CFMA Valley of the Sun Chapter Webinar, presented by Financial Partner Jared Asay. This timely presentation provides best practices to construction companies to help them overcome catastrophic events such as an economic downturn, a loss job, loss of a key employee, or even a pandemic. Today is the time to prepare; don't wait until tomorrow. Please contact Jared directly if you have any questions.
Due to the recent economic and social challenges we are all facing, financial partner Jared Asay, updated this Arizona Society of CPAs article to specifically include the latest catastrophic event, COVID-19, and how to prepare your companies to find success during and after this pandemic. Stay healthy, personally and financially. https://www.ascpa.com/stay_informed/464-preparing_for_the_worst_planning_for_the_best/view?fbclid=IwAR0v7nF-WjwOndK1mXJ2LP48bOttJ4QB8DxVpdpQ1Y6EUQmED43NMqiBNos
Even though we may prefer this prolonged economic growth to continue, successful construction contractors are continually preparing themselves for a market correction. This recent article in CFMA Building Profits - September/October 2019 by financial partner Jared Asay, provides best practices to help contractors be successful for generations to come.
Effective January 1, 2019 for non-public companies, accounting for contracts will change significantly for the first time in 35 years. Although several characteristics of the old guidance are not drastically altered conceptually, there are numerous improvements in the new standard that allow for more comparable recognition of revenue, consistent terminology across industries, and enhanced disclosures. Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, is not only effective January 1, 2019, but any long-term contracts that are currently in process and extend past January 1, 2019 will be subject to the new standard.
The following are the main provisions of ASC 606:
In order to have a successful implementation of ASC 606, each company should create an implementation plan that includes both internal and external stakeholders. Internal stakeholders include owners, accounting department personnel, project managers and estimators. External stakeholders include bankers, sureties, and other pre-qualification entities. The internal team selected to guide implementation should analyze revenue streams and begin the 5-step process above for each identified contract. The team should also consider potential impacts on debt covenants, taxes, bonding capacity, or incentive plans.
Some key areas of focus during the analysis phase will be multiple performance obligations, pre-contract costs, and uninstalled materials. Documentation and communication of the team’s determinations will be critical in maintaining consistent application of the new standard internally. This will allow for consistent reporting to external stakeholders.
For more information on how to prepare for the new revenue recognition, please contact me at Jasay@conoverasay.com.
Jared A. Asay, CPA, CCIFP | Financial Partner
Office | (480) 500-6333 Cell | (480) 684-4300
Email | Jasay@conoverasay.com
Nevada passed legislation in 2016 creating a new Commerce Tax on all businesses doing business in NV. The Commerce Tax is based on gross revenue and is calculated using a fiscal period of July 1 through June 30 regardless of the entities normal fiscal year. Everyone doing business or licensed to do business in Nevada must file the form annually by 8/15.
The tax only applies if the business has more than $4,000,000 of NV gross revenue. If gross revenue is less than $4,000,000 a simplified filing is allowed. We know that Nevada is sending out "Welcome" letters to businesses that are licensed there.
Penalties can be assessed for failure to file the return but at this time it appears that penalties are based on tax due, so if no tax is due, there will be no penalties. Conover Asay suggests that you file the required forms even if there is no penalty as the State of Nevada may have other consequences for non-filing that may result in a termination of your licenses.
If you have any questions concerning the new filing requirement, here is the link to the Nevada Department of Taxation or call Glenn Conover at 480-500-6333.
Glenn Conover, CPA, CCIFP
As a construction company owner - are you maximizing your profits through brutal cost recapture? If not, hopefully this article will help give you some good ideas to create a great Business, a great Life, and a lasting Legacy.