100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701 | (727) 821-6161 | www.gsscpa.com

A common question asked by business owners and managers is, “What records should we keep, and how long should we keep them? The answer often depends on the type of record being considered.

Business records can fall into several categories, including accounting records, tax records, employment records, internal business records and records necessary to comply with government regulations.

There is another question business managers should be asking: “When should we destroy certain records?”

Most businesses should have a record retention policy and a record destruction policy. It is a good idea to have both policies reviewed by your legal counsel, your tax adviser and your outside auditor.

Tax recordsThe IRS says that you must maintain adequate records, so support

almost every item of income and expense that you claim. That means you must be able to produce receipts, invoices, canceled checks or banking records supporting all expense items. Similarly, you should keep sales slips, invoices or bank records to support all

income items.Normally, the IRS has three years after

you file your return to commence an exam-ination. In some cases, if a substantial amount of income is omitted from the return, the period is extended to six years. As a result, many advisers suggest that you can dispose of tax records after seven years.

But some tax records need to be kept longer. Copies of prior tax returns and elections they contain should probably be preserved indefinitely. Records supporting

t he cost basis

in assets you have owned for many years,

such as buildings and long-lived equipment, should

be retained until the asset is disposed of. Carry-forward items, like records supporting net operating losses, should be retained until seven years after the year in which the carry-forward item is itemized on a tax return.

Accounting recordsYour business probably has an adequate accounting system to

capture routine transactions. If you construct a building for your own use, you need to capture all of the costs associated with the project. When you buy a vehicle, computer or piece of office equipment, retain all purchase documents, assign an inventory number, and set up a depreciation schedule.

If you acquire another business, not only should you keep records of the purchase transaction, but you may also need to gain control of the accounting records from the prior owner, particularly if you are assuming responsibility for events that may have occurred before you purchased the business.

See Record keeping on page 3

Researchers in industrial and organizational psychology have long known that what gets measured is what gets done. Employees are likely to do more of those things they know are being measured and less of those that are not.

Herein lies the value of setting performance goals for employees and measuring their progress toward achieving them.

Following are some keys to setting the right kinds of performance goals.Goals should be relevant.

Ask yourself this. If the employee were to achieve this goal, what difference would it make to the company? Ultimately, all performance goals should support the company’s overarching goals or mission. This means your direct reports’ goals should support your goals, your goals should support your manager’s goals, and so forth up the line.The scope of goals should be neither too broad nor too narrow.

The scope of an employee’s goals should fit their level in the organi-zation. Senior managers’ goals should be strategic. Middle managers’ goals should be tactical and support strategic goals. Non-managerial employees’ goals should be operational and support tactical goals. Goals should be about results, not how to achieve them.

The most common error in goal setting is to make goals that look like a to-do list. For example, “Submit expense reports on time.”

“Store materials properly.” “Conduct new-hire training.” These are tasks, not goals.

Goals should produce value-added outcomes.The way to change a task into a goal is to ask yourself, “Why are

we doing this? What is the value of the task?” This will point to the desired results, which is the goal.Don’t set goals that are too easy or too difficult.

Goal-setting theory holds that, to increase motivation and stimulate better performance, goals should be hard to attain but not too hard. “Stretch goals” are useful, but make sure the employee is able to achieve them. “One hundred percent of calls answered within 25 seconds” is probably impossible. Ninety-five percent might be reasonable.

Choose practical measurements of goals.It should not require as much time and effort to measure a goal as

it does to achieve the goal! Nor should measurement be expensive or intrusive. Whenever possible, choose measurements for which data are routinely gathered, such as from sales records, your telephone answering system, complaint logs or customer satisfaction surveys.

By following these guidelines for setting performance goals with your employees, you will likely get a higher performing team. – Jeff Van Pelt, Ed.D., SPHR

Goal setting with employees to maximize performance

I n s i d e

Summer 2011➜Energy Efficiency

Retrofits as a Growth Area

I n s i d e

Record keeping: What, Why, For How Long?

