An established, growth-focused construction company will employ the services of both an accountant and bookkeeper. The two professionals ensure that business financials are updated and accurate and that financial health is carefully monitored.
If you're still in the early days of your business, you might choose to do the bookkeeping yourself or hire a bookkeeper for a couple of hours a month until it makes sense to bring someone on full time. An accountant, however, should be a key player on your team from day one.
Construction Bookkeeper
The primary role is to handle a company's day-to-day financial management. A bookkeeper will take care of the small but essential details necessary for providing an accurate picture of where a business stands at any given moment.
In addition to a bookkeeper's main job – making sure every financial transaction is accurately recorded in the general ledger – they may also hand over other critical tasks like invoicing, paying suppliers and vendors, and processing payroll.
Ideally, a construction company's books are updated at the end of each business day, so you always have an accurate account of your sales, expenses, and the bottom line. However, if your business is still in its early stages, without much financial activity or the funds to hire a bookkeeper, you should aim to reconcile your accounts at least once a week.
Construction Accountant
Your accountant is responsible for keeping accurate financial records, making summaries, and undertaking analyses of your financial transactions. Depending on their role or specialty, they may also undertake auditing, inventory accounting, and economic forecasting.
They'll also help ensure your business is compliant with tax regulations and may advise you on critical financial issues related to your construction business, such as decreasing costs, setting prices or wages, managing expenses, and budgeting. Additionally, they can help you determine the best way to set up your business, how to increase your returns after-tax, and how to grow your construction company.
Further areas accountants can help you include
Financial planner
Financial planners advise you on your wealth management. Typically, they are specialists in tax planning, managing your portfolio, or retirement planning. They may also advise you on solving your debt or building your long-term wealth.
People who have specific financial goals in mind can turn to a financial planner to develop the best path forward to achieve those goals and improve their financial wellbeing.
Specifically, financial planners can help you with
Certified Public Accountant
The CPA's primary function is to prepare the annual tax return, perform audits, and prepare Certified Financial Statements for bank loans when a construction contractor requires them before issuing a construction bond. Keep in mind that most Certified Public Accountant accounting specialists can do all accounting for most standard businesses that only need regular accounting but not construction accounting. Construction company owners who think it's costly to hire a construction accountant and would instead only seek a CPA's help might be in for more business damage in the long run.
Which services do you need and when?
If you run a construction business, it's a good idea to have a construction bookkeeper for your bookkeeping and a CPA for your tax needs. A construction accountant and a financial planner on your team will also help set you up for success, lessen your risks and develop strategies to enable you to thrive financially. Often, accountants will know of good financial planners to bring onto your team, and vice versa.
If you feel you can only hire one, that one will be based on your specific needs. If you're working towards long-term wealth or other financial goals, considering investing, or concerned about setting up your estate, talk to a financial planner. If your needs have more to do with running a business, daily transactional economic activities, or dealing with your taxes, a construction accounting specialist can help you.
Develop relationships
In an ideal situation, you'd have both a construction accountant and a financial planner on your team. Keep in mind that to help you to their best abilities, they need to know you, your plans, and your challenges. By developing a solid relationship with both and being open and transparent about your financial situation and any issues you face, you can better enable both to help guide you toward success.
Final thoughts
When it comes to managing your finances, these professionals can help you understand your numbers and ensure you have a plan to get to where you want to be. They all play an essential role in your financial success.
There are areas where they are similar, of course, as they can help you determine if your financial plans are feasible and can provide you with important strategies for managing your money. And while they can both advise you, neither can make decisions for you.
A trustworthy bookkeeper's services are essential for a thriving business, and hiring an accountant specializing in the construction industry can do so much more than handle your taxes. Think of your accountant as a trusted business partner - someone whose services you rely on year-round for advice on how to increase profitability as you take steps to achieve your business goals.
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