Feb 28, 2025
This Podcast Is Episode 617, And It's About What Every Contractor Needs To Know About Their Financial Dream Team
Navigating the world of finances can sometimes feel like
trying to build a house without a blueprint. Between managing
budgets, keeping track of expenses, and ensuring you're compliant
with tax regulations, it's easy to feel overwhelmed. That's where
your financial dream team comes in!
Having the right people by your side can make all the
difference in staying organized and achieving your business goals.
In this blog post, we'll chat about the key players you need on
your financial team, what each role brings to the table, and how to
find experts who truly understand the ins and outs of the
construction industry.
Whether you're a seasoned pro or just getting started,
building a reliable financial team will be a game-changer in
achieving your financial goals and securing the future of your
business.
How often have you hired someone expecting they knew how
construction works, only to find out they did not know about it or
your particular type of construction? Let's examine what each
professional does to help with your needs.
The Role of a
Construction Bookkeeper
Construction bookkeepers are the unsung heroes of construction
companies' financial management. They organize everything and
ensure that every penny is accounted for.
Ideally, a construction company's books are updated at the end
of each business day so you can have an accurate account of your
sales, expenses, and the bottom line. However, if your business is
still in its early stages, without much financial activity or the
funds to hire a bookkeeper, you should aim to reconcile your
accounts at least once a week.
Here's what they typically handle:
1. Daily Transactions: Bookkeepers track
daily financial activities, like invoices and expenses, ensuring
all transactions are recorded accurately.
2. Accounts Payable and Receivable: They
manage money coming in and going out, which is crucial for ensuring
a healthy cash flow.
3. Payroll Processing: Construction
bookkeepers often handle payroll, ensuring everyone gets paid on
time and handling taxes and benefits.
4. Record Organization: They keep financial
records neat, making it simple to pull reports or prepare for an
audit when needed.
The Role of a
Construction Accountant
Now, construction accountants step in with a more strategic
approach! They not only keep the numbers in check but also help
with long-term planning.
As a construction business owner, you'll want to work with an
accountant from the very early days to help you with budgeting,
forecasting, and decision-making – as well as for strategic tax
advice and identifying opportunities to reduce costs and maximize
profitability.
Many business owners think they only need to talk to their
accountant once a year at tax time. But to gauge the health of your
business - and make the most of your accountant's expertise - you
should check in at least once a month.
Construction Accountants focus on:
1. Project Costing and Budgeting: Accountants
track project expenses to ensure they adhere to budgets and help
identify areas for improvement.
2. Job Cost Reports: They create detailed
reports that provide insights into each job's costs, which helps
manage profitability and make informed decisions.
3. Financial Analysis: Construction
accountants analyze a business's financial health and help prepare
forecasts and budgets for its growth.
4. Regulatory Compliance: They stay updated
on construction laws and regulations to ensure compliance with
legal requirements.
The Role of a Tax
Accountant (CPA)
Tax accountants bring their expertise to navigate the often
tricky world of taxes. They help individuals and businesses
understand their tax obligations while ensuring
compliance.
The CPA's primary function is to prepare the annual tax
return, perform audits, and prepare Certified Financial Statements
for bank loans when a construction contractor requires them before
issuing a construction bond. Remember that most Certified Public
Accountant accounting specialists can do all accounting for most
standard businesses that only need regular accounting, not
construction accounting. Construction company owners who think it's
costly to hire a construction accountant and would instead only
seek a CPA's help might be in for more business damage in the long
run.
Here's what CPAs do:
1. Tax Return Preparation: Tax accountants
gather and analyze financial data, preparing accurate tax returns
for timely filing—no one likes penalties!
2. Tax Planning: They advise on strategies to
minimize taxes and help clients maximize available deductions and
credits throughout the year.
3. Knowledge of Tax Regulations: It is
crucial to stay current on the latest tax laws, and tax accountants
make it their mission to provide the best guidance.
4. Client Consultation: They help clients
understand their tax responsibilities and the importance of good
documentation.
Construction Accountants should not prepare annual tax
returns—either they should be tax accountants and serve the
interests of tax collection agencies, or they should be
construction accountants and serve the interests of
contractors.
CPAs are like I.R.S. agents in that they owe their primary
allegiance to the tax collecting agencies, and that is OK because
the government needs our tax dollars to operate.
Construction accountants owe their primary allegiance to the
contractor. Our role is to help the contractor optimize their
construction company to generate the most cash flow and profit over
the long term.
Conclusion
While construction bookkeepers, construction accountants, and
tax accountants play essential roles in financial management, their
focuses differ. Bookkeepers ensure the daily financial details are
in line, accountants handle the bigger picture and strategic
planning, and tax accountants help clients navigate compliance and
tax planning.
Knowing what each of these professionals does can help you
find the right fit for your financial needs, whether managing
construction finances or dealing with taxes. Each role is vital for
keeping everything in good shape and ensuring your financial health
is on track!
About The Author:
Sharie DeHart, QPA, is the co-founder of
Business Consulting And Accounting in Lynnwood, Washington. She is
the leading expert in managing outsourced construction bookkeeping
and accounting services companies and cash management accounting
for small construction companies across the USA. She encourages
Contractors and Construction Company Owners to stay current on
their tax obligations. She offers insights on managing the
remaining cash flow to operate and grow their construction company
sales and profits so they can put more money in the bank. Call
1-800-361-1770 or sharie@fasteasyaccounting.com