Cyber Insurance: can you afford to ignore it?

Business Tip – January 2018

If you’re in business, here are five reasons why you really do need cyber insurance

Think identity theft and cyber crime can’t happen to you? Think again. Read on for reasons cyber insurance protects you, your business and your customers.

1. Everyone has and uses a computer

Cyber insurance (also known as cyber liability insurance) was unheard of 15 years ago. Today, it’s as necessary as worker’s comp. If you lived in a flood plain would you not purchase flood insurance?

If you rely on a computer – in any way – to run your business, you need cyber insurance. Consider what would happen if your computer was hacked, and someone gained access to the private information of all of your customers, including their credit card details? Even if you do not do credit card transactions, your data is at risk.

The fallout could put any operation out of business, which is especially scary given hacking is a significant and real risk.

2. You don’t have an IT department or a risk management team

Big corporations can have whole departments dedicated to creating policies and action plans, which deal with potential risks, including cyber crime. If you’re a small or even a medium-sized business, chances are you don’t have a risk management team.

A good cyber insurance policy bridges the gap for businesses that don’t have the luxury of a risk management team. Many carriers offer preventive guidelines and services that will help reduce the chance of a cyber attack. In addition, they will be there to provide the necessary people and specialists and more importantly supply the funds should you have a breach.

3. Your general liability policy will not cover cyber crime

Most general liability policies do not include losses incurred due to the Internet. A comprehensive cyber insurance policy fills this important gap.

You might be wondering why a general liability policy doesn’t cover you for cyber-related injury. A general liability policy covers your legal liability for 3rd party property damage and personal injury. This means someone needs to be identified as responsible for the loss, and some physical damage needs to occur.

As electronic data is not considered to be “physical property”, it cannot be physically damaged. Cyber insurance offers tailored coverage for your business for 1st party and 3rd party losses, breaches to the Privacy Act and loss of profits following the insured event.

4. You may be responsible for data, even if you use a 3rd party cloud provider

If you have information stored on a cloud database, you may be surprised to know that in many cases, you are still legally responsible for how this information is handled.  Your 3rd party vendor has very little protection for you, and at the end of the day it is your responsibility to get a problem fixed and pay for the damages.

This is why it is important to read the fine print of your cloud hosting contracts. If you do find that your cloud provider is not responsible for mistakes or breaches to your data, at least you are protected.

5. It’s affordable

Securing a cyber liability policy doesn’t have to break your budget. With the right broker, such as NTCA Affiliate Member Schechner Lifson Corp., and partner insurers, you can secure affordable coverage that will provide the level of protection that is needed in today’s fast-paced world.

In fact, Schechner Lifson Corp., has been helping NTCA members for years for cyber security issues and a range of other business-related issues as well. For instance, Marci Miller of Infinity Floors recently praised the work of this company and its staff:

“I have been a member of NTCA for several years,” Miller said. “We take advantage of our annual rebates, we learn from the newsletters and TileLetter, on a few occasions we have even called and spoken with someone for technical support regarding installation.

“Recently we experienced the most valuable benefit of all. We were having a terrible issue with our workman’s comp – that is a problem that can cripple any tile contractor,” she added. “We had a broker who was completely useless and refused to help. I contacted NTCA to see if there was a comp policy or agency available to members. I was given the name of Schechner Lifson Corp. I called and was put in contact with Roseanne Gedman. We stayed with the same insurer, but had Schechner Lifson become our broker. Roseanne has worked with me and has been amazing! They are extremely professional and understand the market and the client’s needs. I highly recommend them to all NTCA
members.”

Schechner Lifson Corporation is a large regional insurance and financial company, based in New Jersey. Its mission is to provide superior insurance and financial services to customers through a diverse, highly creative and intellectual staff of over 40 associates who have the unique capacity to deliver a total insurance and investment program to customers. As both broker and agent, Schechner Lifson Corporation writes all forms of property and casualty coverage, life and group insurance, supplemental compensation plans, business continuation programs and qualified plans. For more information, contact Marc Rosenkrantz, CRM, CIC, AAI, President, Schechner Lifson Corporation, (w) 908-598-7813, (c) 973-766-3914 or email
[email protected]

Using magic words: understand Pay-If-Paid vs. Pay-When-Paid clauses in construction agreements

Business Tip – December 2017

There are countless ways for a construction project to go awry. The first claims that come to mind are those based on delays or defective workmanship, but perhaps even more common are the potential claims that arise when a general contractor does not receive payment from the owner, but remains potentially liable to its subcontractors for work performed. Like most construction disputes, the answer to the question of whether or when a general contractor is liable for payment to its subcontractors starts (and often ends) with the language of the contract.

