunny days my framing crew was frequently absent. No matter my level of complaining or prodding I was unable to control my framing subcontractor's work ethic.

Consequently, I had to contact my plumbing, electric, and fireplace subcontractors to inform them of the delay. This was extremely painful to have to do, as I had no definitive date on when I would actually need them and each of them had very full calendars. As a result, to be able to call them at the last minute and expect for them to drop what they were doing to come to work on my project was highly unlikely. Again, through regular communication with these other subcontractors I was able to mitigate some of this problem, however my project did experience significant schedule slips due to my framing crews shenanigans.

In retrospect, I am not sure what I could have done to have prevented this problem. Reference checks on the Framing subcontractor had been positive. I guess I should have asked what his hobbies were and made sure they did not correspond to the season I wanted the work done. It is also a fact that unexpected things do happen on any project and one should expect it and plan accordingly. For example, put some contingency dollars and schedule into your project for events such as mine. Also, I can not stress enough to establish a rapport and regular communication channel with all of your subcontractors. Do not assume anything during a project of this size.

To Be Continued ....

In Part 3 of "Building Your Dream House", the Framing continues and Rough Electric and Plumbing begin. Stay tuned...............

Over the past 20+ years Mr. Donovan has been involved with building homes and additions to homes. His projects have included: building a vacation home, building additions and garages on to existing homes, and finishing unfinished homes. Mr. Donovan's formal education and profession have been as an Electrical Engineer and Marketing Manager.

Me_Donovan@comcast.net
http://www.homeadditionplus.com
http://www.homeaddition.blogspot.com

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Hiring a Sub-Contractor For Jobs

A Subcontractor is an individual or a company hired by a general or principal contractor to perform a specific task as part of a large-scale project.

A subcontractor can be a sole entity - eg an electrician undertaking work for a building contractor - or any national organization. A subcontractor works on a contract with the contractor for some provided services and generally the contractor doesn't employ the subcontractor as a regular employee. Subcontractors perform a part of the project for which the contractor is responsible. For instance, a contractor may hire an electrician to complete a part of the contractor's overall project. The contractor is liable to the customer for the total work including the part done by the subcontractor. Subcontractors work on contracts without any fixed termination date and the work can be stopped at any moment

Important points to remember Before Hiring a Sub-Contractor:

1. While hiring a sub-contractor be sure that he has the respective state's license for his said trade.

2. Know the background and work ethics of the sub-contractor it must be checked whether there are any complaints logged against the sub-contractor to prevent yourself from hiring someone who can cause problems.

3. In the written document, it should be specified that the subcontractors' aren't employees and that they are to pay their own taxes and benefits.

4. To protect both parties businesses, the working relationship must begin with a comprehensive written contract.

5. Have on paper a list of materials used so that if any changes are made, both parties including the homeowner signs off on the changes.

6. Don't let the clients deal with the sub-contractors on jobs.

7. Make sure to go through the sites and let the sub contractors know what is expected of them. A sub contractor is responsible for all works and needs to check and rectify the work performed by the sub contractor.

8. It is very important to review and inspect the work completed by the sub-contractor on each job.

9. While dealing with a sub contractor, it is very important to save the records of dealings with him which contain the contract papers, repairing list and cost incurred, up to date copies of certificates etc. Keeping records of all kind of conversations even after the project is completed is sometimes helpful.

10. Both the parties should have a good relationship with each other. For the general contractor, working with a dependable subcontractor implies completing jobs as per requirements. And for the subcontractor, a sound reputation gives better opportunities for his career and future jobs.

The written agreement is the base of a subcontractor agreement. It is the base document in the file of documentation which is needed when a sub contractor is hired. But there are basic points which should be checked before starting work:

? Certificates of insurance. There must be a condition in the agreement that makes it mandatory for subcontractors to carry workers' compensation insurance, general liability insurance etc. Make sure that certificate of insurance issued by the subcontractors' insurer shows that workers' compensation is currently in place and details the coverage's, expiry dates and limitation of the policy.

? Indemnification. Have a contract with a "hold-harmless" clause which is also called indemnity agreement.

Once you have the above guidelines in place you will notice that the sub contractor is more efficient on all jobs and deadlines will be more regularly adhered to.

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Hiring Home Builders - Your General Contractor is Not Your Plumber

You can't just get away with saying "Builder" any more. If you are building or remodeling your home, you're going to need building professionals at some point. Even as an "owner builder" you'll be working with industry contractors.

You need to know who these professionals are to plan and manage your project well.

Question: What's the difference between a General Contractor (GC) and a subcontractor?

Answer:

It's really a question of who manages the project. If you are managing the project as an Owner Builder, you are the General Contractor (or GC.) Tradesmen, like plumbers and electricians work for you.

Instead, you could elect to hire a GC and let him hire and manage these trades people (also called subcontractors/subs.) There is normally one GC and many subcontractors. This may seem obvious but the confusion comes in when so many people refer to both the GC and the subs as their "builders." Sure, they're all builders but they have very different responsibilities.

The Subcontractor Specializes

A plumber is a builder, an electrician is a builder, a roofer is a builder, an excavator is a builder, and so on. But, they all specialize in their specific expertise. They do not manage the entire home building project. They don't coordinate their efforts with other "builders." They simply perform their tasks.

These are known as subcontractors or tradesmen. They specialize. They do not generalize.

The General Contractor Generalizes

The General Contractor (GC) on the other hand, does generalize. The GC is more of a manager or supervisor and "Jack of all trades." He or she will take charge of the entire project, hire and fire subcontractors, manage their coming and going, inspect the quality of their work, keep the project moving forward, and ... hopefully ... report to you about what is going on.

Also, a GC may not do any labor and may have no employees. A tradesman will usually have a crew and manage his crew while being "managed" by the GC.

Keep this in mind if you plan to be your own GC. It's a big job and I recommend that you hire a Home Building Coach to assist you.

We'd like to give you a FREE email course called "Dream Home Creation" that you can find by clicking here http://DreamHomeCreation.com The order button is on the upper right corner of the page. Again, there is no charge or obligation. You will also find other tips and tools, surveys, and additional articles by Mel Inglima.

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Reduce the Risk of Working With Subcontracted Marketing Consultants

For some projects, a marketing consultant may need outside expertise or just an extra hand to get the job done. For engagements like these, hiring a subcontracted marketing consultant to assist with the project can help you meet your deadlines without having to bring a full-time employee on board. But keep in mind, working with independent contractors does bring a new level of risk to your business.

Even if you've found an independent contractor that you know you can count on, there's always the possibility that a misunderstanding will result in a misstep that could negatively affect your business reputation, liability, and relationship with your client. That's why, when working with subcontractors, it's important to put as much information about the project as you can in writing.

Before you commit to a working relationship with an independent contractor, it's a good idea to have both a written subcontract management plan and an independent contractor agreement, signed by both parties. Documenting your expectations reduces the possibility of errors and omissions, lowering the risk for your company and client.

What's In a Subcontract Management Plan?

A subcontract management plan spells out the relationship between you and the independent contractor you employ, as well as between the contractor and your client.

First, these plans commonly include a detailed discussion of the project, addressing any areas where you think conflict or concerns may arise. Commonly known as a "statement of work," this section of the plan can clearly define the deliverables, tasks and services the subcontractor is expected to provide, as well as any financial or scheduling constraints related to the project. Often, the statement of work will also establish quality measurements for the subcontractor's work.

Many marketing consultants include an organizational chart in their subcontract management plans, noting all participants who will be involved with the project and what roles they will play. This chart may encompass your own primary consultants, your subcontracted consultants, and your client's own team members.

Your plan can also define processes to be used for risk management and issue resolution, and establish who will serve as:

o Primary contacts

o Major decision-makers

o Risk managers

It may also make sense to clearly lay out how you expect to communicate with the independent contractor during the project. For example, you can document:

o Your preferred method of communication: videoconference, phone, e-mail or in-person

o The frequency of progress updates, and in what form you want to receive them

o The frequency of client updates, and in what form the client should receive them

o The frequency of management status meetings

o Expected costs related to long-distance travel or communications

As most marketing consultants have discovered first-hand, not every project turns out as planned. Sometimes, due to factors beyond your control, a project will change course once work has already begun. For this reason, it makes sense for a subcontractor management plan to clearly establish:

o Processes for submitting proposed changes

o Who will make decisions about changing project requirements

o What process those decision-makers will use to evaluate proposed changes

It may also be a good idea to put in writing a definition of when the subcontractor's work will be considered "done," and to address the possibility of him or her providing ongoing assistance to the client once the project work is complete.

