BUSINESS TIP – JANUARY 2017

IRS continues to enforce “reasonable” sharehold-employee salaries

 

 

In the ceramic tile industry there are many small businesses which may be Subchapter S Corporations, since there are many appealing tax benefits while still providing liability protection to the shareholders. If you’re a shareholder-employee of an S Corporation, you more than likely considered the tax advantages of this entity choice. But those very same tax advantages also tend to draw IRS scrutiny. And the agency has made clear that its interest in S Corporations – including possible audits – will continue. The IRS focuses on determining whether the salary of the shareholders is unreasonably low. The tactics listed below will help protect your company from this IRS examination.

 

 
What’s the problem?
The IRS pays particular attention to S Corporations because, as you well know, shareholder-employees of these organizations aren’t subject to self-employment taxes on their respective shares of the company’s income. This differs from, say, general partners in a partnership.

 
To better manage payroll taxes, many S Corporations minimize shareholder-employee salaries (which are subject to payroll taxes) and compensate them mostly via “dividend” distributions. If this holds true for you, the IRS may take a close look at your salary to determine whether it’s “unreasonably” low. The agency views overly-minimized salaries as an improper means of avoiding payroll taxes.
If its case is strong enough, the IRS could recharacterize a portion of distributions paid to you and other shareholder-employees as wages and bill the employer and/or employee for unpaid taxes, interest and possibly even penalties.

How do you define it?
By following certain guidelines, your business can ensure salaries paid to you and other shareholder-employees have a higher likelihood of meeting the agency’s typical standards of reasonableness.
For starters, do some benchmarking to learn how S Corporations of similar size (as indicated by capital value, net income or sales) in your industry and geographic region are paying their shareholder-employees. In addition, pay close attention to certain traits held by your shareholder-employees. These include:
Background and experience
Specific responsibilities
Work hours
Professional reputation
Customer relationships

 

The stronger these traits are, the higher the salary should be in the eyes of the IRS. Shareholder-employee salaries should be fairly consistent from year to year, too, without dramatic raises or cuts.
For more in-depth information about the particulars of S Corporations, visit https://www.thebalance.com/the-s-corporation-your-questions-answered-397844 or http://tinyurl.com/hp2qwna.

 
CTDA helps you succeed in your business through a variety of programs and services that include educational opportunities, webinars, and discounts on shipping, client collection services, telephone charges, auto rentals, and more. CTDA offers networking and relationship-building opportunities through participation in Total Solutions Plus all-industry conference and Coverings annual trade show. Membership in CTDA also increases your national exposure and gives you access to the annual membership survey, a valuable resource to evaluate your company in terms of profit improvement, employee compensation, distribution and company performance. The CTDA website, CTDA Educational Opportunities, Weekly Newsletters and TileDealer Blog are all free resources that will “keep you in the loop” as well. CTDA is always looking for ways to improve the benefits of membership. To learn more about membership, please contact [email protected] or 630-545-9415 visit the website at www.ctdahome.org. Like CTDA on Facebook and Twitter @Ceramic Tile Distributors Association (CTDA).

BY THE BOOK – JANUARY 2017

ANSI Standards:
a tile installer’s best friend!

 

By Scott Carothers,
CTEF director of Certification and Training

How familiar are you with the ANSI American National Standards Specifications for the Installation of Ceramic Tile? (ANSI stands for the American National Standards Institute.) If you aren’t, and you’re in the tile installation business, it’s time you pay attention. ANSI Standards are a tile installer’s best friend!

Why tile installers should study the TCNA Handbook and ANSI Specifications
For continued success, tile installers should study the TCNA Handbook for Ceramic, Glass and Stone Tile Installation and ANSI Specifications, retaining as much as possible, or at least knowing where to find the answers. These books can be your best friend as this article – based on a true story – explains.
Here’s how the story goes.

 


After successfully completing the Large Format Tile and Substrate Prep test – one of the  ained in the Advanced Certifications for Tile Installers (ACT) program – an installer returned to work installing tile while also being the jobsite superintendent.
On this particular day, the superintendent was representing his company at a pre-job conference with the architect since the business owner was not available.
The architect reviewed the scope of the job involving the tile installation and said that the job included a 12” x 24” non-rectified porcelain tile which was specified to be installed in a running bond (brick pattern), at a fifty percent offset and a 1/32” grout joint.