Case study

Beal Bank Nevada v. Northshore Center THC, 64 N.E.3d. 201, 407 Ill. Dec. 823 (1st Dist. 2016) is a recent case from the Appellate Court of Illinois (First District) discussing this issue, and providing guidance to understanding payment risks in a construction agreement in the context of pay-when-paid vs. pay-if-paid clauses.

The facts of the Northshore Center are simple. Northshore Center THC, LLC (“Owner”) borrowed funds from BankFirst to develop real estate in Northbrook, Illinois. The Owner entered into an agreement with a General Contractor, FCL Investors, Inc. (“General Contractor”), to perform certain construction work at the Northbrook site. The General Contractor then entered into a subcontract with Lake County Grading Company, LLC (“Subcontractor”) to provide excavation work, sewer line installation, and other construction services. The Subcontractor performed its work and issued several invoices to the General Contractor, which the General Contractor submitted to the Owner. The Owner failed to pay the General Contractor, who in turn didn’t pay the Subcontractor.

When the parties were unable to resolve their differences, a lawsuit ensued. The main issue between the General Contractor and the Subcontractor concerned whether the subcontract required the General Contractor to pay the Subcontractor’s invoices even though it was undisputed that the Owner had not yet paid the General Contractor. The relevant portions of payment clause in the subcontract provided that:

The Contractor will make partial payments to the Subcontractor in an amount equal to 90 percent of the estimated value of work and materials incorporated in the construction and an amount equal to 90 percent of the materials delivered to and suitably and properly stored by the Subcontractor at the Project site, to the extent of Subcontractor’s interest in the amounts allowed thereon and paid to Contractor by the Owner, less the aggregate of previous payments, within five (5) days of receipt thereof from the Owner.

The trial court reviewed this payment clause and ruled that payment by the Owner was a condition precedent to the General Contractor’s obligation to pay its Subcontractor:

[T]he provisions outlined in the subcontract at issue clearly make the receipt of payment from the Owner to [the General Contractor] the condition precedent to the [Subcontractor’s] payment. The condition precedent has not been satisfied as [the General Contractor] has not received payment from Owner.

Therefore, because the Owner had not paid the General Contractor, the trial court determined that the General Contractor could not have breached the subcontract by failing to pay the Subcontractor.

The Subcontractor appealed. The Appellate Court reversed the trial court and found that the payment clause in the subcontract did not contain a condition precedent requiring the General Contractor to be first paid by Owner. Instead, the Appellate Court ruled that the payment clause in the subcontract governed only the amount and timing of payments, not the threshold obligation of the General Contractor to compensate the Subcontractor (even if the General Contractor had not been paid by the Owner).

In so holding, The Appellate Court applied the following “useful framework” for distinguishing between pay-if-paid clauses and pay-when-paid clauses in construction agreements:

A pay-when-paid clause governs the timing of a contractor’s payment obligation to the subcontractor, usually by indicating that the subcontractor will be paid within some fixed time period after the contractor itself is paid by the property owner…. In contrast, a pay-if-paid clause provides that the subcontractor will be paid only if the contractor is paid and thus ensures that each contracting party bears the risk of loss only for its own work.

Applying that framework, the Appellate Court determined that the contractual provision in the subcontract was a pay-when-paid clause, which governed only the timing of payment, and not a pay-if-paid clause, which would have governed the General Contractor’s obligation to pay. In other words, in this case, the Court concluded that there was no condition precedent to payment; the General Contractor had to pay the Subcontractor whether or not the Owner had paid.

Lessons learned 

Northshore Center is an illustrative case study on the importance of payment provisions in construction agreements being drafted so that they are particularly clear and unambiguous with respect to their pay-if-paid intentions. In our experience, many subcontract agreements in Illinois have payment provisions that do not sufficiently identify that payment by the owner is a condition precedent. As demonstrated by Northshore Center, even language as clear as “to the extent” is inadequate. Without the “magic word,” i.e. “if,” that makes it clear that the general contractor’s payment obligation to its subcontractor exists only “if” payment is made by the owner to the general contractor, the general contractor will likely bear the risk of payment even where the owner doesn’t pay the general contractor. The first and best protection against such unnecessary payment risk is a well-written contract. Pay-if-paid clauses offer greater protection to general contractors and should be a consideration on all sides during the drafting process.

A copy of Beal Bank Nevada v. Northshore Center THC, 64 N.E.3d 201, 407 Ill. Dec. 823 (1st Dist. 2016) is available here at http://bit.ly/2pDSg8w.

Contact 

If you have any questions about this HWH Legal Alert, please feel free to directly contact Daniel Dorfman at (312) 662-4609 ([email protected]). This legal alert is provided by Harris Winick Harris LLP for educational and informational purposes only and is not intended, and should not be construed, as legal advice.