Subcontractor Agreements

With a management plan in hand, there's still one more important thing you need: your subcontractor's signature on a legally binding subcontractor agreement that protects your business interests and reduces your liability.

This type of agreement includes wording to:

o Prohibit your independent contractor from being hired by your client

o Establish ownership of your company's intellectual property

o Define the project deliverables your subcontractor is responsible for

Both the subcontractor agreement and subcontract management plan should help your independent contractor understand what's expected of him or her before they report to the job. Documenting as much as you can, in as much detail as possible, helps you steer clear of many common marketing consulting project mistakes; keeps your client happy; and ensures a successful, longstanding work relationship with your valued contractor.

Jim Cochran has been providing insurance for subcontractors for over a decade. This experience allows him to understand how to manage risk as a small business when working with independent contractors. To obtain a small business insurance quote, visit BusinessInsuranceNow

Do You Really Need a Contractor For That Home Project?

Some things to consider, how big is the project and does it involve some different trades such as an electrician or a plumber? If so then yes it might be a good idea. A licensed contractor will have subcontractors who do these other trades and will be responsible for their work performance and quality. Another reason may be you don't have the time or just want the job done from start to finish without any hassles. A contractor will also do all the leg work for permits, inspections and keep the job going on a schedule. This does require doing some research on your part and finding a good quality contractor and even then you may end up with a bad experience.

Consider the project carefully. Have a clear vision of the job. I would venture to say most people are on a budget and do want some hands on approach. Hiring a contractor for the whole job often times is quite expensive and you may want to consider a different approach. This will be more work but also may come at a considerable lower cost.

One approach is as simple as talking to a good carpenter. A good carpenter not only can handle the whole building process but a lot of times have a good understanding for the permits and inspections necessary for the job. A carpenter however is generally not licensed or required to be licensed but as a sub contractor are required to carry certain liability insurance and work comp policies and certificates. Ask for some references from this carpenter and be sure to ask for proof of these certificates before hiring a carpenter for your project. Ultimately you are responsible for the building codes and regulations involved in the building process, however it is easily obtainable with a little research.

For the other trades needed for the project it could be as easy as looking in the yellow pages for a company that does this work. Again a little research on the company is advisable and if you are happy with the results then get on their schedule.

Your carpenter may also be able to suggest some people or companies for these trades and at a lower cost. Again check them out.

Is all of this research and responsibility worth it? From a financial stand point, yes it may be, from a time or headache stand point may be not, it depends on where you want your savings to be. There are vast amounts of information out there to answer your questions. Whether you hire a contractor or contract yourself, things don't always go smoothly and unexpected things can happen. Be ready for potential problems and stay positive.

Pat Fisher is a professional carpenter and woodworking craftsman. For more information on finish carpentry and household carpentry projects, visit http://www.finishcarpentryhelp.com and pick up your free eBook.

Subcontractor Retentions - "Your Fruit" on "Their Sideboard"

If you are a contractor or a subcontractor in the building & construction industry then you probably have Retention clauses in your contracts.

This means that as a contractor, your client will withhold a percentage of your claim and if you engage subcontractors then you will be deducting a similar percentage from the monies you pay them. The amounts deducted are termed RETENTIONS and their payment is delayed, with typically half paid after the Practical Completion Date and the remainder released after the Defects Liability Period has elapsed and then only if their workmanship is classified as satisfactory. Otherwise, some of the money will be used to bring the work up to "standard".

The Retention rates themselves can vary, but 5% is typical and this is a significant sum on a commercial development.

Its your "Fruit"

Retentions by their nature have an immediate effect upon cash-flow and if they are never released for payment then they will also impact the profit on the job and 5% of the contract value is a significant share of the profit margin. Even if you are satisfied with what you have received from the job to-date this money is "the fruit on the sideboard" and it should be on your "sideboard" not theirs.

What's the Date?

The Payment of Retentions, as we have said, is linked to two key dates - when the project has achieved Practical Completion and when we have reached the End of Defects Liability period. So it's highly desirable for your Construction Accounting Software to be "project date aware" then you can avoid becoming become one of the many Subcontractors who simply doesn't claim their Retentions.

