reports, and be sure the payroll reports coming from the field are accurate (educate those in the field who are tracking payroll hours, equipment use, etc.).
Invest in a good controller to manage the inside of your business; the investment is worth it!
Keep your focus on what’s important— don’t get distracted! Making money has to be the focus. It’s important to surround yourself with a trusted team of professionals who understand the building profession. That team needs to include a CPA, bond agent, a banker, and an attorney--the team is key!
QWhat parameters are important for builders to keep in mind
before purchasing a new piece of equipment for their company?
A: Purchasing new equipment needs to be part of a planning process—not a spontaneous purchase. Ask yourself: Do I have too much equipment? Am I comparing my business to others in the industry, and am I making this purchase as a result of that comparison?
Look at what is coming up—do you really need that equipment for the next ten or twelve jobs? Can you lease instead of buy it? Can you finance it instead of using cash? Sometimes there are more creative options to adding equipment to your fleet. Speak with your accountant before you make a major purchase to see what the implications will be for your business.
The key is utilization: Are you going to use it to make money?
QAre there any benefits to builders in current tax
codes? If so, what are those?
A: Construction business is the best I’ve seen in 40 years for contractors. From the economic downturn of five to ten years ago, we learned that builders are resilient. Small contractors can use different parts of the tax code (less than $10 million per year in revenue is considered small) to their advantage. For example, builders can do taxes on a completed jobs basis. It enables the builder to defer taxes. Why is this important? Well, cash flow is king! An accountant who understands the complexities of construction will know that there are different ways to run financials from the tax return. They do not have to be done the same. Large companies will often have a percentage of a completed job used, but this may not work as well for a small company.
In other words, if you can pay taxes after the job is over, it benefits your cash flow. This is why it is so important to have a healthy working relationship and dialogue with your accountant. Make sure your CPA knows construction well. How? Be sure their clients are predominantly companies in the construction industry. This is important to make sure they are utilizing the tax code to your ultimate benefit.
Rhonda Gilbert (president), Tom Savage (partner), and Gary Fortier (partner), share a unique passion for equipping contractors for business success. As certified public accountants (CPAs) with a special niche for construction-based businesses, they are a power team of expertise that helps Georgia builders realize their fullest business potential.
Have a business question you would like to see featured in our BUILDER BUSINESS Roundtable Q & A? Please email us at: firstname.lastname@example.org.