Legal & Law

7 Tips to Withstand the COVID-19 Economic Storm

On December 31, 2019, Chinese health officials informed the World Health Organization about a cluster of 41 patients with mysterious pneumonia symptoms. Twelve days, the first death was recorded. On February 12, the death toll from COVID-19 in China topped 1,100.

On January 20, the first case was reported in the U.S. in Washington State. On February 29, 2020, the U.S. documented the first death on American soil. March 11 saw the WHO declare COVID-19 to be a pandemic, and by March 13, President Donald Trump declared the situation a national emergency.

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On February 12, the Dow Jones Industrial Average hit a historic high of 29,551. That same day, the death toll in China topped 1,100. The next day the market began a steep decline culminating on March 16, 2020, with the largest point drop in U.S. history of 2,999 to 21,237 or 28% of the market’s value. This figure represents many trillions of dollars.

Professional money managers, as well as casual investors, scrutinize the Dow Jones Industrial Average to obtain a high-level view of the markets. Referred to as simply “the Dow,” it is a price-weighted average of 30 blue-chip U.S. stocks that are generally regarded as the leaders in their respective industries.

Amid the current financial carnage, observing the index can help in determining the damage COVID-19 is inflicting on investment portfolios, and whether the downturn is a short-term consequence of supply chain disruption and skittish consumer demand or a broader symptom of a bull market that has ended.

With an economy of unknowns driven by fear and anxiety over an invisible invader, there is still hope. Keep to the basics. They never fail. Here are 7 tips to weather any economic storm.

  1. Do not spend more than the paycheck.

Limit spending to less than earnings. Simple math demonstrates the effectiveness of this principle. This baseline practice always works. In the turbulent times of a national emergency, it pays to decrease discretionary spending, as these monies may be needed to purchase the staples. As a general financial life principle, frugality is foundational to wealth acquisition and preservation. In times of crisis, it is essential for survival.

  1. Save first, spend later.

Save a portion of personal income first before anything else. Take savings off the top. Live on what remains. Amazingly, the little bit saved and invested each month will grow, slowly at first and then more swiftly.

  1. Create and protect an emergency fund.

Many people think that an emergency fund just needs to sit passively in a savings account, earning barely any interest. In fact, an emergency fund can be in an investment vehicle.  Liquidity is the key. Understand the volatility of the investment vehicle and be comfortable with the risk factor.

  1. Manage liabilities and expenses.

Understand needs versus wants. Financial adviser and motivational speaker Brian Tracy states, “The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term is the indispensable prerequisite for success.”

  1. Reduce debt.

Using the cash jar or cash envelope system is an excellent method to help reduce debt. Accounting for every dollar earned and spent ensures that money is being put towards a goal, whether that goal is to pay off debt or to accumulate savings.

  1. Plan to succeed financially.

Plan the work and work the plan. Do not confuse a financial master planner with an investment advisor. The difference is important to understand. A financial planner acts as the quarterback in coordinating all aspects of the client’s financial life. This coordination includes the rate of return needed to earn on investments. How much should be put into savings? Is the right insurance in place? Are the wheels of estate planning in place and rolling? A qualified financial planner helps people create a plan. An investment advisor will help clients follow their plan and achieve their goals. In the end, each individual must understand their investment plan and make sure it has a solid process with clearly defined and achievable goals.

Albert Einstein was one of the greatest scientists who ever lived. He was not running low on common sense, either. He said, “If you can’t explain it simply, you don’t understand it well enough.” In this case, that goes for a financial plan.

  1. Foster good habits.

Pursue a healthy financial lifestyle. Just like working out and eating smart, it may take months for results to be noticeable. In the long run, it will be well worth it.

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For more information about taxes and bookkeeping services, contact Accurate Tax & Bookkeeping Services by phone at (813) 655-9702.

5 Simple Strategies to Minimize Likelihood of an IRS Tax Audit

In general, audits are rare and only about 0.5% of returns are audited. However, the frequency of audits has been increasing since 2008. Once the IRS singles out an individual or business for an audit there is little that can be done to end the process. The best approach is to avoid an audit in the first place. Here are 5 simple strategies to help the taxpayer steer clear of IRS scrutiny.

Tax Accounting
  1. Make sure all information is correct

A very common red flag that captures the attention of auditors is erroneous data entry. Yet, it is one of the most preventable. It seems simple enough to double-check the return. But people are often careless regarding their taxes. It is wise to wait for income reports, bank and investment statements, and other applicable financial paperwork to arrive before commencing work on the tax return. Disorganization increases the likelihood of errors.

The automated system of the IRS will easily detect obvious discrepancies. Correctly report dependents and exemptions and make sure the numbers match.

  1. Honesty and accuracy are always the best policy

Being completely truthful on the tax return will reduce the likelihood of an audit. Are the figures for income, deductions, credits, and other items realistic? If not, the IRS may notice. Accurate, honest reporting will help keep an IRS audit away.

Underreporting income attracts attention. Intentional inaccuracies, especially when they involve six-figure income earners or the concealment of large sums of cash, invite an audit.  Filers should be prepared to support any number claimed on their return. Self-employed filers should have receipts for every business deduction they claim.

  1. Try not to be so obvious

Individuals or joint filers who earn less than $200,000 but more than the lowest earners tend to avoid the scrutiny of the IRS. Taxpayers making more than $1 million a year and those in very low-income brackets are most likely to be audited. Wealthier taxpayers take more deductions and contribute to more charities and other entities, which increases their risk of facing an audit.

Also, Schedule C filers are about four times more likely to receive an inquiry. Taxpayers in the low-income bracket (a married couple with three children earning $54,884 or less in 2017) have access to the Earned Income Tax Credit. Both categories historically are noted for fraud and mistakes in data entry. Taxpayers filing Form 1040-EZ, earning a modest income, paying rent, and having no children are highly unlikely candidates for an audit. A mistake with the numbers or unusual expenses may trigger an inquiry from the IRS. A charitable contribution in excess of 30% of one’s income could raise an IRS eyebrow.

  1. Report realistic deductions

A red flag may be raised by odd or unrealistic deductions, either for individuals or small business owners. The sole proprietor who reports losses on their Schedule C for three years or more could alert an auditor to request proof that the filer is truly in business.

Filers itemizing deductions on Schedule A should be able to distinguish between a legitimate and an illegitimate deduction. The daily drive to a regular job is not a valid deduction.

  1. E-filing helps

The IRS notes that filing returns electronically dramatically reduces errors. The unblemished return lowers the probability of an audit.

The IRS received the first electronically filed return on January 24, 1986. By 1989, taxpayers in 36 of the 50 states could file their federal taxes electronically. In 1990, electronic filing was available throughout the USA for taxpayers who expected a refund. Out of over 154 million individual tax returns received by the IRS in 2018, over 137 million (92%) were electronically filed.

While the word ‘audit’ strikes fear in many taxpayers, exhaustive audits are relatively rare. The most common federal audits are fairly simple. The taxpayer receives a notice from the IRS requesting information about certain details of the returns. The IRS may only want further information or clarification. This type of small audit, known as a correspondence audit, still is rare.

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The IRS notes that, of the nearly 154 million individual returns filed for 2017, about 1 million were audited. The tentative figures for 2018 seem to reflect these numbers.

Having taxes professionally prepared is the most reliable way to avoid an audit. The professional knows the laws and understands the nuances that attract the attention of the IRS. He or she has a vested interest in filing an accurate return that will not trigger an IRS response. It also can include representation should the IRS request more information. When it comes to taxes and the IRS, peace of mind is priceless.

For more information about tax preparation in Brandon, FL, contact Accurate Tax and Bookkeeping by phone at (813) 655-9702 or visit them on the web at brandonaccountant.com.

7 Reasons Why Contractors Need General Liability Insurance

Construction sites involve many workers, complicated licensing and regulations, dangerous equipment, and sometimes even dissatisfied customers. Liability insurance is indispensable for general contractors and construction firms. It is important to understand the many facets of general liability insurance and how it affects the construction industry.

General Contractors License

What Is General Liability Insurance?

General liability insurance covers many unexpected circumstances. Some of the most common are lawsuits, legal counsel, and medical bills resulting from injuries on a business’s property. Complaints of slander or libel may be covered as well.

When obtaining general liability insurance, the plan will have a maximum coverage amount. When determining coverage, the rates will reflect how much the insurance company will pay for legal fees and settlements and how much the contractor or construction company will have to pay.

It is recommended to research average legal and lawsuit costs in the area before settling on a maximum coverage amount. A contractor reporting and consulting service can assist in working through the details.

Should a general contractor or construction firm have liability insurance? Here are 7 reasons why they should.

  1. Worker and Bystander Injuries

All companies with more than three employees must provide workers compensation. General liability insurance can also help cover workers’ lawsuits when they are injured on the job. Sometimes people enter a construction zone with or without permission and may become injured. General liability insurance will cover medical expenses and litigation resulting from the injury.

  1. Material Issues

Even if the construction process goes smoothly, sometimes issues arise after the project is completed. Faulty or inferior materials may be the cause. Sometimes the contractor is blamed for issues. Liability insurance will cover such legal action arising after the project is completed.

  1. Property Damage

In the construction process, occasionally damage occurs to existing buildings or land either on the project site or on adjacent property. General liability insurance would take care of unintended expenses.

  1. False Advertising Claims

Many people are not aware that general liability insurance covers claims of false advertising. While such cases are a less common issue with construction jobs, contractors are sometimes sued when people do not believe they have fulfilled their promises.

If customers are not satisfied with the finished project, they may claim there has been a failure to deliver on the contract. Liability insurance makes sure the contractor will not have to pay for a lawsuit.

  1. Copyright Issues

People often do not consider that copyright laws apply to construction blueprints. However, blueprints and plans are sometimes protected intellectual property. If a business or individual thinks that a contractor has disclosed plans that should have been kept confidential, a lawsuit may be filed to resolve the issue. Liability insurance will cover such a lawsuit.

  1. Project Bids

Many contractors win major projects by offering price bids. Many business or government construction jobs require contractors to have general liability insurance and be bonded. Bonding covers the customer if there are any issues with the construction company. The insurance covers the contractor or construction company if the customer or employees sue.

Since insurance is often a requirement before a bid can be submitted, being insured qualifies contractors to submit bids on more and better jobs.

  1. Employee Benefits

General liability insurance can be a benefit offered to employees. If there are employees or individuals with whom the contractor often contracts with, they can be added to the company’s liability policy. This benefit is attractive to employees and contract laborers and will enhance worker retention.

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Conclusion

Liability insurance protects the insured general contractor in cases of personal injury, property damage, and material flaws. Lawsuits concerning false advertising and copyright violations also fall under the scope of general liability insurance. General liability insurance is required before some project bids can be placed. Employees and contract laborers may be covered under liability insurance. To function at optimal efficacy, general liability is a necessity for a contractor or construction company.

For more information about obtaining a general contractor license in Florida, contact Contractors Reporting Services in Tampa, Florida at (813) 932-5244.

3 Reasons to File the Notice of Commencement

An article in the Florida Bar Journal entitled “Florida’s Unwieldy but Effective Construction Lien Law” drives home the importance of following lien law and filing the Notice of Commencement for every construction project.

The article states, “A glance at any urban skyline in Florida will confirm that construction is still big business. Look again, and you might also see that it’s chaotic and messy, characterized by one-off projects owned by short-lived one-asset entities, and built by a transient alliance of hundreds of vendors and thousands of workers. As a result, the money that is the lifeblood of a project travels a long and difficult path from the inevitable lender to a worker’s weekly paycheck or a supplier’s invoice. It doesn’t always make it, and its failure to do so underlies the reason for Florida’s construction lien law.”

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In a concerted effort to reduce or eliminate the “chaotic and messy,” Florida is serious about the enforcement of lien law and the filing of Notices of Commencement for construction projects. Property owners and general contractors must have their documentation in place, on time, and accurate. Having this information can prevent misunderstandings that cost the property owner or general contractor time and money. As the article states above, money is “the lifeblood of a project.” The Notice of Commencement is an important tool that helps keep people and money on track. Failing to file the Notice of Commencement may lead to some unintended negative consequences that could be very costly to the property owner and the success of the project.

What is the Notice of Commencement?

The Notice of Commencement (NOC) goes by other names such as the “Notice of Project Commencement” or the “Affidavit of Commencement.” The NOC officially states the project start date. Beginning on that date, the contractor, subcontractor, or support can commence providing labor and materials for the project.

The NOC also contains information that is useful for different stakeholders at various stages of the project. This information may include:

  • The property owner’s name and address
  • Property description and full address
  • A succinct scope of work
  • The general contractor’s name, address and contact information
  • The contractor’s surety information
  • Lender information
  • Details of the property owner’s legal representatives
  • NOC expiration date
  • The property owners’ signatures (helpful if payment issues arise)

For general contractors in Florida, this information, as well as the signatures from the property owners, can be used if payment issues arise. Also, pre-lien notices (such as the Notice to Owner and the mechanic’s liens) need this information. General contractors, subcontractors, and suppliers should record and archive information contained in the Notice of Commencement.

Who Files the Notice of Commencement?

Property owners or the general contractor file the NOC. It is served in conjunction with the commencement of the project. It must be officially recorded at the local state office where the project is based.

The property owners must sign the NOC. It must show their legal names. That person will also be required to sign the document. For full compliance, all property owners must provide their signatures.

Why File a Notice of Commencement?

Florida lien law requires a notice of commencement be filed. The Notice of Commencement announces the starting point for the mechanic’s lien process. The information found on the NOC will be used to file pre-lien notices by participants on the project because a Notice to Owner is a legal requirement in Florida.

The NOC also allows a general contractor in Florida (as well as subcontractors and suppliers) to schedule the filing of other relevant documentation. For example, the preliminary notice needs to be sent within the first 15 days of the project, and that 15-day count begins on the date recorded in the notice.

What Are the Consequences for Not Filing a NOC?

There are several negative consequences for failing to properly file the Notice of Commencement. These consequences can be punitive. Here are three:

  • In Florida, without a correctly filed NOC, the general contractor will not be able to secure a building permit.
  • Without a NOC, the property owner may face double payment if the contractor leaves before paying subcontractors and suppliers.
  • Without a NOC, the property owner will have violated Florida’s rulings on mechanics liens. This will then make the property owner responsible for all payments to stakeholders, even if the contractor has been paid in full.

As a point of information, a mechanic’s lien is a guarantee of payment to builders, contractors, and construction firms that build or repair structures. Mechanic’s liens also extend to suppliers of materials and subcontractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of a liquidation.

Florida law requires that a Notice of Commencement be filed by the property owner or the general contractor. The NOC contains important information that is useful for all involved parties in the project. A correctly filed NOC is required to obtain business permits and to start the mechanic’s lien process. Failure to comply could result in the property owner making double payments should the general contractor exit the project before it is completed and before all parties are paid.

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Contractors Reporting Services in Tampa, FL, understands the importance of filing all required paperwork correctly and on-time. They help general contractors and other construction stakeholders ensure that all the documentation for a project is in order, which ensures that clients can focus on the project rather than papers.

Whatever the general contractor’s needs, Contractors Reporting Services can provide expertise and assistance, from Florida contractors license requirements to business services.

6 Reasons General Contractors Should Pull Permits Before a Project Begins

A holder of a general contractor’s license performs many functions in a building project. They lay out the overall plan and manage schedules and timeframes. Licensed general contractors in Tampa, FL coordinate the proper sequences of the project components. The general contractor is responsible for subcontractors, suppliers, equipment rental, and materials. As project managers, they also are responsible for taking care of all documentation, such as pulling permits and filing Notice of Commencement.

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Some general contractors will wait until after a project has commenced pulling building permits. Other general contractors will negotiate with the property owner to have the property owners pull the contracts. Neither course of action is advisable.

Here are several reasons why it is unwise to delay pulling building permits in Florida until after a project has started.

  1. Excessive fines could be levied against the general contractor or property owner. Starting and running a construction job site without proper permitting and notices can lead to excessive fines. These fines may be many times the actual cost of the permits that now must be pulled anyway.
  2. A cease and desist order may be issued that could end up with a court date to determine who was responsible for pulling the permits, why the responsible parties did not pull the permits, and who is going to pay the fines and job overrun costs. Sound messy? It is. In the final analysis, the property owner bears the burden either directly or indirectly. There are no winners when avoiding, delaying, or ignoring permitting requirements.
  3. Redo orders could be issued. Building inspectors must be confident that what is under the ground, behind walls, encased in conduit, or hidden under insulation is up to code. If they cannot see it, they will not approve it. The materials or job must be uncovered, exposed, or be redone. The direct and indirect costs of this delay can turn positive margins into real losses.
  4. Inspectors will lose confidence in the contractor, his subcontractors, and the entire project. Trust is foundational for a positive relationship between the inspector and the project manager. Building inspectors can make life miserable for general contractors, project managers, flippers, and property owners who subvert the system. This loss of trust can lead to project delays, cost overruns, and bankruptcy.
  5. Operating a job site without having pulled the correct permits first, can lead to criminal charges. Depending on the city and county, multiple permitting infractions can result in a misdemeanor and even a felony charge and conviction. General contractors who seek to skirt the system may lose their GC license, get sued, or even end up in jail.
  6. Aside from safety risks and hefty fines, projects that come to completion without the necessary permits can jeopardize coverage and elevate premium rates. This can also lower the resale value of the project and maybe even turn off prospective buyers.