Building For Success

An information bulletin to contractors from:

The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2011 CPAmerica International

P.O. Box 10588 • Goldsboro, NC 27532

Belhaven • Clayton • Goldsboro • LaGrange • New Bern • Raleigh • Williamston • Wilson

Travel and entertainmentThe tax law contains specific record-keeping requirements

to support your tax deduction for travel and entertainment expenses. These rules can be complex. In general, you must capture where, when, who, how much, and the business purpose for each expense.

Ask your accountant to help you design a standard expense report form that you can distribute to all employees who incur these expenses. Require each employee to submit the form, with appropriate receipts, to receive reimbursement. If you have employees who drive on company business, require an auto log showing the miles driven for each trip.

Employment recordsA number of government agencies have a say in what records

you need to retain with respect to current and former employees, as well as job applicants. Your attorney and human resources professional can steer you through these rules.

IRS – The Internal Revenue Service says you must keep records relating to payments made to employees, employer tax reports and tax deposits for at least four years.

DOL – The Department of Labor requires that you keep records on each employee, including identifying information, pay rate, hours worked, time cards, bonuses, withheld taxes, etc., for at least two and – for some records – up to three years.

INS – U.S. Immigration and Naturalization Service Form I-9, Employment Eligibility Verification, must be signed by the employee and the employer and be readily available until three years from date of hire or one year after termination.

OSHA – A Log and Summary of Occupational Injuries and Illnesses must be kept for at least five years, according to the Occupational Safety & Health Administration.

ERISA – The Employee Retirement Income Security Act requires that most corporate and employee pension plan records should be kept indefinitely.

ADA – The Americans with Disabilities Act requires you to keep personnel and employment forms relating to hiring, promotion, demotion, transfer, layoff, termination, rates of pay, etc., and selection for training or apprenticeship for at least one year.

ADEA – The Age Discrimination in Employment Act requires you to keep payroll records for at least three years and personnel records for at least one year.

Corporate recordsKeep all records associated with the formation of your

business, such as articles of incorporation, partnership agree-ment, LLC documentation and business licenses. Also save bylaws and minutes of all board meetings.

Shareholder records should include stock registers and records of all share issuances and redemptions. Also keep copies of all contracts and leases. And do not forget proprietary information such as formulas, trade secrets, patent information and designs. – Michael Redemske, CPA

Despite a dismal real estate and construction market outlook for 2011, there is one bright spot.

A combination of government and local incentives and rising energy costs is spurring growth – albeit slower than expected – in the residential energy efficiency retrofit industry. From new insulation to doors and windows to system upgrades, including alternative energy, homeowners are making investments.

A main driver is the federal government. Sustainability projects were a key piece of the American Reinvestment and Recovery Act of 2009, with planned stimulus spending in 2011 and 2012 to total 19.9 percent and 22.1 percent, according to the Congressional Budget Office.

The rationale is to stimulate the construction industry, create higher-skilled, higher-paid “green” jobs and help homeowners reduce energy costs while benefiting the environment.

At the local level, state and county governments are imple-menting weatherization programs. Utilities are also stepping up their energy efficiency efforts by offering rebates and on-bill financing. And unlike the 1970s, when the gas crisis and interest in alternative energy quickly faded when oil prices sank, continued world unrest and volatile fuel and energy prices are ensuring that efficiency upgrades will continue even after spending based on tax credits ceases.

The attention to retrofits is more than a feel-good idea. According to nonprofit Affordable Comfort Inc. (ACI), homes account for 20 percent of national energy use. Homeowners can save an average of 10 to 40 percent in energy costs with basic improvements. When you consider that some energy costs, such as heating oil, have doubled or tripled, making these improvements could help keep homes affordable.

ACI’s Thousand Home Challenge is pushing the envelope further by seeking 70 to 90 percent cuts in energy use in existing

homes. While this may be ultimately impossible, the project is a real-life laboratory exploring new technologies amid the challenges of working with older homes.

The first step to entering this market is learning state-of-the-art techniques. Fortunately, there is a wealth of resource material for contractors.

