January 2020 Newsletter
- Featured monthly installments of new products, partners, and technology. Part Three’s a doozy!
- Visit us in Vegas! Three big shows coming up in Q1: IBC, WOC & CONEXPO
- Ruth S. on “Things that stay the same” in January
- Repost: The Inside Track on Procore’s Field Productivity
- Love construction, hate time entry? hh2 ‘Remote Payroll’ is the answer!
- Awesome ‘Tips + Tricks’ for Accounting | Sage 300 CRE | Sage 100 CON (Don’t miss the NEW W4s help!)
Part Three – The Really BIG News!
by Ed Ledgerwood | President and Founder, LAI
New Decade, New Name, More Innovations
A new decade brings new challenges for all of us in business. Ledgerwood Associates, Inc., celebrated ten years in 2019 and continues to grow and prosper thanks to our dedicated employees and clients. We look forward to 2020 and the opportunities this new decade will bring.
New products are being added to our Sage ‘family of products’ that will benefit us all. We will continue to add new solutions, new marketplace partners, and additional staff to serve our clients’ growth.
As of January 1st, 2020 Ledgerwood Associates, Inc. and Cornerstone Solutions have formally merged to join their decades of industry knowledge and acquired resources to form a larger Sage partnership. The company will be known as ETHOSystems, Inc.
Dom Pernai is the principal of Cornerstone Solutions and we have known each other for over 30 years. They too, are a Sage Partner, and enjoy a respected market presence and loyal client base in the Midwest. The combined companies will make both of us stronger with more shared experience. Cornerstone Solutions have resources to help us, and Ledgerwood Associates, Inc. have resources to help their clients.
All of the employees of both companies will merge into the new company of ETHOSystems.
Intacct for Construction update
Sage will be introducing Sage Intacct for Construction in February of 2020. This will give our clients a new modern cloud application. As you know, the world is changing and some of you are already using our cloud products of SSO, SFO and Paperless applications. The new Sage Intacct products will give all of us the option of many new applications as well as interfaces to Marketplace applications that will increase the productivity of all businesses.
Personal Thank You
I am truly looking forward to working with Dom and crew in this new venture. Let us know if you have any questions. Thank You for your continued support of our company!
It’s Tradeshow Season again!
NAHB International Builders Show – Jan 21-23
The NAHB International Builders’ Show® (IBS) is the largest annual light construction show in the world.
IBS 2020 will take place at the Las Vegas Convention Center.
Las Vegas Convention Center (LVCC)
3150 Paradise Road
Las Vegas, NV 89109
World of Concrete – Feb 4-7
Visit ETHOSystems in Sage Booth N1263
At World of Concrete, find all the products, resources and valuable information necessary to strengthen your business. This is the commercial construction industry’s first, largest and most important annual international event for concrete and masonry professionals across the globe!
There’s a nifty new app to download this year! Check it out:
Visit ETHOSystems in Sage Booth S64419
“North America’s Largest Construction Trade Show”
CONEXPO-CON/AGG is North America’s largest construction trade show representing asphalt, aggregates, concrete, earthmoving, lifting, mining, utilities and more.
- 2,800 exhibitors
- 2,500,000 square feet
- 150 education sessions
Things That Stay the Same (in January)
by Ruth Stockdale, Director of PSG (Emeritus)
The merger of Cornerstone and Ledgerwood that has created ETHOSystems is an exciting development! But even with that change, there are some things that stay the same every January.
We focus on the same topics
By now you should have seen information about version updates specific to your product and situation. If you need more information, check out Sage City, Sage e-mails you’ve received, or check in with us. You can either ask your consultant or contact the office.
Year-end updates relate to tax changes
The most significant change this year is the new W-4 form and related tax tables. Refer to the item above if you need information.
Everyone is busy
You are busy with normal accounting year-end activities in addition to the software updates. We are busy making sure we address everyone’s needs. Although scheduling time and responding to your questions may not be as quick as usual, our goal is to make sure you get the service you need.
