Blog Archives

Time Management

Peter Drucker was arguably the most well-known management expert of the 20th century.  The entire first section of his book, The Effective Executive, is devoted to how the executive must manage his time in order to be effective.  It’s a must-read for anyone who wants to get the most from their business.

Time Management is more than just managing our time; it is managing ourselves in relation to time.  It’s the art of arranging, organizing, scheduling, and budgeting one’s time for the purpose of generating more effective work and productivity.  And it is most essential for the person who owns his or her own business.

As with any system (including software), it comes with a price.  That price is the time you must spend first learning and then maintaining the system.  As Steve Pavlina says, “The essence of time management is the following:
1. Decide what to do;
2. Do it.
The general mindset of time management is far more important than any system. And the mindset of time management is simply that you value your time.”

Drucker agrees.  He advocates stripping away or delegating tasks which are not essential to the process of managing, and reserving a large chunk of undisturbed time regularly for pure thinking and research.  He claims it’s essential that the effective manager or executive divorce themselves from the practice of spending most of their time dealing with crises and putting out fires. Read more »

How to Make Money in Construction

It’s no secret that you have to know your trade (or if you’re a general contractor, all of the trades) to be successful.  No need to state the obvious or dwell on it.
But these days, there are essential ingredients for success in construction:

Communication

You have to communicate with:
-    Your customers
-    Your vendors
-    Your employees
-    Other contractors

If you’re not constantly communicating the right information to all of the above, your business will slow down when it needs to keep growing.  It sounds like a lot, and it is, but if you choose the right time of day to call, e-mail, IM, etc., to the right person, the chances you will be successful at asking the right question or getting the right answer increase.
Obviously, other contractors and most of your vendors (including subcontractors) are available earlier in the day.  Your employees are available at known times.  And the customers can be called a little later unless you know otherwise.
It’s easy to overlook the necessary communication with your employees.  But you can learn a lot about your customers and vendors from them if you ask.

Organization

Maybe the hardest thing for contractors to learn is good organization.  It’s not necessary when you’re coming up as someone else’s employee.  Make the time to get organized and stay organized.  It will improve all parts of your business if you know where everything is and how to reach it.  Appointments and finances are key to this area.

Consistency

One of the things you value most in an employee is consistency.  And it works in every direction.  Between you and your customers, between you and your vendors and between you and your employees.  It may seem like a burden or a chore to “be predictable”, but the hidden rewards are there.  When people know they can reasonably count on you to pick up the phone, answer an e-mail, show up on time to an appointment, be in the office for a period of time every weekday, they are more tuned in to your needs. Read more »

Journal Entries

Entering Fixed Assets as Journal Entries

When entering fixed assets using the 1-3 screen, the correct accounts should be used for debits and credits.  Typically, the accounts might be something like this:

Account Debit Credit
18010 – Ford Truck (Purchase Price) 20,000.00
28010 – Ford Truck Loan (principal only) 18,000.00
10000 – Checking (down payment) 2,000.00
_________ _________
Totals 20,000.00 20,000.00

The important things are:  1) Debits = Credits;  2) there is an asset account which declares the actual asset value of the vehicle (purchase price) and a long-term liability account which declares the principal loan amount.

When a monthly payment is made again the loan, it would typically look like this:

Account Debit Credit
28010 –  Ford Truck Loan Payment 200.00
68010 –  Loan Interest 34.77
10000 –  Checking (actual check amount) 234.77
_______ _______
Totals 234.77
234.77

This can be accomplished in the 1-1 screen by displaying the two debits in the grid.  Or if you want to run it through A/P and pay an invoice, display the two debits in the grid of the A/P invoice screen.

When the asset is depreciated, your CPA should give you a journal entry to accomplish that.

There other possible scenarios, such as when the interest and principal change every month.  To implement that, you would need a schedule from the lending institution showing the principal and interest monthly over the life of the loan.  This summary above covers the basic idea.

