South Carolina Business Management and Law for Residential Builders

Key Concepts

Sole proprietorship — Simplest ownership form; you are the sole owner and own the assets of the business. The owner bears unlimited personal liability for all actions taken in the name of the business; net income is reported as ordinary income and sole proprietors do not pay corporate income taxes. The business dissolves upon the owner's death. If it does business under a different name, a fictitious name certificate is typically filed. (Pages 2-1, 2-5)

Partnerships — A relationship between two or more persons who join to carry on a trade or business. A general partnership can be formed by oral agreement, but a written agreement is recommended. All general partners have personal and unlimited liability; limited…

Key Concepts

• Purpose of licensing. "A major purpose of contractor licensing is to protect the health, safety, and welfare of the public." Licensing also "defines the work that a contractor is allowed to do under a particular license" and establishes entrance requirements, standards of practice, and disciplinary authority to protect the public from unqualified, incompetent, and unethical contractors (NASCLA Contractors Guide, Ch. 3 — Purpose of Licensing). Section 40-1-10(A) adds that the State may abridge the right to practice a trade only "as a reasonable exercise of its police powers."
• Commission composition. Per Section 40-59-10(A), the SC Residential Builders Commission "must be composed of eight persons" who have been state residents at least five years: two consumers…

Key Concepts

• Bid package contents — an invitation to bid (project overview, deadlines, general requirements), bid instructions (how the bid is completed and submitted), bid forms (bid sheet, bid schedule, bidder's questionnaire, copy of the contract), and supplements (property survey, soil analysis). Chapter 7, Bid Documents (Page 7-1)
• Unresponsive bidder — a bidder can be found "unresponsive" if information is incorrectly submitted or omitted altogether. Bid Documents (Page 7-1)
• Addendum — changes made to a bid package before it is due are issued as an addendum, which becomes part of the bid documents and ultimately part of the contract. Bid Documents (Page 7-1)
• Specs vs. codes — if specifications and applicable codes conflict, follow **the…

NASCLA Contractors Guide — SC Residential Builders, 8th Edition | Chapter 8: Contract Management

Key Concepts

Four required elements of a binding contract (Chapter 8 — Required Contract Elements): (1) Offer and Acceptance, (2) Consideration, (3) Competent Parties, (4) Legal Purpose. Notarization is not required.

• Offer and Acceptance (Chapter 8 — Offer and Acceptance): An estimate or bid submitted for work is an offer. The acceptance window is typically 30 days, but it should be stated in the offer. If no deadline is stated, the offer expires in a "reasonable time," which is up to court interpretation on an individual case basis. A counteroffer is not acceptance — acceptance occurs only when both parties agree to the contract…

NASCLA Contractors Guide — SC Residential Builders, Chapter 9: Scheduling and Project Management

Key Concepts

Scheduling process (Chapter 9 — Scheduling Process). Scheduling takes the list of tasks and labor hours from the quantity take-off and assigns an order of completion. The elements determined during scheduling are: sequence of tasks, activity duration, contingency time, task time ranges, and float time.

• Activity duration depends on size of the project, labor hours estimated, and length of time dedicated to the task each day. Example from the source: a task estimated at four hours where the crew has only two hours per day = two working days.
• Contingency time is a buffer between tasks to protect against unforeseen delays. Rules:…

South Carolina Business Management and Law for Residential Builders

Key Concepts

Risk management benefits — Good risk management provides three benefits: lower business and liability insurance premiums, reduce chances of being sued, and improve chances of prevailing in a lawsuit (Chapter 4, Risk Management Benefits).

Indemnity — A way to transfer risk and exemption from loss incurred by any course of action; an insurance payout is sometimes called an indemnity (Chapter 4, Insurance).