Your consultants are still here
The consultants you routinely work with are all still here. Last month I mentioned I would be phasing out, but your consultants are not. With the merger into ETHOSystems, we may also have additional shared resources available.
As always, check for technical tips elsewhere in the newsletter and contact us with questions.
The Inside Track on Procore’s Field Productivity
Reprinted by permission from Procore Jobsite. | By Duane Craig | Posted on May 1, 2019 | Original blog post here.
When Brandon Lopez, field operations manager for ABLe Communications, found himself tracking employee and task times by taking notes on box lids, or whatever was at hand, he knew it was time to look into better ways to beat the clock.
“We needed to get a little more up-to-date, so we started looking into our options,” Lopez says. “We needed a way to be able to track time and give employees a little barometer to show how they’re doing and performing against the budget.”
ABLe Communications is a family-owned business in Grand Prairie, Texas, specializing in copper, optical and wireless information transport systems, with integrations for audio-visual systems. The continuing boom in companies adopting technology means ABLe is taking on larger and more complex projects, bringing the need for time-tracking solutions to the forefront. That’s why the company recently adopted Procore’s labor tracking software that includes Timesheets and Crews.
Cost Code Soup
“On a big job, speed counts because we make money based on the labor hours,” Lopez explained. “The faster I get something done, the more money I make. That’s really hard to manage if an employee is doing an eight-story building with four quadrants on each floor.”
Lopez breaks up the job basing on cost codes. Then he assigns a time for completion of each. The company focuses on five core cost codes. As employees apply their times to the codes, they have a very granular view of their progress. Especially on long-term jobs, employees can now see right away how many hours they have invested in a cost code, even if they’ve been away from the job waiting for other trades to complete their portions.
ABLe’s cost codes are lined up with its specifications sections, making it clearer for its employees when time-tracking particular tasks. Thus, the company is using language that everybody immediately understands. So even when the GCs check on ABLe’s progress, they’re doing so based on specifications tied to submittals.
Tie Budget to Tracked Time
“If we’re bringing in a subcontractor, we’ll assign them their own cost code,” Lopez said. “But typically, for all of our self-performed work, we try to use our five core codes. Although we have branched out from there, there is such a thing as too much detail. I could put a hundred cost codes on there and get a lot of granular detail about where we’re at in a job. But that becomes a very hard thing to track and manage from an admin level.”
The company used to put all the costs into a bucket and draw from that. However, then they couldn’t really tell how they were doing until near the end: too late to make corrections. Now, they organize their budget in Procore, set the hours for time tracking, and manage the job with a constantly updated budget outlook.
“I’m able to forecast where I’m at in a job from day one,” Lopez said. “From the first day when I set the budget and the hours, I can watch that money bar move so I’m constantly up-to-date. When it comes to last-minute decisions, I make those every day. I make manpower adjustments and material adjustments, depending on what my budgets say on a daily basis. It is an ability I’ve never had before.”
Over the past decade, ABLe found itself gradually getting into increasingly complex projects. They were originally strictly subcontracting; now, their work for GCs and owners often requires them to have a full specification package. They need to subcontract everything that isn’t a part of their regular offerings. Jobs are larger, more complicated, moving faster, and with tougher schedules to manage.
“The truth of the matter is that the industry, especially my industry, has completely changed in ten years,” said Lopez. “So we’ve just evolved from a little guy who dealt with the amateurs, to a full-fledged prime contractor. The old ways of doing things weren’t working as well anymore.”
Getting people on board with tracking their time was easier than expected. Of course, Lopez said, some of the staff were content with how it had been handled before. But in the end, most see the benefit in using time tracking. And although there were some hiccups and lag before seeing improvements, Lopez characterized the rollout as one of the easiest he’s been a part of.
Improving Other Processes
ABLe is seeing improvements in its estimating processes, as well. Finding out the costs of activities in real time is helping the company to refine its estimating so labor budgets are more accurate. They are also seeing trends related to certain budgets and work performed in certain environments, helping them be more realistic in their labor allocations.
