FREQUENTLY ASKED QUESTIONS
What is different about bookkeeping for the Construction Industry?
Owners of successful construction businesses know their numbers but not just for the company as a whole, for each job and job type as well. Effective job costing and class tracking are at the center of bookkeeping for construction companies, more so than just about any other industry. Endeavoring to build this process is overwhelming, that is why developing standard operating procedures (SOPs) and then strategically integrating the right technologies is crucial to the overall success of a construction business. The benefits of implementing these nuances within the bookkeeping process include; identifying problematic job types, assessing the performance of project managers, and providing valuable job insights which will aid in effecting estimating.
Why is tax planning so important for construction businesses?
Tax deadlines for S corporations, LLCs, corporations, and personal returns are March 15th and April 15th. The inherent issue with the timing of these deadlines is they correspond with traditionally slow times in the construction industry. For some construction companies, the winter months are marked by extended periods of low cash flow. All too often construction business owners are caught off guard by surprise tax liabilities that come at the worst possible time, and even if a return is extended, an owner must still pay the anticipated liability at the initial deadline. Profitable businesses pay taxes, sometimes there is no way around this reality, but minimizing taxes and planning for those liabilities months in advance is absolutely critical for construction business owners.
How does a construction business owner know if their business is healthy?
Oftentimes construction business owners do not have a pulse on the overall health of their business. Between managing jobs schedules and ensuring that there is a steady pipeline of work, owners find themselves with little time to look at the business at a high level. Unfortunately, if this is not done on a regular basis, negative operational trends will not be discovered until it is too late. Reviewing the financial statements and establishing key performance indicators (KPIs) should be given a high priority on an owner’s to-do list. Establishing KPIs and regularly benchmarking results against these KPIs will provide invaluable insight into the overall health of the business.
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