When it comes to construction, there are undoubtedly a lot of moving targets, but your accounting, budgeting, and tax planning shouldn’t be one of them. If you’re looking to streamline budgeting, improve expense tracking, and give your business the opportunity for increased profitability, choosing specialized accounting and tax services for construction businesses is crucial.
Getting Started with Accounting and Tax services for Construction Businesses
The construction industry is unique and so are the financial needs of the businesses that operate within it. From budgeting and bookkeeping to tax planning and preparation, a strong financial foundation opens up more opportunities and access funding as your firm grows.
When managing the accounting for a construction business, here are a few things you’ll want to keep in mind.
Budgeting and Forecasting
In construction, cash is king. This makes effective budgeting and forecasting an essential part of your financial planning.
Develop a system to track actual spending against your budget on a regular basis. This will give you the information you need to make informed decisions about where to allocate your resources.
Job Cost Accounting
In construction, individual projects can have a big impact on your overall financial picture. That’s why it’s important to have a system in place to track the income and expenses for each project separately.
This information can be used to help you bid on future projects and make sure that you are accounting for all of the costs associated with each job.
Working with a specialist
When it comes to accounting and tax services for construction businesses, working with a specialist can make a world of difference. They will have the industry-specific knowledge and experience that you need to navigate the unique challenges of budgeting, forecasting, and project accounting.
If you’re looking to get the most out of your construction business, investing in specialized accounting and tax services is a smart place to start. With the help of a skilled professional, you can take your business to the next level.
Tax Planning and Preparation For Construction Businesses
Construction businesses have to deal with a complex web of state and federal regulations. This can make tax time a stressful experience if you’re not prepared.
Working with a specialized accountant or tax preparer who understands the construction industry can help you take advantage of all the deductions and credits you’re entitled to. They can also help you plan for upcoming tax liabilities so that you’re not caught off guard.
Managing Accounting for Your Construction Business
While it’s important to have a handle on your finances, it’s also crucial to have someone in your corner who understands the construction industry inside and out. Our team of experienced accountants works with construction companies across Georgia and South Carolina to offer valuable insights and assistance when it comes to navigating the complexities of the construction industry.
Which Accounting Method is Best for Your Construction Company?
There are several accounting methods available to contractors.
- The full accrual method is the most common accounting method used by contractors. This method recognizes revenue when it is earned and records expenses as they are incurred.
- The percentage of completion method is often used in conjunction with the full accrual method. This technique allows you to spread out the costs of a project over its lifetime which can provide a more accurate picture of your financial position.
- The cash basis method is the simplest accounting method and is often used by small businesses. This method only recognizes revenue and expenses when they are actually received or paid.
And each of these options comes with its own set of rules and best practices for how your books should be managed and project expenses should be tracked and allocated. Our team of experienced accountants can help you identify the best-fit option based on your company size, job type, and other factors.
Managing Your Job Cost Accounting
We understand the importance of job cost accounting and help your business track revenue and costs for each job in order to optimize profitability and to ensure proper reporting.
We Assist with Budget Planning and Projections
Each job generally has a budget and we want to make sure you’re working to stay on target and mitigate risks along the way.
Throughout your project, we can help you review tracked revenue and costs to determine cost overruns and determine if change orders are needed to help you maintain profitability.
Helping You Manage Risks and Financing in Construction
We always recommend that our construction partners take care to hold profits from completed jobs so that there is capital to support new jobs and operating costs. A construction company that is highly leveraged will often struggle to stay afloat. And, depending on your building segment, larger jobs often require bonds, which many states request audited or reviewed financials for licensing.
Helping you to see and proactively manage the risks of large-scale investments and funding needs is a key part of the financial partnership we establish with our clients.
Tax Planning for Construction Businesses
The tax regulations for long-term contracts associated with construction projects are complex. Depending on the scale of your company and project workload, tax planning can be much more involved than standard business taxes.
In order to project profitability for a period, each job must be reviewed and this can take a substantial amount of time. Our team of CPAs works with construction companies to help manage and minimize tax liability and leverage deductions.
There are a few different tax elections that can be made when it comes to accounting for job costs. The method you choose will have different implications on your taxes, and having a trusted accountant on your side will give you the resources you need to identify the best option for your business.
In addition to helping you plan and prepare your taxes, we can also help you take advantage of tax incentives that may be available to you, helping you to keep more of your profits inside the business.
Why You Need an Experienced CPA for Construction Businesses
When it comes to managing accounting and tax services for construction businesses, it’s important to have a CPA on your side who understands the unique challenges and opportunities that come with this industry.
A good CPA will manage your books but a great partner for your business will use your financial information to help you grow and thrive in the years ahead.
We understand that construction accounting and tax preparation is a complex process, but it doesn’t have to be overwhelming. Having the right team in place to help you manage the finances of your business will free up your time to focus on what you do best: building.
SME, CPAs is a trusted accounting and tax partner for Construction Companies
SME, CPAs has a long history of working with many types of construction companies, from general contractors to specialty subcontractors. We have the knowledge and expertise in this industry to handle all tax, audit, and accounting needs.
By assisting business owners and providing them with an understanding of the tax and accounting rules related to their industry, we enable them to prepare more accurate forecasts and understand the impact on financing and tax needs as they grow their company.If you’re looking for specialized accounting and tax services for your construction business, contact us today. We would be happy to help you streamline your budgeting process, improve expense tracking, and increase profitability.