Contractor accountant in Saskatoon

A season the weather decides

Foundations, framing and roofing work in Saskatoon bunches into the months when the ground is workable, while overhead runs all year. That shape catches contractors on instalments: pay a flat amount based on last year and you overpay through a slow winter, or come up short after a busy summer. Instalments are set against the real pattern and revisited as the business grows.

The same season drives cash. Materials and labour go out months before the final draw comes in, which is why a line of credit sized for the peak matters more than the year’s total profit.

Growth around Martensville and Warman has kept residential builders busy in the bedroom communities north of the city, while commercial and industrial work follows the resource cycle. A contractor doing both sees two different cash patterns in one set of books, and job costing is how they are kept apart.

Subcontractors and T5018 slips

A business whose principal activity is construction reports payments to subcontractors for construction services on T5018 information returns, due six months after the end of the reporting period. The slips are simple once the ledger codes every sub payment properly; they are painful when that coding is reconstructed in a rush. Each slip needs the sub’s business number or social insurance number, so it is collected before the first cheque, not chased in the spring. The T5018 form page sets out what is reported.

The harder question is whether each sub is really a subcontractor. That turns on control of the work, who supplies tools, the chance of profit or loss and whether they could send someone else, not on how the invoice is addressed. A framer working only for you, on your schedule, with your tools, is the classic exposure. See subcontractor versus employee.

Progress billing and when GST becomes payable

On a job billed in stages, GST on each progress draw generally becomes payable when the draw is invoiced or paid, whichever comes first, not when the job is finished. A contractor who remits GST only on completed jobs is remitting late on every draw in between.

Holdbacks work differently: the GST on an amount held back is generally not payable until the holdback is paid or falls due. The ledger needs to separate the two so the GST return matches the contract, and so the year-end reflects what was earned rather than just what was banked. Construction holdbacks covers the accounting side.

PST on materials and on the contract

In Saskatchewan a contractor is often the consumer of the materials it installs into real property, which means paying PST on them rather than charging it. Some construction services are also subject to PST, and whether a contract is taxable can depend on the kind of property and the kind of work. The rules are general here and specific in practice. A renovation for a homeowner, a commercial fit-out and repair work on equipment can each land differently.

Getting it right means setting up the PST registration and the job-costing together, so materials, labour and subcontracted work are recorded in a way that shows which tax applies. The rate is on the Saskatchewan tax facts page.

WCB Saskatchewan and your subs

Construction employers register with WCB Saskatchewan and pay premiums by industry rate code on assessable payroll. A contractor who hires a sub without coverage can end up responsible for the premiums on that work, so a current clearance is checked before paying and kept with the invoice. Coverage for owners and directors of the corporation is a separate question from coverage for employees, and worth confirming rather than assuming.

The payroll figures reported to WCB and the wages in the ledger should agree. When they do not, it is usually because subcontractors who look like employees have been left out of one and included in the other, and that is exactly the comparison an auditor makes.

What lenders and bonding companies ask to see

Equipment finance, a surety bond on a public job and a general contractor’s vendor check all ask for financial statements. For most owner-managed builders the right form is a compilation engagement: statements with a report and a note on the basis of accounting. It is not an audit, and it says so. Where a lender specifically needs assurance, that is a different engagement, and we will tell you before you submit the wrong thing.

The request always comes with a deadline, and statements are quick to prepare when the books have been current all year. A bonding company will also look at working capital and at how much of the year’s profit stayed in the company, so decisions about owner pay feed straight into bonding capacity. Equipment and trucks sit on those statements at cost less CCA; see compilation engagements.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return and year-end financial statements
• Progress draws and holdbacks reviewed at the cut-off
• T5018 subcontractor information returns
• GST and Saskatchewan PST set up to match your contracts
• Payroll and WCB Saskatchewan reporting
• Equipment and vehicle CCA schedules

A trades corporation taking bookkeeping, payroll and a year-end T2 with statements usually lands between $450 and $650 a month. See what it costs.

Builders working on mine sites should also read mining services accounting in Saskatoon; the monthly side is bookkeeping in Saskatoon.

Remote contractor accounting from Abbotsford

Contractor accounting for Saskatoon clients is delivered remotely from 32615 South Fraser Way in Abbotsford. There is no Saskatoon office and no local team. Meetings are virtual, documents are signed electronically, and you deal with the CPA directly. Sub invoices, progress billings and equipment costs are tracked as they happen rather than rebuilt at year-end.