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Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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Amended Tax Return and IRS Resolution

I was initially worried about picking someone off the internet but your testimonials sold me so I would more than happy to assist and hopefully the next person will be at ease choosing to utilize your services. I am pleased to write you to let you know I received a response from the IRS in response to the schedule C you assisted with filing. They responded saying the information supplied was sufficient and they have closed discrepancy. I spoke with the IRS and they said no tax is due. I asked even though I did make a $400 profit and they said again no tax liability is showing that the case was closed. I just wanted to thank you again for your assistance with this issue.

Jason Stoltz

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Wilmington NC Accountant and CPA comments on Construction Bonds

An accountant in Wilmington NC discusses construction bonds

Lots of financial discipline and expense go into that first Bond!

As a construction accountant, my experience is that bonding comes up a bit late in the game, once a potential job is basically forfeited because of it.

“Because it takes a lot of preparation to obtain that first Bond, even if you are bondable.”
Gary Bode, CPA
Construction Accountant, Wilmington NC

I’ve worked as a controller for a residential builder, and as a staff accountant for a specialty contractor. Here in wonderful Wilmington NC, we see contractors fade away as cash flow and other problems thin the pack. But the contractors who prosper usually have to break through the Bond barrier. Because of the increased profitability and more plentiful jobs that lay beyond it.

The Expense

The surety company’s requirements are sometimes seen as arbitrary and intrusive, with accounting related hurdles. Percentage of Completion basis financial statements are usually required, at least at some dollar amount of bond. Which is not the way most contractors keep their books.  And, this is not the down and dirty POC construction accounting required for your license. It has to be true Percentage of Completion Financial Statements that can pass a Review by an independent accountant.

Converting Completed Contract accounting to Percentage of Completion financial statements isn’t really that difficult, especially if good job costing records are kept. After all, it’s the same pie, just split differently. So that’s not the main expense.  The main monetary cost of bonding, worse even than the bond fee, is having the Percentage of Completion accounting reviewed, or even audited, by an independent accountant.

The Discipline

The main issue preparing for bonding is the discipline to retain Working Capital over time. This is rough in any business, much less contracting where cash flow is everything. Balancing today’s needs against expanded future profitability, via bonded jobs, is a good trick, especially in a recession.

The Reason

So, if Completed Contract accounting is good enough for tax preparation, why are Percentage of Completion basis financial statements required for bonding?  Because the surety company is interested in your Balance Sheet as an indication of ongoing financial viability. Which is essentially what they’re insuring. This is different than dealing with the NC Board for your license, which only concerns working capital, at a specific point in time.  While smaller bonds may use your financial data for just last year, larger bonds require strong Financial Statements for a period of years.  It takes time.

We’re a Wilmington NC CPA firm with extensive construction accounting experience.  Including Completed Contract and Percentage of Completion basis tax preparation.  If you need a free consult on this or any accounting issue, please call us at (910) 399-2705.

Of course, we have clients in multiple States and in other parts of NC.  Through phone calls, E Mails, faxes, Skype and web portals, client proximity is less an issue.  So we may be able to offer you services despite the fact you’re not in the greater Wilmington NC area. 

2 comments to Wilmington NC Accountant and CPA comments on Construction Bonds

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