By David Nour

In the July/August 2014 issue of Construction Today, Alan Dorich wrote, “If there is any area in U.S. construction where there is room for improvement, it’s our infrastructure.” He was talking about roads and bridges, but there is a deeper message here: There may be room for improvement in your strategic relationship infrastructure.

That infrastructure is precisely what you need to stay relevant to your best clients, suppliers, and employees. Aging roads and bridges need to be maintained. Likewise, your strategic relationships need regular maintenance. On-ramps allow new strategic relationships to form. Are you making time to get to know new people? Your current contacts won’t stay current if you don’t communicate regularly. Are you building bridges by offering relevant information or connections? This will lead to pivotal contacts, people well-situated to make introductions that help you achieve you goals.

Your past contacts include people for whom you are simply no longer relevant. Can you be of mutual benefit today? If not, it’s time to build an off-ramp and let them go — politely, of course. To maintain a relevant competitive advantage, prioritize maintaining the “rural roads” at the far edges of your strategic relationship network. These are your infrastructure for sensing inflection points occurring far from your home market.

The North American construction industry needs to be aware of innovations and market trends around the world. How does your organization gather intelligence? Relationships are the single most important off-balance sheet any company owns. It is up to you to make time to maintain your relationship capital. Are you creating a culture and expectation within your organization that others will maintain your relationship infrastructure as well?

Consider holding a discussion in your next senior leaders meeting about relationship development. It’s not hard for anyone who’s read financial statements to grasp the fundamental economic insight that you cannot invest or leverage capital until you have accumulated it through deposits. Hopefully the U.S. Congress and the Obama administration will find the will to improve the U.S. transportation infrastructure, leading to new contracts for the construction industry. In the meantime, will you find the will to stay relevant to your clients, suppliers, and employees, by improving your strategic relationship infrastructure?

Takeaways

1. To maintain relevance, build “roads and bridges” that connect you with mutually beneficial relationships. 2. Leverage the relationships at the edge of your network for sensing trends outside your home market. 3. Create a culture in your organization in which relationships are recognized as a strategic asset.

David Nour is an enterprise growth strategist and the thought leader on Relationship Economics® —the quantifiable value of business relationships. He is the author of several books including the best selling Relationship Economics— Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger) and Return on Impact—Leadership Strategies for the age of Connected Relationships (ASAE). Learn more at www.NourGroup.com. David may be reached at dnour@nourgroup.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.        

 

By David Nour

“The No. 1 reason why contractors do not get jobs is because they neglect to follow up and ask for the order,” wrote Rich Fineman in “Selling Your Company”. Why do so many in the construction industry miss that crucial step? I believe it is because so many people lack confidence in themselves. Before you can convince anyone else that you can improve their condition, you have to believe it yourself. Fundamentally, the first sale is to yourself.

To close more construction bids, we need to shift from selling (which most of us hate, which is why we so often neglect to follow up and ask for the order) to helping our prospects buy. It’s much easier to feel confident asking for the sale if you believe that you can be a trusted advisor to the potential buyer. That means you must prioritize selflessness over self-interest. Help your potential buyer consider all options and choose the one that offers the most promise, even if it isn’t yours.

To do that, you need to understand the customer’s journey. The purchase process begins with needs recognition, triggered by a stimulus. In the construction trades that might be anything from a town’s tired retail district to a developer’s plans for a new office complex. A buyer seeks out information, evaluates alternatives, makes a purchase decision and then experiences either satisfaction or dissatisfaction. As a trusted advisor with specialized industry expertise, you are ideally positioned to help the buyer on this journey.

It’s not hard to make a follow-up call when you believe that your primary job is to improve your customer’s condition, without regard for whether your firm gets the thumbs-up or not. In my executive coaching, within the construction industry as well as in other fields, I’m seeing too many issues with low self-worth, and its hobbling otherwise effective, intelligent people. Do you genuinely believe that you can improve your prospective customers’ condition? then you’ve made that first sale — to yourself. Now you’re ready to take a trusted advisor stance and make follow-up calls, confident in your capabilities but ready to sacrifice any one sale in order to win a bigger asset — a mutually beneficial relationship you can nurture into future opportunities.

Takeaways 1. To close more construction bids, paradoxically, you must your potential buyer consider all options and choose the best fit, even if it isn’t yours. 2. Offering your insights as a trusted advisor with specialized industry expertise, who understands their customer journey. 3. The real goal of follow-up is a mutually beneficial relationship leading to future opportunities, not one sale.