When current ANSI Specifications call for a different application
The now ACT-certified installer politely informed the architect that the current ANSI Specification, A108.02 under section 4.3.8, calls for a much different application.
Here follow the criteria excerpted from ANSI A108.02 Section 4.3.8 regarding grout joint size, particularly in relation to the tile size, dimensional precision, and offset pattern:

4.3.8 Grout Joint Size:
To accommodate the range in facial dimensions of the tile supplied for a specific project, the actual grout joint size may, of necessity, vary from the grout joint size specified. The actual grout joint size shall be at least three times the actual variation of facial dimensions of the tile supplied. Example: for tile having a total variation of 1/16” in facial dimensions, a minimum of 3/16” grout joint shall be used. Nominal centerline of all joints shall be straight with due allowances for hand-molded or rustic tiles. In no circumstance shall the grout joint be less than 1/16”.

4.3.8.1 Running Bond/Brick Joint Patterns:
For running bond/brick joint patterns utilizing tiles (square or rectangular) with any side greater than 15”, the grout joint shall be, on average, a minimum of 1/8” wide for rectified tiles and, on average, a minimum of 3/16” wide for calibrated (non-rectified) tiles. The grout joint width shall be increased over the minimum requirement by the amount of edge warpage on the longest edge of the actual tiles being installed. For example, for a rectified tile exhibiting 1/32” edge warpage on the longest edge, the minimum grout joint for a running bond/brick joint pattern will be 1/8” + 1/32” or 5/32”, on average. Of necessity, in any installation, some grout joints will be less and some more than the average minimum dimension to accommodate the specific tiles being installed.

4.3.8.2 Running Bond/Brick Joint Offset:
For running bond/brick joint patterns utilizing tiles (square or rectangular) where the side being offset is greater than 18” (nominal dimension), the running bond offset will be a maximum of 33% unless otherwise specified by the tile manufacturer. If an offset greater than 33% is specified, specifier and owner must approve mock-up and lippage.

The ANSI Standard-based solution
The installer paraphrased the ANSI specification saying, “The tile is to be installed in a running bond offset at a maximum of 33% with a 3/16” grout joint.”
The architect asked the installer where he found this information and how he knew it so well. The installer showed the architect the portion of the ANSI book containing that standard, and told him that he became aware of this and many other aspects of the industry standards through his studies in preparation for the ACT certification tests. The architect reviewed the ANSI listing and agreed that the specifications would be modified to follow the standard that the installer had described. The tile was installed successfully and everyone involved was satisfied with the end result.
The owner of the tile company, who was absent through this process, is convinced that had they installed the tile as originally specified, the job would have been rejected due to edge lippage, requiring it to be removed and replaced.

Get to know the tile installer’s best friend!
The ANSI Standards-based knowledge saved this contractor a significant amount of time and potential expense. Using knowledge wisely can reap large benefits. Wouldn’t you agree?
Have you encountered tile installation situations where the ANSI Standards were truly your best friend? Please share your experiences with us at [email protected]

The Ceramic Tile Education Foundation (CTEF) is an educational institution that offers local, regional, and national training programs for consumers, installers, construction professionals, architects, designers, building inspectors and sales associates interested in the sale and installation of ceramic tile. Find out more at ceramictilefoundation.org.

 

QUALIFIED LABOR – JANUARY 2017

CTEF, NTCA develop Regional Evaluator program to facilitate CTI testing

By Kevin Insalato,
Regional Evaluator Coordinator

The CTEF and the NTCA are listening. The demand for qualified labor is RED HOT. If you are a talented and quality-oriented tile installer, you are in demand. The best way to prove to a dealer, tile contractor or consumer that you are a qualified installer is to pass the Certified Tile Installer (CTI) test.
In the past, the demand for CTI testing outpaced the supply. But NTCA’s Bart Bettiga and Jim Olson and CTEF’s Scott Carothers heard the screams to be tested and took action. The NTCA has tasked me to develop a plan to meet the demand for testing installers across the United States.

