All Forum Posts by: Aaron McGinnis

You will need a building permit plus a permit for each trade. 

The building permit will require full architectural plans if you are moving any walls and a site plan if you are doing an addition. 

Have a licensed company test for abestos and lead prior to buying. If it turns up hot, get an estimate for abatement. Pretty straightforward.

Being tech savvy has very little to do with using Quickbooks correctly. I know Quickbooks experts who are otherwise techno troglodytes. 

I come from a tech background (CS/BA in college with an accounting focus; long time nerd), and I still royally screwed up the QB setup when I did it myself. I ended up paying tens of thousands to a proper CPA a few years later to go back and fix years of bad entry. 

Getting QB set up properly and having someone at least show you how to run it isn't ultimately that big of an expense, but doing it wrong could be very expensive.

From the contractor's perspective, someone asking to pay behind work is a huge problem and red flag. 

1) You're turning the contractor into a lender

2) Liens are a bad way to get paid if things go wrong

3) No matter who you are or how big your war chest is, pay-behind-work is going to limit how much work you can take on at any given time.

We require a 5% deposit when we execute a construction contract, and generally 30-35% when the permit gets issued. The next draw is at foundation inspection, then mechanical rough inspections.

When we deal with reputable lenders (IE: A large or at least regional non-HML, non-private money lender), I typically see 10% down stroke at contract execution and then draws against completed work... so, surprise surprise, we look at doing 10 draws through the course of the project. (Working construction to perm loans through some place like Fidelity, Regions, Wells Fargo, etc.)

When we deal with HMLs or private money, I require my draw schedule to be adhered to. The terms of the draw between the investor and the lender are between the investor and the lender, and I'm not interested in what they are. The investor can get reimbursed by the bank however they want to work it out between themselves.

(I don't have a very bright view of the way most HMLs do business from the perspective of the contractor)

You want a detailed scope of work, period. The more detailed the better, to a point. What I tell my customers is that my bid is a summary of a summary of a summary. I've got line items broken out very well, for example -

"Frame house per architectural plans $xx,xxx"

"Drywall interior $xx,xxx"

"Plumb in 17 new fixtures $xx,xxx"

"Portapotty for 6 months $xx,xxx"

What doesn't need to be on the scope of work is that we're using 850ea 2x4x8 studs, 10 boxes of nails, 52ea 90 degree pipe fittings, etc... that level of detail is too distracting, byzantine, and just not helpful.  

Book keeper does his thing twice a week and reconciles monthly. 

If you intend to do this more than once, I would at the very least advise getting a professional to help set up Quickbooks for you and show you how to run the program correctly. Start building a system right away so that you can hand it off to someone else a little ways down the road.

I would also advise having a book keeper do your month-end reconciliation and year-end taxes right off the bat, even if you do the day-to-day entry by yourself. It's very easy to get off track and not know it until you're hundreds of transactions down the road... then you have to pay out the nose for someone to go back and forensically audit your bad habits, fix it, and move forward from there.

At a minimum a book-keeping/accounting service should handle -

* System set-up (Quickbooks is a fine solution for most)

* Data entry/general journal log keeping

* Month-end reconciliation

* Quarterly report

* Quarterly tax filing (Payroll, etc.)

* Yearly tax returns

A full service accountant should also handle -

* Accounts payable

* Accounts receivable

* Weekly/biweekly reporting

* Project reporting

One of the biggest regrets I have is not having gotten a good book keeper earlier in my business. I'm of the opinion that doing the daily data entry is not something a business owner really needs to be doing; it's too easily outsourced as job.

Also, as the business grows doing the monthly reconciliations becomes an unbelievable burden, and doing year-end taxes is the stuff of nightmares.

Ooorrrr... How about you specify what 25%, 50%, 75%, and 100% completion means and then you don't have to worry about whether or not the work has been completed?

Stop talking to him. Change the locks and move on. You just paid a tuition payment. 

Next time use a real contractor and have a real contract.

They cannot be partners. Period. Partners must be equally yoked financially. A partner without financial heartburn isn't a partner, it's an employee with way too much controlling interest.

They cannot be straight up shareholders without a buy-in.

They can be employees. Maybe employees that get stock options as part of their compensation, but I'd caution against that.

As you gain success in life, you will find a long line of people ready to take your money, your success, or your fame without giving back or contributing. They will want to be your 'partner'... do not even consider the offer.

If someone has a skill or talent to offer, and that YOU ACTUALLY NEED, make an assessment of what it is worth to you and then offer to hire them for that amount of money. If they aren't interested, keep looking until you find someone willing to trade time for dollars.

The ONLY reason to bring in a partner is -

1) They are truly exceptional AND are willing to buy-in to the company at a similar financial level to your own AND they do something you can't do on your own.

2) There is no #2.