Tag Archives: Construction

Ready to Start a New Business in Washington State? Know these 10 things

The start of a new year always lends itself to dreaming – of new heights to achieve personally, new places to travel, new financial goals to set, and so much more. No matter how 2018 went for you, 2019 is a completely new canvas, and you have an opportunity to paint your brightest and boldest colors.

So why not start up that business you’ve always dreamt of? If you’ve been dreaming of leaving your day job and diving into something new, perhaps 2019 is the year to take the plunge!

After many years of hard work gaining experience and knowledge it should be easy to start, shouldn’t it?  Not really…starting a new business is exciting, but the path is also fraught with many details – small and large – that can seem tedious at best and overwhelming at worst.

If you decide to move forward, you could be on your way to making your dreams become a reality, creating the life you want and doing the things you love. But where to start? Below we’ve provided a 10 critical steps and knowledge points to help you get going.

Note that this list is specifically focused on Seattle-area Construction companies, but in many industries and locales there are likely some equivalent actions you will need to take, no matter the type of business you are starting. Now is the time to turn that dreaming into action!!!

Choose a Business Structure – Sole Proprietor, Partnership, Corporation, or LLC? There are specific tax implications for each option. We suggest meeting with a CPA who can walk you through the pros and cons of each to help you decide which option is best for you.

Apply for an Employer Identification Number (EIN) with the IRS – This number will allow you to open bank accounts for the business, apply for state business licenses, pay employer taxes, and file tax returns.

Register your Business with the Secretary of State – This is necessary if your new business will be a partnership, corporation, or llc.

Apply for a Washington State Business License – This will allow you to conduct business in the state. This application is where you will specify if you plan on hiring employees. If so, once you file this application, the two entities that handle unemployment insurance (Employment Security Department) and workers compensation (WA L&I) will be notified automatically and you will be assigned account numbers from each entity. Also, if you know you will be doing business in specific cities, you have the option to add city license endorsements while filing this application. Not all cities offer their licenses through this service, so check beforehand to see if your city has a separate application.

Purchase Bond & Liability Insurance – WA L&I requires contractors to have a surety bond for either $12,000 (General Contractor) or $6,000 (Specialty Contractor). Liability insurance coverage can be a $50,000 property damage policy and $200,000 public liability policy OR a $250,000 combined single limit policy. You can find more information here.

Complete Contractor Registration – This allows you to work as a licensed contractor in the state. Take your completed registration application and proof of your bond & insurance to any L&I office to have it notarized and processed.

Apply for City Licenses & Permits– Many cities in WA require you have a city license to conduct business there. Access WA is a helpful site that links to each city’s web page directly.

City of Seattle – Seattle has specific labor laws that are different than the state laws. If you will have employees working in Seattle, here is where you can find information on their requirements.

Apply for Reseller Permit –  This allows you to purchase materials purchased for direct resale without paying sales tax.

B&O and Sales Tax – Understanding the requirements specific to your industry is critical to be sure you are charging your customers the correct sales tax rates. DOR has provided a guide for contractors to understand their requirements.

No More Feeling Out of Control (Part 2): What Kind of Accounting Help Do You Need?

Many businesses come to the realization that they need a Bookkeeper to keep their books in order on a weekly, monthly, or quarterly basis. And in many cases, a traditional bookkeeping service may be exactly what is needed. But did you realize that an accounting service could provide so much more than just maintenance of your day-to-day finances?

In Part 1 of this series, we discuss when you, as a small business owner, need to seek outside accounting help. But that only gets you part of the way. What considerations are important when selecting a bookkeeping service.

First, let’s take a brief look at the first two questions posed in the previous post and discuss how the answers could illuminate what kind of help you need.

  • Are your goalposts visible? This question relates to the strategic pillar of your business. If the answer is “No, I’m just trying to survive day to day,” then you likely need more than just basic bookkeeping help; you may need help defining your vision and aligning your tactics to that vision.
  • Do you feel out of control? This relates to your day-to-day, or operational, reality. If the answer is “yes”, or you don’t feel like you are spending time on the ‘right’ things in order to make your business successful, then you may need more than a traditional bookkeeper; someone who can 1) determine the root causes and suggest fixes, and 2) manage the day-to-day reality of your business, and 3) continually ensure that you are aligned to the vision that you’ve set (see the previous question).

If your goals are clear, you are tracking successfully towards them, and you are spending your time on the right things, then a ‘basic’ bookkeeping service may be exactly what you need (see options 1 and 2 below). Otherwise, you may lean towards something more comprehensive (see option 3 defined below).

What are Your Options?

Option 1 – Basic Support from Any Quality Bookkeeping Service

Opting for basic support from any qualified bookkeeping service is certainly a step in the right direction. Any good bookkeeper will be able to keep your books in order, manage payroll, and keep track of miscellaneous items such as quarterly tax preparation. This will be the cheapest of the three, but you’ll also receive the least value.

The downside of obtaining help from ‘any qualified bookkeeper’ is that every industry is unique and different. Being able to speak the language of your particular industry (or other niche) is an important, and often critical, component of being able to provide great service. In general, many people fail to understand the variance from industry to industry in accounting by assuming that ‘accounting is accounting’.

While getting help from any qualified bookkeeper is better than no help at all, we caution you against bookkeeping companies that take any and all clients that come their way. No one bookkeeping company can do it all, and going with a firm that takes every type of client likely means you’ll miss out on some personalized service that you could get with an expert.

Option 2 – Basic Support from an Expert

The ‘expert’ part is the critical element that differentiates options 1 and 2. An expert will know the right questions to ask the CPA. An expert will understand your business and should be able to point out any pitfalls with your current process or data.

Think of it this way – would you hire someone internally to your team that didn’t understand your business? Although they are not an internal employee, you need to apply the same standards to any outside resource that you would to an internal employee.

At Joy Accounting, we focus primarily on construction, trade-related industries, real estate, and other similar industries. Time and time again our clients have seen how much value we add because we understand our industries.

Take construction as an example. We know the construction apps that sync with QuickBooks Online, we understand the monthly cadence of a general contractor, and we understand the types of reporting needed to show how successful a construction business is.

The specifics of what is considered ‘basic’ support certainly will vary, but as a general concept it’s anything that doesn’t touch on the strategic elements of your business. A bookkeeper that performs the basics simply ensures that the books are balanced and the other assigned tasks within scope are completed. Of course, good bookkeeping companies will be able to flag issues and concerns, but they won’t necessarily impact, guide, or help track any of the strategic elements of your business.

Finding a true expert on your business (option 2) will likely be more expensive than finding a general bookkeeping service (option 1), as you are paying more for expertise. But in the long run, finding and hiring an expert will pay for that difference many times over.

Option 3 – From Strategy to Execution: The Entire Package

In our experience at Joy Accounting, we’ve seen that most small businesses need more than the basics; they need a partner who understands the company’s ‘True North’ and can help guide it in the right direction. They need a partner on the strategic level who can also help execute the strategy.

Mid-sized and large companies have the benefit of having access to all levels of accounting, all the way from account receivable/payable to Controller-level and all the way up to CFO-level analysis focused on improvement across all financial markers. It’s typically assumed that these strategic services are out of reach for smaller companies because they simply don’t have the luxury of spending that kind of money.

For any small company to be successful, the people, processes, and technology all need to be working like a well-oiled machine. There is much less room for error than typically exists in a larger company. At the end of the day, then, small companies typically have to compete with fewer tools and skills at their disposal, at least as far as accounting goes.

But why can’t the small company get access to the same skills that the larger companies get? Asking this question is how we are oriented at Joy Accounting. We believe that the small guy absolutely should have the same tools as the bigger guys.

If what you need is simply a bookkeeper, we are happy to help. If you are a small business within our area of specialty that truly needs a partner in your small business journey, please contact us!