Construction CPA Columbus Ohio
Focus on Construction Management and New Projects. We’ll help you with Construction Accounting
Construction CPA Services
Whether working on residential real estate projects or commercial apartments, restaurants, medical facilities, or warehousing, the construction business can get overwhelming. Your time is best spent managing your tradesmen, meeting inspections, keeping projects on schedule, and bringing in new business – instead of managing your accounting.
Working with a professional construction CPA firm can help you streamline your operations, understand your hourly rates for workers, machinery, overhead, and structure your business taxes to minimize your tax burden while maximizing your profitability.
- We can help you throughout the entire accounting process including integrating the business with QuickBooks, chart of accounts, and managing your taxes and expenses.
- Our detailed accounting and reporting can help you make data-driven decisions on running the business, where you spent excess budget, bought too many supplies, too many man hours on certain job types or with certain contractors, and more. This can help you cut costs and improve business efficiency.
- We can help remedy seasonal cashflow issues during winter months versus summer construction seasons
- We advise how best to get tax relief by buying machinery and depreciating assets instead of renting equipment.
- We help entrepreneurs that own multiple businesses strategize for maximum tax efficiency
Managing your Construction Company finances with Hogan CPA, a QuickBooks ProAdvisor
Running your construction business smoothly means banking integration with an accounting software like QuickBooks should be essential to your processes. Automatically importing transactions for income, expense, employee salaries, and more, with the addition of rule-based automations to automatically sort transactions can streamline your finances and cut down the number of hours spent on accounting drastically.
QuickBooks reporting can generate simple profit and loss statements to customized reports for things like how much you are spending on equipment versus employee rates and more. In the end, having a better financial picture of your entire business can allow you to choose the most cost-effective solutions for you.
2. Construction Tax Planning and Management
A construction CPA can help you with proper tax planning, identifying areas where you can save on taxes and file your taxes correctly. One of the most important factors in planning is knowing when to make big investment decisions, such as purchasing an office, large machinery or equipment, and vehicle purchases. Timing large purchases with high-revenue years can create an expense that offsets the taxes you would be forced to pay anyway. It’s better to reinvest those dollars into your business rather than pay the taxes and be out that money.
Additionally, any assets you purchase can be depreciated as they degrade over time through usage. Depending on the type of asset, the IRS has spelled out specific depreciation schedules allowing you to recoup some of the “loss in value” on your taxes, putting money back in your pocket. The values of depreciation change year by year so it’s important to have someone that is properly tracking and accounting for those items on your taxes.
Other expenses you can deduct to lower your net operating income and your taxes include:
- Maintenance or fuel costs
- Other rented equipment
- Government fees or licenses
- Utilities like water, electricity, internet
- Employee salaries, wages, and benefits
- 1099 contractors
- Marketing and advertising
- And more
Because of the nature of construction and how it fluctuates with seasons and the economy, it can be difficult in down times to remain profitable. Construction businesses that end up with more deductible expenses than the income in a year can claim Net Operating Losses (NOL). These losses can be carried forward and you can deduct them from the next year’s taxes but you cannot carry them backward. The Tax Cuts and Jobs Act (TCJA) stopped allowing businesses to carry back losses in 2017. The NOL rules are a little more complicated than our simplistic description but our knowledgable construction CPAs can help you properly deduct any losses in your business.
Our services also extend to help with estimating tax liabilities, accounting and tax preparation to ensure your business stays on schedule to meet all tax filing deadlines.
Why Choose a CPA Specializing in the Construction Industry?
With a high volume of transactions, many employees, subcontractors, materials, equipment and more, it’s important to hire a CPA specializing in the construction industry to make sure you get the right advice about accounting for your business. Some bookkeeping challenges within a construction company include:
Job Costing and Granular Accounting:
Tracking the costs of your projects in a very detailed manner can help you better optimize your business and understand exactly where your money is being spent. You can do this both on a project-by-project basis in addition to breaking down specific expenses like labor, material, and equipment into more details.
