Atlanta  Homebuilding Company Accountants

Tax Planning & Bookkeeping Advice For Your Homebuilding Business

Most businesses require accounting and bookkeeping. However, home building construction and accounting requires unique financial management. Homebuilding company accounting requires contractors to track each job they do separately, while simultaneously seeing how it fits into the entirety of the work performed by their construction company.

Homebuilding company bookkeeping includes monitoring costs of employees, materials, labor, equipment, and insurance. When these aspects are combined, they allow you to accurately bid jobs and determine how much you will pay subcontractors. The small differences that set homebuilding company accounting apart from general accounting are crucial in determining the success of any construction company.

Why Is Homebuilding Company Bookkeeping Different than General Bookkeeping?

In the same way that manufacturing or retail industries have distinct factors that influence their accounting, homebuilding bookkeeping is also influenced by several variables.

Homebuilding Bookkeeping Is Project Driven

A homebuilding company CPA maintains books based primarily on individual projects. Each project is divided into billing, production, or labor. With each job, the focus of the homebuilding company changes. Each job has unique factors that can impact the company’s profit margin, so a homebuilding company CPA needs to stay organized when doing bookkeeping. A homebuilding company's success can greatly depend on its ability to use accurate data to control costs and bid rationally.

Scattered Production Impacts a Homebuilding Company's Bottom Line

Homebuilding companies that take on multiple projects simultaneously have equipment and labor resources working at different sites. Equipment needs to be transported from one place to another, which leads to mobilization costs. Labor costs and equipment costs must be linked to each job site, and varying wages need to be factored in.

Construction work is usually seasonal.

Production cannot be predicted. This means that contractors cannot purchase large amounts of inventory. They rely on their accountant to help monitor inventory levels compared to their current need. This requires attentive tracking and planning.

Things to Consider When Reviewing Homebuilding Company Tax Planning

Homebuilding companies are usually busier during the summer months. Forethought and planning during busy months can make things easier when tax time comes around.

Equipment Acquisition Section 179 deduction makes it possible for you to expense as opposed to depreciate new equipment acquisitions. The amount allowed changes every year. Your homebuilding company financial adviser should know the amount allowed for this year, and they can help you manage your deductions accordingly. Section 179 applies to equipment, machinery, light trucks, and even certain software purchased for construction.

Strategic Planning

Although the summer months are busy for homebuilders, they are a good time to make some strategic moves. For example, a homebuilder can hire their own children who are under the age of 18 to work for them. They do not have to pay unemployment or payroll taxes on their wages. And the kids get a tax break.

Working with your homebuilding company financial adviser, you can look at the progress of different projects and see if it’s best to delay the completion of some jobs so you can report the income next year. Or it may be better to make sure that all of your jobs get completed on time, allowing you to deduct costs this year.

Here at Fusion CPA, we offer homebuilding company CFO advisory services to small and medium-sized homebuilding companies in Atlanta and across the United States. Our focus is helping our clients see ways to improve their homebuilding company tax planning, accounting, bookkeeping, and financial planning. We use QuickBooks and other accounting software Part of our CFO business advisory is recommending software and conducting software evaluation to help improve the topics addressed in this article. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive