Most people do not think of a CPA, or certified public accountant, as a person who needs construction expertise. If you are a contractor or client, however, you will soon find out why your CPA needs to be specialized in construction. A CPA who understands construction is often the contractor and clients’ greatest ally because he or she understands how these businesses work. A CPA certified in construction also has experience helping accounting and construction work seamlessly together, to the benefit of everyone involved.
Your CPA as Consultant
In addition to preparing taxes, financial statements and other accounting documents, many CPAs function as silent or quasi-partners in construction businesses. They serve as consultants, apprising contractors of every financial aspect of a project. For example, a CPA who knows construction can help a contractor narrow down his or her bidding choices. If a bidding war occurs, the CPA helps the contractor see beyond the bottom line to other factors, such as cost control and project length.
In addition, a CPA who is well-versed in construction is a valuable evaluator. He or she will spend considerable time looking at internal company financials and how project money is distributed. If you the contractor suspect a problem or find something on the books confusing, go to your consulting CPA. He or she will clear up confusion and apprise authority figures of inconsistencies as needed. Your consulting CPA may also suggest changes that will keep the company in good financial status. For example, if your company is not getting much work, your CPA can tell you why. Your CPA may analyze competitors’ financials and find something they are doing from which you could benefit.
Beyond the Money: Structure, Software and More
In our technologically-dependent age, no contractor can get by without a basic knowledge of accounting computer programs. For many contractors though, these programs are confusing. This is especially true if your company updates its system frequently or adds new programs. It is well worth bringing a CPA on board who understands how your business works with accounting software. With help from a CPA, you are less likely to run into problems like viruses, slow systems and inaccurate data.
A CPA who knows construction will also help you understand your company’s structure and make it work for you. For example, some contractors enter a new company without knowing how bonding capacity works in that environment, or how to apprise clients of new bids. A CPA is there to explain these issues, as well as any rules unique to your company or a specific project. Bonding capacity usually requires heavy CPA involvement, so a CPA who knows construction is the best person to help you get and stay bonded as well.
Within construction, there are several different company structures. You might work for an LLC, a C corporation, an S corporation, or anything in between, and not know what that means. This is another reason why your CPA needs to be specialized in construction. He or she can walk you through the differences between these structures, and let you know the financial and tax implications of each.
Many contractors wonder why their CPA needs to be specialized in construction. While it may seem like overkill, a CPA who specializes in construction will be invaluable to your company. Such a CPA will not only help you understand your financials and tax implications but also help you get and stay bonded, understand your company’s structure and choose projects.