Daniel Dorfman is a construction lawyer in Chicago, Illinois, with the law firm of Harris Winick Harris LLP. Daniel has a national construction practice, representing owners, developers, engineers, architects, designers, general contractors, subcontractors, specialty trades, and construction suppliers in all types of commercial construction disputes. Daniel is licensed to practice in the State of Illinois, United States District Court for the Northern District of Illinois, and the United States Court of Appeals for the Seventh Circuit. Daniel received his J.D., cum laude, from Northwestern University School of Law.

Should you convert to an S corporation?

Business Tip – November 2017

Many private business owners elect to incorporate, turning their companies into C corporations. But, at some point, you may consider converting to an S corporation. This isn’t necessarily a bad idea, but it’s important to know the ramifications involved.

Similarities and differences

S and C corporations use many of the same recordkeeping practices. Both types of entities maintain books, records and bank accounts separate from those of their owners. They also follow state rules regarding annual directors’ meetings, fees and administrative filings. And both must pay and withhold payroll taxes for working owners who are active in the business.

There are, however, a few important distinctions. First, S corporations don’t incur corporate-level tax, so they don’t report federal (and possibly state) income tax expenses on their income statements. Also, S corporations generally don’t report prepaid income taxes, income taxes payable, or deferred income tax assets and liabilities on their balance sheets.

As an S corporation owner, you’d pay tax at the personal level on your share of the corporation’s income and gains. The combined personal tax obligations of S corporation owners can be significant at higher income levels.

Dividends vs. distributions

Other financial reporting differences between a C corporation and S corporation are more subtle. For instance, when C corporations pay dividends, they’re taxed twice: They pay tax at the corporate level when the company files its annual tax return, and the individual owners pay again when dividends and liquidation proceeds are taxed at the personal level.

When S corporations pay distributions – the name for dividends paid by S corporations – the payout generally isn’t subject to personal-level tax as long as the shares have positive tax “basis.” (S corporation basis is typically a function of capital contributions, earnings and distributions.)

Risk of tax audits 

C corporations may be tempted to pay owners deductible above-market salaries to get cash out of the business and avoid the double taxation that comes with dividends. Conversely, S corporation owners may try to maximize tax-free distributions and pay owners below-market salaries to minimize payroll taxes.

The IRS is on the lookout for both scenarios. Corporations that compensate owners too much or too little may find themselves under audit. Regardless of entity type, an owner’s compensation should always be commensurate with his or her skills, experience and business involvement.

The right decision

For businesses that qualify (see sidebar), an S corporation conversion may be a wise move. But, as noted, there are rules and risks to consider. Also, as of this writing, there are tax reform proposals under consideration in Washington that could affect the impact of a conversion.

CTDA helps you succeed in your business through a variety of programs and services that include educational opportunities, webinars, and discounts on shipping, client collection services, telephone charges, auto rentals, and more. CTDA offers networking and relationship-building opportunities through participation in Total Solutions Plus all-industry conference and Coverings annual trade show. Membership in CTDA also increases your national exposure and gives you access to the annual membership survey, a valuable resource to evaluate your company in terms of profit improvement, employee compensation, distribution and company performance. The CTDA website, CTDA Educational Opportunities, Weekly Newsletters and TileDealer Blog are all free resources that will “keep you in the loop” as well. CTDA is always looking for ways to improve the benefits of membership. To learn more about membership, please contact [email protected] or 630-545-9415 visit the website at www.ctdahome.org. Like CTDA on Facebook and Twitter @Ceramic Tile Distributors Association (CTDA). 

NTCA launches new Career Center

Sponsored By:

OCTOBER 2017: BUSINESS TIP  

NTCA has added an updated, high-powered Career Center to its list of member benefi ts that allows you to bypass extraneous listings you’ll find on commercial job boards. The NCTA Career Center is tailored specifically for you. There are opportunities for both job seekers and employers. Job seekers can manage their job search, access job postings, post a resume, or join the job alert system. Employers can quickly post job openings, manage online recruiting efforts, advance resume searching, or reach targeted qualified applicants.

Job Seekers

The Career Center is designed to provide you with a better overall experience through a modern design and an intuitive interface. You will be able to access the Career Center through any device of your choice- smartphone, tablet, or desktop. Job seekers Once you create an account you can start and track your search. There’s an ability to manage resumes and set job alerts.

And the services to job seekers are free! In the Find a Job section, there is a listing of hand-picked employment opportunities culled from the web. Next to this listing is a link that enables you to upload your resume, and allow employers to find you! You can tailor your job search by state or do a nationwide search for the type of position you seek, and return 10-100 results at a time. In the Resources section, there is a collection of articles that will help you with a range of job related activities, like honing your resume, preparing for an interview and even planning a career change or using digital tools to network and gain exposure.

