Handling accounts in the construction industry
Posted by Vidit Agarwal on October 7th, 2021
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 progress.
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.
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About the AuthorVidit Agarwal
Joined: March 9th, 2018
Articles Posted: 83
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