alt=""/> Occupational Safety and Health Administration (OSHA) Form 300. Log of work-related injury and illness.
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A construction, or mechanic’s, lien is used to collect past due amounts owed to a company claiming the lien. These liens can be attached to land, buildings, or partially completed new construction. Once a lien is placed on property, the owner may lose some control over it until the lien has been satisfied and the past due amounts paid in full. Lien laws vary widely from one state to another and can be very complicated. Understanding how the lien law works in your state may save you money, time, and embarrassment.
Be very careful with using credit cards. Failure to pay the full amount due each and every month is an extremely expensive mistake. When late fees are added to interest charges, the cost of paying only a portion of the monthly invoice can easily exceed 20 percent of your purchases. Using a credit card can be a very useful tool for a company. However, care should be taken when deciding which employees have the authority to have or use one. The best advice is to keep the list of users to a bare minimum and require that itemized receipts accompany the monthly invoice and each purchase has a legitimate business purpose. Remember, a simple rule of thumb is to use a credit card by choice as a convenience to help maintain your cash flow or to keep from carrying a lot of cash, but NOT in a situation where you do not have the money available in hopes it will come along later. Remember, debt should be a decision, not a default, and credit card debt is dangerous.
Positive cash flow is often a problem for new businesses. During a project, funds are spent on wages and materials. Many times a client is not presented an invoice for the work until completion of the project and then may wait 30 days, or longer, to pay the bill. By securing credit with suppliers, a contractor can ease the pressure on cash flow—the money that comes in and out of the bank account. If managed properly, a contractor can purchase materials and often pay for them 30 to 60 days later. While some suppliers request payment in ten days, most do not charge a late fee until the invoice is more than 30 days past due. Every effort must be made to pay supplier invoices on time; and when cash is tight and payments cannot be made on time, the contractor must contact the supplier and explain the situation. Most suppliers are cooperative, especially if the contractor has a good payment record. Still, there are other suppliers who “go by the book” and do not agree to the delay of payment; some will even send a notice to your client that they will place a lien on his property if payment is not made. For obvious reasons, contractors must avoid this scenario at all cost.
Most contracting businesses require at least two types of bank accounts for handling their cash: a checking account, which does not pay interest, for accounts payable and payroll, and a savings or money market account for holding excess cash until it is needed. Interest rates for these types of accounts vary and change as the national economy changes, but the rates have been rather low in recent years. As a new business owner, however, you are not in a position to take on any high-risk investments with your profits.
Using cash as a vehicle to pay suppliers or employees is a very poor way of doing business. It also makes record-keeping difficult and opens the door to abuse and even theft. Instead, checks, credit, and credit cards are far better and safer methods of spending money. Online banking makes it very easy to handle your banking transactions and keep track of your balance at all times. Most banks have made online banking very easy in recent years.
Many entrepreneurs start their own business because they do not want to work at repetitive or boring jobs. Factory work has no appeal to them. They cannot imagine sitting behind a desk eight hours a day, shuffling papers. Spending days in a retail store is abhorrent to their senses. They are looking for work that is not routine and varies from day to day. The contracting industry offers just the type of working atmosphere that these entrepreneurs want and enjoy.
If you were to ask a contractor to describe a typical day at work, he would tell you that there is no such thing. That’s not to say that each of the 60 or 70 hours you will work each week is thrilling and rewarding. Every job has its unpleasant moments, and the contracting industry is no exception. However, for a vast majority of successful contractors, the fun times on the job far outnumber the frustrating and unpleasant times.
Most contractors start their days well before 7 A.M., when they begin to review the schedule for the day. While they usually have a schedule for the week on their iPhone or organizer, disruption and changes are the norm. Here are a few such business disruptions to explain why contractors must remain flexible: