Chortek's 401(k) audit services

Why Should Your Business Consider a 401(k) Audit?

As your business grows, there may come a time when you need to have an external 401(k) audit. What should you know about the process before you hit that key number of 120 eligible employees? We are experienced when it comes to 401(k) audits. Here’s what we’ve seen at Chortek, and what you should think about before you need one.

Why Would I Need a 401(k) Audit?

Your business will spark its first 401(k) audit when you have 120 eligible employees at your company. This doesn’t mean that 120 employees would have to participate in your 401(k) plan, but they would be eligible to participate. After that, if you have over 100 eligible employees, your company is considered to have a large plan. A large plan requires an audit. Likewise, under the “80-120 participant rule,” if you happen to be over 100 employees, but filed as a “small plan” in the previous year, you can do that in the current year as long as you have under 120 eligible employees.

We’ll be honest – nobody comes to us asking for a 401(k) audit. The reason you’d get one is to make sure you’re compliant, so you don’t suffer penalties from the IRS. So, once you hit that 120 number, you’re going to need one, and in all following years where you have more than 100 eligible employees.

What are the Most Common Problems We See on 401(k) Audits?

The biggest thing we see at Chortek when working on 401(k) audits for our clients is that people either over-rely or misunderstand what it is their recordkeeper does. Make sure you have an understanding of what your recordkeeper collects and what payroll records, because ultimately, your company is responsible for keeping track of everything, and will pay the fine related to any missing documentation. Download our checklist for the list of documents you will need to be ready before the process even starts.

We also see frequent miscommunication or disconnection between the payroll provider and the recordkeeper. For example, if an employee increases their contribution by 2%, how is payroll informed about that? How does the system work for changes? When there is a communication breakdown, it’s more common for a company to fail to remit contributions in a timely manner. We can help provide insight and advice on what we’ve seen successful clients do in the past for these processes as part of our work with you.

What Should You Do If You’re Close to Needing a 401(k) Audit?

First, if you’re close to needing a 401(k) audit, meaning you are close to having 120 eligible employees, your first priority would be in seeing if you can delay the audit another year or so. Go through your trust report to look for people whose balance is below the cash out level. If they are either no longer employed by you or have retired, they can automatically get out of the plan. Keep their number down to push the audit off longer.

Second, make sure you are determining eligibility correctly. Are people in your plan able to participate on a timely basis? If not, you owe them money from the time they were supposed to be enrolled in the plan versus the time they were actually enrolled. If you’re doing some piece of eligibility wrong, like not responding quickly to manual pieces of auto enrollment, you could owe your employees their contribution, plus the match, plus lost earnings. Your company is on the hook for any mistakes in determining eligibility.

Before you ever need a 401(k) audit, you should make sure what your plan documentation says matches up with what you’re actually doing, and if not, work to amend the plan document. You can write almost any amendment and any provision to make your plan document describe the way your plan works, but you have to have it in place well before your audit.

What Types of 401(k) Audits Are There?

There are two different types of 401(k) audits – the limited scope and the full scope.

A limited scope audit saves time and is more affordable, because your accounting firm isn’t auditing investments or investment activity. It is the most common type of audit, and is essentially about compliance – Regardless of intentions, are you doing what your plan document says? You should be treating your document as the governing body of your 401(k) plan. To find out if you are eligible for a limited scope plan, you need to ask the custodian of your assets to issue a certification on the assets (generally your custodian is an entity like a bank or a life insurance company). If the certification goes through, we can do a limited scope audit for you.

A full scope audit includes lots of additional procedures, including an audit on the valuation of the investments themselves. If we were to conduct a full scope audit for your company, we would need to report on the dividends received, daily valuations, and many other figures. Because it is more time- and labor-intensive, you want to find out if you can get a limited scope audit first.

What Else Can We Do For You?

When auditing your 401(k) plan, Chortek can also advise on provisions to change in your plan to make them a better match for your business. We can look at the eligibility requirements versus your goal for the plan, and see if those requirements are helping you achieve your goal. Based on employee retention, the nature of your business, and the characteristics and practices of the people involved with the plan’s operations, we can advise you on what provisions might be the best fit for your company.