David Nour is an enterprise growth strategist and the thought leader on Relationship Economics® — the quantifiable value of business relationships. He is the author of several books including the best selling Relationship Economics — Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger) and Return on Impact — Leadership Strategies for the age of Connected Relationships (ASAE). Learn more at www.NourGroup.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.    

 

By Jennifer Friedman

Annual report season is here and deadlines are just around the corner. For corporations formed in Delaware, annual reports needed to be filed by March 1, and many other states have filing deadlines in April-June.  Are you prepared to file your annual report? Most states require incorporated businesses and limited liability companies (LLCs) to file an annual report. It is imperative to file correctly and on time in order to maintain good standing and avoid fees or more severe repercussions.

Annual Report Requirements

The key elements of an annual report are:

  • The business entity’s legal name;
  • The principal office address;
  • The registered agent’s name and address; and
  • The names and business addresses of the officers, directors and managers

Tips For Filing Annual Reports

  • Track the filing deadlines for all of your active corporations / LLCs.
  • Deadlines vary depending on which state you are filing with so it is imperative to track the dates and renewal periods.
  • Prepare the annual reports.
  • Since the specifics vary from state to state, it is important to pay attention to required information for each of the reports.
  • File the completed documents with the state.

Each state has its own annual report guidelines so you must check the specifics with the state you in which you incorporated your company. If you own a construction business that operates in several states, you will have to file a separate report in the formation state and each state where the company has qualified to do business as a foreign company. If you are overwhelmed with the thought of running your company and handling detail-sensitive documents such as an annual report, consider a professional registered agent who may be able to assist you in preparing your annual report the right way.

Consequences of Not Submitting a Proper Annual Report

To facilitate on-time filing, states take disciplinary action on the companies that do not file correctly or by the deadline. Businesses that file after the deadline must pay a late fee, in addition to the original annual report fee. Failure to file an annual report altogether can result in the Secretary of State dissolving your company or a revocation of the business entity in the state records. If this were to transpire, your company would have to cease all construction work, losing out on bids and business. And, you may become personal liable for business debts and judgments incurred during this time.

While it is usually possible to be reinstated, this is not a certainty and can occur only after you submit your annual report would your business be reinstated. Annual reports may seem like a hassle but they serve the important purpose of keeping your company on record with the necessary government agencies. By filing early and well ahead of the deadline, you are setting your construction business up for a prosperous year with less worry and more opportunities.

Jennifer Friedman is the CMO of the small business segment of CT, a Wolters Kluwer Company, which provides legal compliance solutions to small businesses. In this role, Jennifer directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships, and enhancing the customer experience.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

 

By Alexander Ruggie

Marketing is critical in any business, but especially so in the construction trade where it’s still possible to be a blue collar entrepreneur competing against the likes of massive McMansion builders and cookie-cutter tract housing projects. Construction professionals in smaller to mid-sized companies, or even one-man operations using effective SEO marketing strategies can still compete with the bigger players or even dominate niche markets that aren’t cost effective for larger companies to target.

For those just starting out in the trade, there is the usual hurdle of battling all others in the area for the same jobs, but reaching that audience is easier than ever. The days of placing a photo ad in the yellow pages and naming your company “AAA Contracting” to get prime placement in the front of the alphabetically oriented construction section are long gone, and while that may scare some more traditional operations, it should be seen as a boon to those with any computer skills at all.

Even two-finger typists can still create and execute an effective social media campaign, Outbrain or Taboola ad that places them right in front of their potential customers. Individuals or companies who desire to reach their audience with more resonance and authority would do well to hire an SEO marketing firm to reach out to their demographic for them. This allows the same differentiation of labor that a foreman would use on a job site to get the most out of his crew.

In the same vein that you wouldn’t have a roofer take on plumbing jobs, the office administrative assistant shouldn’t be tapped for the company’s marketing efforts. To accomplish the greatest number of priorities in the shortest amount of time with the least expense, it is crucial to hire these services out to the professionals trained to do them. Search engine optimization (SEO) sounds like a heady term, but in reality it is just a descriptor for the act of adjusting a websites parameters, structure and content to better place it in the market.