If a general contractor offers to knock $50 to $100 off the price of the job for every permit the homeowner pulls, it could very well indicate that the GC does not have insurance. By pulling the permit himself, the homeowner is, in effect, declaring that the job is a DIY, and the homeowner is practically acting as the general contractor.

The irony in the situation is that the homeowner pays the same permit fee as the general contractor. So, there are no real savings on the project, and the homeowner is out the time, travel expense, and inconvenience of having to fight traffic to pull the permits.

When the homeowner pulls the permits in place of the general contractor, the homeowner assumes liability for any injuries that might occur on the job site. Roofing is a good example of how bad it can get. The insurance rates in this industry are very high. It makes it almost impossible to function legitimately. One Florida building inspector described a case of an uninsured worker who was injured when he fell off of a ladder. The worker sued the homeowner and won $65,000. The homeowner saved a few dollars on the job from the contractor, but the distraught homeowner eventually lost his home.

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General contractors should pull permits and file notifications before the project begins. They are best able to navigate the forms and any questions the inspectors might pose. Failure to do so could result in excess fines, project shutdown, license suspension, felony charges, and reduce the overall value of the project and drive away prospective buyers. In short, waiting to pull necessary permits until after a project begins could be catastrophic.

For more information about acquiring a Florida contractor’s license requirements or to learn about how to become a contractor, contact Contractors Reporting Services in Tampa, FL by calling (813) 932-5244.

6 Simple Strategies to Reduce Personal Federal Taxes

Accurate Tax & Bookkeeping Services shares 6 strategies people can utilize to reduce their personal federal tax bill.

Early in the year is the best time to begin implementing strategies to reduce a personal federal tax bill. There are practical ways to make sure the IRS does not receive any more than it should. Accurate Tax & Bookkeeping Services, a full-service tax attorney in Brandon, FL, is revealing 6 strategies that anyone can use to reduce their tax bill.

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Step #1: Maximize retirement plan opportunities

As much as possible, put the maximum amount allowable into the employer-sponsored 401(k), 403(b) or other tax-deferred retirement account. Contributions to these accounts reduce taxable income for the year. At the same time, avoid if at all possible making an early withdrawal from a retirement plan. Taking money out of a 401(k) for non-essential spending comes with a sting at tax time. The distribution may be taxed as ordinary income, and the IRS typically penalizes another 10% if the money is withdrawn before the age of 59 ½. It may be possible to take out a loan on a 401(k). However, most 401(k) loans charge loan fees. Leaving one’s job before the loan is repaid could result in owing income tax and penalty fees at the end of the year.

Step #2: Utilize the gift-tax exemption

Taxpayers can reduce their estate by giving away a portion of their money. The gift-tax exclusion (at the end of 2019) is $15,000, but that amount can be given to as many recipients as desired without paying federal estate or gift taxes. Seek advice from a tax attorney or accounting firm before moving forward with this strategy.

Step #3: Maximize 529 education savings contributions

Both the contributor and the recipient can receive tax benefits when money is saved in a 529 plan to pay tuition and other educational expenses. The donor can invest the funds in a variety of investment vehicles, and the earnings are not subject to federal income tax. However, the contributions are considered a gift to the beneficiary, so they are subject to the $15,000 gift-tax exclusion.

Withdrawals by the beneficiary from a 529 plan are not subject to federal or state income taxes when the money is used for qualified higher education expenses. In addition to the federal tax benefits, more than thirty states offer a full or partial tax deduction or credit for 529 plan contributions. Rules differ from state to state, so check state laws.

Step #4: Bundle contributions

The federal tax overhaul, which passed in December 2017, nearly doubled the standard income tax deductions. The impact is that many taxpayers will not have enough expenses to exceed their standard deduction. But if more deductions are needed to exceed the standard deduction and lower taxable income even more, then try bundling contributions such as charity donations.

Match the total annual gift with a year-end lump sum for what would have been given the following year. If that amount is enough to exceed the standard deduction, start adding on other small, deductible expenses. For example, it is a good time of year to clean out the closet and donate clothes and other items to a nonprofit.

Step #5: Liquidate investments that are losing money

If investments in taxable accounts have lost more money than they earned, the losses can be deducted up to $3,000 a year to offset ordinary income. Any remaining losses can be carried forward to future tax years. This tax-deferral strategy is known as “tax-loss harvesting.”

Step #6: Defer a portion of income

It may be possible to reduce this year’s tax bill by deferring payment of a year-end bonus, for example, until early next year. Taxable income is generally not recognized when it is earned but when it is received.