We can also provide consulting services before you hit 120 eligible employees to help you make sure everything is in order when the day comes that you need an audit.

Outside of 401(k) audits, we are a firm that can provide a wide array of services that can help you achieve success for the life of your business – outsourced accounting, state and local tax services, and managed IT services, to name a few. Managing your business is stressful enough, without having to worry about the behind-the-scenes processes to keep it running smoothly. Chortek can manage some of that burden for you.

Want to learn more about what we can do for your business? Contact us today!

A QuickBooks issue, like a plumbing issue, may need an expert. Here's why you need an accountant.

If You Have QuickBooks, Do You Need an Accountant?

If you have QuickBooks, you may still need an accountant. Here are three reasons why having an accountant, even if you use QuickBooks, is a great idea.

If you have a clogged drain, do you need to call a plumber? Maybe, but maybe not. However, when you’re building a new house, you have a layout of your plumbing needs as part of the design phase, well before you build the house. The same idea is true when it comes to accounting needs for your business.

When you start a new business, an accountant can help you identify the most helpful chart of accounts that makes sense for your business. You want your financial information to flow properly and be accounted for accurately. When tax time rolls around, you want to be able to identify the activities that can be deducted. This will help you save money and limit your tax liability. Once you get the hang of things, sometimes you need a checkup to ensure you stay on track. These check-ins can help when you experience a “clog,” so to speak, that prevents the proper flow of information.

So, how do you keep yourself from making emergency plumbing calls to an accountant? Here are three reasons why you need an accountant, even when you have QuickBooks.

You need an accountant to confirm your records

QuickBooks is user-friendly. It automatically books the double-entry, meaning debit and credit. For example,  when you write a check to pay the utility bill and enter utilities expense, QuickBooks makes the entry hitting both the checking account and the utility expense account.  It does not allow the debit to not equal the credit.  However, you can mistakenly choose the wrong account and QuickBooks will not identify the error.  The debit will equal the credit, but it will not know to correct the account.

Say your business purchases equipment for $5,000.  You write a check marking equipment expense, and then you think you’re done. However, there are rules to assess based on the type of equipment you’ve purchased. Most likely, you should account for this as an asset on your balance sheet, and not an activity fully expensed in the year it was purchased. Equipment purchases like these are called capitalized assets. The initial entry is then affecting your balance sheet verses the income statement.  However, capitalized assets are depreciated and thus expensed over a period of time.  Therefore, further entries are made over time to slowly expense the asset.

There are various other instances where the entry made is not always a simple answer and further details are needed to make the proper accounting entry.  This is when having an accountant to turn to is beneficial.

You need an accountant to ensure compliance

There are various areas of compliance that accountants need to pay attention to. Some of these areas include tax filings, payroll-related filings, and tax rules for depreciating and amortizing. QuickBooks assists by providing information to perform these functions, but again, QuickBooks will not detect errors and confirm the filings are complete and accurate.  You need an accountant to ensure compliance.

A perfect illustration of this is when an accountant performs the annual tax return. Once an accountant confirms that the records are accurate, they use that financial information to perform an annual tax return. If income and expenses are not appropriately stated, the reporting would cause inaccurate results on the tax return. Inaccurate results mean potential fines and penalties. It is not only important to file accurately, but also in a timely manner.  An accountant would be able to keep you on track with all of your filing requirements.

In relation to the above records entry for capitalizing assets, different assets are depreciated using different rules.  Your accountant will ensure you are properly reflecting the net value of the assets on your books by complying with the current tax guidance.

You need an accountant to provide guidance

Accountants are trained in what to look for and ask about to assist business owners, not only in day-to-day activities, like ensuring your balance sheet is updated, but also looking at trends and noticing when a pattern reveals something has changed. Accountants also know the right questions to ask that will better help them guide the organization and assist management. Your accountants can advise you on how to segment information in QuickBooks to best identify business segment profitability. You can quickly identify which business segments aren’t worth your additional investment, and focus on the segments that are performing well for you. Or, your accountant can help you figure out where to best invest your money, time, and further training to get under-performing business segments on track.

In the end, you need accountants to provide value to your business.  They will help you ensure proper records, compliance, and offer guidance to help you run your business better. As a business owner, you can’t know and see everything, so your accountant is your extra set of eyes. Accountants have experience to enhance the financial aspects of your business.

All things flow together, but in order for them to flow smoothly, you need an accountant. Don’t get clogged up. Let Chortek keep you flowing, so you can do what you do best. Contact us for more information on our QuickBooks services.

succession planning 5.15.19 690x215

White Paper: Employee Incentive Planning – Succession Planning

Leaving behind a strong management team should be an essential step in any business owner’s succession plan. Keeping key employees is crucial to growing business cash flow and value and attracting sophisticated buyers. It is also vital if you are planning on transferring the business to your management team or children.

The first step in building an incentive plan is identifying the key employees you want to benefit from the plan. Key employees are apt to act more like owners than employees. They are up to challenges and are always looking for the next opportunity. Key employees have a stake in the company like it was their own. Once you’ve identified your key employees from your other employees, you can start planning incentive programs to keep them around.

Our white paper on key employee incentive plans includes the five criteria you need to consider when creating a plan. It also outlines the pros and cons of offering a stock- or cash-based plan, along with details to consider for each. We have included a downloadable employee benefit checklist you can use to create and evaluate your incentive plan.

With these tools, you’ll be that much closer to achieving your goal of creating an airtight succession plan. Want to know more about the process? Contact us, and we can guide you through the rest.

Read the white paper –  Employee Incentive Planning

Download the checklist – Employee Benefit Checklist

resources for the construction industry

Key Resources for the Construction Industry

When we work with companies to select the right system that fits their needs, we also spend time researching their industry to determine which systems should be on their list for evaluation. In doing this, we’ve found that the construction industry in particular has a great resource you may not be aware of.

JBKnowlege ConTech Report

JBKnowledge, in partnership with The Construction Financial Management Association (CFMA), National Electrical Contractors Association (NECA) and Mechanical Contractors Association of America (MCAA) conducts annual surveys to develop its ConTech (Construction Technology) report. Survey answers include what technology solutions respondents are using for estimating, project management, and more. If you want to read the latest surveys, you can do so for free through JBKnowledge, which has been conducting the survey since 2012. If you want to keep up-to-date on the latest technologies being used in the construction industry, this survey should be on your list to review every year. You can use this report to benchmark your company’s use of technology compared to your peers. You can also use the information to improve almost every aspect of your business. Here are a few recent stats from the 2018 report:

IT budget

  • 46% of construction companies are spending less than 1% of their revenue on IT.
  • 41% of construction companies are not billing their IT expenditures to specific projects.
  • However, the percentage of companies who are billing IT indirectly or directly has increased from 22.2% in 2017 to 24.5% in 2018, so it is increasingly becoming a billable expense.

IT staffing

  • CFOs and CEOs are most likely to be in charge of the IT department.
  • 66% of construction companies have a dedicated IT staff of 1-5 employees.
  • Generally, staff size has mostly to do with the number of employees in the company.

Data security

  • Employee training is the most common method of cloud data security. 66% of companies said they did this.
  • 78% of companies have not experienced a data breach in the last 12 months.

Mobile devices and top mobile apps

  • 85% of companies believe that mobile development is important or very important for their industry.
  • More people surveyed use smartphones (93%) than laptops (80%) daily.
  • Top apps for daily report management included Bluebeam, Procore, PlanGrid, and BIM 360 Field (Autodesk).


  • Workflows are less likely to be dependent on spreadsheets in 2018
  • Accounting/ERP workflows are most likely to be using dedicated software (80%), followed by estimating (56%).