Entering Payroll Records as Journal Entries

When entering payroll records using the 1-3 screen, the correct accounts should be used for debits and credits.  Typically, the accounts might be something like this:

Account Debit Credit
64000 – Overhead Labor (or Direct or Admin) 1,000.00
64010 – Overhead Payroll Taxes 110.00
64060 – Workers Comp. 100.00
23000 – Federal Payroll Tax Liability 165.00
23010 – State Payroll Tax Liability 55.00
23020 – Workers Comp. Liability 100.00
10000 – Checking (Net Pay) 890.00
________ ________
Totals 1,210.00 1,210.00

The important things are that:  1) Debits = Credits;  2) all accounts for which payroll tax liabilities are Credit accounts (in the Current Liability range), not asset accounts.

If a payroll advance is added, it’s a credit to Checking and a debit to the Payroll Advance account (an asset account in the Current Assets range).

Other entries might include deductions for health insurance (reduces Net Pay and credit a separate liability account in the Current Liabilities range), an employer-paid benefit (debits an expense account and credits a separate liability account in the Current Liabilities range) or a reimbursement (debits an expense account and increases Net Pay).

There are many other possible debits, credits and deductions or additions to Net Pay, but this summary covers the basic idea.

Paying Liabilities

Liabilities are created in various ways.  Your company might take out a loan, use a revolving credit line or overdraft protection, buy an item based on credit (such as a computer using Dell Credit), accrue a payroll liability to be paid in a deposit to the Federal or state government, or use a credit card to buy something.

Liabilities do not include using a debit card (which is like writing a check), or transferring funds between asset accounts (such as a transfer from a checking account to a savings account, transferring between checking accounts, or a transfer from a checking account to petty cash).  I will cover those topics later below.

Making a payment against a liability account is almost always the same procedure.  Using a check writing screen, such as 1-1 or 4-3, or making a journal entry in 1-3, the payment is a credit to a checking account and a debit to the liability account you are paying against.

If the payment was a deposit of Federal Payroll taxes, the ledger side of the entry would look like this:

Account Debit Credit
23000 – Federal Payroll Tax Payable 2,500.00
10000 – Checking 2,500.00

If it was to pay a credit card, it would look like that also:

Account Debit Credit
24050 – Bank of America Visa 2,500.00
10000 – Checking 2,500.00

The same would apply for a line of credit payment (whether you initiated it or it was an automatic deduction by the bank), a payment against a loan or other credit account.

Transfer of Funds Between Accounts

Because of the way Master Builder’s bank reconciliation works, it is best to use a clearing account as an intermediate step between two accounts when transferring funds.  If you were transferring $10,000 from Savings to Checking, the transactions would look like this.

Account Debit Credit
10500 – Cash Clearing Account 10,000.00
10300 – Savings 10,000.00

Then (Step 2),

Account Debit Credit
10000 – Checking 10,000.00
10500 – Cash Clearing Account 10,000.00

The reason for this is that if you transfer directly from one cash account to another, the transaction only appears on one Bank Reconciliation.  If you use the above method, you can use the Bank Reconciliation screen 1-5 in Master Builder normally for each cash account.

A Word About Debit Cards

Although a debit card might look like a credit card, we know it’s like using cash.  The best way to think about a debit card it that it’s like writing a check each time you use it.  It credits the checking account, and usually debits an expense account.  If you purchased lumber at Home Depot with a debit card, the transaction would look like the one below.  You can use screen 1-1 or 1-3 to produce the transaction.

Account Debit Credit
50001 – Materials 2,500.00
10000 – Checking 2,500.00

See my article Debits and Credits Made Easy.

Please contact us if you would like to learn more about instituting a comprehensive training process.  Thank you.

Time Management Matrix

Time Management Matrix from Stephen Covey’s book “First Things First”

Urgent Not Urgent
I(MANAGE)

  • Crisis
  • Medical emergencies
  • Pressing problems
  • Deadline-driven projects
  • Last-minute preparations for scheduled activities
II(FOCUS)

  • Preparation/planning
  • Prevention
  • Values clarification
  • Exercise
  • Relationship-building
  • True recreation/relaxation
Quadrant of Necessity Quadrant of Quality &
Personal Leadership
III

(AVOID)

  • Interruptions, some calls
  • Some mail & reports
  • Some meetings
  • Many “pressing” matters
  • Many popular activities
IV

(AVOID)

  • Trivia, busywork
  • Junk mail
  • Some phone messages/email
  • Time wasters
  • Escape activities
Quadrant of Deception Quadrant of Waste

See my article on Time Management.

Please contact me if you would like to learn more about instituting a comprehensive training process.  Thank you.

Bookkeeping 01 – Understanding Debits and Credits

For years, I’ve been working with people in accounting and bookkeeping jobs who are really, really good at what they do.  But when they have to deal with Debits and Credits, they seize up and go blank.  Although these people are highly knowledgeable about their business (or the business at which they work), the basic backbone of accounting has remained a mystery to them.

And it was a mystery to me also.  When I started working with accounting software, I interviewed for a job in tech support.  My pitch was, “I don’t know anything, but I want to learn”.  A very kindly person hired me, and it became clear within a week that I really didn’t know anything.  This was highly embarrassing.

So I resolved to at least learn accounting, and the software knowledge would have to come through osmosis.  I spent long hours every night reading accounting texts, downloading accounting tutorials and studying them, asking questions in forums, but I still couldn’t understand the basis of accounting:  what are Debits and Credit?  How do they work?  Why?

All of the books, tutorials and forums seemed to use a lot of words to not explain what I needed to know.  So I decided to experiment. Read more »

Relaxed Concentration

For several years, I played golf.  Although I didn’t put a lot of time into it every week, I managed to string together more than a hundred consecutive weeks of weekend play a couple of times.  During the last few years, people have mentioned how much they would like to learn the game, or that they “ought to” learn it.  When I’ve said that I’ve played before, and for quite some time, some of them have asked “what’s the key?”.

Given that I want to be helpful, I’ve thought about how to answer that question.  Maybe I’ve come up with an answer.  Although I can’t help anyone to be motivated to start playing or stick with it, and I’m certainly not qualified to give golf lessons, I did learn from a friend that there is mindset which is helpful in terms of success.  And in golf, if you don’t succeed in the first year, you usually quit.

During this time I played, the group of guys I went out with didn’t change much week-to-week, but over the years, various characters rotated in and out.  Vance was a 6 foot, blond, wiry dude, who could have been a surfer, or maybe a waiter at a country club.  He had a casual, confident air, and a really nice set of clubs.  His white and brown saddle shoes were always clean (at the beginning of the round).

Vance also liked to drink several beers during the 4 hours or so we were out.  His shoes got dirtier and his playing got sloppier as play progressed.  His attitude became dependent on how well he played.  His breezy, smiling façade might fade into a surly red-faced whine by the 11th hole, or if things were going well for him, he might adopt a manic, superior demeanor which he would wear like a cheap tie.

Paulie was the opposite.  He was short, dark and not a dresser.  His hair stuck out of his cap at all angles when he showed up, and he seemed intense most of the time until we started play.  He would usually get to the course early with his second-hand clubs, and proceed to spend a half hour practicing his putting and chipping.

But by the first tee drive, Paulie had his game face on.  And he kept it on for 18 holes.  His face was totally relaxed, even when he hit a third shot into sand or water.  His stance was relaxed, and he wouldn’t hear anyone or anything from when he selected a club, through addressing the ball, until his follow through was finished on any given shot.  I thought Paulie was a pretty boring guy when I met him, but over time, I appreciated his attitude, and his game.

Paulie’s play was super-consistent.  Every round was within 3-4 strokes of the last one.  Vance, some of the other guys, and I would be all over the place.  We would have good days and bad.  But Paulie just slowly improved, almost imperceptibly, over many months.  After playing with Paulie for awhile, I asked him how he managed to stay focused.

He said his grandfather taught him the basics of golf.  And his grandfather died when Paulie was 16.  But the most important thing he said (more than once) was that golf is a game of “relaxed concentration”.  You have to relax, and you have to concentrate.  You can practice your swing, your stance, your posture, and you can sight the land like an eagle, but if you don’t have both a relaxed and concentrated mind together, it wouldn’t matter.

This is hard.  It involves practice.  Meditation may help, or maybe not.  Practicing relaxed concentration while practicing golf means doing exactly that, and that only.  And that’s why Paulie came early every week.  He was practicing his mental game while performing the physical tasks.