Keeping Track of Retentions

Despite their significance, Retentions are often not recorded in the accounting software used by the business - instead are "tracked" in a spreadsheet. Firms who are serious about their liquidity and profitability use specialised Construction Accounting Software which handles Retentions as part of the normal processing.

Contractors using General Accounting software often have to use "workarounds" to handle Retentions. And in some accounting systems the Retentions can't be rolled over to the next financial year - which is a concern.

But either way, your software should record the Retention amount against the project and display it prominently in reports so it is not "forgotten". This means that Accounts Receivable Trial Balance and Management Reports should ideally have a separate Retentions column.

In a similar fashion the Retentions you withhold from your Subcontractors should be clearly identified as such on the Remittance Advices and for your benefit should be shown on Accounts Payable Reports because you need to be aware of this future liability.

In fact you really need an Project Payables Report - because the payments are due based on an invoice date plus 30 days - but rather when the project reaches milestones.

Calculating Retentions

If your software does handle Retentions and if you are a Contractor, then it's probably better for your software not to calculate the Retention Amount automatically when you are preparing Progress Claims. Instead you can allow your Project Managers to calculate them to your advantage - not the clients. When it comes to calculating the Retentions for YOUR subcontractors, then of course you want the software to calculate it accurately - not a Dollar more nor a Dollar less than what they are entitled to. But of course you hope that they forget to claim it later so it can be your "Fruit on the Sideboard".

The author Ronald Skeoch is managing director of Muli Management Pty Ltd, an Australian software developer, specialising in Construction Accounting Software.

The flagship product, Muli, has an integrated Retention facility.

Video demonstrations of Muli processing RETENTIONS is accessible via the company website.

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Defective Construction - Protect Yourself

Contractors can protect themselves from defective construction claims by hiring license and insured professionals to perform the work. Because most sub-contractors obtain future work through word of mouth, there is a built in incentive for contractors to police themselves and correct substandard work before it can negatively impact a project.

Some contractors provide an express warranty for work performed. While this express warranty may put homeowners mind at ease, in reality, a contractor remains responsible for any construction defects which are not determinable at the conclusion of construction.

In Florida, an owner may bring a claim against a contractor for latent defects up to ten years after the completion of construction. For example, upon the completion of an owner's new dream home the owner inspects the home and finds nothing out of the ordinary.

The owner moves in and after living in the home for nine years a water spot appears on a bathroom wall. Inspection of the cause determines that a defective solder in a bathroom pipe has allowed water to slowly seep into the wall and cause extensive water damage.

The owner may bring a claim against the contractor for a latent defect provided that the sub-standard work is the cause of the damage. The contractor can then seek to have the sub-contractor and its insurance cover any defect actually proven.

It is important to remember that while the owner has ten years from the completion of the work within which to bring claim, the owner must also bring the claim within five years of discovering a problem.

For example, in our previous discussion of the leaky pipe: if the owner noticed water stains on the wall in year one, but ignores it until year nine believing the source of the problem to be a leaky roof, which the contractor fixed, the five year period within which to bring a claim against the contractor will most likely have run.

The five year period begins to run at the time the water stain is discovered, not at the time the cause of the water stain is determined. Owner knowledge of the problem is a factual issue, which will depend upon each individual case.

As a result, if a subcontractor or contractor is faced with a claim for defective construction, legal counsel should be retained immediately to protect your rights.

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You Can Increase Contract Team Efficiency & Deliver Real Savings on Your Project!

In this article (the 2nd in a series highlighting the compelling benefits that you'll enjoy when you apply certain workplace management solutions) you will discover how people, like you, in the construction industry, are saving time and money - as a result of being more effective - right now.

How? By using proven tools and methods to effectively overcome the challenges that come with subcontractors.>

Were you aware of the shift in the dynamics of construction projects in recent years? Perhaps you already understand that most main contractors, instead of undertaking to do most of the work themselves, have become more like managing contractors - something akin to project management companies.

Think about it: Is it not unusual for a main contractor to have 5 to 10 salaried employees on site overseeing multiple contractors with 500+ operatives? Of course, this approach provides benefits to main contractors, including:

oYou don't have to deal with industrial relations issues.

oYou don't have to deal with own labour variables by paying the subcontractor a fixed price for work.

oYou can deliver quality as a result of using skilled specialists (e.g., groundworks, mainframe, mechanical and electrical).

