Handling accounts in the construction industryby Vidit Agarwal Marketing Director Constructor contractors have a hectic and tight schedule:
- They wake up early to answer emails and plan for the day before heading
to the construction site.
- They have to attend meetings with subcontractors and review the project
- They must ensure that the whole project remains on track and is finished
on the deadline within the allotted budget.
This sound stressful. It indeed is a very stressful career profile. However, the good part is that construction contracting is equally rewarding. It is a capital-intensive business, which means using some of that resource to hire a construction industry accountant. This will save you a lot of trouble and give you peace of mind.
- Job costing: Matching expenses with
their respective revenue sources become difficult while dealing with various
projects that vary in size and length. Numerous transactions are involved in
completing a given project which makes job costing a critical task. It will
give you detailed insights into contract profitability and also simplify your
tax preparation. It is an essential tool to track the cashflow direction and
ensure that all expenses are covered in the final service price
- Cash basis.:It is the simplest
accounting method that records expenses when paid and revenue when received.
You must cautiously allocate expenses evenly over the entire benefit period in
the case of multi-year contracts.
- Percentage completion: The varying lengths of
contracts make it difficult to match revenue and expenses. The percentage
completion method helps in determining the project direction in terms of profit
and loss. It involves come complex calculations that can give you accurate
insights to keep the project on track. You can even predict company financials
even before project completion.
- Tax reporting strategies.: Most countries amend
their tax rules annually; this can be a challenge for multi-year contracts and
increase your tax burden. Factors like these must be taken into consideration
while making a tax strategy to maximise tax savings.
Do I need a construction accountant?
Doesn’t matter which industry you are operating in; hiring accountants in Brighton is the best thing you can do for your business. However, the construction industry is quite unconventional, and the accountant has to deal with additional factors like progress billing, change orders, retention and job costing. That’s why you need to hire an exceptional CIS tax accountant to manage your books.
Created on Oct 6th 2021 07:19. Viewed 142 times.
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