Payroll processing has gone from a seven-hour process involving the whole administrative staff to just 10 minutes, turning Thursday into a more enjoyable day. Moreover, by using approvals on submitted time, Lopez claimed, there’s no concern about people fudging on their hours.
Lopez especially appreciates how Procore and its labor tracking system are designed to be driven from the field and not from the desk. Procore helps them focus at the field level, making it easy to include pictures, watch their hours, communicate, and even submit and track RFIs.
“Procore is a very easy thing to see the benefit in. They have a great team over there ready for anything you need. They’re constantly making adjustments, which is very important to me. You can’t just roll out one product and think that’s universal across the industry—it’s just not.”
To learn more about how Procore’s Field Productivity can save you time and money on your projects, you can click here.
Love construction, hate time entry? hh2 ‘Remote Payroll’ is the answer!
Free webinar, January 29, 10:00 am, MST
It’s time to move your time entry to the cloud! Join LAI and hh2 in this hour-long, live session to learn how to ditch obsolete pen & paper or excel spreadsheets and make timekeeping accessible from anywhere, anytime, on any connected device (phone, tablet, etc.). Integrates with both Sage 300 CRE and Sage 100 CON.
hh2 Remote Payroll streamlines and automates gathering, approving, and reporting job costed payroll data from remote job sites while syncing seamlessly with your Sage 300 CRE or Sage 100 CON accounting system. In addition to hh2 Remote Payroll, we will be covering reporting from the field and collecting your pay stubs.
hh2 Remote Payroll was created from the ground up as a cloud-based solution and has been tackling almost every conceivable problem that you could encounter from the field for over 14 years.
Power to the User!
Save the dates:
2020 TUG National Users Conference | May 12-15, 2020 | Hyatt Regency New Orleans | New Orleans, LA
The annual TUG National Users Conference is the largest conference in the country where all levels of users of the following software meet to share knowledge, ideas, and experiences:
- Sage 300 Construction and Real Estate
- Sage 100 Contractor
- Sage Estimating
For questions about the TUG National Users Conference, please call (404) 477-5142 or email registration@TUGweb.com
Classification of Workers
Submitted by BeachFleischman, CPAs
The IRS and employers often are at loggerheads over the classification of workers as employees or independent contractors. Typically, many employers want to treat workers as independent contractors, while the IRS often determines that workers are misclassified employees. Sometimes, the issue winds up in the courts.
Fortunately, there might be a way for employers to obtain a measure of protection if the IRS challenges the classification of a worker or workers. With “Section 530 relief,” an employer may avoid adverse tax consequences from a misclassification of employment status. However, this special safe-harbor rule is only available if the employer can show it had a reasonable basis for treating workers as independent contractors.
A Brief History of Section 530
As we stated in the main article, Section 530 is part of the Revenue Act of 1978. Initially, it was scheduled to expire on December 31, 1979. After then being extended twice, it was made permanent by the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982.
In 1996, a paragraph was added to the existing Section 530 provision, requiring the IRS to inform an employer about the safe-harbor rule, when appropriate. This notification must be provided before the IRS begins an audit of the employment status of an employer’s workers.
Make no mistake about it — the stakes are high for employers. Let’s start with the payroll tax aspects.
If a worker is treated as an employee rather than an independent contractor, the employer must withhold federal income tax and the employee’s share of Old Age Survivors Disability Insurance (OASDI) tax, commonly called “Social Security tax,” plus the employee’s share of Hospital Insurance (HI) tax, also called Medicare tax. In addition, the employer must pay the employer’s share of the taxes and the federal unemployment tax (FUTA). The employer must also issue Form W-2 for the wages and send a copy to the IRS.
The dollar amount of these payroll taxes keep going up. For 2020, the “Social Security wage base” for purposes of the OASDI tax is $137,700, up from $132,900 in 2019. The tax rate for OASDI tax remains 6.2%. As before, the 1.45% HI tax continues to apply to all wages paid to employees.