Unfortunately, this approach also brings the main contractor challenges, including:

oManaging subcontractor attendance on site.

oManaging subcontractor health & safety.

oManaging and sharing project documentation.

oDealing with subcontractor "claims" for additional payment due to unforeseen project issues.

You may be wondering how you can overcome these challenges or deal with them more effectively. And that's a good thing to wonder... and to wonder what is important about that... what difference will it make when you do overcome these challenges and deal with them more effectively? How valuable would that difference be to you?

You'll be happy to know that recent technology gives you what you need to overcome and effectively deal with each of the challenges listed above. I wonder if you can imagine how much more you can focus on the project at hand (and not on managing endless folders of raw data) once you have put the right technology to work for you. If this appeals to you, you'll want to know about the two key technological developments as well as the solutions they offer.

Two Key Technological Developments:

1)Broadband Availability - Over the years as broadband coverage has grown and continues to grow significantly, so has your ability to have internet (datacards, wireless and satellite broadband) access on site.

2)Internet as a Shared Network - Not only can the internet be used in the same way as a traditional internal network drive, it also has the ability to be used by multiple organisations in uploading and sharing and viewing data in a secure environment. (And any part of it you want to be protected can be easily with a password.)

Solutions Available to You Now:

1)Managing Subcontractor Attendance - Solutions include, swipe/prox-imity cards, key fobs, finger, palm and facial biometrics. Biometrics improves the integrity of attendance information on site by eliminating "buddy punching". You can also take advantage of mobile enabled biometric solutions which operate free from telephone lines or broadband. On site from day one these "plug-n-play" options provide you with a robust solution. Couple this with advancements in web-based technology and it's possible to view attendance by operatives / by organisation / by site in real time from any internet-accessible location. This transparent view of hours worked by subcontractor organisation gives you more accurate information (re: contractor claims, future project pricing, etc.) as well as a live register of who is on site in the event of an evacuation.

2)Managing Subcontractor Health & Safety - If you're a managing contractor then you already know that one of your biggest challenges is accurately tracking subcontractor Health & Safety documentation across multiple sites! The type of information that needs to be tracked includes:

oCompany Health & Safety statement

oEmployers Liability Insurance

oPublic Liability Insurance

oSite specific risk assessments

oSite specific method statements

oOperative skills (e.g. CSCS cards)

Web-based technology allows subcontractors to upload required documentation remotely into a project through username/password access. The main contractor can easily track subcontractor organisations and retrieve any outstanding information.

2)Managing Subcontractor Project Documentation> - The contract team can share documentation securely online. Features such as version control, controlled access by organisation etc., ensure that information can be shared easily among all selected organisations meaning that the most accurate information is viewable at all times. By taking the decision to set up a system (see #1 above) you get an accurate point of reference to support claims for additional payments, stage payments or resources disputes across sites.

If you read the last article, you'll already have a good idea of just how much time and money you can save by choosing to increase your efficiency. Why is that? Because this puts control of the project firmly back in the hands of the main contractor - back in your hands where it belongs - improving your effectiveness, overall efficiency, allowing more time to be spent on valuable activities rather than administration-based activity.

What would you do with extra time? Extra money? Less stress and hassle?

Now that you are aware that ~

osubcontractors can be managed more efficiently and accurately

othe technology is available to you

othe technology is proven in the construction sector

With increasing competition pushing down pricing, when now would be a good time to... increase project and contract team efficiency... deliver excellent projects with time savings... increase your profitability...

Thank you for taking the time to read this article. In future articles we will deal with subjects concerning time leakage, health & safety, traceability, budgeting and cost management.

Vincent Lynch
Donseed Ltd

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5 Questions To Ask Before Starting Any Home Improvement Project

1. What experience does your contractor have with this type of project?

How much experience does the home improvement contractor have in doing projects like yours? Does s/he specialize in this type of project, or will s/he be using your home as a learning project? Typically, contractors who have done several projects like yours will have a better idea of the actual costs and production issues involved in your project. Remember, however, that every remodeling project is a little different, and it is doubtful that any contractor has ever done a job EXACTLY like yours.

2. Who will be doing the actual work?

Will the individual you're talking to be doing the work himself, or will they be using subcontractors or employees? Each scenario has its own advantages and disadvantages, but make sure you know what to expect on your job. Who will you ask questions once the project begins? Should you talk to the subcontractors, a jobsite manager, or the owner of the business? It is very important you have one person who will consistently answer your questions and not give you the run around.

