For established contractors, entity selection is a long-gone concern. Business owners focus instead on operational strategy and tax optimization within the confines of their chosen entity type. But in light of the ever-changing tax environment, it may be worth your while to take another look at your entity selection. Is your choice of entity serving [...]
Despite tariff uncertainties, a tight labor market, and the rising costs of employee benefits, the construction industry has been flourishing in recent years and is expected to continue its economic growth into the next decade. The industry got an added boost from the Tax Cuts and Jobs Act (TCJA), passed at the end of 2017. [...]
Construction business owners have been dealt many challenges in the past several years. Although some construction indicators show improvement, many construction business owners are still addressing concerns in operating their companies. A key component in managing a construction company is accurate financial reporting. One area that needs particular attention is revenue recognition in accordance with the [...]
We all know that “cash is king” for construction companies, and, therefore, cash flow is the company’s lifeblood. Cash flow health is essential to mitigate the ever thinning profit margins, and the contract can be used as a blueprint for managing and maintaining strong cash flow. Entryway: Construction Contract Payment Terms It’s possible to negotiate [...]
With fierce competition for available work, deteriorated profit margins, and difficulty finding banks willing to extend credit for construction projects, contractors know that every dollar counts. As a result, it is appealing to contractors to look back and reminisce the good old days, but there are additional reasons to “look back” that include enhancing cash [...]
Evolution of Construction State Nexus The picture of today’s construction industry is that there are a lot of service, internet, and web-based industries. Meanwhile, state nexus laws are trying to catch up, but they are not quite there yet. In the meantime, this lag has created a lot of grey area and construction state nexus exposure. [...]
Fraud happens at companies both large and small. Why should smaller companies focus on construction internal controls? One advantage for large construction companies, however, is that they are more likely to put fraud detection and prevention measures in place and catch the fraudster before the business is devastated. Small contractorsare often not in the position [...]
The rights and responsibilities of the companies involved in a construction joint venture agreement can vary greatly based on the composition of the agreement. Specific provisions of joint venture agreements may differ, but certain items should be addressed in each agreement. These include: • Purpose statement • Capital contributions by each participant (such as cash [...]
We all know the phrase, “dress to impress.” We make sure that we are making that lasting first impression by dressing up for an occasion, but this same process can be used to maximize bonding capacity and provide a firm foundation of contractor success. But what are the three keys for construction contractors to impress [...]
Are your construction financial statements ready for their close up? The first user of financial statements is generally not the surety but a bonding agent who represents several sureties. This bonding agent performs the first analysis and determines which surety is best suited for a particular contractor. Since sureties are the largest providers of unsecured [...]
Construction companies face special management challenges that brick-and-mortar business owners can generally avoid. One of these is effectively managing a large group of employees in a remote work environment. Mobile technology, such as through mobile construction management apps, is the perfect way to bridge what was once a daunting management gap. Office Management via Smartphone [...]
Second to the intellectual capital provided by management’s knowledge and experience, a construction company’s single largest investment is typically its heavy equipment fleet. Proper management of these assets has a direct impact on construction equipment fleet profitability - and the company's ultimate success. Is Your Construction Company Equipment Fleet Profitability Maximized? To answer this question accurately, [...]
Working capital is the backbone of every construction business, and the ability to understand and maintain working capital is a vital component of long-term success. Why? Surety companies utilize a working capital calculation to determine bonding capacity. Working capital may seem like a simple mathematical calculation: CURRENT ASSETS minus CURRENT LIABILITIES = WORKING CAPITAL. Or, [...]
Most contractors know that one goal of theirs is to maximize bonding capacity, but they sometimes don't know where to start. What is Surety Bonding? Many people (and even some contractors) get confused when they first become involved in surety bonding and incorrectly think that surety bonding is insurance. However, insurance has different underwriting guidelines [...]
Creativity can be a great thing, but most would agree that your financial statements are not the time or place to "get creative” especially related to job costs and profit fade. Most contractors are aware that recognition of revenues is not driven by billings, but instead revenues are recognized based on the following formula: (cost [...]
Business owners usually dream differently from those who don’t own a business. Likewise, owners of construction companies often dream differently from owners of other types of businesses. They envision investments in large, earth moving equipment, and safety performance that beats their established record. And sometimes they dream about how another company's resources could help them [...]
Recent figures generated by the Construction Labor Market Analyzer, a web-based tool for collecting and aggregating construction labor data, construction labor data, estimates that by 2016 U.S. construction projects will require about 50% more than the current 6.7 million total workers available today. For contractors, such a drastic shortfall of skilled laborers could boost wages [...]
One typical and often-overlooked way construction businesses lose money is an estimate. Although estimating is no doubt a “bread and butter” skill of any contractor, accuracy can slip over time without an occasional check-up on this critical process. Check out our advice before beginning your construction estimate review. Regular Construction Estimate Review Process The first [...]
Construction companies that understand the repair regs and whether to expense or capitalize can help customers reduce their tax bills. For example, consider a building containing asbestos insulation that has begun to deteriorate, thus creating a health risk. The owner hires a contractor to replace the insulation. Assuming that the customer meets the requirements under [...]
The bid has been won, but the owner wants to hit completion in three months—half of the time anticipated for the project type in question. Welcome to the challenging world of fast track construction project jobs. Compressed timelines and tight margins are no strangers to many construction markets. So consider these ways to not just [...]