Commercial general liability (CGL) — Basic liability coverage for four types of injuries: (1) bodily injury to non-employees, (2) damage or loss to property not belonging to the business, (3) personal injury, including slander or damage to reputation, and (4) advertising injury (Chapter 4, Commercial General…

Exam: South Carolina Business Management and Law for Residential Builders

Key Concepts

The governing standard. Recordkeeping duties come from 29 CFR 1904, Recording and Reporting Occupational Injuries and Illnesses, one of the three OSHA standard sets that apply to construction (along with 29 CFR 1926 and 29 CFR 1910) — Chapter 12, Safety Standards section (p. 12-1).

Who must keep records. Every employer covered by OSHA who has more than 10 employees, except employers in certain low-hazard industries in the retail, finance, insurance, real estate, and service sectors, must maintain three types of OSHA-specified records of job-related injuries and illnesses: OSHA Form 300, Form 300A, and Form 301 — Chapter 12 — OSHA Recordkeeping section (p. 12-3).

Reference: NASCLA Contractors Guide — SC Residential Builders, 8th Edition

Key Concepts

Employee documentation at hire - Employers must verify each new employee is legally eligible to work in the U.S. by completing USCIS Form I-9, Employment Eligibility Verification (Page 15-5, Circular E / Publication 15, Hiring New Employees). - Form I-9 must be kept on file at least three years after the date of hire, or one year after employment ends, whichever is later (Employee Management chapter — Immigration and Nationality Act). - Ask each new employee to complete Form W-4, Employee's Withholding Allowance Certificate, to figure federal income tax withholding (Page 15-4, Federal Income Tax Withholding; Publication 15, page 21). - If a new employee **doesn't give…

Key Concepts

• Accounting cycle (six steps, in order): classifying/recording transactions, posting, preparing a trial balance, preparing an adjusted trial balance, preparing financial statements, analyzing financial statements — Chapter 14, "The Accounting Cycle" section (Page 133).
• Debits and credits: a debit increases asset and expense accounts and decreases liability, equity, and income accounts; credits do the opposite. Every general ledger entry contains both a debit and a credit, which must equal each other — Chapter 14, "Understanding Debits and Credits" sidebar (Page 134).
• Journals: cash receipts and sales, purchases, cash disbursements, payroll journal (summary of salaries and wages, deductions, and employer contributions), and general journal — Page 134.
• Balance sheet: Assets = Liabilities + Owners' Equity.…

Key Concepts

Employer Identification Number (Chapter 15, Tax Basics — Employer Identification Number section) - The EIN is a 9-digit number issued by the IRS, arranged as 00-0000000. - Four ways to obtain one: call the Business and Specialty Tax Line at (800) 829-4933; fax the completed Form SS-4; mail the completed Form SS-4; or apply online at www.irs.gov. - Only entities that do not need an EIN: sole proprietorships with no employees and no excise or pension tax returns, and single-member LLCs where the owner will NOT file employment tax returns. Those owners use their Social Security Number as the taxpayer identification number.

Key Concepts

• Purpose of a mechanics' lien. A mechanic's and materialmen's lien "clouds" the title to real property and is a method (sometimes the only method) for securing payment for labor or materials used in the improvement of real property. It stops the owner from selling with clear title, and it may be foreclosed in a lawsuit in which the court can order the property sold and the proceeds used to pay the contractor, subcontractor, laborer, or material supplier — even if the owner already paid the general contractor, meaning the owner may have to pay twice. (Chapter 16 — What is a Lien?) The governing law is the South Carolina Code of Laws, Title 29, Chapter 5…

South Carolina Business Management and Law for Residential Builders

Key Concepts

Federal framework. The Clean Water Act establishes the basic structure for regulating discharges of pollutants into the waters of the United States and gives the EPA authority to implement pollution control programs, such as setting wastewater standards for industry and water quality standards for all contaminants in surface waters. (Ch. 12 — Environmental Law section)

State agency. The South Carolina Department of Health and Environmental Control (DHEC) is responsible for enforcement of federal and state environmental laws and regulations and for issuing permits, licenses, and certifications for activities that may affect the environment. (Ch. 12 — South Carolina Department of Health and Environmental Control section)