You don’t need to use the Master Builder Estimating module in order get a large amount of value from Master Builder.  What’s necessary is a Budget, which is the job estimate, summarized by Cost Codes and Cost Types.  You can use any estimating method to create the estimate:  yellow pad, Excel, or a third party estimating program.  But if a budget for the job is not entered and followed when creating job costs, at least half of the value of Master Builder is lost.

Having said that, the rest of this article will focus on Master Builder’s Estimating module.

If you do use the Estimating module, you can save a large amount of data entry time for each job on an overall basis.  This is because the Estimating module (in Master Builder ” Takeoffs”) allows you to export Budgets, Proposals, Purchase Orders, Subcontracts, Change Orders, Requests for Proposals and Service Work Orders.  It also allows you to export templates of parts of the estimate or the whole estimate to a holding file, then import the file contents back into a blank screen.  This feature of being able to re-use previous work with minor changes will, in the long run save you potentially hundreds of hours of work.

Other features include:
1) using Formulas to create dependent entries by declaring variables and applying simple math formulas;
2) declaring Global Variables to be able to use declared variables throughout the job estimate;
3) entering Scheduling Tasks which work together with the job Schedule to produce an automated project Scheduled Cash Flow Report;
4) entering insurance, use tax and binding costs independently based on declared increments;
5) marking up the estimate for bidding by a global percentage or declaring a bid amount independently of the estimate.

There are at least a dozen more useful and interesting features relating to item/part databases. Read more »

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:

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:

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:

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:

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

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.

Then (Step 2),

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.

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.

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.