You can also schedule a session with a career expert who can coach you and answer your questions in one business day.

Employers

There are a number of recruitment options available for employers, starting from a single,
30-day job posting, and a number of enhanced packages. Search for resumes, keep track of candidates, post information about your company, and much more. A template tab allows you to store letters, job posting templates and templates for questions you want to ask someone considering a career with your company.

Development of this iteration of the Career Center is in direct response to NTCA member feedback. “One of the most consistent messages we have heard from our members recently is that the tile industry offers numerous career paths,” said Bart Bettiga, executive director. “From sales and installation, to training and technical assistance, to business and project management; there are so many great jobs for people who commit to learning about tile and stone.

We at the NTCA are excited to offer an easy-to-use program that will allow for people to post their resume to explore their options at furthering their career. As more and more people do this, we will be able to help connect companies looking for qualified people in the tile and stone industry to these candidates.”
Access the Career Center on the home page of the NTCA website at www.tile-assn.com or
paste either of these links in your browser: http://bit.ly/2yENKhA or http://careerwebsite.com.

Is your employee handbook up to snuff?

Business Tip – June 2017

“Do you have an employee handbook?” No matter the size of the business, or type of industry, this is one of the first questions I ask employers when speaking with them about their business practices and how they can lower the risk of liabilities. Having a handbook and providing employees copies, however, may not be enough to protect your business from legal liability or other unintended consequences. Lawsuits and agency claims, employee turnover, and poor public relations are a few examples of the unintended consequences that can result from outdated or unlawful handbook provisions, or ones that are misinterpreted or inconsistently administered by managers and supervisors.

To reduce your exposure, your employee handbook must be

1) Comprehensive

2) Tailored to your specific business and industry

3) Regularly reviewed and updated, and

4) Compliant with federal, state, and local laws and regulations.

Liability and an incomplete employee handbook

Why are employee handbooks important? First, handbooks set employer expectations and employee responsibilities. For example, your handbook should explain that the company expects its business practices and internal communications to be kept confidential and outline the consequences for breaching confidentiality. Similarly, your handbook should outline what constitutes prohibited conduct and establish consistent guidelines for disciplining those who violate company policy. Absent such guidelines, your company may be open to legal claims based on arbitrary or inconsistent discipline.

Second, a properly-designed handbook can protect your business against legal liability. For example, handbooks that do not include comprehensive anti-harassment and anti-discrimination policies can expose employers to charges of harassment and discrimination. Your handbook should include policies that prohibit unlawful employment practices and explain to employees what to do if they are harassed or discriminated against and how to report such conduct. Ensuring your employees sign an acknowledgement form when they receive the handbook and any updates can significantly improve your chances of avoiding liability.

A comprehensive, carefully-developed employee handbook can be a valuable resource, providing important information about an organization’s history, mission, values, and culture, as well policies, procedures, and benefits. Consulting with an employment attorney is the best way to make sure you are covering all of the bases.

Company- and industry-specific

No two companies are the same, even in the same industry. The employer who uses cookie-cutter or off-the-shelf handbook templates to craft a handbook takes an unnecessary risk. First, templates rarely cover all of the topics that may be important to your business and typically do not address specific state laws and regulations. For example, many states have recently passed laws regulating whether (and under what circumstances) employees may store firearms in vehicles parked on company property. Even if an off-the-shelf handbook covers this issue, it likely will not cover the law specific to your state (or states, if your business operates in more than one). Moreover, a generic handbook may contain policies that are inconsistent with your company’s practices or customs.

Review. Update. Repeat.

Federal, state, and local labor and employment laws are changing constantly. For example, state and federal anti-discrimination laws are in flux with regard to whether discrimination based on sexual orientation is unlawful. Conduct that may not have been illegal when your handbook was issued may now be prohibited. With the assistance of employment counsel, your human resources professionals should monitor changes in the law and update your company’s policies regularly.

In addition to changes in the law, your handbook should keep up with changes in your company’s policies and practices. For example, your handbook should reflect changes in your IT policies or vacation matrix on a timely basis. Your employees must have access to the current policies to reduce your company’s exposure to liability.

“An ounce of prevention is worth a pound of cure.” 

Benjamin Franklin’s famous quote is particularly relevant to employee handbooks. Let me be blunt: each of your employees is a potential plaintiff (or cause of litigation). Making sure you have a comprehensive, tailored, up-to-date handbook could save you a substantial amount of time, money, and grief. If you do not have an employee handbook, I strongly recommend that you get one. If you have one, check when it was last updated. If it has been more than a year since its last update, it is time to get your employee handbook up to snuff.


This article is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis P.C. and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis P.C.

