Tips for Outside Accountants and Auditors of Sage 100 Contractor Clients

I get calls from clients asking for assistance with entering Adjusting Entries provided by their outside accountants and auditors, only to find out that the entries are written without consideration of the functionality of Sage 100 Contractor. I sometimes find that outside accountants don’t understand how the program works and what effect certain built-in controls have on the accounting processes of the company. In an effort to help clients with communicate their accountants, I suggest the following tips be provided to your accountants:

• Understand what General Ledger (“GL”) accounts serve as control accounts and have specific requirements. Control accounts are specified in menu 1-8 General Ledger Setup. Most control accounts have specific requirements:
• Accounts Receivable entries require that a job be specified and, where appropriate, specific invoice numbers.
• Service Receivable entries require that a client be specified and, where appropriate, specific invoice numbers.
• Accounts Payable entries require that a vendor be specified and, where appropriate, specific invoice numbers.
• Journal transactions cannot be posted directly as such to receivable and payable control accounts but such entries can be made by entering debit and credit memos to these accounts.
• Sage 100 Contractor vigorously enforces job costing in specific ranges of accounts. Any entry to GL accounts in the WIP Assets or Direct Expenses ranges of accounts must have a job, cost code and cost type! If you are going to propose an adjusting entry to accounts in these ranges, expect to provide a job number, cost code and cost type. Don’t suggest that the client create a junk job number just for adjusting entries. It just trashes up important reports like the bonding report. If you have an entry that can’t be attributed to a specific job, post it to a GL account in the Overhead or Administrative ranges of accounts.
• Sage 100 Contractor vigorously enforces equipment costing in specific ranges of accounts. Any entry to GL accounts in the Equipment/Shop Expense range of accounts must have a specific equipment number, cost code and cost type! If you are going to propose an adjusting entry to accounts in this range, expect to provide an equipment number, cost code and cost type. Don’t suggest that the client create a junk equipment number just for adjusting entries. It just trashes up the equipment database and encourages clients to subvert the enforced equipment costing. If you have an entry that can’t be attributed to a specific equipment number, post it to a GL account in the Overhead or Administrative ranges of accounts.
• Control accounts for the Equipment Management system are specified in menu 1-8 General Ledger Setup. Single GL accounts for Equipment Cost, Equipment Accumulated Depreciation, and Equipment Loans are defined there, and any postings to these GL accounts require subaccounts that correspond to Equipment defined in menu 8-3 Equipment. If you propose an adjusting entry to one of these control accounts, be prepared to identify what equipment number should specified.
• Be aware of defined departments and subaccounts when proposing adjusting entries. If a GL Account is set up for Subaccounts or Departments, please provide that information for your entries. Subaccounts and Departments are important control and information points, and are required for any entry to GL Accounts that are defined for such.
• When adjusting journal entries are provided to the client, help them by identifying which entries are merely reclassifying entries (for presentation purposes only) and do not need to be posted to the client’s books, and which entries are accruals that should be reversed in the next fiscal year.
• When adjusting journal entries are provided to the client, it helps to also provide a copy of your working trial balance as well. This can help resolve questions about the entries, and provides a means of confirming that the client’s books are in agreement with published financial statements and tax returns.

This list is not exhaustive, but it can go a long way to improving the service you receive from your outside accountants and auditors.

If your outside accountants and auditors have questions that you cannot answer satisfactorily, consider having them contact Mathieson Consulting, your friendly Sage Certified Consultant!

Current Version Information!

The latest and greatest version of Sage 100 Contractor is version 19.5.27.  This version was announced in the middle of December 2014 with the caveat that it should not be installed before the payroll of 2014 (based on check date) is processed and posted to the general ledger and the 2014 Payroll Year is closed. This version includes the latest Federal and State withholding tax tables for 2015 and enhancements for helping employers collect and report employee benefit information to comply with the Affordable Care Act.

