11 min
The Difference Between A Construction Accountant And A Tax Accountant Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services
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This Podcast Is Episode Number 511, And It's About The Difference Between A Construction Accountant And A Tax Accountant How often have you hired someone with the expectation that they know how construction works, and then you found out they did not know about it? You are a master in the construction industry, so you recognize what to look for in your particular field and quickly observe if someone has the skillsets, and you proceed accordingly.
You know what happens when you send your best Rough Carpenter that you pay piece work for framing spec from the ground up in all kinds of weather and working conditions to install some custom-made cherry wood cabinets with gold plated pulls and knobs in the home of your best client (who happens to be in the wealthiest neighborhood in your town). It is not a pretty sight.
Have you pictured a crew with muddy work gear and boots stepping onto your client's pristine floors? The dirty secret is that Tax Accountants operate like Rough Carpenters because they work fast and furious, and they are paid piece work. The main difference is that they earn the bulk of their annual income in three and a half months. This means they do not waste time going through your receipts to ensure you get all the deductions you are entitled to.
Both Groups Are Important, And Each One Fills A Need
Project Management Construction Accounting Professionals (PMP) work above the line and focus on generating positive outcomes and results for contractors:
Increase Sales Reduces Expenses Increase Net Income Certified Public Accountants (CPA) work below the line focused on filling out annual income tax forms, ensuring contractors pay their fair share of taxes, preparing certified financial statements, and performing audits on your QuickBooks contractor file.
Three Times Construction Contractors Need A CPA In Their QuickBooks For Contractors File:
You apply for a large loan or line of credit over a million dollars You need certified financial statements to get a performance bond Your construction company is so large that you are required to have an annual audit Most construction contractors with annual sales under $10,000,000 and less than 20 employees will never have those issues.
Preparing end-of-year reports and filing taxes can be complicated. If you're not doing it right, you could be liable for penalties or, at the very least, not take advantage of tax gains and financial opportunities. A Construction Accountant can ensure your business remains compliant (and pay as little tax as possible), help you analyze your business performance, and work with you to achieve your goals.
On the other hand, Tax Accountants can kill more cash flow and profit in your construction business (in less than an hour) by preparing your annual tax return using a messed up QuickBooks file than you can make up for with hard work in several months, if not years. This is because saving you money on your tax bill is not what they are paid to do; they are paid to fill out tax returns.
Why does it need to be separate?
Trust but verify! When you need financing, most bankers and finance sources like to see a separation of duties. They want to see two different firms involved because it reduces the chance of errors, collusion, cover-up, and fraud. They may not say a word to you; however, we often hear about it!
We insist our construction contractor clients use an outside CPA or tax preparer to review the QuickBooks Contractor's bookkeeping services that we have performed and prepare the annual income tax return. As a result, we have developed good working relationships with several CPA firms and yearly qualified tax preparers.
It is good to know our contractor clients trust us and know that we have their best interest in our minds and hearts; however, we are human, make mistakes, and welcome input from CPAs and tax preparers. It is all about teamwork and people working together to ensure everything in your construction
This Podcast Is Episode Number 511, And It's About The Difference Between A Construction Accountant And A Tax Accountant How often have you hired someone with the expectation that they know how construction works, and then you found out they did not know about it? You are a master in the construction industry, so you recognize what to look for in your particular field and quickly observe if someone has the skillsets, and you proceed accordingly.
You know what happens when you send your best Rough Carpenter that you pay piece work for framing spec from the ground up in all kinds of weather and working conditions to install some custom-made cherry wood cabinets with gold plated pulls and knobs in the home of your best client (who happens to be in the wealthiest neighborhood in your town). It is not a pretty sight.
Have you pictured a crew with muddy work gear and boots stepping onto your client's pristine floors? The dirty secret is that Tax Accountants operate like Rough Carpenters because they work fast and furious, and they are paid piece work. The main difference is that they earn the bulk of their annual income in three and a half months. This means they do not waste time going through your receipts to ensure you get all the deductions you are entitled to.
Both Groups Are Important, And Each One Fills A Need
Project Management Construction Accounting Professionals (PMP) work above the line and focus on generating positive outcomes and results for contractors:
Increase Sales Reduces Expenses Increase Net Income Certified Public Accountants (CPA) work below the line focused on filling out annual income tax forms, ensuring contractors pay their fair share of taxes, preparing certified financial statements, and performing audits on your QuickBooks contractor file.
Three Times Construction Contractors Need A CPA In Their QuickBooks For Contractors File:
You apply for a large loan or line of credit over a million dollars You need certified financial statements to get a performance bond Your construction company is so large that you are required to have an annual audit Most construction contractors with annual sales under $10,000,000 and less than 20 employees will never have those issues.
Preparing end-of-year reports and filing taxes can be complicated. If you're not doing it right, you could be liable for penalties or, at the very least, not take advantage of tax gains and financial opportunities. A Construction Accountant can ensure your business remains compliant (and pay as little tax as possible), help you analyze your business performance, and work with you to achieve your goals.
On the other hand, Tax Accountants can kill more cash flow and profit in your construction business (in less than an hour) by preparing your annual tax return using a messed up QuickBooks file than you can make up for with hard work in several months, if not years. This is because saving you money on your tax bill is not what they are paid to do; they are paid to fill out tax returns.
Why does it need to be separate?
Trust but verify! When you need financing, most bankers and finance sources like to see a separation of duties. They want to see two different firms involved because it reduces the chance of errors, collusion, cover-up, and fraud. They may not say a word to you; however, we often hear about it!
We insist our construction contractor clients use an outside CPA or tax preparer to review the QuickBooks Contractor's bookkeeping services that we have performed and prepare the annual income tax return. As a result, we have developed good working relationships with several CPA firms and yearly qualified tax preparers.
It is good to know our contractor clients trust us and know that we have their best interest in our minds and hearts; however, we are human, make mistakes, and welcome input from CPAs and tax preparers. It is all about teamwork and people working together to ensure everything in your construction
11 min