Successful SEO campaigns can elevate an individual or company’s website from obscurity in the past-page-one netherworld of Google to prime placement right next to other major players in the business. Localizing SEO strategies can also do wonders for smaller construction outfits by increasing their presence in smaller communities. This may seem like a backwards strategy to some, but in reality being the top search result in many various low population areas may yield more jobs than being a sidelined player in bigger communities where a company may not even get the opportunity to bid on a project due to lack of exposure.

Many more traditional companies may view simply having a website in general as the extent of their needs in the online world, but as consumers go deeper and deeper into the digital realm for all of their needs it is becoming equally imperative for businesses to work in concert with this approach. Additionally, many websites built before the onset of the smart phone revolution may be doing more harm than good when consumers search for those services with their phones.

If sites aren’t optimized for mobile devices they end up lagging in loading times and many other problems that instantly turn consumers off. Making it easy for a potential customer to access the information about your company is absolutely critical to compete in the mobile marketplace. All indicators point to a steady increase in searches done with smart phones and when a potential customer reaches a company site that isn’t optimized for their device it almost becomes self-inflicted negative advertising for that company with consumers who have come to expect information instantaneously, and it may even taint your image with this audience en masse.

A construction business, like all others, requires marketing to be successful, and while it may be initially challenging to position a company online, the cost of not doing so is far greater.

Alexander Ruggie is the public relations director for 911 Restoration, a home restoration company that specializes in disaster recovery and water damage solutions.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

 

By Art Valentz

These days, green construction is rapidly becoming the new normal. By 2012, an estimated 48 percent of US commercial projects had already incorporated green building practices. That percentage continues to rise as existing projects prove the financial, environmental, and social advantages of going green.

Why Roofs Matter in Green Construction

Roof design is critical to optimizing building performance. Not only does the roof cover the entire building footprint, but direct radiation to space results in approximately 15 percent more heat loss through the roof than through other parts of the building envelope. Roofing can also affect water quality and conservation, albedo effect and heat island mitigation, and urban aesthetics. There are many sustainable roofing options on the market today, each with their pros and cons. Here are a few:

  • Living roofs – Literally green, living roofs utilize live plants as roofing material. Proponents of living roofs cite many benefits, including energy savings, creating a wildlife habitat, improved water and air quality, noise and fire protection and even reduction of EMF radiation. However, they can be quite expensive to install and must be properly engineered for structural rooftop pipe and equipment stability and water management.
  • Cool roofs – A “cool” roof is any roof that has high solar reflectance. Cool roofing materials range from light-colored metal roofs to coatings sprayed onto a new or existing roof. Cool roofs can reduce roof temperatures by up to 60°F on hot summer days compared to conventional roofing materials. This can significantly reduce cooling costs and even reduce the urban “heat island” effect in the building’s proximity. Many cool roofing options are quite affordable. Most are compatible with standard rooftop support systems, and, like living roofs, they can help a project earn LEED points for solar reflectance. Cool roofing technologies provide the greatest payback in hot, sunny climates in the south and southeast part of the country.
  • Solar roofing – While solar panels are still the most popular solar option, advances in thin film solar technology are making integrated solar roofing a viable option for certain applications. Solar-integrated shingles and other thin roofing materials offer built-in electricity generation without the bulky appearance of panels. These systems can be pricey, however, and require full sun for optimal payback. Shade from phone wires and rooftop protrusions such as HVAC equipment can seriously impair performance, so be sure to analyze the site thoroughly before investing.
  • Metal roofs – Metal roofs last for decades and can easily be recycled when their work is done. They are also ideal for integration with rainwater collection and solar panels, and can be manufactured as cool roofs, too. However, the upfront cost can be high, and they can be noisy during rainfall. Keep in mind, too, that metal has a high coefficient of expansion. Care must be taken to allow for this during installation of the roof and rooftop equipment.

In addition to their environmental and financial benefits, these roofing systems can help buildings meet standards for LEED and other popular green building certifications, as well as meet tightened federal energy efficiency standards for new construction. No matter what your next project, be sure to find a green roofing material to fit the bill!

Art Valentz is the founder and CEO of PHP Systems/Design. With over 24 years of experience in rooftop support systems, he is well known for his industry leading research, design, testing, and engineering practices. When he is not on the rooftop, Art enjoys supporting the Wounded Warriors Project and fishing with his family.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

By Tom Leach

As March 15 quickly approaches, tax filing obligations and end-of-year financial decisions are top of mind for contractors. They’ve likely heard about the IRS’ new repair regulation rules for capitalizing or expensing property since these rules have serious financial implications for the construction industry due to the large amount of repairs.