It is also possible to defer income by taking any capital gains that may have been realized this year and pushing them into next year. Be careful that the deferred income does not elevate income to an even higher tax bracket next year.

There are a number of other strategies to reduce the personal federal tax liability, such as opening a flexible savings account (FSA) or converting to a Roth IRA. In any case, obtaining the advice of a tax professional is essential to avoid costly errors or missteps.

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For more information about tax preparation in Brandon, FL and to schedule a consultation, contact the office by phone at (813) 655-9702.

Florida Contractors License Company Explains Filing a Mechanics Lien

Filing a Mechanics Lien in Florida Explained by The Best General Contractors License Company in The State

Florida law offers strong lien rights for general contractors and suppliers. Providing that correct paperwork is in place if a contractor isn’t paid for a job, they are able to file a lien to receive payment as well as protecting themselves. In cases of non-payment, there are requirements that need to be fulfilled and a strict process followed. 

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These are 3 important things you need to know about the mechanics lien law in Florida:

 

1) The Notice to Owner is a Strict Requirement if You’ve Been Hired By The General Contractor

A preliminary notice (referred to as the Notice to Owner) needs to be delivered as soon as possible after the first labor or materials are provided. For parties who do not contract directly with the property owner, they must serve a Notice to Owner within 45 days of providing labor or materials to the project. The two exceptions are for individual wage-laborers as well as design professionals (such as architects and engineers) who are not required to send an NTO.

There is also provision for property owners to request a list of subcontractors and suppliers from the general contractors. If the general contractor receives this request, they have 10 days from when the request is made to supply the list of subcontractors and suppliers that they have hired for the project. 

Who receives the notice?

  • If you have been hired by the general contractor, the notice should be sent to the property owner.
  • If you were hired by a subcontractor, the notice should be sent to the property owner and the general contractor.
  • For those hired by a sub-subcontractor, the notice will need to be sent to the property owner, the general contractor as well as the subcontractor.

If you are involved in a construction project, and you don’t know who these parties are, help is at hand. Florida’s Notice to Owner law means that you can rely on publicly available information.

Importantly, when sending the Notice to Owner in Florida, it must be sent by Certified Mail, and a Return Receipt must be requested.

 

2) A Mechanics Lien Must Be Filed Within 90 Days From the Last One Doing Work (This Excludes Warranty Work)

Florida lien law is different from many other states in that mechanics lien claimants must record mechanics liens within 90 days from the last day that they did work on the project. The 90-day period starts from when the substantive portion of the work has been completed and does not include the correction of deficiencies in work, or warranty work. In the case of equipment rental companies, the count down starts from the last date that the equipment was on-site and available for use.

In most cases in Florida, the mechanics lien must be recorded with the Clerk of Court where the county maintains property records. The exception to this is where the county has a designated County Recorder who is responsible for property records. Before filing your lien, determine where it needs to be filed so that there is no confusion, and the lien is filed within the deadline.

 

3) Not All Parties Have Lien Rights in Florida

Mechanics lien law provides lien rights to general contractors, subcontractors, material suppliers, laborers, professionals, and equipment rental companies. In Florida, there is no requirement that you have a written contract in place in order to file a mechanics lien. But the following parties do not have rights to file a mechanics lien in Florida:

  • Suppliers to suppliers
  • Suppliers to sub-subcontractors
  • Sub-sub-subcontractors
  • Maintenance workers
  • Parties who should be licensed in Florida, but are working without a license
General Contractors
Contractors Reporting Services in Tampa, Florida, specializes in assisting clients with when, where and how to file a mechanics lien. Trust them to help you with the paperwork while you focus on fulfilling your contracts and securing new ones.

3 Frequently Asked Questions About Filing the Notice of Commencement in Florida

Florida Contractor Licensing Service Provider Helps Contractors With Questions On Filing the Notice of Commencement

When it comes to the filing of the Notice of Commencement in Florida, there are a number of questions that come up most frequently. For general contractors and subcontractors, it’s important to understand the protection that the NOC offers. And for all involved parties, the Notice of Termination has a critical part to play in the ending of the Notice of Commencement, which also has implications for parties involved in the project.

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How does the Notice of Commencement protect general contractors in Florida?

The Notice of Commencement benefits general contractors in much the same way as it benefits property owners. Importantly, the NOC designated the start date of the project, posing a strict deadline for the notice requirements that need to be sent by material suppliers and subcontractors. And, if payment issues arise in the future, the general contractor in Florida will only need to deal with the mechanics lien claims of parties that have met the pre-lien notice deadlines.  

