What's unique about the construction industry is the risks and demands associated with economic upturns and downturns. Because projects have longer timeframes, the impacts are not felt immediately but require planning to prepare your business for an increase or decrease in future projects. This can be a daunting task.
General contractors, subcontractors, and home builders should all focus on forecasts and projections, emphasizing the inherent risks for the business.
Price increases, combined with supply and labor shortages, are the biggest challenges for the industry.
Accurate estimates and project management tools will help you improve your operations.
Understanding contract penalties and performance obligations will help you manage your unexpected costs and challenges.
Understanding the federal, state, and local tax incentives and obligations will help you minimize taxes and maximize your profits.
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Construction projects are among the largest and most complex financial investments undertaken by owners. Billing errors, overcharges, and unauthorized expenditures can leave an owner paying thousands of dollars in additional costs. We can help reduce the risk of being overcharged by applying specific procedures in a Construction Contract Compliance Analysis (CCCA). Throughout the contract, we conduct the CCCA to help reduce the risk of contract non-compliance during each phase of your project.
Tax Incentives and Credits
Construction projects qualify for many federal, state, and local tax incentives. A comprehensive state and local tax strategy helps minimize your company's compliance risk and tax burden. Staying current and compliant with federal tax incentives will help you control your costs. We work closely with you to identify and implement strategies that bring you the maximum tax benefit and leverage our years of experience to deliver tailored solutions that consider the full spectrum of tax credits available.
Tax Accounting Methods Analysis
SVA can help you manage your tax liability by choosing an appropriate accounting method or changing methods or sub methods. With recent tax legislation such as TCJA, there are more benefits to certain accounting methods making a review of your current options imperative. Large contractors that use the Percentage of Completion Method (PCM) could defer income by making certain elections or adopting certain sub methods. For instance, a general contractor that has substantial retainage payables may be able to exclude the retainage payable amount from costs incurred, when calculating the percentage is complete. SVA can review your current accounting method and make recommendations to help you use the best option for your specific business.
Using software that is designed to support the tracking of costs is imperative to accurate financial reporting. SVA works with several software options and can make recommendations on which is the best fit for your company. Once you have the right software, creating customized on-demand reports will allow you to monitor your estimates compared to actual expenses, as well as track overhead allocations by the project.
Construction bonds protect against financial loss due to a contractor’s failure to meet or complete a specific contract. SVA will help you determine how your financial statements impact your bonding capacity. We can develop metrics to help you monitor and manage your bonding capacity. We also provide education to bonding agents and underwriters, so they better understand your individual business.
This eGuide covers 5 business impacts that construction company leadership needs to be aware of to prepare for the future.
There is a misconception that R&D tax credits are reserved for companies that have a dedicated R&D staff. The truth is any business can qualify as long as they adhere to a few simple guidelines outlined in this eGuide.