To expense, or not to expense?

In maximizing the potential tax benefits of the new rules moving forward, contractors need to understand a few key points. One of the primary provisions of the new rules focuses on the safe harbor to eliminate the grey area around whether the IRS will agree with a business owner’s treatment of expensing or capitalizing certain equipment purchases. The IRS has set two separate “de minimis” thresholds. If a policy on capitalization aligns with whichever threshold applies, the IRS won’t challenge the decision to expense or capitalize. For businesses that have one of the following, they can use the threshold of $5,000 per unit of property (if none applies, the threshold totals $500):

  • Financial statement filed with the SEC
  • Financial statements audited by a CPA
  • Financial statement – other than a tax return – required by a federal or state agency

Contractors can also determine their capitalization policy annually under the new regulations. This means their policy might state that they will expense all equipment purchases under $5,000 in the current year, but in the following year they could set the bar at $2,500. This flexibility seems like good news overall, but contractors must exercise caution. To qualify for this safe harbor treatment, they must treat items the same way on their books as they do on their tax return.

Don’t ignore the financial statements 

While most contractors view the latest regulations as a way to possibly reduce their tax burden, many fail to see the potentially negative impact on their financial statements. For example, let’s say a business owner sets a policy at $5,000. Then, the owner decides to replace 1,500 items (computers, tools, parts, etc.) that cost around $3,500 each. On one hand, the owner can write off $5.2 million of equipment in one year. But on the other hand, that owner just reduced the net income for the year by $5.2 million that he or she otherwise would have likely written off over at least a five year period. This could result in numerous negative repercussions, including:

  • Contractors could unintentionally violate their loan covenants, such as the debt-to-equity ratio, debt service coverage, etc.
  • Auditors may not give a ‘clean opinion’ on the contractor’s financial statements.
  • Changing the policy annually could create consistency concerns and negatively affect an auditor’s opinion. In addition, loan covenants may require an unmodified/clean opinion.
  • Stakeholders may not understand why the operations results for the year don’t align with expectations.
  • Contractors face a potential long-term reduction of the sales value of the business due to the reduced equity and equipment investment on the balance sheet.

Bottom line, it’s easy to get blindsided by focusing solely on the tax planning opportunities associated with these new regulations, but it’s critical that contractors consider the effect on the financial statements. If they don’t, they’ll run into numerous unexpected – and often unpleasant – surprises.

Tom Leach, CPA, is the partner-in-charge of Sikich LLP’s Decatur, Ill., office and has more than 29 years of experience serving clients in a variety of industries. He has worked with both commercial and local governmental audit clients and has also supervised audits of large State of Illinois agencies. Contact him at tleach@sikich.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

   

 

By Kristin Jones and Michael Schwartz

The latest enforcement trend in disadvantaged business enterprise (DBE) fraud focuses on suppliers.  Federal and state investigations are increasingly looking at pass-through arrangements where a DBE supplier performs no commercially useful function and only lends its name to the transaction so that DBE credits can be obtained. These cases should raise concerns not only for the contractors that benefit from DBE credits and the DBEs who act as pass-throughs, but also for legitimate non-DBE suppliers, which may be subject to criminal or civil liability for participating in such arrangements.

In a typical pass-through arrangement, a non-DBE supplier negotiates a subcontract for materials with a contractor bidding for a government job.  After the contractor wins the job, it informs the supplier that a DBE needs to be used on the project.  A “certified” DBE supplier is located and executes the subcontract, purchasing the materials from the non-DBE supplier, which are then delivered directly to the job site.  The contractor pays the DBE supplier, which then remits payment to the non-DBE supplier after subtracting its own percentage fee. 

The DBE supplier’s role is confined to acting as a middleman, passing invoices between the legitimate non-DBE supplier and the contractor. Recent federal criminal cases in the Northern District of Illinois and the Southern District of New York charged sham DBE suppliers for their roles in pass-through arrangements.  Although neither case ultimately indicted the non-DBE suppliers, both cases investigated them as potential co-conspirators, and other similar investigations are ongoing at the federal, state and local level in other jurisdictions. Legitimate non-DBE suppliers may also be implicated in federal civil cases brought under the False Claims Act or in state and local fraud actions, which are increasingly focusing on suppliers.