Invested in training
My name is Kevin Insalato, Region 5 Director and Board Member for the NTCA. I am the owner of California Flooring, which installs all types of flooring and performs full-bathroom remodeling. Our employees believe in training. Five are CTIs, one installer just took the CTI test, and our newest employee is taking the online Apprenticeship Program at the NTCA University (http://www.tile-assn.com/?page=NTCAU). Two of our CTIs are also ACT-Certified in Large Format Tile. California Flooring is a small residential business.

The CTI Evaluator program expands
Originally, the CTEF had one evaluator, but the demand for additional testing grew that number to four evaluators testing new candidates. We started a Regional Evaluator (RE) program to add and localize our REs. The training for this new group of REs began in November 2016. We held a three-day session for eight new evaluators in Chicago. All 12 Regional Evaluators worked together to revamp the original evaluation program and streamline the testing. Our intention is to provide a grading system that is transparent, fair and maintains the integrity of the CTI test.
The future of CTI testing will continue to pair candidates and distributor / manufacturer host sites. The mobility and regional advantages of our new REs will benefit NTCA members and non-members alike. The honor of hosting a CTI test is now available to those dealers and contractors willing to share their facilities. Contact me at [email protected] and we will get you on the list to be tested.

New program details:
Discounts and coupons
The amazing news about the test is the cost is only $495. This covers both the cost of your written test and hands-on skills test. All the materials you will need to prepare for this test are included. There are also videos available that will assist you to prepare for the hands-on test section.
The manufacturers recognize the importance of this test and support it strongly. You will receive $1,200 in manufacturers’ coupons after successfully passing your test.
Great news for dealers or contractors planning to test three or more employees at one time – we have a discount for you. The test price is lowered to $395 and you still receive $950 in coupons for each candidate that passes the CTI test. If you are a large dealer or contractor and we test 10 or more of your employees at one time, your test price is only $295 each, with coupons worth $ 700 for every candidate that passes the CTI tests.
The CTEF wants to continue to thank past supporters of the CTI program. For this reason, after you pay for 10 candidates to take the CTI test, every additional candidate will qualify for the top discount price of $295 with a return of $700 in coupons for every successful test candidate. We will meet your demands and get you tested. The tile industry wants you to become a Certified Tile Installer and they are willing to prove it!

EDITOR’S LETTER – JANUARY 2017

“Our business in life is not to get ahead of others, but to get ahead of ourselves – to break our own records, to outstrip our yesterday by our today.”
– Steward B. Johnson

1947. Do you remember what you were doing then? Maybe you were graduating from high school or starting a business, or maybe you weren’t even a twinkle in your mom’s and dad’s eyes yet.
1947 is a popular date here in New Mexico, where I have my home office, since that was the year of the “Roswell UFO Incident,” which purports that an unidentified flying object crashed near Roswell.

It was an important year for India and Pakistan, since both countries gained independence from Great Britain.

 
Harry Truman was the U.S. president, and signed The National Security Act of 1947 into law; the Cold war began; The Diary of a Young Girl by Anne Frank was in the bookstores; The United Nations voted to create an independent Jewish State of Israel; the film “Miracle on 34th Street” premiered in the U.S.; The first of the Dead Sea Scrolls was discovered in Qumran; Princess Elizabeth married the Duke of Edinburgh; Jackie Robinson joined the Brooklyn Dodgers; and “I’ve Got a Crush on You,” and “Always” sung by Frank Sinatra were on the top song charts.

 
1947 was important for another reason too – that’s the year that NTCA began as the Southern Tile Contractors Association (STCA) in Birmingham, Ala., under the direction of executive director Jim Trimm. STCA catered to tile contractors in 13 southern states, promoting ceramic tile and quality installation. From humble beginnings (and several name changes), it has evolved into the largest tile contractor association in the world. Joe Tarver took over the leadership of the association in 1972 when it was known as the Southern Tile Terrazzo Marble Contractors Association, and with other dedicated industry members, spearheaded the NTCA Workshop Program which took education on the road around the country; and then in 2002 Bart Bettiga took the reins to develop it to where it is today – expanding the nonprofit association’s charter of education, training, networking.
You’ll undoubtedly be hearing a lot about NTCA history over these next 12 months as we celebrate our 70th Anniversary – from the evolution of the industry convention into Coverings and then spinning off a little management and leadership conference we now know as Total Solutions Plus; the development of the Technical Committee and those first NTCA Reference Manuals and of course TileLetter, which was produced tirelessly by Myra Caldwell, who passed away last year.