Isn’t this what we want in life?  Relaxed concentration?  I don’t mean all the time, but in the avenues we pursue which matter.  A lot of people have this almost automatically while watching a movie, or driving, cooking, working in a garden.  It seems easiest when there is no pressure as a matter of course.  But given a job, or a sport, or some kind of assignment, most of us become a whole lot less relaxed.  And I don’t know about you, but focus and concentration don’t come as easy to me when I’m “working”.  There are a million distractions and “things I’d rather be doing”.

It seems that the best way to achieve relaxed concentration is to consciously practice it, rather than the techniques of the task.  Of course, you have to learn the techniques, and practice them, but also practicing the mental portion seems to yield the best results.  It sure worked for Paulie.  And when I started to understand what he was talking about, I started to try to do that also.

During that time, I was too self-conscious to show up at the course a half hour early and practice my short game while also practicing my mental game.  So I would go to a driving range nearby beforehand and do that.  And when someone wanted to ride together, I would try to get to the driving range the day before.  Any practice is better than no practice was the theory.

A year after I started doing this, I wasn’t conscious of much change.  But one afternoon, Vance rolled up to the 14th tee and caught me over on the side.  He asked me what had happened.  My game had improved so much in the last few months, I was playing better than him consistently.  He was half in the bag, but that probably allowed him to level with me without feeling bad about his play.

Paulie hadn’t been able to make it for the last month.  His wife was having her first baby, and he was needed elsewhere.  I’d seen him leaving the driving range as I was pulling in one night a couple weeks before, so I knew he was still practicing.

I was tempted to just blow off Vance with some jive about taking lessons and working on my game.  But I had to pass along the wisdom Paulie had passed along to me.  “Relaxed concentration”, I said to Vance, and I described to him my version of how it had worked for me.

Sure enough, Vance busted up laughing and minimized what I had patiently explained to him.  It didn’t bother me in the least, because my game had grown and improved to the point that I was having more fun and getting more satisfaction out of it than I ever had.  I just shrugged and grinned, and hit a perfect 250 yard tee shot to the sweetest spot on the dogleg left.  Vance just stared and muttered.  And I said “let me know when you want to talk about it”.

After five or six years of weekly golfing, my life changed also.  I wasn’t able to make it out more than twice a month, then once a month, then not at all.  The foursome rotated as always, and I didn’t see or talk to anyone in it for a long time.

Vance had been a rising star at a brokerage firm.  He parlayed the weekly golfing into golfing with the partners, and the last I heard when I was straggling in once a month near the end of my golfing career, he was headed for seven figures a year.

Paulie owned his own machine shop and had one employee.  His wife did the books, and eventually they had three kids.  They ran at breakeven for years, in and out of debt, but always making it.  I remember stopping by the shop only once, and watching Paulie, bent over a lathe, oblivious to the rest of the world, with just a hint of a smile on his face.

Probably ten years later, I ran into Steve, one of the foursome back when I was a regular.  We talked about old times and people.  It turned out that Vance had dome incredibly well, but had taken the firm way out on a limb with derivatives.  In 2009, he crashed the firm.  But Paulie had employed some sixth sense or whatever, and had branched out into plastic extrusion.  He hadn’t had any qualms about meeting with a company from Taiwan, which had subcontracted work back to his shop.  The Taiwanese company was a subcontractor to a major supplier for Apple.  Paulie was making millions of tiny frames for the interior of iPods and iPhones.  His shop now occupied half a city block.

Leaving the store, I was laughing.  These days, I bust out laughing anytime, anyplace, when a thought comes up.  I feel real relaxed around hundreds of people, or no people.  Doing whatever I’m doing seems easy, compared to how it was 15 years ago.  Your results may vary, but relaxed concentration is working for me.

Over the years, I’ve tried many disciplines in order to achieve what I learned from Paulie.  I’m sure many people have benefited from these other disciplines, but they didn’t work nearly as well as what Paulie taught me on the golf course.  Concentrating and relaxing at the same time isn’t easy, and it requires a lot of practice.  As I said above, remembering to laugh for no particular reason helps a lot.  Maybe this will help, and maybe you can adapt it to work for you.  Enjoy!

