It goes without saying that contractors should do what it takes to keep the company continuously on the upswing in terms of revenues, profit margins and bonding capacity, and to remain creditworthy, without straining existing bank lines of credit or failing to secure new ones. Solicit the help of your accountant, who should be completely familiar with the surety industry and can provide valuable insight and practical strategies to propel the contractor to the head of the surety's list of good customers. But in the end, a contractor's profitability, financial strength and track record will be the determining factors. It cannot be stressed enough, that contractors who do not possess these attributes and who have become used to being pursued by bonding companies will be in for a rude awakening as the market hardens. Now is the time for contractors to take a long look at themselves-and discern what needs to be done to boost their appeal to the surety industry.
Most contractors know the importance of proper documentation when preparing a billing requisition.
If the i's aren't dotted and the t's aren't crossed, there could be a delay of days or weeks in getting paid. This can be particularly so when trying to get payment from a governmental agency. While you may have the good fortune to have never been audited, if the IRS ever decides to examine your company's tax return, the lack of proper documentation could end up costing you thousands of dollars in taxes, interest and penalties. Many contractors award year end bonuses to shareholders. These payments may be made pursuant to an incentive compensation arrangement, or may simply be amounts agreed upon among the shareholders as a reward for a good year.