 

Business Tip – May 2017

NC changes tax requirements on installation labor

 

Labor may now be subject to state sales tax

By Paige W. Smith, Neuse Tile Service, NTCA Region 3 Director

This is an important development in tax laws that affect contractors that is taking place in North Carolina. Important in its own right, it holds even broader importance when one considers that once a single state passes this sort of law, other states will likely consider it or follow suit. Tile contractors should check with their tax accountants about any changes or revisions to laws in their own state related to sales and use tax. Forewarned is forearmed. – Ed.

Tile installation contractors who work in North Carolina should be aware that some of their labor may now be subject to state sales tax. Previous legislative changes had only applied to installers who were also retailers, but, on Jan. 1 of this year a new state law was enacted which requires the application of sales and use tax to all “real property contracts.”

The N.C. legislature has come up with its own statutory definitions of “real property,” “real property contract,” and “capital improvement” as well as a new tax form, E-595E. Tile contractors will most likely fall under the classification of “specialty contractor.” There have been several attempts to clarify which types of work are considered repair/ replacement/ reconstruction/ vs. remodeling, but the distinctions remain open to some interpretation.

The N.C. Department of Revenue Directive issued 11/15/2016 included 15 pages of definitions and “clarifications,” and on 3/17/2017 another 12-page Notice of “Additional Information” was issued. Accountants in the state have issued differing opinions on which aspects of tile work will be taxable, and contractors will definitely want to get in touch with their own tax advisor.

The new law is very confusing as evidenced by the continued “clarifications.” I’ve been to quite a few seminars on how we should interpret the new statute, and each time the answers seem to be slightly different.

Sales tax on repair work

Generally, for any repair work or replacement of existing tile, contractors should now be charging  — and paying to the state — sales tax on the total invoice amount (both material and labor). The sales tax is based on the rate for the county where the work is done. Most installers will want to become “tax exempt” for their purchases so that some material tax will be paid in as “use tax” and some as “sales tax.” It has been explained that those who work exclusively for general contractors will usually be exempt from the new tax on labor IF the tile installer gets the general contractor to complete the “blanket use” portion of the new tax form.

Repairs or replacements in which the tile contractor is including the work of other trade specialists (i.e. a plumber & glass door company) are not so clearly delineated as to whether they are “repairs” or “capital improvements” under the legislation’s definitions. I went to a forum in which even the head of the N.C. Sales and Use Tax Division said he was still trying to figure out how to answer many of the construction industry’s questions.

For now, contractors should be sure to speak with their local tax advisor, set up a system for tracking county tax rates, and charge sales tax on their work when required. The link to the N.C. Department of Revenue’s March notice can be found at www.DORNC.com/taxes/sales/realpropertycontractors

 

Business Tip – April 2017

Your journey to emotional ownership

by Ed Rigsbee

Pain and pleasure are such close cousins.  In life, it’s painful not to experience pleasure.  Too often though, it’s the holding on for dear life to familiar pain that keeps us from having what we say we really want.

In 1988 I joined the National Speakers Association, a trade group for professional speakers.  No, I wasn’t a speaker yet, but I wanted to be.  I had closed down my manufacturers’ representative company to accept a position of vice president for my principal manufacturer. Two years later, I found myself without a job.  It was now time to fish or cut bait.  Was I going to pick up another line and go to war with the manufacturer that fired me or was I going after my dream?  I went after my dream.  A decade later, I’m a nationally recognized keynoter on business alliances.

This experience, for all of the pain and pleasure, has yielded a path, my path to emotional ownership.  Since discovering this path, I have interviewed several business leaders and found that my path was also theirs.

Whatever pleasure you seek; there is usually pain in the way of having that pleasure.  I believe this path is also your path to the emotional ownership, of staying the course to having what you want in your life, both personal and professional.

In your personal and professional life you continually have challenges.  Challenges without solutions or answers generally cause extreme pain.  To solve or remove this pain, you must either move into action or simply do nothing and hide out.  Action means possibilities. Doing nothing is a formula for failure.  Doing what you have always done and expecting different results is called experiencing insanity. Nobody intentionally wants to be insane.  You will succeed at what you want through understanding and remaining on your path.

What is your challenge?  What would you like to do you are currently not doing?  What major decision would you like to make?  Your first step will be to think up ideas on how to deal with your challenge.

1. Idea:

Some ideas are gold and some are worthless. You must constantly seek possibilities to your challenges.  Earl Nightingale would sit with a yellow pad thinking of solutions to his day’s challenges every morning before the rest of his family awoke. Dr. Robert Schuller’s idea of possibility thinking is to list no less than 20 ways to solve your challenge.  His 20th is how he started the church that is known today as the Crystal Cathedral.

2. Excitement:

When an idea crystallizes, excitement sets in. Your view of the challenge is like a world of possibilities.  All is right as you are moving closer to dealing with your pain.