Year-end Close Preparation

NOTE:  The following Payroll and 1099 procedure is subject to experience gained in the first year of actually performing it.

You do not have to be running the latest version of Sage Master Builder Version in order to close, but you must be running it in order to receive Tax Updates for 2011. If you are running a version prior to MB15, much of the Payroll and 1099 details below do not apply.  You can perform the close the “old” way.  Please see below in the section titled “W-2s” for a summary of the W-2 process, which involves registering with a third party software vendor in order to produce W-2s. The information about Aatrix forms below may not be complete.  I’ve asked for clarification more than once, and I’m not convinced that Sage Tech Support really understands the details.  This also applies to 1099 forms.

Close Payroll (after your last payroll entry of the calendar year):

Mid-December: If you are going to print W-2s, you must print them on “4-part perforated paper”; please see section “W-2s” below.  You can also elect to e-File through Aatrix for a fee.  You will have to ask Sage or Aatrix how much the fee is, or it may become visible during the process.

Sage’s official statement in writing is “The forms needed to print W-2s have changed from 2-up to 4-up. This means you will need to order new 4-up forms.”.  What this means is each W-2 or 1099 will print the same employee or vendor’s W-2 or 1099 four times on one sheet of paper.  Then you tear the perforated paper into 4 copies for distribution.  You can order forms from Sage, or per Sage Tech Support, you can print to blank “4-part perforated paper”.  If you have any questions beyond this, please contact Sage Tech Support at 800-866-8049.  I have inquired about this process in detail, and there are still questions.

For 1099 Forms, Aatrix will also handle the processing.  They will print on “4-part perforated paper”, which you can get from your paper vendor.  Please read the section “W-2s” below.
In screen 4-4, make sure all Vendors have a 1099 status which is not “0 – Undetermined”. Corporations should be set to “5 – No 1099″.

I’ve written a custom 1099 report to display in screen 4-1-5 as Report 15-Vendor 1099 Report.  It works in MB Version 15 and 16, and it may work in earlier versions.  Use it to determine which Vendors you still need to get a Federal ID# from.  E-mail me to inquire about it.

You will generate a 1099 form for each vendor which is not incorporated, which rendered services or received rent and which received over $600 during the calendar year. MB will correctly generate 1099 forms as long as your settings are correct.

It is HIGHLY recommended that you perform a trial run before you print W-2s and 1099s, to see what is really involved.  It is not that difficult, but it is different from what you are used to.

W-2 and 1099s:

Sage will provide year-end support for version 15 in 2010, but you can only receive Tax Updates for 2011 for Version 16.  The process for W-2s and 1099’s has changed.  Pull out a W-2 from last year for reference for an employee with the most calculations displaying on it that you have.  They can be printed from MB on pre-printed forms from Sage, or on plain paper (see below), but will be done through the Aatrix software that became a part of the MB program with version 15.  You can do a “Test Drive” during the following process.  In order to be able to process either 1099’s or W-2s, you will need to:

Register with Aatrix:
Go to menu 5-4-1, Options, Aatrix software registration.  Enroll in e-File (by setting up a company username and password).  Write down what they are and store them in a secure place.
Go to menu 5-4-1, select W-2s, then select the year 2010 (a reminder pops us here as well).  Elect to e-file thru Aatrix (which may actually cost less) OR purchase 4 part blank forms to do them yourself.   The process/wizard includes various setup questions about the company as well as verifying employee & vendor data before being able to print.

It is HIGHLY recommended that you perform a trial run before you print W-2s and 1099s, to see what is really involved.  It is not that difficult, but it is different from what you are used to.

During the verification process, ALL payroll calculations will be listed as a separate column and will need to be reviewed and identified if in fact that information is to be included on the W-2s.  For example, California SDI is shown as being associated with box 14, Gross Wages as box 1, etc.  Items that do not need to be included on the W-2 do not need to be linked to a box number (such as union deductions, most child support deductions, etc).