The Department of Energy is creating a set of voluntary guidelines for efficiency projects and work force development. Available now on the website is a draft document presenting work specifications and job analysis outlines. Familiarity with these standards will help contractors when preparing bids for projects funded by federal dollars.

ACI has positioned itself as a “go-to resource” for best prac-tices in home weatherization. It offers regional and national conferences, with meeting proceedings posted as webcasts.

The Building Performance Institute (BPI) is a nonprofit offering certifications in energy efficiency. Education is offered nationally through a network of training affiliates. BPI states that some state-funded weatherization programs are requiring that contractors be BPI certified. The American Society of Heating, Refrigeration and Air-Conditioning Engineers also offers training and certifications.

Key to growing a successful energy efficiency retrofit business is a strong customer marketing and education program.

Many homeowners are not aware of how much energy they can save, how much (or little) improvements cost or what incentives are available to help pay for them. In the best case scenarios, energy costs are lowered enough to offset any loan payments. Calculating energy savings, payback periods and net cost of improvements for your customers is a valuable part of the sales process.

To get an overview of what’s available in your state, check DSIRE, the Database of State Incentives for Renewables and Efficiency. It has a state guide to all kinds of programs, including state and utility rebates, tax incentives, financing programs and community-specific programs. With this information, you can target customers who use certain utility companies or live in specific cities or counties.

For all homeowners, the Energy Star website has informa-tion on federal tax credits for consumer energy efficiency. Tax credits are available in 2011 for a wide range of improvements, including biomass stoves, heat pumps, windows, insulation and furnaces. Wind turbines, geothermal pumps and solar systems also qualify. Energy Star provides educational materials you can use with customers in explaining the benefits of various improvements. Contractors can also participate in Energy Star’s Whole House program.

Energy efficiency is a trend that is here to stay. Don’t miss the opportunity to position your contracting business as a great resource for your customers’ energy efficiency needs. – Elizabeth Penney

Record keeping continued from page 1How to develop a

document retention policySome people save every scrap of paper, while others toss

everything without a second thought. But if a legal problem arises or the business is audited by the IRS, it may be the one memo thrown out or the one e-mail that was not deleted that saves or costs the company thousands of dollars.

Document needs vary from industry to industry and from company to company. After you have identified your legal and business requirements, here are some suggestions for devel-oping a document retention policy:

➲ Consult your attorney, accountant, human resources professional and others. They can tell you which documents you need to keep and when you can destroy them.

➲ Create a calendar that describes the time and method for archiving, maintenance and destruction of documents.

➲ Train your employees so they understand the policy and make it part of your employee handbook.

➲ Follow your policy diligently. Do not wait until someone sues you to implement it.

➲ Explain the rationale for each part of the policy. Assume you will have to defend every action later.

➲ Write everything down – the policy and the rules for implementation and enforcement.

Your document policy should include the following:➲ A statement of purpose➲ A description of the specific records and documents

covered by the policy, including both written and electronic records

➲ Exceptions to the policy➲ A schedule showing what is to be retained, by whom,

and where the documents will be stored and for how long➲ A schedule showing which documents were destroyed

and when and how they were destroyed➲ A stipulation that management must approve the

destruction of documentsIf you are under the threat of a lawsuit, you should check with

your attorney to determine whether document destruction should be suspended or continued.

Of course, retained documents are of no use if you cannot find or access them. Your retained documents should be:

➲ Archived➲ Indexed➲ Searchable➲ Organized logically➲ Perhaps encrypted (save the passwords at a different

location)You should ensure that access to the files is limited and be

sure to store duplicates offsite.Document management software may be available to assist

you.

DSIRE – www.dsireusa.orgEnergy Star – www.energystar.govACI – www.affordablecomfort.orgBPI – www.bpi.org

Department of Energy – www.eere.energy.gov

Energy Efficiency Retrofits as a Growth Area

Resources

Summer 2011 Building For Success2 Summer 2011 Building For Success 3

Travel and entertainmentThe tax law contains specific record-keeping requirements

to support your tax deduction for travel and entertainment expenses. These rules can be complex. In general, you must capture where, when, who, how much, and the business purpose for each expense.