A New Year Resolution

The Times Square ball has dropped, the 2014 calendar has been replaced with a 2015 version, and it is traditionally time to resolve to do things better in the New Year.  With that in mind, consider adopting the following New Year Resolution:

I resolve to help all of my Sage 100 Contractor users customize their program workspaces so that they can work more efficiently and effectively with the program. I will learn how to:

• Change what Activity Centers (the tabs across the top of the desktop) are shown and available to a user for their daily work tasks.
•  Modify what menu items show on an Activity Center and how those menu items are arranged on the screen, whether there are lines corresponding to work flows between the menu items, and whether there are boxes drawn around like menu items.  This is all intended to make it possible to arrange the desktop in a manner that is most helpful to a specific user and his or her role in the organization.
• Place links to specific reports on the activity center workspaces that are most likely to be useful to a user during their typical workday.  Report links can be integrated into the work flow diagrams or grouped to suit the user’s needs.
• Place links to other programs (like Excel, Word, Outlook, DataLink Viewer, or whatever one might need) on the Activity Center workspace so that the user doesn’t have to get out of Sage 100 Contractor to use other tools that are important to their work and role in the organization.
• Teach users how to hide unneeded columns in work grids throughout the program so that they aren’t burdened by viewing and entering through columns that don’t apply to the way the user should work.

Helping users use Sage 100 Contractor more efficiently will help the organization achieve its goals in the New Year.

If you are unsure how to take advantage of these features, give your Sage 100 Contractor Certified Consultant a call for assistance.

Critical Version Information!

All users should plan on updating their Sage 100 Contractor program version to Version 19. Sage has advised that they will not support Versions 18 and earlier. Specifically, the Aatrix Tax Filing capabilities will not produce documents (think W-2s and 1099s) suitable for filing with Versions 18 and earlier. The program will likely produce documents, but they will be printed with a DRAFT watermark that makes them unsuitable for filing.

Version 19.5 will be available for download to users with current support contracts in mid-December.  This version will contain the latest Federal and State Income Tax Withholding Tables for 2015 and will include capabilities to assist with compliance with the Affordable Care Act.  DO NOT install this update until after you have completed all your 2014 payroll entries and closed your payroll year.

Year End Closing

Last month, I wrote about things that users can do to prepare for year end, particularly for preparation of W-2s and 1099s. There is still time to continue with your preparations, but now I want to talk about what users should do at the end of December.  With the functionalities added in Version 19, the tasks that must be done at the end of December are significantly fewer than were required in earlier versions of the program. 

The only thing a user must do at the end of December in Version 19 is close the payroll year. Payroll must be closed only after the last payroll record for 2014 is entered, computed, printed and posted and before any payroll record for 2015 is entered in menu 5-2-2.  Payroll data entered in 5-5-1 Daily Payroll or 6-11-6 Daily Field Reports or 11-2 Service Work Orders/Invoices/Credits will survive the Close Payroll Year process and be available for 2015 Payroll processing, but any entries in 5-2-2 Payroll Records will be removed during the Close Payroll Year process.

Follow the Year-End Checklists document found in the Product Documentation area of the drop-down menu of the Home and Resources Activity Center. I strongly encourage users to read through the document and then follow the check list in the order specified.  And above all else, BACK UP your data folder before you start!

Be aware that the Maximum Wages subject to FICA (Social Security) Tax in 2015 is $118,500, up from $117,000 in 2014. While the Version 19.5 update will update the Federal and State Income Tax Withholding tables, users are expected to update their FICA, FUTA, and State Unemployment payroll calculations and push the updated data to all employees.

Other than making sure your data is shipshape, there is little that needs to be done at the end of December for 1099s or your fiscal year end closing.  The 1099s should be processed and printed or E-Filed during January 2015, and your fiscal year end data should not be archived until all entries are made and finalized for 2014 and your balances tied back to published financial statements and tax returns.