If you print the forms, you must print them on “4-part perforated paper”.  That means you do not have to buy W-2 forms, you can buy 4-part plain paper which is perforated in the same place W-2s are and which prints 4 copies per employee on each page.  Sage Tech Support assured me it’s common (and less expensive than buying W-2 forms).  In any case, you may want to ask Staples or Office Depot about this so you can be prepared.  Evidently Aatrix will print the entire W-2 form on plain paper.

Sage’s official statement in writing is “The forms needed to print W-2s have changed from 2-up to 4-up. This means you will need to order new 4-up forms.”.  What this means is each W-2 or 1099 will print the same employee or vendor’s W-2 or 1099 four times on one sheet of paper.  Then you tear the perforated paper into 4 copies for distribution.  You can order forms from Sage, or per Sage Tech Support, you can print to blank “4-part perforated paper”.  If you have any questions beyond this, please contact Sage Tech Support at 800-866-8049.  I have called them 3 times about this, and the information I received may not be complete and detailed.

Because of my experience with Master Builder, I have never had to issue a disclaimer until now.  However, if anything goes wrong with the printing of W-2s or 1099s, please contact Sage Tech Support for guidance.  I have called them 3 times and received information which in my opinion is not detailed or specific enough.  Basically, Sage guarantees that if you buy the forms from Sage, the W-2s and 1099s will print correctly.  Although it is stated that you can print the forms to blank “4-part perforated paper”, evidently there is no guarantee.  For example, when I asked about how one would be assured that the forms printed on blank paper would work with window envelopes correctly, the answer I got was basically that Sage doesn’t deal with the envelope question.  Sorry I have to say this, but I cannot accept any responsibility or liability for anything having to do with printing or transmitting of W-2s or 1099s.  I’ll be happy to help with a solution, but it’s outside the scope of year-end close at this point.

Close Fiscal Year as of 12/31:

Late December or Early January (before the closing procedure and before you pay any Vendors in the New Year):

Make sure all checks, deposits and billings are entered, posted and accounted for – do not enter any more transactions.

If you have any entries on the Bank Reconciliation for any account (screen 1-5) preceded by the letter “P”, the entry is from a prior year.  It should be dealt with before closing the books.  SMB used to clear the item, then delete it.  This may no longer be the case.  But if you deal with these items, it will help you understand what may still be outstanding.

If you need to create a payroll before closing the fiscal year, and the date falls in the New Year, you can perform all the usual steps through printing the checks.  Do not post the checks. This is why SMB has a separate payroll posting option.  Post the checks after you close the fiscal year.

If you wish to remove Closed jobs from the new year, set the Job Status in Jobs (3-5) to Closed.  Job information will still be in your prior year company.

You can enter AP Invoices and CPA Journal Entries for the prior year after you perform the fiscal close.  Do not enter AR Invoices, Deposits or Checks of any type for the prior year after the fiscal close.

Please contact us if you would like to learn more about instituting a comprehensive training process.  Thank you.

Master Builder Featured Reports

List of Custom Reports featured on this site:

Estimating/Bidding

These 5 Proposals print directly from the Takeoff in screen 9-5:

Proposal by Phase with Notes

Proposal by Phase and Cost Code with Notes

Proposal by Cost Code with Notes

Proposal by Bid Item with Notes

Proposal by Bid Item and Cost Code with Notes

Job Reports

Gross Profit Long Form

There are dozens more reports available, please see Contact page.

If a report cannot be written in Master Builder’s Report Writer, it definitely can be written using Crystal Reports. For any reports you would like written using Crystal Reports, please contact Dolente Consulting, and mention that you were referred from this site.

Mission Development

Welcome to Mission Development.  For software and financial consulting services, including Sage Master Builder and QuickBooks by Intuit, please click the Consulting section above.

Your success is the reward for your hard work.  The satisfaction and happiness you feel from creating a business, making it grow, working through the challenges and realizing a profitable business is beyond measure.

The timing is perfect for business growth.  The worst of the recession is behind us, so it’s time to get in gear.  Mission Development helps you to analyze your current financial situation, both strengths and weaknesses.  Together, we make a plan, and follow through with it.  It’s hard work.  There are no magic wands.

Luck is when preparation and opportunity meet.  We influence our own luck by being ready for opportunity.  There are no mysteries about financial success.  Let’s get to work.