Michigan Construction Accounting Firm | Avoid Construction Accounting Pitfalls
How to Avoid Construction Accounting Pitfalls
Many business owners regard accounting as an administrative bottleneck to avoid. However, a good Michigan construction accounting firm is integral for excellent business management. Accurate and timely financial construction reports will help you control costs, monitor performance, manage cash flow, and improve profitability.
Without good construction accounting, businesses will not clearly understand where projects stand at any point. They will also fail to detect problems and effect the necessary changes until it is too late.
Numerico is an experienced Michigan construction accounting firm with a deep understanding of the various trades and sectors in the industry. We help businesses like yours reach their full potential.
Keep Accurate Records | Stay Organized
Working with a construction accountant is a sure way to stay organized in your business. Excellent organization comes with the following benefits.
Accurate Overhead Allocation
A reliable method for spreading out overhead allocation among different jobs is essential if you want an accurate picture of project costs and their profitability. Without adequate organization, under or overallocation of overheads can distort the reality of a job’s profitability.
Adequate Job Costs Cutoffs
Cutoff errors are common in construction companies using suboptimal accounting practices. A good number of businesses in the industry adopt the accrual basis method.
However, it is easy to omit expenses for a specific financial statement window if invoices don’t come in within the timeframe. Shifting to a voucher system will eliminate these errors.
Accurate Job Cost Estimates
For construction companies using the percentage-of-completion (POC) approach to estimate job costs, working with a construction CPA is the best way to avoid errors due to inaccurate recording of actual expenses, poor forecasting and estimating, and mishandling of change orders.
Make Sure Your Accountant Is Familiar with Construction Accounting
Construction accounting shares similar principles to accounting in other industries. However, there are challenges unique to the industry.
For example, construction accounting is project-based. Managing each project is important to ensure profitability. With projects usually large and one-off, business leaders must get the numbers right the first time to ensure profitability.
Construction accounting is more challenging because a company typically has multiple projects distributed across different sites. The mobile workforce translates to fluctuating costs.
Therefore, it’s not enough to have an accountant. You must ensure the firm you work with understands these industry-specific challenges and is an expert to overcome these obstacles. As a Michigan construction accounting firm with a difference, Numerico brings instant improvement to your business.
Meet with Your Accountant Regularly
When you find a construction accountant that understands the industry inside out, it’s crucial to maintain a healthy relationship with them. Honor meetings regularly, and ensure there are multiple of them over a year. Ideally, you should meet with your accountant monthly, not just at tax time.
Through regular meetings, you’ll be the first to hear about new trends, new opportunities, and more. Regular meetings also give your accountant more time to review your tax strategies.
Your accountant should be your year-round adviser with a clear understanding of your goals. Without regular meetings, you may not know if an accountant is suitable for the job until it is too late.
Don’t Wait Last Minute to Hire an Accountant
Hiring an accountant should be one of the first things you do once your construction business is up and running. You could face a few problems if you wait until the last minute.
First, missing tax deadlines can lead to hefty fines that may leave a dent in your business’ finances.
Secondly, hiring an accountant early gives them enough room to work with. They’ll have adequate time to uncover problems and find solutions. A job you believe might take a day to complete might require two weeks of meticulous work.
Michigan Construction Accounting Firm | Numerico
Construction-specific accounting is the best way to balance your books and eliminate debilitating mistakes. It goes beyond making sure you pay your taxes on time to ensure you remain in business over the long haul.
Are you looking for a Michigan construction accounting firm you can trust? Choose Numerico. We have an expert construction CPA committed to seeing your company grow.
You’ll experience a new level of professionalism right from the first appointment with us. Regardless of your company size, we guarantee personalized service. Contact us today at (313) 278-8030 to schedule an appointment.