For example, suppose a worker expects to earn $150,000 in 2020. the OASDI portion of the tax will be $8,537.40 (6.2% of $137,700) and the HI portion will be $2,175 (1.45% of $150,000). Thus, the total comes to $10,712.40. This is the amount both the employee and the employer have to pay.
And that’s not the end of the story. Employers may also be responsible for certain state taxes. What’s more, if a worker is classified as an employee, he or she may be eligible for expensive fringe benefits, such as health insurance and 401(k) matching contributions.
When you multiply these amounts for a sizeable workforce, it’s no wonder that employers frequently want to classify workers as independent contractors. But if an employer improperly classifies employees as independent contractors, it could be hit with a significant tax bill for unpaid employment taxes, interest and penalties.
Volumes have been written about the distinctions between independent contractors and employees. Essentially, one of the key factors is that if you have little or no control over the way a worker gets the job done, he or she is an independent contractor. Conversely, if you have the legal right to control how the worker performs a job, he or she is an employee — even if you don’t actually exercise that right.
Despite these general guidelines, employers and the IRS often agree to disagree about the classification of workers. This is where Section 530 can come into play.
How Section 530 Works
The Section 530 safe-harbor rule may be invoked when a business is assessed back taxes and penalties for misclassifying workers as independent contractors instead of employees. It’s often assumed that the name is taken from a section of the Internal Revenue Code, but it actually stems from Section 530 of the Revenue Act of 1978, the source of this provision.
Congress enacted Section 530 of the 1978 law to provide relief from potentially large retroactive employment tax assessments for taxpayers who had acted in good faith. According to some tax commentators, it was also intended to curb the IRS’s overly aggressive enforcement of employment tax laws. In any event, the provision was supposed to be temporary in nature, but the safe-harbor rule has endured for decades and continues to be a fallback position involving worker classification controversies to this day (see right-hand box).
In a nutshell, if a business can show it had a reasonable basis for treating workers as independent contractors, the resulting back taxes, fines and penalties may be waived. Therefore, it is essential that you obtain the services of a tax professional before you enter into any agreements with the IRS.
There are three main requirements for securing Section 530 relief
- Reasonable basis. An employer must have a “reasonable basis” for treating workers as independent contractors, rather than employees. This might be established by one of the following:
- A related court case or IRS ruling.
- A prior IRS audit involving examination of employment taxes at a time when the employer treated similar workers as independent contractors and there was no IRS reclassification of these workers.If a significant segment of the employer’s industry treats similar workers as independent contractors.
- If a significant segment of the employer’s industry treats similar workers as independent contractors.
- If the employer is relying on some other reasonable authority (for example, the opinion of an attorney or accountant familiar with the business operation).
- Employment status consistency. In the past, the employer has only treated the workers and any similar workers as independent contractors. There is no exception.
- Reporting consistency. At all times, the employer has filed all federal tax returns consistent with your treatment of the workers as independent contractors. For instance, your business must have provided workers with Form 1099s and not W-2s.
ALL of these three requirements must be met. A single failure is fatal to your claim.
Finally, if you aren’t sure you are correctly treating workers as independent contractors, contact your tax advisor to help you make a determination. This is one area where your business can’t afford to make any mistakes. If you are contacted by the IRS, your tax advisor can also provide guidance on applying the Section 530 safe-harbor rule to your situation.
Beach Fleischman 2201 E. Camelback Rd. Phoenix, AZ 85016 | 602.265.7011 | http://beachfleischman.com | twitter: @BeachFleischman
New Year, new W4 form
by Pam Schulz, Sage Senior Certified Consultant
Redesigned and ready for Sage 100 CON
The IRS has redesigned the W-4 form. The Sage 100 Contractor Year-end tax update has everything needed to be current.