For a roofing company, you can break down:
Specific types of materials:
- Plywood and decking
- Drip edge and flashing
- Tar paper and ice & watershield
Specific types of labor
- Tear off
- Roof preparation
- Roof installation
Using this method can give you an indication of the exact costs associated with each material, allowing you to add a buffer to your estimates to account for inflation or rising material costs. This method of account would have been especially helpful back in 2021 with the outrageous rising costs of lumber and other materials, allowing you to budget appropriately and maintain profitability.
A construction CPA in Columbus, Ohio, can be instrumental in deciphering construction contracts and their financial implications. We can identify the potential risks and cashflow issues that may arise, or funding required to begin a project. This information can help you decide whether you’re willing and can afford to take on certain types of projects or if the financial strain is too high and it would be better for you to pass on a project.
Cash Flow Management, Financial Analysis and Debt:
Construction projects often face delays or seasonal changes, which means cash is not always readily available. We can help you better manage your cash by reporting cashflow forecasts so you can adjust the timing of purchases or change seasonal hiring dates based on projects or cash reserves, improving your liquidity.
Additionally, in cases of delays in work or payments, some businesses may resort to debt or financing to cover expenses like paying employees or for materials. We keep your books up to date and provide important company financial data you’ll need to present to banks or other lenders to help you get the funding needed to run your business.
Depending on the size of your construction business, it may make more or less sense to have one entity type or another. For example, for a mom & pop business with mostly 1099 contractors, an LLC can be more advantageous and simplistic as taxes pass through to your personal taxes. As you grow both in revenue and employees, it can make sense to offset taxes through an S-Corp with payroll taxes instead of having higher self-employment taxes. These are ongoing discussions we have with our clients as businesses change over the years.
Tax Planning for Restaurant Companies
Owner-operators have a plethora of responsibilities to manage, including staffing, training, managing finances, and ensuring timely payment of their taxes. No matter the business model of your restaurant, we can help you plan and save taxes. Here are a few of the tax deductions that you may be eligible to claim:
- Cost of Goods Sold (COGS)
- Wages and Benefits
- Rent and Lease Payments
- Utilities and Overhead Expenses
- Equipment and Supplies
- Repairs and Maintenance
- Marketing and Advertising
- Business-related Travel like purchasing inventory or meeting suppliers
- Entertainment expenses like hiring live musicians
- Employee Training and Education
Equipment & Depreciation
Restaurants have some of the most diverse combinations of equipment which all depreciate at different rates. From commercial stovetops and ventilation to parking lots or the building itself (if you own it) – depreciating these assets at their correct rates can be a difficult task when you have thousands of transactions per month. Depreciation allows for critical tax savings that can allow you to recoup monies during tax season and bring cash back into the business.
The American Jobs Creation Act of 2004 refined the system for depreciating these expenses specific to restaurants. Most assets fall into 3 categories:
- Building and Building components: roofs, flooring, drywall, foundations, etc – depreciation over 39 years
- Land improvements: parking lots, light poles, concrete patios (non-structural), etc – depreciation over 15 years
- Office Furniture, Fixtures, and Equipment: desks, filing cabinets – depreciation over 7 years
- Distributive Trades and Services – Food storage equipment, kitchen HVAC, POS systems, furniture unique to restaurants (tables, chairs, booths), etc – depreciation over 5 years
- Information Systems – computers – depreciation over 5 years
There are more intricacies when it comes to trades like electrical or plumbing as one must determine if it’s part of the building (39 year depreciation) vs hook-ups like water lines to a dishwasher (5 year depreciation).
Additionally, you can save on taxes with the strategy for forming a business entity while also protecting yourself from liability. You can choose from the following entities:
- Limited Liability Company (LLC): LLC’s have personal liability protection, flexibility in management and ownership. They can be treated as disregarded entities (taxed like a sole proprietorship or partnership) or choose to be taxed as an S corporation or C corporation, offering flexibility in tax planning.