Version Information

The current version of Sage 100 Contractor is still version 19.4.58, but in the past few days Sage has advised that it will only support version 19.5 (which won’t be available until mid-December) for the impending Year End. The 19.5 update will contain the 2015 Tax Tables.  Thus, be on the lookout for the version 19.5 in December and be ready to install it so that withholdings for 2015 Federal and State Income Taxes will be correctly calculated.

Time to Start Preparing for Year End!

It may not yet be Thanksgiving, but it’s not too early to start preparing for W-2s and 1099s that must be filed in January 2015.

Vendor Payments and 1099s

Most construction businesses will be required to report payments for services totaling more than $600 per year to recipients that are not specifically exempted from such reporting.  Exempted recipients include corporations (other than professional services corporations like doctors and lawyers), governmental agencies, non-profits, banks, and insurance carriers.  Individuals, sole proprietorships, partnerships, and limited liability companies are not exempt from 1099 reporting. Payments for merchandise (but not parts installed as part of a service provided), certain expense reimbursements to employees, and loan principal repayments do not need to be reported on a 1099.

There are a number of steps that you can take to ease your 1099 processing before the end of the year.

• Request a form W-9 from all vendors paid this year to ensure that you have proper names, addresses and Taxpayer ID numbers for vendors. The form also will provide the information needed to determine if a vendor is an entity exempt from 1099 reporting.  The current W-9 form can be downloaded from http://www.irs.gov/pub/irs-pdf/fw9.pdf.
• Review all vendors to ensure that they reflect the correct 1099 Type and if they are designated to receive a 1099 with types 1-Misc, 2-Rent, 3-Sole Proprietor, or 4-Interest, make sure you have the correct Name, Address and Taxpayer ID#. If a vendor is type 5-No 1099, it can’t hurt to have a valid Taxpayer ID#, but you are generally not required to collect one.
• There is no excuse for having a vendor with a 1099 Type of 0-Undetermined unless you have never paid the vendor!
• Review report 4-1-1-61 Vendor 1099 report to find problems or missing data.
• If you have questions about what payments are included in the 1099 balances, run report 4-1-5-61 Vendor 1099 Payments to see the details.
• If your Sage 100 Contractor information is incomplete for the calendar year (for instance you implemented during the year, you may need to adjust your data for payments made outside of Sage 100 Contractor.  Contact your friendly Sage Certified Consultant for more information about this special situation.

I strongly recommend that users not order 1099 forms or plan on in-house printing and mailing of 1099s to recipients and government agencies.  This tends to be more expensive than using the embedded Aatrix E-File service. Yes, there is a cost per recipient, but when one factors in the cost of acquiring the forms and envelopes, printing the forms, stuffing envelopes, affixing postage, and mailing the forms, the benefits of using the Aatrix E-File service become obvious.

Payroll and W-2s

If you prepare your payroll in house and will have to distribute W-2s to the governments and your employees, there are a few steps you can do to ease the process before the end of the year.

• Review all 5-2-1 Employee records for accuracy of employee names, social security numbers and addresses. 
• Be aware of any employees that may have received third party sick pay from a workers compensation insurer or a disability insurance provider and ensure that all reported third party sick pay data has been properly recorded in your payroll records.
• Run 5-3-7 Payroll Audit regularly and ensure that all audit errors are corrected.
• Review with your outside tax accountant whether any items of additional compensation must be added to employees’ total compensation, such as the cost of “excess” employee life insurance, the value of personal use of company owned vehicles, certain benefits provided to company owners, etc.  Such additional compensation can be properly reflected in your payroll records, but care should be taken to quantify the amounts and record them properly.

I strongly recommend that users not order W-2 forms or plan on printing and mailing W-2s to employees and government agencies.  This tends to be more expensive than using the embedded Aatrix E-File service. Yes, there is a cost per employee, but when one factors in the cost of acquiring the forms and envelopes, printing the forms, stuffing envelopes, affixing postage, and mailing the forms, the benefits of using the Aatrix E-File service become obvious.