Ask your accountant to help you design a standard expense report form that you can distribute to all employees who incur these expenses. Require each employee to submit the form, with appropriate receipts, to receive reimbursement. If you have employees who drive on company business, require an auto log showing the miles driven for each trip.

Employment recordsA number of government agencies have a say in what records

you need to retain with respect to current and former employees, as well as job applicants. Your attorney and human resources professional can steer you through these rules.

IRS – The Internal Revenue Service says you must keep records relating to payments made to employees, employer tax reports and tax deposits for at least four years.

DOL – The Department of Labor requires that you keep records on each employee, including identifying information, pay rate, hours worked, time cards, bonuses, withheld taxes, etc., for at least two and – for some records – up to three years.

INS – U.S. Immigration and Naturalization Service Form I-9, Employment Eligibility Verification, must be signed by the employee and the employer and be readily available until three years from date of hire or one year after termination.

OSHA – A Log and Summary of Occupational Injuries and Illnesses must be kept for at least five years, according to the Occupational Safety & Health Administration.

ERISA – The Employee Retirement Income Security Act requires that most corporate and employee pension plan records should be kept indefinitely.

ADA – The Americans with Disabilities Act requires you to keep personnel and employment forms relating to hiring, promotion, demotion, transfer, layoff, termination, rates of pay, etc., and selection for training or apprenticeship for at least one year.

ADEA – The Age Discrimination in Employment Act requires you to keep payroll records for at least three years and personnel records for at least one year.

Corporate recordsKeep all records associated with the formation of your

business, such as articles of incorporation, partnership agree-ment, LLC documentation and business licenses. Also save bylaws and minutes of all board meetings.

Shareholder records should include stock registers and records of all share issuances and redemptions. Also keep copies of all contracts and leases. And do not forget proprietary information such as formulas, trade secrets, patent information and designs. – Michael Redemske, CPA

Despite a dismal real estate and construction market outlook for 2011, there is one bright spot.

A combination of government and local incentives and rising energy costs is spurring growth – albeit slower than expected – in the residential energy efficiency retrofit industry. From new insulation to doors and windows to system upgrades, including alternative energy, homeowners are making investments.

A main driver is the federal government. Sustainability projects were a key piece of the American Reinvestment and Recovery Act of 2009, with planned stimulus spending in 2011 and 2012 to total 19.9 percent and 22.1 percent, according to the Congressional Budget Office.

The rationale is to stimulate the construction industry, create higher-skilled, higher-paid “green” jobs and help homeowners reduce energy costs while benefiting the environment.

At the local level, state and county governments are imple-menting weatherization programs. Utilities are also stepping up their energy efficiency efforts by offering rebates and on-bill financing. And unlike the 1970s, when the gas crisis and interest in alternative energy quickly faded when oil prices sank, continued world unrest and volatile fuel and energy prices are ensuring that efficiency upgrades will continue even after spending based on tax credits ceases.

The attention to retrofits is more than a feel-good idea. According to nonprofit Affordable Comfort Inc. (ACI), homes account for 20 percent of national energy use. Homeowners can save an average of 10 to 40 percent in energy costs with basic improvements. When you consider that some energy costs, such as heating oil, have doubled or tripled, making these improvements could help keep homes affordable.

ACI’s Thousand Home Challenge is pushing the envelope further by seeking 70 to 90 percent cuts in energy use in existing

homes. While this may be ultimately impossible, the project is a real-life laboratory exploring new technologies amid the challenges of working with older homes.

The first step to entering this market is learning state-of-the-art techniques. Fortunately, there is a wealth of resource material for contractors.

The Department of Energy is creating a set of voluntary guidelines for efficiency projects and work force development. Available now on the website is a draft document presenting work specifications and job analysis outlines. Familiarity with these standards will help contractors when preparing bids for projects funded by federal dollars.

ACI has positioned itself as a “go-to resource” for best prac-tices in home weatherization. It offers regional and national conferences, with meeting proceedings posted as webcasts.