3. Hope:

Hope is the apex.  Hope without how will get you nowhere.  From this pinnacle the slow degrade begins.  As the reality of the challenge sets in doubt begins.  Unfortunately, at this point, hope turns into nope!

4. Reality:

When the reality of the steps, work and pitfalls involved in creating a solution set in, a feeling of hopelessness is not far behind.

5. Desperation:

Many people are living lives of quiet desperation.  Even people who are moderately successful find it difficult to make a new decision that would position them for greatness.  When the pain is at a level so high that anything else must be better, the point of decision is near. This is where tension can help you to mobilize, but too much tension can immobilize you.

6. Purpose:

Clarity of purpose allows you to see and understand the value of your struggle.  You must know you are playing in the right sandbox and for the right reason.  Now comes the promise of success.  Through example or belief, you now know success is possible and you can make a decision to go for the success.  If you are off purpose, are settling for less or see your world from the window of scarcity, you might make the decision of indecision and only move toward failure.

7. Decision:

The decision to move forward or to make no decision, the choice is yours. Knowing what to hold on to and what to discard is crucial to your well being.  This is where your emotional ownership comes alive.  No decision, no ownership and a continual decline.  Yet, with a new decision, all becomes possible.  Look for your emotional strength and security rather than comparing your self to what is not real. Be cautious of not falling into the impostor syndrome, thinking that you are not really good enough.  Look for your moments of decision. A friend quit drinking, and I ask him about his moment of decision.  He told me that it was one night while he was hanging out his second-story bathroom window, about to fall out and in a drunken stupor and realizing that he should change his life.  He said that he knew if he didn’t make some changes soon, he would no longer have a life.

8. Paying the price and taking risk:

This is the truth detector.   This is the point on your journey where you must internalize the intellectual ownership of your decision.  You must be willing to pay the prices.  Nothing good is free.  Having a track record of previous success and concrete examples of other successful person’s journeys will help.  It’s now time to stick your neck out!

9. Getting help:

Relationship building at its finest.  Nobody goes it alone.  Every successful person seeks help.  You may end up with some unlikely partners; especially people that can help you connect with your inner strength.  Receiving help connects you back to all your previous steps.  Also, you must accept help in anchoring back to your moment of decision.

10.  Accepting success:

Self-confidence and self-worth go hand in hand.  Accepting that you are worthy of success is key. When you have completed your journey to Emotional Ownership, you do it all over, repeatedly.  Additionally, you must realize that you are currently at different steps in different aspects of your personal and professional life.

Every day you are starting another journey in a different area of your life; personal and professional. Your journey always comes full circle; you can never just sit back because another phase of your total life journey is about to start. Enjoy your journey.

Ed Rigsbee is the consummate evangelist for member recruitment and strategic alliance success. He holds the Certified Association Executive (CAE) and Certified Speaking Professional (CSP) accreditation. Ed is the author of The ROI of Membership-Today’s Missing Link for Explosive Growth, PartnerShift, Developing Strategic Alliances, and The Art of Partnering. To his credit, he has over 2,500 articles in print and countless articles electronically published.
Ed is the Founder and CEO of the 501(c)(3) non-profit public charity, Cigar PEG Philanthropy through Fun, and president at Rigsbee Research which conducts qualitative member ROI research and consulting for associations and societies. He has been called “the dynamite that broke up our log jam” by association executives—rarely politically correct and almost always provocative—and from a dozen years as a United States Soccer Federation referee, Ed calls it the way he sees it. Exceptional resources at www.rigsbee.com.

Riding Shotgun – Business Tip – March 2017

by Connie Heinlein

Connie Heinlein is the wife of NTCA technical trainer Mark Heinlein. She accompanies him all over the country and assists him as he gives workshops, participates in trade shows and conferences (many of Mark’s great photo documentation of his workshops, and people and places he visits is due to Connie’s photography skills). Here she shares her perspective on the value of NTCA, as she, “rides shotgun” with Mark. Follow her and Mark’s adventures on Facebook. – Lesley Goddin

Connie Heinlein (center) at the Mechanicsburg, Pa., workshop earlier this year at Daltile. With Connie are: (l. to r.): Scott Carothers (CTEF/NTCA); Todd DeKorte , MAPEI; Tim Phoenix , Daltile; and Dale Kreider.

I spend a lot of time riding in the passenger seat of the NTCA van, traveling all over the country to workshops and trade shows with my husband Mark. Much of that time I watch out the window as the country passes by—rolling hills in Pennsylvania, corn fields in Iowa, mountain vistas in Montana, farms with red barns everywhere, and the ubiquitous truck stops. Sometimes I read or listen to the radio. I never sleep because I don’t want to miss anything.

