QNow that tax season is almost over, what tips can
builders follow to make this coming end-of-year tax filing go more smoothly?
A: Builders need to consult with a CPA who will visit to assess their company and accounting systems to be sure they are set up properly and are running accurate reports.
Tax and bond planning is important, so meet a month or two before the end of the year to look at your taxes; the CPA can project your estimated taxes. Reducing taxes but not hurting the company’s bonding and banking is crucial. To understand the company financials, the Percentage of Completion Method of accounting for construction companies should be used. Not all CPAs understand this; it is specialized for the construction industry. Be sure to select an accountant who is using this method of accounting to ensure your taxes and financials are being handled to your maximum benefit.
Good accounting and sound job cost records will help you avoid any surprises and will help you plan properly for the end of the year. At Large and Gilbert, we provide our clients with a safety zone report card that covers various scenarios. These 15 scenarios in one place help a business owner quickly determine what their tax liability is and where their business is headed. It helps the builder see, “If you do this, then . . .”
QWhat advice would you give to small companies to
enhance their profitability and safeguard their assets?
A: Builders need to be involved in the financial side of their business—even if they don’t enjoy it. They should learn as much as they can about how it works and the information the bonding company wants so they can stay on top of things for their business. Learning to use a basic accounting program like Quickbooks is fine, but a builder needs to know how to create and utilize the report features of that software to make sure they are managing their jobs properly.
A builder needs to have good internal controls. Small business owners don’t like to talk about it, but stealing money happens—especially when the business owner is totally trusting of the person in charge of the cash flow. To prevent fraud or theft, every owner should open their bank statements monthly. By just looking and asking questions, builders can prevent money being stolen. Also, it sounds so simple, but check the mail! Builders who are not part of the internal controls of their business sometimes find that federal payroll tax notices that are being mailed to them by the government are being intercepted and thrown away to hide the fraud that’s happening inside their business.
QIs there anything builders should keep in mind in order to run a sustainable business? How does a builder maintain a healthy cash flow?
A: Tax planning is key to managing cash flow. We calculate a client’s projected break-even point, that is, how much revenue or how many jobs do they need to break even for the year. It’s important to know that figure and keep it in mind all year. Stay on top of overhead and keep it down. Refrain from buying too much equipment. Read your monthly