The right CPA firm understands the nuances of construction accounting. From calculating indirect costs to tracking variable compensation rates, this expertise allows you to be more precise with your job cost reporting. Look for a firm that offers more than just tax minimization and filing services. A good CPA should provide business coaching and insights into improving operations, job costing, and cash flow.
Qualifications
Regarding accounting, a construction company needs more than just high-level bookkeeping. The right accountant will have actual industry knowledge. They’ll understand the ins and outs of business operations, state and local compliance, and taxes. They’ll also know how to make a real difference to the financial health of a construction firm.
For example, a CPA with construction experience will be adept at tracking indirect costs such as delivery fees, gas prices, and equipment repairs. A construction company will likely have variable compensation rates from project to project that must be accurately tracked and recorded. A specialized accountant can help contractors navigate their relationships with lenders and bonding companies. It is essential as new accounting standards come into effect, such as how a company records revenue and lease obligations.
A specialized accountant can also help a construction company secure a more significant bond line, opening them up to bigger projects and government contracts. Choosing the best construction accounting firms is crucial to your firm’s success.
Experience
An accountant with experience in the industry will know what you need to run a successful and profitable firm. They can provide insights into the planning and management of your construction business. They can offer input on maximizing deductions for tax purposes and give you pointers to help boost revenue. They can also introduce you to vendors who deal with the industry, like bankers who finance projects and surety firms that write bonds. It can make all the difference when bidding for new work.
Construction-focused CPAs also understand the nuances of cash-based accounting, which considers income and expenses as they are received and paid. They can describe the benefits and drawbacks of various business structures, such as LLCs vs. S-Corps, and suggest the best bookkeeping strategy for your business. They can also advise you on the three primary types of construction bonds: bid, performance, and payment. They can even help you secure a more significant bond line, which could open the door to more extensive jobs or government contracts.
Tech-Savvy
The correct construction accounting professional should be proficient in the software needed to run a firm. It allows them to integrate new technologies into existing business processes and helps keep companies competitive as they adapt to the digital era. A quality bookkeeper should also be skilled at analyzing and tracking indirect costs for a construction firm. These may include delivery fees, equipment repair, worker’s compensation, insurance, etc. These costs detract from a company’s profit and must be accounted for accurately to ensure it has enough cash flow to keep going. Lastly, a good construction accountant should be familiar with the percentage-of-completion method of accounting. This approach records expenses and revenue as a percentage of a project’s completion and gives businesses a detailed look at their finances at any given time. To find a qualified construction CPA, ask other construction professionals who use the services of a CPA or search online CPA directories. Additionally, your construction accounting software provider may have ties to CPAs that fit your company well. Lastly, you can contact your local chamber of commerce for referrals.
Communication
In the accounting department of a construction company, a knowledgeable specialist can make a huge impact. The best accountants for construction have a thorough understanding of the sector and are skilled at streamlining financial procedures to cut costs, enhance cash flow, and boost profitability. Most construction firms work on multiple projects simultaneously, each with unique costs and milestones to meet. This arrangement can be challenging to manage without accurate and reliable data. A good accountant can help by setting up a system to track expenses, revenue, and project status by completion percentage. It gives everyone involved in the project a clear picture of how much is left to do and when the company will break even. A specialized accountant can also provide a more effective method for allocating overhead expenses among jobs based on equipment, material, or labor costs rather than a general formula. It can prevent a construction business from over- or under-allocating overhead and distorting job profitability. They can also be a valuable partner when changes in accounting standards or new regulations arise, helping clients adapt and solve their challenges.
Flexibility
A construction accountant should be able to adapt to the unique accounting requirements of your company. For instance, some construction companies must use accrual-based accounting because long-term contracts require a specific method for recording revenue and expenses. This approach gives a more realistic view of the financial situation and might be mandated by investors or lenders. Finding a CPA who can track the indirect costs of operating a construction business—such as delivery fees, gas prices, equipment repairs, insurance, and more—is essential. It can save your company money and prevent costly mistakes. The right accountant can also help with specialized accounting for your firm’s workers. Variable compensation rates, bonuses, overtime, and worker’s comp must be tracked carefully. The best construction accounting professionals can make this happen promptly and efficiently.
Specialized construction accountants can help your firm get a more significant bond line for the three main types of bonds a construction company must make—bid, performance, and payment. It can open your company to larger jobs and government contracts.