 
As we skip down memory lane, I invite you to share with me your favorite memories of NTCA over the years. Maybe you were part of those early “road shows,” committees or conferences; maybe you have a unique perspective of how the industry and association has evolved over the years. Please share at [email protected], and let’s skip down memory lane and celebrate our association’s accomplishments together!

God bless,

Lesley
[email protected]

 

Ask the Experts – January 2017

QUESTION

Attached are pictures of an exterior grout leaching problem we are having on concrete, waterproofed with a membrane with a latex-modified thinset mortar and sanded grout with additive. Latex leaching (or efflorescence?) came through the grout not long after installation.
We removed all the grout three weeks ago and covered with plastic as you can see. It never got wet for those three weeks and we had fans on the tile. Yet when a penknife was pulled through the joints, the material was still a little damp and the latex is still coming through.
We feel it is in the mortar we used. A manufacturer rep is supposed to look at it. The manufacturer said for us to use unsanded grout with an additive. I do not feel like that will work at all – the latex is leaching through, even with no grout in the joints.
We felt like an epoxy grout would be the answer to fix this. What is your professional opinion on this?

ANSWER

My suspicion is that this is latex migration coming from the mortar.
This does not necessarily mean it is a problem with the mortar itself. I suspect the latex in the mortar may not have been allowed to fully coalesce and may continue to be an issue. Have you lifted a tile to examine the coverage and condition of the bond coat?
It is good that you have asked the manufacturer for a review. They will be able to assist you in determining whether this is efflorescence or latex migration, and its source. If the residue is powdery and salty it is efflorescence. If it is hard and more difficult to remove it is likely latex migration.
It is important to solve the problem then select the grout. Trying to lock in the migration with epoxy grout is not necessarily a cure for the issue. The source of the efflorescence or latex migration must be determined then remedied to ensure a long term successful solution.
If epoxy is eventually selected as a grout, ensure it is rated for UV exposure on an exterior installation.
– Mark Heinlein
CTI #1112,
NTCA Technical Trainer/Presenter

NTCA Benefits Box – January 2017

benefitsboxNTCA offers two “partner” programs in its package for members: PartnerShip® and Partnering for Success

PartnerShip

partnershipPartnerShip, the endorsed shipping management provider of NTCA, offers shipping discounts to all NTCA members on select FedEx® services, as well as savings on less-than-truckload (LTL) freight shipments arranged through PartnerShip. This program is FREE to all NTCA members, with no minimums required.

Members can request a no-obligation free quote for standard or guaranteed LTL (less-than-truckload) services from PartnerShip freight broker. The service works with the reputable LTL carriers, including: AAA Cooper, Estes Express, FedEx Freight, Dayton Freight, Old Dominion, New Penn, Pitt Ohio, R+L Carriers, Reddaway, Southeastern, UPS Freight, YRC Freight and many more!

Services also include full or partial truckload (dry van, flat bed, step deck, refrigerated, etc.). PartnerShip employs a stringent carrier review process and has access to thousands of the top truckload freight carriers across North America.

If you need to ship to a trade show, PartnerShip can help with this as well, as it can arrange great shipping rates with leading exhibit freight carriers. The company has a relationship with UPS Freight and YRC Freight and, if needed, can secure other carrier options as well.

Interested in learning more about PartnerShip or becoming a NTCA member? Contact assistant executive director Jim Olson at 612-788-4726 or email [email protected]

Partnering for Success

NTCA’s Partnering for Success benefit virtually pays you to be a member! Leading installation material manufacturers have invested in NTCA members by offering same-as-cash vouchers for valuable products you use every day – $1,800 worth of vouchers to be exact. This enables contractor members to experience all NTCA has to offer and actually MAKE money as an NTCA member when using Partnering for Success vouchers.