This would be an issue in the case where a subcontractor leaves the project before completion without settling their dollar-outstanding money (Outstandings) with sub-subcontractors and equipment suppliers. If sub-subcontractors and other project participants had not submitted their pre-lien notices before the deadline, this would have the effect of rendering their mechanics lien-claims null and void. This would mean the general contractor would not be liable for any of the debts that were incurred by the subcontractor.

 

Why is the Notice of Commencement important for material suppliers and subcontractors?

The NOC has an impact on potential lien claimants for all parties down the contracting chain from the subcontractor, sub-subcontractor and more. In addition to its other important roles, the NOC contains almost all of the information that will be needed if pre-lien notices need to be filed.  Specifically, the mechanics lien itself is found on the Notice of Commencement.

The Notice of Commencement also contains the names of the property owners along with their contact information. So, in the case of filing a mechanics lien, these parties will need to be served and having the correct information is important. 

The NOC also contains the official starting date of the project. This date forms the base from which preliminary notice deadlines can be calculated as knowing when to issue pre-lien notices is critical for protecting lien rights. 

Payment issues come up regularly in the construction industry, so a carefully planned timetable for potential mechanics lien-claims is a good precautionary step.

 

Is it possible to terminate a Notice of Commencement and how is it done?

In Florida the Notice of Commencement can be terminated. This happens when a property owner experiences financial issues, or in the situation where they wish to terminate all, or in some cases, part of the construction. 

If an NOC is to be terminated, the property owner will need to:

  • File a Notice of Termination including the same information that was included on the NOC
  • Specify the date when the commencement notice will be effectively terminated in the Notice of Termination
  • State clearly in the Notice of Termination that all claimants have been paid in full
  • Serve copies of the Notice of Termination to the general contactor and all other claimants before the Notice of Termination is recorded.

For a full understand of the process for terminating the Notice of Commencement in Florida is available on Section 713.132 of the Florida Statutes.

General Contractors
Contractors Reporting Services in Tampa, Florida offers help for property owners and general contractors by providing assistance with the paperwork allowing their clients to focus on getting the job done.

Are General Contractors in Florida Liable for Hiring Unlicensed Subcontractors?

Can General Contractors in Florida be held liable for Hiring an Unlicensed Subcontractor? 

When a construction project runs into problems, tensions can run high and the Florida general contractor’s license provider is often blamed. In these circumstances, an owner may feel that they have no alternative but to go the legal route. This usually entails a lawsuit by the property owner against the general contractor. When this happens, it is important for general contractors to have all their ‘t’s crossed and ‘i’s dotted as the property owner will look to leverage any potential pressure point to gain an advantage.  

Aiding and Abetting of Unlicensed Work  

One of the ways this can take place is when one of the subcontractors on the project is unlicensed. Here, the owner may accuse the general contractor of engaging in work that is not licensed, or they may accuse the general contractor of aiding and abetting unlicensed work. Clauses in the Florida Statutes stipulate the penalties for any work that is not licensed (including the aiding and abetting of unlicensed work). These charges are serious and have stiff penalties, including the possibility that the general contractor would be liable for treble damages as well as having to pay for the owner’s attorneys’ fees.  

Florida General Contractors 

Legal Precedent Protects General Contractors 

However, there is a vital distinction between knowingly and unknowingly aiding and abetting unlicensed contracting. If a general contractor in Florida uses a subcontractor without a license from a contractor license provider in Florida, but who has confirmed that they hold the relevant active license, then the general contractor will not be held liable. This is based on the outcome of Blume vs Department of Professional Regulation, 489 So. 2d 880 (Fla. 2d DCA 1986) where Blume, the general contractor, subcontracted out work to a subcontractor who confirmed that they had the relevant license when in fact, they did not. 

A failure by the general contractor to validate the license of the subcontractor was not deemed to constitute a violation of the prohibition against aiding and abetting unlicensed contracting. The decision was appealed, and the Second District court upheld the decision as “aiding and abetting” requires active participation and an intention to participate in the illegal act. Because Blume had not intended for unlicensed work to be performed, they could not be held liable for aiding and abetting the work. 

