Missed our Mitigating Risk seminar last week? No problem!
In partnership with Corrigan Krause and The Fedeli Group, we spoke to the construction industry and provided tips and know-how to help contractors and businesses mitigate risk and set themselves up for success.
Dennis Dlugosz, CPA, of Corrigan Krause touched on taxes and benefits that you may be missing out on, including:
- Deductions for manufacturers
- Options to maximize tax depreciation deductions
- Utilizing credits and deductions to your benefit
Mr. Dlugosz also shared updates on the 2018 tax reform.
- The corporate tax rate is reduced to 21%
- Increasing the "small contractor exemption" to $25m
- Doubling the estate tax exemption to $10.98 million
- Used equipment may be fully expensed
Wickens, Herzer, Panza, Cook & Batista Co. attorney, Phil Truax, Esq., shared some thoughts and practical approaches to conditional payment payment clauses and tips to protect your business when dealing with contracts.
- Conditional payment clauses include pay-if-paid and pay-when-paid. The difference?
- Pay-if-paid: contracts must state that the subcontractor understands and agrees that Contractor's receipt of payment from Owner for Subcontractor's labor, materials or equipment is an express and absolute condition precedent to Contractor's obligation to pay Subcontractor.
- Simplified: The contractor does not have to pay for the Subcontractor's work unless and until the Contractor is paid by the Owner for the same.
- Pay-when-paid: contracts must state that the Subcontractor understand and agrees that Subcontractor will be paid within a specified number of days after Contractor is paid by the Owner for Subcontractor's labor, materials or equipment regardless of when Subcontractor performs the same."
- Simplified: The subcontractor will be paid by the Contractor within a reasonable time from invoice.
- Considerations as a Subcontractor:
- Carefully and clearly define your scope of work and your governing contract documents
- Identify and include all pricing assumptions in subcontract
- Avoid pay-if-paid clauses wherever possible
- Obtain the upstream contract and understand what is included
To wrap up the presentation, The Fedeli Group's Director Scott Liptak discussed the surety industry and the state it's currently in.
- Surety industry is growing and profitable
- Bonds are easy to obtain but it's important that you work with a qualified professional bonding agent
- Construction reform in Ohio has effected the growth of the surety industry – many large projects within Cuyahoga County have NOT been bonded because of these changes.
All-in-all, aside from the key points made above, one of the biggest messages sent home was this: as a contractor or a subcontractor, make sure that you've secured your team of CPAs, lawyers and bonding agents and they all work well together. Having them all on the same page and understanding what each other is doing will only be a benefit to your business.