Participating manufacturers authorize NTCA to provide vouchers for their products that can be redeemed by NTCA contractor members, directly from the manufacturer or through any participating distributors. A total of $1,800 in vouchers is provided in contractor membership packets in these product categories: backer board, setting and grouting materials, membranes, cleaning and sealing materials, tools, floor heating systems, and ceramic tile.

In 2017, Home Depot will accept vouchers from QEP, Custom, and James Hardie.

Participating manufacturers for 2017 include: Alpha Professional Tools, American Olean, Aqua Mix, ARDEX, ATR Leveling, Bellota, Blanke, Ceramic Tool, Composeal, Contractors Direct, Custom Building Products, Daltile, Dependable Bagging, Emser, Flextherm, Florida Tile, LATICRETE, MAPEI, MAPEI Ultracare, Marazzi Tile, Mark E. Industries, Metropolitan Ceramics, MLT, NAC Products, National Gypsum/Permabase, Noble Company, NTCA Store, NTCA University, Nuheat, Oceancare, Porcelain Plus Speed Bit, Proflex, QEP, Rubi Tools, Schluter, Sun Touch, TEC Specialty, Texrite, The Home Depot, Trending Accessiblity, Trimaco, USG, VanHearron, Warmly Yours and wedi. Select the vouchers you want for the products you use or have been meaning to try. Vouchers are either used as cash, good for discounts or provide rebates on purchased products, depending on the manufacturer. For information, contact Jim Olson, NTCA assistant executive director, at 612-788-4726 or [email protected]

MAPEI Corporation – January 2017 Feature

1-featureA small building has accomplished a monumental goal. The Bill Fisch Forest Stewardship and Education Centre (FSEC), located in the regional municipality of York, Ontario, was built to meet the Living Building Challenge.

The Living Building Challenge is an international sustainable building certification program created in 2006 by the non-profit International Living Future Institute (LFI). LFI describes the Living Building Challenge as “the built environment‘s most rigorous performance standard. It calls for the creation of building projects at all scales that operate as cleanly, beautifully and efficiently as nature‘s architecture. To be certified under the Challenge, projects must meet a series of ambitious performance requirements over a minimum of 12 months of continuous occupancy.”

The Living Building Challenge is comprised of seven performance areas, called ‘Petals.’ The petals are:

  • Place – relationship to natural environment
  • Water – respecting a natural resource
  • Energy – renewable and pollution-free
  • Health & Happiness – environments that optimize well-being
  • Materials – non-toxic, ecologically restorative, transparent, and socially equitable construction
  • Equity – supporting a just, equitable world
  • Beauty – design that uplifts the human spirit
A small building has accomplished a monumental goal. The Bill Fisch Forest Stewardship and Education Center (FSEC), located in the regional municipality of York, Ontario, was built to meet the Living Building Challenge.

A small building has accomplished a monumental goal. The Bill Fisch Forest Stewardship and Education Center (FSEC), located in the regional municipality of York, Ontario, was built to meet the Living Building Challenge.

Petals are subdivided into a total of twenty Imperatives, each of which focuses on prescriptive or performance-based goals that contribute to the overarching goals of sustainability, equity and regeneration.

Dialog, the architecture and design firm selected to design the Bill Fisch FSEC recognized that “Many common building materials have some toxicity and none can be present in a Full Petal LBC building. As a result of extensive research, huge commitment and exceptional collaboration from the entire team to meet the LBC criteria, the new centre not only looks beautiful, but feels healthier.”

To meet the Materials Petal requirements, Dialog and the regional municipality of York asked for sustainability and transparency in the products that were used to construct the building. According to one

A trio of MAPEI products was used to infill the slight depression in the floor necessary to accommodate the floor to ceiling windows. All three products met the environmental requirements for the Living Building Challenge.

A trio of MAPEI products was used to infill the slight depression in the floor necessary to accommodate the floor to ceiling windows. All three products met the environmental requirements for the Living Building Challenge.

of the engineers on the projects, “…one of the biggest challenges of the project was working with the ‘Red List,’ trying to get particular information from suppliers about the materials’ ingredients and find alternatives to the materials/products that were not permitted under LBC guidelines.”