Top 3 Software Choices by Category

  • Accounting: Viewpoint, Sage 300, QuickBooks
  • Takeoff: On-Screen Takeoff, Bluebeam, Accubid / Autobid
  • Estimating: Sage Estimating, AccuBid (Trimble), HeavyBid
  • Bid Management: SmartBid, iSqFt, BuildingConnected
  • Project Scheduling: Microsoft Project, Primavera P6, Procore
  • Project Management: Procore, Prolog, HCSS HeavyJob
  • CRM: Cosential, Salesforce, Outlook
  • File Storage / Collaboration: DropBox, OneDrive, SharePoint

Emerging technologies

  • 35.2% of people survey are using voice assistance technology sometimes, with 58% of them using Siri.
  • The majority of respondents (59%) are not using drones on construction sites.
  • 38% of companies believe that prefabrication will give them a “strategic advantage” over competitors.

Chortek’s White Paper

If you are considering replacing your existing systems, our white paper on “How to Select a New Business Management System” is a must-read.

Are you trying to decide what system is right for your business? Contact us to start the conversation today. We can connect you with the resources and the experienced people to continue to grow your business.

Chortek managed IT services - Outsourced IT services

IT Outsourcing Services: 4 Things to Consider When Choosing a Company

When it comes to IT outsourcing services, you have a lot of options. If you select the right firm, an outsourced, managed IT service can help provide focus. They can free up your time spent managing IT either in-house, or with an IT firm that is more reactive. Here are a few things you should consider when you’re searching for the ideal managed IT service company:

1. They suggest the right tool for the job

While it may be easier for you to visit a website and see a pricing page of everything a managed IT service company has to offer, this may be an indication that the company is more interested in selling you as many tools and services as possible without assessing your actual needs. At Chortek, we only recommend tools that fit the IT challenges of your unique business. The last thing you want from a company specializing in small business IT outsourcing services is one that pushes a long line card of products. They need to understand the business challenges you have, and match the services and solutions to that challenge. Read More >

Integration is driving the need for new systems - integrated business systems blog

Integration is Driving the Need for New Systems

There are a few contributing factors that have led to changes in how people look at and buy new business software. Some of the consideration comes from end users becoming more knowledgeable about business software, and some has to do with the business climate changing over time, but regardless, there is an increased emphasis on opting for software that lends itself well to integrated business systems. Learn more about the history of how the demand for increasingly integrated software has grown over time. Read More >

Are SaaS Solutions Right For Your Business?

Are SaaS Solutions Right For Your Business?

Software as a Service (SaaS) is a distribution model for software with wide-reaching applications. With SaaS, businesses can use and access software hosted by a third party as an enterprise resource management (ERP) cloud solution. But, are SaaS solutions the right fit for your business? In this blog, we review deployment options for software, providers, vendors, and the potential future for SaaS/Cloud ERP solutions, so you can better determine what makes sense for your business.

Deployment Options


On-Premise software is installed on your servers. Because it is onsite, and not hosted by a third party, you will be responsible for upgrading the operating system (OS) and physical box periodically. You will likely need an internal IT staff member to maintain systems, or you will need to contract with an IT provider. Read More >

5 reasons why business valuation is important

White Paper: 5 Reasons Why Business Valuation is Important

Here are 5 reasons why business valuation is far from an unnecessary expense. 

Small business owners have a lot on their plate, and have to be wise about their expenses. The last thing you want to do as a business owner is spend money on something that doesn’t feel essential. If you’re years away from selling, a business valuation likely sounds frivolous. It’s just as likely that selling your business hasn’t even crossed your mind yet.

At some point, you will need to think about what comes next for your business. Getting an estimate of value is a great first step to a more predictable future for you and your small business. Our latest white paper outlines why an estimate of value should be a can’t-miss item on your to-do list.

Download our white paper today – Business Valuation: 5 Reasons Why It’s Important

How to reissue a bill payment in QuickBooks in a closed period

How to Reissue a Bill Payment in QuickBooks in a Closed Period

A vendor you paid via Bill Payment lost the check.  You need to re-issue the Bill Payment check, but it was in the last fiscal year and the books are now closed.  You do not want to delete or void the check as this would cause problems.  Therefore, you want to perform the following steps: Read More >