3. What happens if changes are required to the initial bid?

What is the contractors' process for making changes in the middle of the project? Most times you would like to avoid making changes mid-project but there can be unforeseen obstacles that arrive and it is good to know ahead of time how your contractor will deal with those obstacles. Most contractors use some sort of change order form that details the exact work and cost involved in changes once work has begun.

4. Am I prepared to be flexible when the unexpected arises?

Invariably, every job has something that wasn't planned on come up. Delays due to weather, unforeseen conditions which present themselves once walls are torn down, changes to design or material choices, and problems with employees or subcontractors can all upset the planned flow of the project. Are you prepared to be flexible and work with your contractor to find solutions when these problems arise?

5. How do I feel about working with this contractor?

What is your gut feeling on working with this individual? Do you trust him or her? How do you feel about their design ideas as compared to your own? Can you communicate openly and clearly with this person? If it's a remodeling project, how do you feel about this person being in your house for several days or weeks at a time often when you are not home? This is a really important factor to consider if you don't trust this person don't hire them.

This article was written by Gregg Hicks of http://www.reliableremodeler.com which provides Internet-based home improvement information and services. Offering homeowners a simple, quick, and free way to access, qualified home improvement remodeling contractors.

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So You've Hired a Worker, But What Happens Next?

Congratulations! You have hired a worker. Or maybe, you have workers and have for a while. It is a great feeling to have that extra support and it is a great responsibility knowing that others are depending on you to make a living and support their families. So what does this have to do with being financially savvy? It is all about knowing the rules.

In most businesses the cost of labor is the first or second largest expense that a company has. A lot of companies try to control the cost of this labor by paying their workers as subcontractors. And here is where you need to put on the brakes!

There are very specific rules for how you pay a worker. The rules outline how you are to classify a worker either as an employee or as a subcontractor. There are also very substantial ramifications if you misclassify an employee as a subcontractor. And this is important for every employer to know because in this instance, size doesn't matter! You may have one worker or a hundred workers, the rules are the same.

So first, how do you know how to classify a worker? The Internal Revenue Service (IRS) has a great tool on their website that allows you to go through their list of worker classification questions to ask yourself and then to determine your worker status. http://www.irs.gov/businesses/small/article/0,,id=99921,00.html. The IRS governs whether or not your worked is an employee or a subcontractor based on what they call the "Common Law Rules".

The Common law rules basically ask you, who has the direction and control over the worker? Some sample questions are:

Is worker required to comply with instructions?

Does worker need to be trained?

Are worker's tasks integrated into normal business operations?

Does the worker have a continuing relationship with the hiring firm?

Are worker's hours set by the hiring firm?

Is work performed on the hiring firm's premises?

Is the worker required to submit regular oral or written reports?

Is the worker's payment based on time spent instead of by the job?

Does the hiring firm furnish tools, materials and other equipment?

If you answered yes to a majority of these questions then you have a "Common Law Employee" according to the IRS. Typically if your classification of a subcontractor is challenged the court will look at who has the right to control the worker. If you tell your worker what to do, when to do it, how to do it and they use your equipment or facilities to do it then under the rules of direction and control, you have an employee not a subcontractor.

When a worker is misclassified as a subcontractor when they should be an employee there can be substantial ramifications. The first of which is the audit process. There are several agencies that can audit you for employee classification: The IRS, your State revenue department, your State unemployment agency, your Worker's Compensation Company to name a few.

And right at this point I know some are thinking, "not me, they would never audit me, I am under their radar"....but you are not. Audits get triggered in several was but the most common is by one of your workers. If a misclassified subcontractor gets hurt, they may look for Worker's Compensation. This would trigger an audit. If you fire a misclassified subcontractor, they may try to collect unemployment. This would trigger an audit. There are more ways audits get triggered, but this appears to be the most common.

So what happens next? You would have to go through an audit process. This means that you are going to pay out of pocket to have a CPA or your attorney represent you through an audit. If all goes well, the only expense you incur is their billable time. However, if it is discovered that you have misclassified a worker as a subcontractor, the financial ramifications can be substantial.