MAPEI was able to provide Health Product Declarations (HPDs) and/or Environmental Product Declarations (EPDs) for each of its products that were selected for use in the centre.

MAPEI products at work on the jobsite

MAPEI’s Technical Services Department has been proactive in developing HPDs and EPDs for its flooring installation products and surface preparation materials. Rigorous testing and results analysis have produced reliable results that MAPEI has been able to publish along with its Technical Data Sheets on the MAPEI web site.

MAPEI Ultralite Mortar was then used to install 12” x 24” custom concrete tiles on the walls in the bathrooms. The tiles were manufactured locally by Mondo Pietra Ltd. of Whitchurch-Stouffville, ON.

MAPEI Ultralite Mortar was then used to install 12” x 24” custom concrete tiles on the walls in the bathrooms. The tiles were manufactured locally by Mondo Pietra Ltd. of Whitchurch-Stouffville, ON.

For the Bill Fisch FSEC project, MAPEI products were used in a number of areas:

As part of the surface preparation before the installation of tiles in the bathroom areas, Mapelastic, an all-climate, flexible, cementitious membrane was used for waterproofing. The membrane waterproofs and protects concrete and masonry. Mapelastic can also be used for applications on new concrete structures with hairline cracks, as well as any cementitious surface that may be subject to vibrations and subsequent cracking.

MAPEI Ultralite Mortar was then used to install 12” x 24” custom concrete tiles on the walls in the bathrooms. The tiles were manufactured locally by Mondo Pietra Ltd. of Whitchurch-Stouffville, ON. In addition to its HPD pedigree and certification by the Tile Council of North America’s Green Squared program, Ultralite has many qualities that recommend it for use by installers. These include its light-weight technology, excellent vertical application with large-format tiles, and a creamy consistency that promotes ease of use.

Ultracolor Plus grout was used to fill the joints between the concrete tiles. Ultracolor Plus demonstrated that it met the environmental requirements of the designers, and its ease of use was a real benefit to the installers.

Ultracolor Plus grout was used to fill the joints between the concrete tiles. Ultracolor Plus demonstrated that it met the environmental requirements of the designers, and its ease of use was a real benefit to the installers.

Ultracolor Plus grout was used to fill the joints between the concrete tiles. Ultracolor Plus with DropEffect™ technology is a fast-setting, color-consistent, grout that eliminates the efflorescence often seen in Portland cement grouts. DropEffect technology reduces surface absorption to help repel water, dirt and grime from penetrating grout joints. Ultracolor Plus demonstrated that it met the environmental requirements of the designers, and its ease of use was a real benefit to the installers.

In order to accommodate the floor-to-ceiling windows in the center, the contractor poured the floor with a slight depressed area where the windows were installed. This necessarily created a trough between the window area and the rest of the floor. The contractor needed a product to infill that area, and he wanted something that had the look of natural concrete to flow with the rest of the area. MAPEI’s Ultratop was the solution. Plainbond EBA was used as the bonding agent between the concrete and the

MAPEI was able to provide Health Product Declarations (HPDs) and/or Environmental Product Declarations (EPDs) for each of its products that were selected for use in the center, meeting its material requirements.

MAPEI was able to provide Health Product Declarations (HPDs) and/or Environmental Product Declarations (EPDs) for each of its products that were selected for use in the center, meeting its material requirements.

Ultratop. Planiseal HG, solvent-free, moisture-tolerant, 100%-solids, clear, high-gloss epoxy sealer was used over the Ultratop. All three products met the environmental requirements for the Living Building Challenge.

The regional municipality of York has made great strides in restoring the York Regional Forest, and the construction of the Bill Fisch FSEC adds that exemplary environmental effort. The building shows the world how construction should be for the future, and MAPEI is proud to have had a part in the project.

 

The regional municipality of York has made great strides in restoring the York Regional Forest, and the construction of the Bill Fisch FSEC adds that that exemplary environmental effort.

The regional municipality of York has made great strides in restoring the York Regional Forest, and the construction of the Bill Fisch FSEC adds that that exemplary environmental effort.