Field notes
Notes from real cleanups. What I find in the books, how I fix it, and what to do before year end. Clients are never named.
Do you have a W-9 for every sub you paid this year?
A restoration company paid subs for months without W-9s on file. In January that turns into a chase. A rule for next time.
Does every sub's certificate cover the months they worked for you?
A remodeler had a certificate of insurance on file for one of his subs. It started in October. He had paid them before that.
Are you paying insurance premium on your subs' materials?
Sorting a remodeler's sub list for 1099s turned up vendors that only sell materials. At an insurance audit, that can cost premium you don't owe.
Will the truck you buy in December be working by December 31?
A restoration company wanted trucks before December 31 to cut its tax bill. The deduction depends on a date most owners don't check.
Are there checks in your office that already count for this year?
A restoration company closed its first full year at about $200,000 of profit. A day later, $120,000 of checks came in. On cash basis, the day you receive a check decides the year.
Are your income tax payments booked as a business expense?
An electrical contractor's revenue tripled, and he asked whether to pay his income tax through the business. It lowers nothing. Check where those payments land.
Did you take out more than the business made?
A carpet cleaner's books showed $55,000 of profit for the year. He paid himself $6,000 a month. The business lost money.
Is there a $250 printer on your balance sheet?
Closing a restoration company's year, the CPA wanted every asset listed. One of them was a $250 printer. Here is where I draw the line.
What's really in your meals and entertainment account?
A remodeler's giveaway tickets landed in meals and entertainment. That line is worth zero at tax time. Advertising is not.
How old are your unpaid invoices, really?
An electrical contractor wanted to push a bad invoice into the new year. On cash basis, it was never on his taxes to begin with.
What percent of every dollar did you keep this year?
A remodeler beat his revenue goal and missed his profit goal. Two points on every bid was worth $15,000 to $30,000 a year.
What's still charging your card every month?
Ten minutes on a carpet cleaner's software and insurance lines turned up a policy he didn't recognize, a tool to cancel, and a forgotten trial.
Is QuickBooks billing a card you still have?
A lost debit card shut off a carpet cleaner's QuickBooks for two months. Turning it back on doubled his expenses.