So what should a supplier do if asked to use a DBE supplier on a project? 

First, suppliers should understand the rules governing DBE programs.  A fundamental rule of every DBE program is that the DBE must perform a “commercially useful function.” According to Department of Transportation regulations, a commercially useful function means that the DBE “is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved.” It is not enough for the DBE to participate in a transaction in name only. To make sure a transaction complies with the applicable rules, suppliers should conduct some basic due diligence. 

Ask the contractor or the DBE what commercially useful function the DBE will be performing and if the transaction complies with DBE regulations. If they cannot provide satisfactory answers, the supplier should not participate.  Suppliers should also keep in mind that they may still be found liable even if they claim to be ignorant of the fraud or the DBE supplier is “certified” as a DBE by a government agency. By conducting simple due diligence and strengthening internal DBE compliance programs, legitimate suppliers will be able to better protect themselves in this heightened enforcement environment. For more information on these issues, read a full analysis at Pepper Hamilton.

Kristin H. Jones is a partner in the white collar litigation and investigations practice group of Pepper Hamilton LLP, resident in the Philadelphia office. Ms. Jones specializes in civil and white collar criminal cases arising out of allegations of fraud, false statements and bad faith. Michael A. Schwartz is a partner and co-chair of the litigation and dispute resolution department of Pepper Hamilton LLP, resident in the Philadelphia office. He is a member of the firm’s white collar litigation and investigations and media and communications practice groups. Mr. Schwartz focuses his practice in the areas of criminal defense and counseling, internal corporate investigations, corporate compliance programs, and First Amendment matters.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

 

By Taylor VanTol 

There's no doubt about it: the Internet is an amazing place. It's where we go to keep up with world news, watch our favorite television shows and look at funny pictures of cats. We use it to interact instantly with friends and family through social media. What's more, the Internet age has brought about previously unthinkable business innovations. As a contractor, you can now conduct a large part of your work without even leaving your home, as new technology has made it possible to obtain signatures online and provide proposal forms and other documents via email. It's true that sending out proposals electronically is the faster, easier way to go. But there are some major advantages to presenting proposals in person – advantages that can't be forgone if you're looking to foster better client relationships and grow your business. Here are just a few of them:

  • Building a relationship – Reviewing the proposal with the customer in person offers a great opportunity to improve the client/contractor relationship. It's unlikely someone is going to buy from you if they don't trust you, and trust requires engagement through face-to-face conversation. This is the perfect time to establish a deeper connection with the client.
  • Clearing up confusion – You are a contractor; your client is not. It's important that you recognize you may not share the same expertise. Assuming the client isn't a home improvement professional, it's your responsibility to go through every item of the job in order to explain what you're doing and why it's necessary.
  • Adding value through detail – Any time you sit down to speak with the customer, you have the occasion to communicate the reasons why you're the best at what you do. Telling a client you're to going to prime bare wood is one thing. To tell them that you're going to prime all of their bare wood, and the wood knots, with a special oil-based primer to provide the best possible coverage adhesion for the paint…well, that's something else. Details like these demonstrate a commitment to quality that just can't be expressed in an emailed estimate.
  • Removing barriers to decision-making – How many questions and doubts are floating through the client's head when they read your quote? Sitting by their side as they go through it will give you the chance to eliminate ambiguity from the beginning. Ask how they feel about it and listen carefully to their concerns. This will ensure that they're comfortable and confident in making the decision about whether or not to hire you.
  • Asking for the job – The chances of getting a job if you aren't assertive in asking for it are slim to none. If you leave it to the customer, they'll keep kicking that decision can down the road. Use this moment to ask them outright if they're ready to move forward. With the details of the proposal fresh in their mind, they'll be more apt to give you an honest response regarding how they feel about hiring you for the job.

