The tax laws and accounting policies for construction and real estate development companies are unique and particular. If your accountant doesn’t have the industry experience, you’re likely missing out on some significant tax savings.
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Construction executives – in looking for an accountant or CPA – should look for somebody with experience in their industry.
If you’re a fairly significant construction company, you should know whether your current CPA or accountant is a member of an industry group that shares ideas and gets together and talks about what's going on in the industry, whether that be the Associated Builders and Contractors (ABC) or the Construction Financial Management Association (CFMA).
From an accounting perspective, there are different ways to account for contracts and the recognition of revenue on those contracts. It requires a fair amount of good estimation on behalf of the client to accurately reflect the revenue that the company is earning on a year-by-year basis on those contracts.
From a tax perspective, there are different methods of accounting for those contracts. The use of the proper methods – or the most advantageous methods for the client – could result in increased current cash flow and deferral of income recognition to the later years.
If the method of accounting for the jobs is not accurate, you're going to get an inaccurate picture of how the company's doing, and management may make decisions based upon numbers that are flawed. So it's very important that the methodology in accounting for the job is as close to being accurate as possible.
Learn more about Concannon Miller’s services for construction-related companies here or contact Andy Kahn, CPA, MBA, CFP at email@example.com or 610-433-5501 for a personalized consultation.