When the IRS deems that a company has misclassified a worker as a subcontractor they do not go back to the employee and ask them to pay the tax; they go back to the company that misclassified the employee in the first place. So in an IRS audit if your worker is found to be misclassified you will pay the employees' taxes, the employer overhead taxes and penalty and interest for those payments not being made in a timely manner.

The easiest ways to avoid this situation is to go through the IRS Common Law Rules and to go through and answer the questions honestly. After that is done you need to call your accountant and ask them what the standard is for your industry. Your accountant will be able to advise you what the proper classification of your workers should be.

Even though labor can be one of the biggest costs of being in business, this is not an area where you can save money by paying workers as subcontractors if it is not your industry standard. Don't get fooled into thinking that you can break these rules or that you are under the radar on this. Size is not an issue for tax agencies to ignore misclassified employees.

Talk to your accountant, trusted advisor or attorney and find alternate ways to save money on your labor costs. Some examples of this would be from having employees telecommute to paying staff on a production basis scale of pay. There are many appropriate ways to control these costs, keep your workers happy and comply with the rules.

Meg Eynon started at the Payroll Factory in 1994. With a BA from West Chester University she looked for opportunities to build a life as a business professional. Meg's dedication to customers and quality was rewarded in 2000 when she was promoted to Vice President.

Meg loves her job and the company she helped build. She likes that The Payroll Factory's full service team helps clients grow their businesses by providing advice in the areas of payroll processes, procedures and protocols; eliminating the need for small business owners to divert their attention from running their businesses.

Meg resides in Pennsylvania and in her spare time loves to read and spends a good deal of time playing, gardening and cooking with her husband and son.

http://www.thepayrollfactory.com

Tips For Hiring Subcontractors

An Owner Builder is a person who is building a home without the services of a general contractor. With the tight economy, this option has begun to look a lot more attractive than ever before, and indeed permits show us the number of people doing their own building has almost doubled.

In the state of Arizona, we have a registrar of contractors, which most owner builders know about and use to check out prospective subcontractors. Any complaints lodged against these contractors is supposed to show up, and contractors who break the rules willfully are supposed to have their licenses suspended. There is also the belief that the ROC in some way insures the workmanship of the project.

Here are some very important things to know, before relying on that resource for anything at all. Contractor complaints, when registered, can take up to 6 months to appear on the website. It could take more, but the ones I have filed have taken as much as 6 months. While the ROC is supposed to act as an arbitrator between the home owner and the subcontractor, hearing are generally schedule 9-12 months after the complaint is validated. All told, you may be looking at over a year before any action at all is taken.

There is also a perception, a rumor really, that there is a recovery fund that covers any subcontractor malpractice. This could not be farther from the truth. The recovery fund only pays out to persons who are injured due to poor workmanship, or no work being performed. You are also covered for a maximum of $30,000. Even if you do have a legitimate claim, the process of recovering funds is glacially slow, and there is no guarantee you will be successful.

If the ROC offers no real protection or useful information, then what can an owner builder do? Here are a couple of extremely useful ways to find out the real deal on any contractor, and protect yourself.

? Identify all the principles of the company. Run a check on them through the Recorder's office to determine if someone has liens on their company, personal property, etc...

? Run the company and all principles through the Maricopa superior court to find out if there is any legal action pending.

? Check their references. Actually call their references and get info on their performance

? Do not pay a deposit to the subcontractor! Most subcontractor's will require a deposit for materials. However, you can either set up an escrow account or offer to pay their material suppliers directly and have the materials dropped at your job site, at which point you should be watching them like a hawk.

? Do not pay 100% until you are positive you will no longer need that trade. Most companies will need to be paid most of the contract upon completing the work, but you can insist on paying 95% and holding back 5% until any changes which are needed are complete.

These are very solid basic actions to protect yourself from crooked contractors. There are a disturbing number of companies going out of business right now, and one of the worst things that can happen is to give someone a deposit, and the next they they shut the doors to their business. You have no legal recourse in this situation, and even if you did it would be very tough to actually get any money back in your pocket.

This is still a historic time to build a home. There is almost never this much excess supply driving material and labor prices down, and this is the best time to take advantage. Done right, there are still people making money by building.

Joshua Jacoby
4034 E Ashler Hills Dr, Cave Creek, AZ 85331
480-575-8780
joshjacoby@cccbuilders.com
www.cccbuilders.com