Taylor VanTol is an administrative assistant and blogger for CorkCRM. She covers topics related to customer service, business management and marketing. For more information, contact her at taylor@corkcrm.com.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

 

 

By Hany Elbanna

Ask any member of the construction community for two words that are must crucial to the success of a project and they are likely to give the same answer: time and money. In an industry where finishing a job ahead of schedule and under budget is crucial, it is important to keep up with current trends and cutting edge technologies. Currently, one of the construction scheduling industry’s most important new technologies is the 5 Dimensions Building Information Model (5-D BIM), a process that converts two dimensional drawings into three-dimensions. This process’ output displays a timeline that dictates when each phase of a project should be completed while also calculating updated project costs. Why is this technology so important? Simply put, it has the ability to save construction schedulers time and money. There are four main benefits:

1.)   Clash Prevention – Onsite organization and subcontractor scheduling is one of the more trying day-to-day worries. By employing a 5-D BIM, delays, potential design changes, and additional material costs due to schedule clashing can be avoided.

2.)   Workflow Management – A 5-D Building Information Model provides precise scheduling which gives project managers the opportunity to identify potential setbacks and implement appropriate supply chain and materials management.

3.)   Offsite Efficiency and Pre-Fabrication – Of all of the benefits offered by the complex 5-D BIM, perhaps the most important is the acutely accurate pre-construction visual of the finished project that will result. With this information, contractors can reduce waste, ensure accurate delivery of components, and improve on quality control by utilizing off-site fabrication of various project pieces.

4.)   Enhanced Communication – When a construction scheduler plans their project with the assistance of a 5-D BIM, the accuracy of the project’s plan and the plan itself become a singular goal that every team can clearly understand. A construction schedule that is developed by skilled specialists utilizing this technology can be a project manager, contractor, construction scheduler, or consultant’s greatest ally. In a constantly evolving industry, 5-D BIM is an important tool for construction schedulers. Its complexity and accuracy are invaluable when the saving of time and money is paramount, and adopters of this technology continue to see results.

Hany Elbanna is the president of HSE Contractors, a specialized CPM consulting firm, with multiple locations in the United States. They work on submittals for mega construction projects, time impact analysis and change orders management.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.

By Jennifer Friedman

All good things must come to an end. However, if you wish to close your construction business, it is imperative to dissolve your company properly. By taking the following steps to dissolve your business, you limit your liability for lawsuits and regulatory fees, in addition to ending your obligations to pay annual fees and business taxes. Also, many of these steps will apply if you merely wish to withdraw from one or more states while remaining in business in others.

File a Certificate of Dissolution with the State

If you are a sole proprietorship, it is relatively easy to conclude your business by simply notifying the proper government authorities such as licensing authorities, payroll or income tax departments. If you are closing an S corporation, LLC or a C corporation, shareholders or members of the company must vote to dissolve it. Only then can paperwork be filed with the state office in which the business was incorporated. If your company was operating in other states, paperwork must be filed in each of those states as well. If you are only withdrawing from a state, you may still need shareholder or member approval, depending on your bylaws or operating agreement. And, you will still need to file a Certificate of Withdrawal in each state. The requirements for filing a Certificate of Dissolution or Withdrawal vary from state to state. This can potentially be a time consuming process itself. A professional registered agent can help move this filing along more efficiently.

Notify the IRS

You must settle any outstanding tax obligations with the IRS and submit required documents to formally declare your business as closed. The IRS website has a business closing checklist to help you with this process. Most states require a similar process with regard to their taxes. An accountant or tax advisor can also assist you in preparing these documents.

Close Accounts and Distribute Remaining Assets

As a construction company owner, you likely have many business permits; upon dissolution, you must cancel all licenses. Also, remember to cancel your Employer Identification Number (EIN) with the IRS, once your final tax returns are filed. In addition, you should cancel any business bank or credit accounts to prevent issues such as business identity theft. After financial obligations have been taken care of, company owners can divide the remaining resources according to share of ownership or the terms of the operating agreement. Distributions must be reported to the IRS and, in many cases, to the states in which you have been paying taxes. By minimizing penalties that stem from improper dissolution, you can maximize your take-home allocation for your next business or personal ventures. Avoid legal complications and financial worries by talking to trusted advisors, such as a professional registered agent and accountant. Properly dissolving your company is a process that requires diligence, but if you take care to complete all the necessary steps, you will set yourself up for less stressful next chapter ahead.

Jennifer Friedman is the CMO of the small business segment of CT, a Wolters Kluwer Company, which provides legal compliance solutions to the small-business community. In this role, she directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships, and enhancing the customer experience.

Have an idea for a guest blog for Construction Today? Contact alan.dorich@phoenixmediacorp.com or jim.harris@phoenixmediacorp.com.  

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