The Building Performance Institute (BPI) is a nonprofit offering certifications in energy efficiency. Education is offered nationally through a network of training affiliates. BPI states that some state-funded weatherization programs are requiring that contractors be BPI certified. The American Society of Heating, Refrigeration and Air-Conditioning Engineers also offers training and certifications.

Key to growing a successful energy efficiency retrofit business is a strong customer marketing and education program.

Many homeowners are not aware of how much energy they can save, how much (or little) improvements cost or what incentives are available to help pay for them. In the best case scenarios, energy costs are lowered enough to offset any loan payments. Calculating energy savings, payback periods and net cost of improvements for your customers is a valuable part of the sales process.

To get an overview of what’s available in your state, check DSIRE, the Database of State Incentives for Renewables and Efficiency. It has a state guide to all kinds of programs, including state and utility rebates, tax incentives, financing programs and community-specific programs. With this information, you can target customers who use certain utility companies or live in specific cities or counties.

For all homeowners, the Energy Star website has informa-tion on federal tax credits for consumer energy efficiency. Tax credits are available in 2011 for a wide range of improvements, including biomass stoves, heat pumps, windows, insulation and furnaces. Wind turbines, geothermal pumps and solar systems also qualify. Energy Star provides educational materials you can use with customers in explaining the benefits of various improvements. Contractors can also participate in Energy Star’s Whole House program.

Energy efficiency is a trend that is here to stay. Don’t miss the opportunity to position your contracting business as a great resource for your customers’ energy efficiency needs. – Elizabeth Penney

Record keeping continued from page 1How to develop a

document retention policySome people save every scrap of paper, while others toss

everything without a second thought. But if a legal problem arises or the business is audited by the IRS, it may be the one memo thrown out or the one e-mail that was not deleted that saves or costs the company thousands of dollars.

Document needs vary from industry to industry and from company to company. After you have identified your legal and business requirements, here are some suggestions for devel-oping a document retention policy:

➲ Consult your attorney, accountant, human resources professional and others. They can tell you which documents you need to keep and when you can destroy them.

➲ Create a calendar that describes the time and method for archiving, maintenance and destruction of documents.

➲ Train your employees so they understand the policy and make it part of your employee handbook.

➲ Follow your policy diligently. Do not wait until someone sues you to implement it.

➲ Explain the rationale for each part of the policy. Assume you will have to defend every action later.

➲ Write everything down – the policy and the rules for implementation and enforcement.

Your document policy should include the following:➲ A statement of purpose➲ A description of the specific records and documents

covered by the policy, including both written and electronic records

➲ Exceptions to the policy➲ A schedule showing what is to be retained, by whom,

and where the documents will be stored and for how long➲ A schedule showing which documents were destroyed

and when and how they were destroyed➲ A stipulation that management must approve the

destruction of documentsIf you are under the threat of a lawsuit, you should check with

your attorney to determine whether document destruction should be suspended or continued.

Of course, retained documents are of no use if you cannot find or access them. Your retained documents should be:

➲ Archived➲ Indexed➲ Searchable➲ Organized logically➲ Perhaps encrypted (save the passwords at a different

location)You should ensure that access to the files is limited and be

sure to store duplicates offsite.Document management software may be available to assist

you.

DSIRE – www.dsireusa.orgEnergy Star – www.energystar.govACI – www.affordablecomfort.orgBPI – www.bpi.org

Department of Energy – www.eere.energy.gov

Energy Efficiency Retrofits as a Growth Area

Resources

Summer 2011 Building For Success2 Summer 2011 Building For Success 3

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701 www.gsscpa.com | gss@gsscpa.com

(727) 821-6161If we may answer any of your questions on the information contained in this

publication, please contact us.

A common question asked by business owners and managers is, “What records should we keep, and how long should we keep them? The answer often depends on the type of record being considered.

Business records can fall into several categories, including accounting records, tax records, employment records, internal business records and records necessary to comply with government regulations.

There is another question business managers should be asking: “When should we destroy certain records?”