- S Corporation: S-corps function similarly but require more payroll deductions and require reasonable compensation for owner-employees and restrictions on the number and type of shareholders.
- Partnership: If you’re starting your restaurant business with a partner, partnership pass-through taxation to multiple owners so profits and losses flow through to individual partners who report them on their personal tax returns. Partnerships may also be subject to specific tax rules that govern the allocation the income and loss among partners.
- Sole Proprietorship: Sole proprietorships are not separate legal entities, and the owner reports business income and expenses on their personal tax return. Self-employment taxes may apply. Considering the high-degree of liability that comes with a owning a restaurant, both financially and legally, we highly do NOT recommend restaurants be a sole proprietorship.
Most restaurant owners opt for the Limited Liability Company (LLC) due to its personal liability protection, flexibility in management and ownership, pass-through taxation, and simplicity of operation. This can safeguard their personal assets, customize the management structure, allocate profits and losses, and benefit from the tax advantages of pass-through taxation. Additionally, the administrative requirements and ongoing compliance obligations of an LLC are typically less burdensome compared to other entities.
Construction Company Accounting Services with Hogan CPA
Hogan CPA Financial Services can assist in all matters of accounting so that you can focus more on running the business. To do this, we offer several services related to the construction industry:
Tax Planning, Filing, and Consulting
Considering the construction season typically starts in the spring and tax deadlines are at the same time, it can be common for construction business owners to get overwhelmed and possibly forget to file their taxes. Additionally, with limited time you may not be taking advantage of all the deductions available and paying too much in taxes. We help you keep on time and make adjustments to minimize your tax burden.
Operational Review & Assessment
Making sure you are operating optimally is what we are here to help you achieve. There may be times where you're bringing in new business, but it doesn't seems like you're growing. We will review your accounting and finances, identify points of concern, and recommend how to streamline your finances to continue making progress toward your business goals.
Financial Review & Reporting
You can only grow your business if you have the right financial reports coming across your desk. We provide regular reporting (typically monthly) so you can stay on top of your data and understand your financial position. With the integration of QuickBooks and our professional expertise, you’ll be equipped to make smart financial decisions.
How we help construction CPA
Let us help you strategize for taxes and free up your time by taking repetitive tasks like bookkeeping off your plate.
What our construction CPA clients are saying
Tax Accountant CPA for Construction
Schedule an appointment with Hogan CPA Financial Services
For A Complimentary Phone Consultation
Hogan CPA can help you grow and expand your construction company. Whether you want a simple financial analysis, a detailed report on your business performance, or need to get a grip on your taxes, we can help. We can collaborate with your team of in-house accountants or be a sole external partner to help you better understand your business, taxes, and accounting. Simply call or message us, and we can schedule an appointment with you.
See our Frequently Asked Questions below for commonly asked questions about our Construction CPA services.
Construction CPA FAQs
A construction CPA can optimize a company’s tax strategy by identifying industry-specific deductions, incentives, and credits. This means you can reduce your tax liability while keeping more money in your pockets. This is especially critical if you are performing work in multiple cities, counties, or states where different jurisdictions have their own specific tax regulations you’ll need to comply with.
The CPA is essential for preparing accurate and detailed financial reports and tax statements. These documents showing a profitable, well-managed business give confidence to bonding companies, banks or other financial institutions responsible for lending capital or insuring your business. If you are performing work but do not turn much of a profit, the likelihood of getting approved will be lower – we can help you improve your bottom line.
A CPA can help you maximize your deductions over multiple years when work ebbs and flows, like in the case of changes in economic trends and industry disruptions. Properly planning for years of large growth versus knowing when to take losses and carry losses forward can offset tax burdens over multiple years. This will reduce overall taxes and can be a vital financial plan for the sustainable growth of your business.
In short, yes. If you do not understand how your business spends its capital, how frequently new business is gained, and cash flow, profitability can be a problem. A specialized construction CPA can analyze your financial data and find areas that can offer cost savings, leaving you with more capital to spend or reinvest elsewhere in the business.