Tampa FL General Contractors 

Implications for General Contractors 

This legal precedent illustrates that contractors by law do not have to determine that their subcontractors hold a valid license. And, unless the general contractor intended for unlicensed work to be done, they cannot be held liable for aiding and abetting unlicensed work. So, when general contractors are being threatened with a lawsuit by the owner of a project, it is good to know that owners cannot threaten to hold the general contractor liable for subcontractors license non-compliance. However, it is still best practice to ensure that all subcontractors that are hired for a project are licensed to complete the work for which they have been hired. 

In summary, a general contractor is not liable for unlicensed subcontractors unless work is given to them knowing that they do not have the relevant license. The fault would fall on the subcontractor for attempting to mislead.

Florida General Contractors

The role and requirements for Tampa contractors must be understood and they need to carry up-to-date paperwork. Contractors Reporting Services in Tampa, Florida, has been working with general contractors in the construction industry for over 50 years. They have the relevant experience to ensure that Florida general contractors license requirements are met, and that general contractors’ licenses stay completely up-to-date.  

They will assist with an application for a general contractor’s license, run financial stability reviews and reports, assist with the set-up of S-Corporations or C-Corporations, and keep local license and registrations up-to-date. They also have experience in preparing additional entries in the case of multiple licenses, filing annual reports, and offering in-house construction accounting services. 

What work can a Certified General Contractor in Florida perform themselves?

What work can a Certified General Contractor in Florida perform themselves? 

The construction industry in Florida is governed by the Florida Legislature to protect public health and safety by regulating the industry and Florida general contractor license requirements. Construction licensing in Florida also covers the scope of work (and restrictions to the scope of work) that a Certified General Contractor (CGC) license holder is allowed to perform. 

A Certified General Contractor needs to have an active license and can thereby enter into contracts to construct various types of buildings and building alterations in Florida. There are, however, some permissions and restrictions on a Certified General Contractor in Florida that govern the type of work that they are allowed to perform themselves. The difference here is that even though the Certified General Contractor could possess a contract for the work, they may not be able to perform all the work themselves because they do not have the appropriate state certificate for trade specific work. 

Tampa Florida Contractor License 

General Contractors Must Subcontract Some Trade Specific Work 

In general, the basic requirement is that the general contractor will need to subcontract all plumbing, roofing, sheet metal, mechanical, electrical, swimming pool and air conditioning work. But, if they hold a state certificate or registration in the particular sub-trade category, they are not required to subcontract those tasks and can legally perform the work themselves. The converse also holds true, if the general contractor does sub-trade work for which they do not have a license, they may be disciplined for working outside of the scope of their license. 

Structural and Site Work 

licensed Florida general contractor is responsible for and permitted to perform alterations or construction on the structural component of a project including steel and concrete work. The licensed general contractor in Florida is also permitted to perform site work such as clearing, grading, and excavation 

Roofing 

In general, the roofing project will need to be subcontracted to a registered roofing contractor. The exception to this is the installation or repair of certain roof types that are still under warranty if the work is done on a new building that the general contractor constructed. For existing structures, a licensed Florida general contractor is not allowed to do roof repairs or maintenance. The only exception to this is in times of emergency where general contractors are given permission to help with roofing repairs. 

Swimming Pool Construction 

licensed Florida general contractor does not have to subcontract structural swimming pool work, including work to the pool shell if it is deemed to be part of the structure. For all other swimming pool work, the project needs to be subcontracted to a registered pool contractor. 

Tampa FL Contractors License 

Florida General Contractors Working as Construction Managers 

Make sure you know the role and requirements of Florida general contractors Certified General Contractors in Florida can work as construction managers. It is important to note that there are many different types of project delivery methods and in order to manage risk many general contractors are hired to work as construction managers. The two main types of construction managers are Construction Managers at Risk (CMAR) and Construction Managers as Agent (CMa) 

Whether working as a CMAR or CMa, if the management of a construction site is overseen by a licensed certified general contractor in Florida, they can only oversee the activities of licensed subcontractors. The general contractor cannot perform the work themselves; the work must still be performed by a licensed individual or an entity that is properly qualified. 

In summary, a Certified General Contractor in Florida is limited in the work that they can perform, and many tasks in a project will need to be subcontracted to an individual or entity that holds the correct sub-task license.  

Contractors License Florida

Contractors Reporting Services in Tampa, FL helps businesses in the construction industry with paperwork, licensing, and approval processes. This means that business owners can focus on building their business, rather than just trying to keep up-to-date with paperwork. Contractors Reporting Services can assist with license applications and renewals, end-of-year filing, financial stability reviews, credit reports and more. With over 50 years of experience in the industry, they are the right team to support your business and assist with all your Florida contractor license needs. Contact them for more.

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