If you have not become familiar with the changes to the W-4 Withholding Certificate form, the IRS has an excellent FAQ available on their website.
Because of tax law changes, there are major differences in the form, and in the way you will enter this information into Sage 100 Contractor. Fortunately, the Sage 100 Contractor Year-end tax update (version 22.3.30 released 12/19/19) has the new features needed to properly enter the data.
- Existing employees are NOT required to complete new forms and no updates are required to their employee records UNLESS new W-4 information is provided. The software will appropriately update existing employee information and continue to use the existing data to compute taxes. No action is required until an update to the employee’s withholding information using the new 2020 Form W-4 is required.
- New employee’s W-4 information and updates to existing employees are now done on a new tab on the employee screen labeled “W-4 Information”. The tab mimics the fields on the actual W-4 form, with a thumbnail view for easy reference:
Completing these fields will replace entering the data into the “Calculations” tab:
Once the data on this screen is saved the calculations tab is updated. Any existing data in the Marital status and the other tax-related fields are cleared out and entry into those fields is blocked — see below:
The new W-4 information will be used to compute the federal taxes.
These changes do not affect existing payroll records, or your Quarterly and Year-end tax forms. (The tax update should be loaded only after all payroll for 2019 has been completed.)
These new data fields are available only in versions 22.3.30 and higher so it is important to load this update right after completing all payroll for 2019.
Need help from a certified Sage 100 Contractor Consultant? Just click, and we’ll contact you in a jiffy! It’s ‘No Big Deal, right?
New Federal Form W-4
by Kyle Zeigler, Sage Senior Certified Consultant
For Sage 300 Construction and Real Estate users who process payroll using the Payroll application, it is important to note that the Federal Form W-4 changed effective January 1st, 2020. To accommodate this change, Sage 300 Construction and Real Estate version 18.4 includes changes to employee setup information to be in compliance with the new form. Once version 18.4 is installed, users will see additional fields on the Entry Info tab above the existing Federal withholding election fields. The new Federal Form W-4 should be used by employees hired on or after 1/1/2020 or by active employees who wish to modify their Federal withholdings for 2020.
According to Sage Knowledgebase article 25172:
To enter values for an employee using the new W4 form:
- From the Payroll Setup menu, select Employees.
- Select an applicable employee.
- On the Entry Info tab, select the Use W-4 amounts checkbox.
- For Dependents, enter the amount from box 3 on the W-4.
- For Other income, enter the amount from box 4(a) on the W-4.
- For Deductions, enter the amount from box 4(b) on the W-4.
Note: If the employee specified an amount in box 4(c) on the W-4, see article 21619, “How do I withhold an additional tax amount in Payroll?”
- For Filing Status, enter the status selected in the Personal Information box (c) section of the W-4 form.
Note: With the new Form W-4, Exemptions, EIC status, and Misc Tax Codes are not used.
- Click save and repeat steps 1-7 for each applicable employee.
If you have not yet upgraded your Sage 300 Construction and Real Estate software to version 18.4 and would like assistance with your upgrade, please contact ETHOSystems.
BONUS from Kyle: How to Find the Year End Procedures Guide
The Sage 300 CRE Year End Procedures and Government Forms Guide for 2019 is now available!
This 146-page guide is your all-inclusive manual for closing each of the applications in your Sage 300 Construction and Real Estate software, including checklists, step-by-step instructions, and links to knowledgebase articles. It also contains the Sage recommendations and how-to steps for periodic maintenance of your data (i.e., archiving and compressing your data) to keep your system running optimally.
Straight from the Sage Knowledgebase — the year-end guides are posted on the Product Documents website:
- From the Help menu in the software, select Product Documents.
- Click Sage 300 Construction and Real Estate.
- Click Year End to expand the section.
- Select the appropriate Year-End Procedures and Government Forms Guide.
Once there, select Sage 300 Construction and real Estate from the Year-end center by product section.
For assistance with upgrading your Sage software or installing the year-end update, please contact Ledgerwood Associates.