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Get Your Bond Program Ready for 2015




With 2014 in the books, hopefully most contractors are counting all the money they made rather than licking their wounds.  In either scenario, 2015 is a fresh start with an opportunity to prepare your business for success.  One of the first calls most contractors make at year end is to their accountant.  While very important it’s just as critical to contact your bonding agent.prepared

As a contractor that does business in the public sector, bonding is the lifeblood of the business. Without it, one cannot survive. Looking at bonding from this perspective, it’s easy to see that tax planning should align with the contractor’s bonding needs and the surety company’s requirements.  Some topics of conversation should include:

  • 2015 Bonding Needs. What single and aggregate bond program does the contractor anticipate? Tough question but as part of each business owner’s goals, they should be able to have a rough idea.  A contractor’s bonding agent should be able to help.
  • Shareholder Distributions. Based on what the contractor needs, along with the particular surety company’s appetite, shareholder distributions should be discussed. It will likely have an impact on the contractor’s bond program.
  • Financial Presentation for 2014.  Depending on the size of the contractor and his bond program, financial presentation will vary.  While some surety companies will write bonds on a small scale based on internal financials or a CPA compilation, surety companies require a much more in depth CPA financial presentation for large bond programs.  These levels of CPA statements include a “Review” or “Audit” level.
  • Equipment or Other Large Capital Expenditures.  It’s cliche, but true; cash is king. While equipment is necessary (and often smart from a business and tax planning standpoint) for some companies, it should still be discussed with the contractor’s bond agent.
  • Continuity Plan.  Any potential selling of stock, changes in ownership, or developing a formal buy/sell agreement, the subject of continuity should be regularly discussed. A surety company guarantees bonds for an entity, not a person.  Having a clear plan to make sure the entity survives a change is critical to all stakeholders.

While it’s always good to be in constant communication with your bonding agent, the start of 2015 BEFORE a contractor engages his CPA, is the best time.

Call us today to start off 2015 the right way. 877-654-2327

 




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