Most of the time I can’t help but listen in on Mark’s phone calls –what he refers to as the “Heinlein Hotline.” He gets a lot of calls from NTCA members and non-members alike. Most of them have a tile crisis. Some just want to chat. I am not always very interested in the conversations

Connie is a jill-of-all-trades; here she assists Mark in putting education sponsor logos on the new NTCA van she and Mark will be driving all over the country this year.

although I have learned a great deal in the past year about many aspects of the tile industry. I know all about mortar coverage and substrate preparation; I understand the basic complexities of a tile installation; I know that a tile job can fail for many reasons. Before I retired last year from my job teaching high school English, I never thought about mortar and grout and did not know the difference between NTCA and ANSI and TCNA.  But like I said, I’ve learned.  Tile is pretty interesting—maybe not as fascinating to me as literature and grammar, but pretty interesting. All that tile-related chemistry, physics, math and technology makes for some brainy stuff.

So anyway, I often listen in on Mark’s calls. — sometimes I even pipe in if it is someone I met along the way like a new member who joined at one of our workshops, or Mark’s boss with a  “Hi Jim.” Some of the calls are quick; an answer that Mark can rattle off easily. “What is the allowable lippage for such and such?” or “When is Coverings?” Most of the calls involve difficult situations and complicated questions. I remember one from a few months ago about a swimming pool deck that involved multiple calls and research.

Several months ago Mark got a message from a guy in Detroit who wanted to get some experience in setting tile.  He said he loves the tile business and hopes to become certified but needs an opportunity to learn more. The guy asked Mark if he knew of anyone who might help him. I thought that was a pretty big request, that perhaps Mark would diplomatically give the guy some direction toward training materials or an on-line program. I admit now that I underestimated my husband. He spent quite a lot of time with the guy—I now know his name is Alaa Waleed—and discovered what he was looking for and got a sense of his seriousness about learning.  Mark told Alaa that he would think on it, and see if he could come up with someone who might be interested in taking him on.

Alaa Waleed on the job. A connection with Mark Heinlein helped find him work, and Alaa was eager to learn about tile.

Some time passed. We went on a couple more trips. I forgot about Alaa Waleed. Mark did not. He had contacted his friend Phil Kozey about Al. Phil is a great guy, an excellent tile contractor, an NTCA State Ambassador, and fellow Michigander. Phil lives downstate. Mark and I live in the Upper Peninsula. We refer to any part of Michigan that lies below the Mackinac Bridge as downstate and we say it with a bit of sympathy, but oh well, not everyone can be a Yooper. But I digress.

Back to Phil Kozey of southern Michigan. I do not know all of the particulars about Mark’s communications with Phil. I think that during this time Al called and messaged Mark a few times and Mark called and messaged Phil. We all know how these things can go. Life is busy. And then out of the blue one day in March, we were driving on the Ohio turnpike and Mark’s phone chimed that he had a message. He asked me to open it. After all, I was just sitting in the passenger seat, riding shotgun, and staring out the window. The message was from Phil Kozey. Here is what Phil said:

Let me tell you about this guy that we spoke about that said he wanted to learn tile.  He is one of the nicest, eager-to-learn guys I have ever met in my life. After working his butt off for five days straight my

Mark and Connie Heinlein take a pit stop at the Summit Diner in Somerset, Pa., on their way from Mechanicsburg to Pittsburgh.

father handed him a paycheck. An hour later he pulls me to the side and hands me back the check and says I cannot accept this. It meant a lot to me that he was actually there to do nothing but learn and did not want to make any money, but I aggressively refused… and made him take the check.

He came in knowing absolutely nothing, but he is a quick learner and takes great direction and I really think it is going to be a long friendship between me and Al. I just wanted to say thanks for linking us up because it is an honor working with him. 

Of course, after reading that message, Mark immediately called Phil and I listened in on the conversation. Phil told Mark about how he eventually contacted Al and what a terrific person he is and how he is going to make an excellent tile guy.  It turned out to be a heartwarmingly human story about motivation, talent, kindness, and of course, tile. I don’t know the conclusion to this story yet. I do know that Phil and Al are now friends and that Al has a future in the tile business. I’m proud of Mark’s role in helping make this connection between two good men, and I am proud to be a small part of this NTCA world where stories like this happen all the time.

Top 5 tips to avoid ambiguity in construction contracts


Avoiding ambiguity should be a primary goal when drafting and negotiating construction contracts. This helps ensure that you get what you want, including the bargained-for benefits of the contract, smooth contract administration and fulfillment, and avoidance of lengthy and expensive legal disputes. Follow these five tips to minimize ambiguities:

1. Keep it simple.

Keep your writing simple, clear and concise. Construction contracts are read and interpreted by a wide variety of people, including judges with no knowledge of the construction industry. Using plain English and shorter sentences while avoiding legalese and redundancy will make your contracts easier to read and understand.