Most businesses should have a record retention policy and a record destruction policy. It is a good idea to have both policies reviewed by your legal counsel, your tax adviser and your outside auditor.

Tax recordsThe IRS says that you must maintain adequate records, so support

almost every item of income and expense that you claim. That means you must be able to produce receipts, invoices, canceled checks or banking records supporting all expense items. Similarly, you should keep sales slips, invoices or bank records to support all

income items.Normally, the IRS has three years after

you file your return to commence an exam-ination. In some cases, if a substantial amount of income is omitted from the return, the period is extended to six years. As a result, many advisers suggest that you can dispose of tax records after seven years.

But some tax records need to be kept longer. Copies of prior tax returns and elections they contain should probably be preserved indefinitely. Records supporting

t he cost basis

in assets you have owned for many years,

such as buildings and long-lived equipment, should

be retained until the asset is disposed of. Carry-forward items, like records supporting net operating losses, should be retained until seven years after the year in which the carry-forward item is itemized on a tax return.

Accounting recordsYour business probably has an adequate accounting system to

capture routine transactions. If you construct a building for your own use, you need to capture all of the costs associated with the project. When you buy a vehicle, computer or piece of office equipment, retain all purchase documents, assign an inventory number, and set up a depreciation schedule.

If you acquire another business, not only should you keep records of the purchase transaction, but you may also need to gain control of the accounting records from the prior owner, particularly if you are assuming responsibility for events that may have occurred before you purchased the business.

See Record keeping on page 3

Researchers in industrial and organizational psychology have long known that what gets measured is what gets done. Employees are likely to do more of those things they know are being measured and less of those that are not.

Herein lies the value of setting performance goals for employees and measuring their progress toward achieving them.

Following are some keys to setting the right kinds of performance goals.Goals should be relevant.

Ask yourself this. If the employee were to achieve this goal, what difference would it make to the company? Ultimately, all performance goals should support the company’s overarching goals or mission. This means your direct reports’ goals should support your goals, your goals should support your manager’s goals, and so forth up the line.The scope of goals should be neither too broad nor too narrow.

The scope of an employee’s goals should fit their level in the organi-zation. Senior managers’ goals should be strategic. Middle managers’ goals should be tactical and support strategic goals. Non-managerial employees’ goals should be operational and support tactical goals. Goals should be about results, not how to achieve them.

The most common error in goal setting is to make goals that look like a to-do list. For example, “Submit expense reports on time.”

“Store materials properly.” “Conduct new-hire training.” These are tasks, not goals.

Goals should produce value-added outcomes.The way to change a task into a goal is to ask yourself, “Why are

we doing this? What is the value of the task?” This will point to the desired results, which is the goal.Don’t set goals that are too easy or too difficult.

Goal-setting theory holds that, to increase motivation and stimulate better performance, goals should be hard to attain but not too hard. “Stretch goals” are useful, but make sure the employee is able to achieve them. “One hundred percent of calls answered within 25 seconds” is probably impossible. Ninety-five percent might be reasonable.

Choose practical measurements of goals.It should not require as much time and effort to measure a goal as

it does to achieve the goal! Nor should measurement be expensive or intrusive. Whenever possible, choose measurements for which data are routinely gathered, such as from sales records, your telephone answering system, complaint logs or customer satisfaction surveys.

By following these guidelines for setting performance goals with your employees, you will likely get a higher performing team. – Jeff Van Pelt, Ed.D., SPHR

Goal setting with employees to maximize performance

I n s i d e

Summer 2011➜Energy Efficiency

Retrofits as a Growth Area

I n s i d e

Record keeping: What, Why, For How Long?

Building For Success

An information bulletin to contractors from:

The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2011 CPAmerica International

Williamston252.792.6081

Belhaven252.943.2723

Clayton919.553.5291

Goldsboro919.751.8297

LaGrange252.566.4135

New Bern252.633.5821

Raleigh919.848.1259

Wilson252.243.2117

Affiliation with CPAmerica Internationalwww.ppccpa.com