As the owner of a construction business, you understand the importance of keeping your books in order. While outsourcing your accounting and bookkeeping services is a good way to make sure that nothing slips through the cracks, there’s an added benefit you get by working with a specialized construction accountant who holds niche expertise within your industry.
In addition to the standard accounts payable, accounts receivable, and payroll transactions, construction companies deal with retention, job costing, change orders, progress billings, customer deposits, and other anomalies.
Here, we dive into some of the benefits of hiring a specialized accountant for your construction company.
Do I need specialized accounting for construction company management?
It probably won’t surprise you that many industries are turning to specialized accountants to handle their operational needs. That’s because the right accounting professional can do more than manage your books. Specialized accountants have a thorough background and niche knowledge in top industries, which allows them to answer more industry-specific questions related to your finances, taxes, and more.The right accounting partner can also provide targeted insight to scale your business and move you into the future. With all of that said, it’s no wonder that over 65% of small and medium-sized businesses value specialized expertise when looking for an accountant.
For construction businesses, specialized accountants offer the ability to help tackle financial tasks that are unique to the industry. Beyond the basics like payroll and accounts payable and receivable, construction businesses have to deal with things like job costing, change orders, progress billings, and other industry-specific financial transactions.
What are the benefits of specialized construction accounting?
While it might take a little more work to find the right accountant with specialized expertise in construction accounting, it’s the following key benefits that make the search worth your time:
Industry-specific accounting practices
A specialized accountant will be familiar with accounting practices that fit your industry. For instance, a construction accountant can help you implement the percentage-of-completion method for maintaining your business records. Using this method, you’ll record your revenue and expenses as a percentage of a particular project’s completion, which gives you a more accurate understanding of your cash flow at any given moment in time.
The ideal construction accounting professional will not only help you implement new accounting methods, but can also optimize your financial processes so you can get the most out of your business. They can even provide reports that can help you strategize for future work.
Bonding and credit
When it comes to securing a business line of credit, lenders will only be willing to extend credit to companies they trust. But with the right accounting professional in your corner, you might be able to navigate the credit application process more astutely and can present a more attractive case for securing funds.
When it comes to bonding, a construction accountant will be better equipped to understand the guidelines and regulations around the three primary types of construction bonds: bid bonds, performance bonds, and payment bonds. Specialized accountants can help your construction business secure larger bond lines, which opens up your business to bigger jobs, a higher volume of jobs, and access to government contracts.
Faster surety decisions
Construction companies rely on sureties to make progress in their projects, and sureties expect to see accurate, to-the-minute information about your company’s operations.
An accountant with construction accounting experience can provide efficient and detailed updates upon request. This is good for business, since accurate information can streamline the funding process and result in a reduced turnaround time from your surety underwriter. All in all, this means that working with a specialized construction accountant could mean getting more done for your company in less time.
Tax planning and assistance
Taxation can be one of the biggest question marks for business owners, and construction taxation can be increasingly complex. Businesses within the construction industry usually have to navigate complicated tax legislation including IR35, which applies to contractors, freelancers, and self-employed professionals. IR35 ensures that “disguised employment” is taxed at a fixed rate.
Construction businesses also have state-specific sales tax regulations that apply to them, including that they don’t typically charge sales tax for the services they provide but are required to pay sales tax on materials purchased for jobs completed.
Hiring an accountant who understands the ways that these specific laws and regulations impact your business and employees is essential. They can make sure you remain compliant and in many cases, they can even find ways to plan ahead so you get the most from your deductions when you’re filing your annual business tax return.
Insider knowledge to increase your revenue
When you hire an accountant with construction accounting experience, they’ll also be able to offer input on the overall planning and management of your company. Your accountant may have experience consulting with or even working at companies that are similar to yours in size and age. As such, they might be able to offer thoughtful advice and pointers on how to maximize deductions for tax planning and how to manage your assets to help you move forward, grow your business, and generate more revenue.
In other words, your accountant can help you refine your strategy. And with the right electronic accounting tools, they may be able to assemble informative, actionable reports that help you learn more about the state of your company and how to take your business in the right direction.
How can you find a specialized accountant for your construction business?
With these benefits, it’s easy to see why companies are turning from accounting generalists to accountants with experience in their niche industry. An accountant with insider knowledge and experience in the construction industry can take your business to the next level and help it flourish in the long run.
Many accounting firms already specialize in constructing accounting or at least have team members with that background. Contacting an online accounting firm can help you locate the right addition to your finance team so that you’ll be able to reap the benefits of partnering with an industry professional.