One of the most important relationships for any business is with their CPA. This is especially true in the construction industry because of the many unique features and complexities in construction accounting. Industry knowledge and close collaboration are instrumental in providing construction businesses with the insight and awareness to make the best decisions and seize growth opportunities. Here are some things to look for when hiring a construction CPA firm.
1. Knowledge of Construction Accounting
The most important thing you should look for in a CPA is their knowledge of construction accounting. There are many accounting issues affecting the construction industry, including:
- Method of recognizing revenue
- Allocation of direct and indirect costs
- Calculation of work in progress, over billing and under billing
All of these items can be treated differently depending on the type of contractor, the company’s gross annual revenue and the length of the projects. Working with a CPA who is able to navigate these differences and provide you with accurate and timely financial data is important to the success and growth of your construction company.
In addition, the Financial Accounting Standards Board (FASB) has issued a number of new accounting pronouncements that will go into effect in the near future. Two of the most important deal with the way in which companies recognize revenue, and the way companies record lease obligations. The CPA firm you choose should be knowledgeable about these two new standards and the potential impact they will have on your construction business.
2. Recognized in Industry
The right CPA firm will work closely with your other professional service providers such as bankers, lawyers and sureties. This is especially important in the construction industry where these providers use your financial data to extend credit, provide bonding and help ensure you are able to operate your business successfully. Having a reputable CPA in the construction industry provides comfort to your other service providers and allows them to make better decisions regarding your finances.
Tip – When considering a construction CPA, ask for industry references!
“Excellent service matched with quality work and great people.”Tom Getzke | Minnesota Builders Exchange
3. Familiar with Construction Software
Most businesses use a fairly basic accounting software like Quickbooks or Sage. However, some of these programs do not have the capability to handle accounting issues specific to the construction industry. This is especially true for large and growing construction companies. You should work with a construction CPA firm that is knowledgeable about a wide variety of software packages. Your CPA should make a recommendation if a change in your system is needed, and this will help make implementation and maintenance easier.
4. Help Save you Money with Construction Industry Tax Advantages
Construction industry tax is a complex area and should be done by a CPA who understands these intricacies. There are a number of tax accounting methods and advantages available to construction companies, and each method has its own set of rules and exceptions. Your CPA firm should understand how these complexities affect your business and how you can benefit from the various tax methods available to the construction industry.
5. Other Experience
Knowledge and experience is an important factor in hiring a CPA firm. You should find a firm who works on a large number of construction clients of all sizes and types. This will ensure they understand the industry as a whole. The variety of experience will help them provide you with other value-added services, not just assurance and tax compliance. This will ultimately help your business grow and prosper.
“We have a great team working on our account! They are professional, proactive, and responsive.”Alan Matthys | Engineered Products Co.
Smith Schafer is a recognized leader in providing accounting, auditing and consulting services to the industry. Our Construction & Real Estate Group, comprised of numerous professionals, is committed to serving over 800 Minnesota construction and real estate entities. From large construction companies to specialty contractors, we have the experience to bring you innovative solutions.