Why a Construction CPA Can Be a Contractor’s Best Friend

Managing finances for a construction company comes with its unique set of challenges. From tracking project costs and managing cash flow to maintaining tight profit margins to preparing for tax season, construction companies must stay on top of their finances year-round. 

This is where construction certified public accountants (CPAs) come in.

These professionals specialize in the financial nuances of the construction industry and offer invaluable support not only during tax season but throughout the entire year. 

Think of a CPA as a trusted financial advisor who helps you reach your goals while maintaining compliance with taxes and other financial regulations.

Below, we’ll explore a few ways construction CPAs can help contractors with the construction financial management they need to maximize their profit margins to grow their business.

Key Takeaways

• Construction CPAs specialize in managing project-based accounting to help contractors improve their cash flow management and avoid cost overruns.
• Construction CPAs provide year-round support, offering strategic advice on budgeting, cost management, taxes and business expansion.
• With expertise in construction accounting software — like FOUNDATION® — CPAs help streamline financial processes, reduce errors, and generate real-time reports for better decision-making.

Expertise in Financial Challenges

Construction CPAs have the knowledge and experience to manage project-based accounting, ensuring costs are allocated correctly across various projects.

For example, CPAs can help a contractor refine their job costing and work-in-progress (WIP) reports by implementing new accounting software. 

Additionally, reviewing these reports allows CPAs to provide contractors with the financial insights they need to avoid cost overruns and maintain their profit margins.

Construction CPAs have the knowledge to forecast cash flow based on seasonal and industry changes. This insight helps contractors ensure they have enough liquidity to cover operations during slower months.

CPAs are also a great resource for structuring payment terms with clients and suppliers to improve cash flow.

Strategic Planning and Financial Advice Throughout the Year

While tax season may be the time most associated with accountants, construction CPAs are an invaluable resource year-round.

They provide strategic advice that helps a contractor’s business thrive long-term in a competitive environment. A construction CPA can help contractors: 

• Make important financial decisions about the growth and expansion of their business
• Plan for major investments like new equipment
• Review financing options for new projects

One of the most valuable aspects of working with a construction CPA is their ability to assist with budgeting and cost management. 

Accurate budgeting is crucial in the construction industry because even small miscalculations can lead to significant losses, especially on larger projects. 

A CPA can help contractors stay within their budgets without compromising on quality or timelines by: 

• Setting realistic budget goals
• Tracking project expenses in real-time
• Adjusting forecasts as necessary to make more informed decisions

The knowledge CPAs offer can also be helpful for making more long-term decisions like taking on a new type of project, hiring additional staff or investing in new technology.

Increase Tax Savings

Tax season is a critical time for all businesses, but the construction industry is especially complicated due to the long-term nature of some projects, project volume and work across multiple states. 

Construction CPAs play an essential role in ensuring contractors remain compliant with construction tax regulations while also maximizing their tax savings.

One of the key benefits construction CPAs offer during tax season is their deep understanding of tax deductions specific to the construction industry. 

They are familiar with tax laws that allow contractors to deduct certain expenses, such as those related:

• Advertising
• Depreciating business assets (i.e. equipment)
• Office expenses
• Certain travel expenses

Additionally, a construction CPA can advise you on tax credits and incentives that your business may be eligible for, such as those related to energy-efficient building projects or government contracting.

Another critical aspect of tax planning for construction companies is understanding the best method for recognizing revenue.

Construction contractors normally involve long-term agreements that may span multiple years, making revenue recognition a complicated issue.

Construction CPAs can help contractors decide between:

1. The percentage-of-completion method: Revenue and expenses are recognized at each step of the project
2. The completed contract method: Revenue and expenses are only recognized once a project is finished.

This decision can have a significant impact on your company’s tax liability, and a construction CPA can ensure you make the right choice.

Streamlining Financial Processes 

Many construction companies are increasingly relying on construction accounting software to handle their finances.

A construction CPA can assist contractors with integrating these systems into their financial operations. This not only saves time but also reduces the likelihood of errors in financial reporting.

A CPA can also help contractors understand how to best use these tools to maximize efficiency by generating real-time financial reports that provide valuable insights into their business’s performance.

Find the Right Construction CPA With FOUNDATION®

The role of a construction CPA extends far beyond just preparing construction taxes at the end of the year. These professionals offer critical support year-round by helping contractors:

• Navigate complex financial challenges
• Improve cash flow management
• Plan for future growth

Whether it’s managing your finances throughout the year or maximizing tax savings during tax season, a construction CPA is an invaluable partner for any construction company.

FOUNDATION is construction accounting software that offers financial reporting and CPA audit and review features. FOUNDATION also offers a CPA directory to connect contractors with nearby construction CPAs. 

For more information about FOUNDATION, speak with an expert today.