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Why Go Digital? The Future of Construction Management

The construction industry has traditionally been slow to adopt the technology. Many of its work processes are legacy solutions from decades ago, like spreadsheets and yellow notepads. Today’s workers are stuck in the process of trying to digitize an industry that has been stuck in the analog world for many generations.

However, contractors are beginning to realize that they no longer have a choice when it comes to embracing technology. Now it’s a race to decide who will be the first adopters to bring the industry into the future.

We’ve put together five reasons why construction companies need to go digital today.

Why go digital?

Save time and money

Many contractors run several software systems simultaneously – one for estimating, one for project management, and one for accounting. These systems often don’t talk to each other, and each system becomes its own information silo, creating obstructions to the flow of information. Each software system provides information, but it’s difficult or impossible to share that information with the other systems.

Companies soon develop workarounds like entering data by hand from one system to another or using spreadsheets to provide the information everyone needs. Some software systems allow data sharing through import/export, but it still takes time to capture the data, download it, then upload it to another system.

When workers have to manually enter data, there’s an increasing chance that mistakes will be made. Inaccurate information can lead teams to make wrong decisions that can have a profound effect on the financial success of projects over time.

All-in-one software packages create workflows that allow project teams to share data between departments without resorting to workarounds that can cause errors and lost productivity.

Attract a younger workforce

In order to attract younger workers contractors need to upgrade their tools to the latest technology has to offer. You don’t have to be on the cutting edge, but there’s a lot of tried-and-true technology that construction has been hesitant to implement. Companies need to adopt tech more readily to match the skill sets, education, and training future workers are receiving.

Construction management students are learning project management and documentation using the software. These packages make tracking correspondence, submittals, and RFIs much easier than using Excel and other legacy software. If contractors don’t adopt these tools, they could be losing the opportunity to work with some of the best and brightest in new talent.

Integration is key when it comes to estimating and material takeoffs. Too many companies rely on outdated software or manual methods to create estimates and perform takeoffs. That data then has to be entered into another software system once the project is approved. Younger workers don’t understand why these systems are separated when there are so many options for integrating them.

Harness the power of new technology

New tech, like AI, machine learning, and automation are changing the landscape. Artificial intelligence (AI) is more than robots and droids. It describes how machines are able to mimic human thinking, like problem-solving, pattern recognition, and learning.

AI is being used to create predictive models based on past project data. These models analyze projects for cost overages, schedule delays, and other potential issues. The software looks for similarities between past projects and current work, and from there it can predict potential problems and bring them to the contractor’s attention.

Machine learning is a subset of AI and uses statistical techniques and calculations to understand project data and gain insights. As more data is added to the machine learning model, the software is able to assimilate the information and refine its predictions in current situations. Contractors are using both machine learning and predictive analysis to assess projects before they start so they know the risks and can proactively manage them from the beginning of the project.

Automation, or the use of technology to perform tasks, is also gaining in popularity in construction. Construction management and accounting software systems use automation to speed up data entry tasks and help prevent errors. For example, automated invoice entry in accounts payable allows workers to pull amounts and codes from commitment records and get notified when budget line items are over their limits. This automation helps ensure data is accurate and cost overruns are detected and managed.

Streamline your operations

With business growth responsibilities and processes are often developed organically. Employees do the best they can, but without a big picture view, they often create processes without knowing why. These processes certainly get the work done, but it doesn’t mean they’re the best way to do something.

The software can provide the overall structure needed to streamline processes that have grown cumbersome over time. With software as your guide, roles and responsibilities can be reorganized based on the most efficient way to perform a process.

Using an all-in-one system also simplifies record-keeping and data retrieval processes. Project records can be stored in the cloud, so now there’s only one place to look for information. Teams don’t have to search in multiple folders and software applications to find the information they need. It’s at the tip of their fingers 24/7.

Manage/control risk

Construction management software can help teams mitigate many of the risks found on a project. Although it can’t address all potential risks, it can speed communication and document what’s being done to proactively address issues.

Project management software allows teams to see and address overdue tasks and documents that may delay the project. Teams can run reports that show outstanding items as well as who is responsible for those items. The software can also track health checks and other safety-related inspections that are required in today’s world. This daily reporting allows team members to see the status of various items and predict potential problems.

Having a central hub where documents are stored is a must, given the number that is created and distributed during a project. Document storage, version control, and distribution are easily managed by project management software, ensuring everyone is working from the latest documents and has access to them from wherever they are. The same is true for project correspondence. Team members have only one place to look when it comes to searching for an email or notice. All communication is tracked and documented within the system, and specific items can easily be recalled in minutes.

Having an integrated system where costs are instantly updated in the field allows teams to respond to potential budget issues quickly. Project managers can manage the project budget and costs from the site, without having to request information from the office.

Digital is changing the construction world

While the outside world and other industries transitioned from analog to digital several years ago, construction has always been behind the times. It’s only now that the industry has begun harnessing the power that has been available for decades. Tomorrow’s workers are better prepared for this change and are sure to lead the effort. See how smoothly Jonas Premier can assist you and your team in the process of going digital. Visit our website or schedule a call with our team of professionals at Jonas Premier today for a complimentary walk-through of our simple and easy-to-use software.

Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.

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Filing 2020 1099-NEC Forms in Premier

For tax years prior to 2020, companies were required to file a 1099-MISC form for any nonemployee compensation paid out to subcontractors for any amount over $600. This year the Internal Revenue Service (IRS) has created a new form to be filed, the 1099-NEC which is specifically used for nonemployee compensation.