2. If it’s part of the agreement, include it in the contract.

If a contract appears complete and comprehensive on its face, courts will prohibit the use of other documents to give meaning to the parties’ intentions. Statements made during pre-bid meetings or negotiations will not be effective in contradicting express terms in the contract. Include all terms of the deal in the contract, or incorporate key documents by reference.

3. Define key terms.

Courts give ordinary terms their ordinary meanings and technical terms their technical meanings. But the meanings of words cannot be divorced from the context in which they are interpreted, and parties often disagree on what terms mean in certain contexts. To avoid disputes, capitalize and define terms to attribute specific meaning. Then use the capitalized term as needed throughout the contract.

4. Include an order-of-precedence clause.

Because numerous documents make up construction contracts, conflicts may arise between requirements contained within the documents, such as the drawings and specifications. One way to address these conflicts is to include a clause providing that in the event of a conflict, the specifications take precedence over the drawings, or that contract documents take precedence according to a prescribed order of hierarchy. You may also wish to include a provision stating that what is required of any contract document shall be binding as if required by all.

5. Make proper use of standard forms.

Standard-form agreements such as AIA and ConsensusDocs are commonly used throughout the construction industry. However…there are risks with using such forms because they are written broadly, they may contain terms that are inapplicable to the transaction at issue, and parties often use such forms without fully reviewing them. Even if both parties orally agree to terms that differ from what is written, oral understandings will yield to written agreements, so it is important to read all the terms before using standard-form agreements. Add terms you think should be included in the contract and delete terms that are inapplicable.

 

BUSINESS TIP – JANUARY 2017

IRS continues to enforce “reasonable” sharehold-employee salaries

 

 

In the ceramic tile industry there are many small businesses which may be Subchapter S Corporations, since there are many appealing tax benefits while still providing liability protection to the shareholders. If you’re a shareholder-employee of an S Corporation, you more than likely considered the tax advantages of this entity choice. But those very same tax advantages also tend to draw IRS scrutiny. And the agency has made clear that its interest in S Corporations – including possible audits – will continue. The IRS focuses on determining whether the salary of the shareholders is unreasonably low. The tactics listed below will help protect your company from this IRS examination.

 

 
What’s the problem?
The IRS pays particular attention to S Corporations because, as you well know, shareholder-employees of these organizations aren’t subject to self-employment taxes on their respective shares of the company’s income. This differs from, say, general partners in a partnership.

 
To better manage payroll taxes, many S Corporations minimize shareholder-employee salaries (which are subject to payroll taxes) and compensate them mostly via “dividend” distributions. If this holds true for you, the IRS may take a close look at your salary to determine whether it’s “unreasonably” low. The agency views overly-minimized salaries as an improper means of avoiding payroll taxes.
If its case is strong enough, the IRS could recharacterize a portion of distributions paid to you and other shareholder-employees as wages and bill the employer and/or employee for unpaid taxes, interest and possibly even penalties.

How do you define it?
By following certain guidelines, your business can ensure salaries paid to you and other shareholder-employees have a higher likelihood of meeting the agency’s typical standards of reasonableness.
For starters, do some benchmarking to learn how S Corporations of similar size (as indicated by capital value, net income or sales) in your industry and geographic region are paying their shareholder-employees. In addition, pay close attention to certain traits held by your shareholder-employees. These include:
Background and experience
Specific responsibilities
Work hours
Professional reputation
Customer relationships

 

The stronger these traits are, the higher the salary should be in the eyes of the IRS. Shareholder-employee salaries should be fairly consistent from year to year, too, without dramatic raises or cuts.
For more in-depth information about the particulars of S Corporations, visit https://www.thebalance.com/the-s-corporation-your-questions-answered-397844 or http://tinyurl.com/hp2qwna.

 
CTDA helps you succeed in your business through a variety of programs and services that include educational opportunities, webinars, and discounts on shipping, client collection services, telephone charges, auto rentals, and more. CTDA offers networking and relationship-building opportunities through participation in Total Solutions Plus all-industry conference and Coverings annual trade show. Membership in CTDA also increases your national exposure and gives you access to the annual membership survey, a valuable resource to evaluate your company in terms of profit improvement, employee compensation, distribution and company performance. The CTDA website, CTDA Educational Opportunities, Weekly Newsletters and TileDealer Blog are all free resources that will “keep you in the loop” as well. CTDA is always looking for ways to improve the benefits of membership. To learn more about membership, please contact [email protected] or 630-545-9415 visit the website at www.ctdahome.org. Like CTDA on Facebook and Twitter @Ceramic Tile Distributors Association (CTDA).

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