This article is designed to explain how Premier can streamline reporting, as well as provide updates on the new form implemented by the IRS.

What is Non-Employee Compensation? 

Per the IRS, if the four conditions are met, you likely will need to report payments as Non-Employee Compensation:

  1. You made a payment to someone who is not your employee.
  2. You made a payment for services in the normal course of your trade or business (including government agencies and non-profit organizations).
  3. You made the payment to an individual, partnership, estate, or a corporation.
  4. You made payments to the payee of at least $600 during the year.

What Changed from 2019 to 2020 ?

For the tax years starting after 2020, the IRS has decided to bring back form 1099-NEC. In tax years prior to 2020, the filing deadline for NEC on the 1099-MISC 2019 Form was still January 31, for any amounts in Box 7 which related to non-employee compensation. This has been done to streamline and simplify the process given the different dead lines for each form. Now all items which would have previously been reported in Box 7 of the 2019 1099-MISC will instead be recorded in Box 1 of the 1099-NEC.

Extensions for Form 1099-NEC reporting Nonemployee Compensation can only be requested as a non-automatic 30-day extension of time and must be filed on paper using Form 8809.

Is its important to note per the IRS publication, that the 1099-NEC form is not part of the Combined Federal/State Filing (CF/SF) Program. This means you must file a separate form directly with the state.  Form 1099-MISC can continue to be filed with the CF/SF Program.

Although the forms have changed, it is important to note both forms are intended for trade or business reporting only and not related to personal payments. The 1099-NEC is strictly for reporting independent contractor payments exceeding $600 in the year.

How Premier Streamlines Your Report

Premier has specialized forms that allow you to directly print on your IRS Submission forms! This saves you valuable time by automatically generating your 1099-NEC’s. In Premier, simply select the 2020 – 1099-NEC Default Form to print directly on the IRS Forms. In Premier, you are also able to print completed forms directly on blank paper for State tax department forms (Copy 1), recipient tax forms (Copy 2 to file with taxes and Copy B for records), and your own personal copy (Copy C). Premier allows you to automatically generate your annual information for each independent contractor including their address, tax identification number (TIN) and total non- employee compensation paid out, including applicable taxes.

Premier also has the capability to file online directly with the IRS! You are required to have  Please note if you have over 200 1099-NEC’s to file, you must efile your forms with the IRS.

What should be reported on 1099-NEC?

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Box 1 Non-Employee Compensation:

  • Must report payments to independent contractors
  • Payments for working interests for oil and gas payments
  • Prizes and awards for services performed by nonemployees
  • Termination payments to former self-employed insurance salespeople if certain criteria are not met (see IRS for details)
  • All payments made to a corporation that provides legal services i.e. the attorney fees must be reported (note settlement payments for contracts are to be included in 1099-MISC box 10)

When reporting taxes on 1099-NEC, it is important to note that if you have paid state or local taxes on the amounts paid to a nonemployee, the amounts you have paid must be included in Box 1.

Some examples from the IRS of what should be included in Box 1 include the following:

  • Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc.
  • Fees paid by one professional to another, such as fee-splitting or referral fees.
  • Payments by attorneys to witnesses or experts in legal adjudication.
  • Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service.
  • A fee paid to a nonemployee, including an independent contractor, or travel reimbursement for which the nonemployee did not account to the payer, if the fee and reimbursement total at least $600.
  • Exchanges of services between individuals in the course of their trades or businesses, such as a barter transaction.
  • Taxable fringe benefits for nonemployees, such as transit passes and parking passes which exceed $21 in a month. The value of parking may be excludable from an independent contractor’s gross income, and, therefore, not reportable on Form 1099-NEC if certain requirements are met

Box 4: Federal withholding taxes

For the majority of all 1099-NEC’s filed, this is may be non-applicable. There are only certain conditions that the IRS may mandate that withholding taxes be held back. The most likely scenario to occur which requires withholding is :

  • The recipient fails to provide their TIN to you
  • The IRS notifies you to impose backup withholding because the recipient provided an incorrect TIN

Box 5 to 7: State or local sales taxes

According to the IRS, these boxes are provided for your convenience and do not need to be completed.

Who is responsible to file?

If you make a payment on behalf of another person using their funds, you may be responsible for filing Form 1099-NEC.  In addition, if you make payments directly and even if you provide management oversight for the issuance of payments you are responsible for filing information returns for payments of $600 or more paid to contractors. Please note, if the independent contractor is registered as a C corporation or S corporation, a 1099-NEC will not be required.

IRS Deadlines

It is important to note the filing deadlines differ between the two forms. The deadline to file Form 1099-NEC using either paper or electronic filing with the IRS is on or before February 1, 2021 (note January 31, 2021 is a Sunday).

However, this is different for Form 1099-MISC. Paper filings for 1099-MISC must by filed by March 1, 2021 (note February 28, 2021 is a Sunday), but electronic filings must be completed on or before March 31, 2021.

Deadlines for Statement to Recipients

Regardless of whether you are filing Form 1099-NEC or 1099-MISC, all recipients must be provided their copy of their respective form by January 31. One exception is amounts reported in Box 8 or 14 of  Form 1099-MISC are due by February 15.

For detailed instructions please visit the IRS site for Instructions for Forms 1099-MISC and 1099-NEC (2020).

To learn more about Premier Construction Software can help you streamline your business, schedule a free demonstration with our sales team here