MKS&H Articles

Are you taking advantage of this huge tax opportunity?

[fa icon="calendar'] Jan 24, 2017 11:30:00 AM / by Tim Stolz posted in tax deduction, Tax Savings, Construction Industry

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When clients call me looking to create tax deductions before year end, I generally deliver the bad news that if they want to bring their taxable income down they are going to have to spend some of their money or at least put it in a restricted account.  This, however, is not necessarily the case with clients working in the construction industry.  Clients in this industry do have an opportunity to create tax deductions for jobs that they have already completed that vastly exceeds any additional cash they will need to spend to create those deductions. 

This elusive opportunity, to magnify the deductibility of cash outlays, is called the “179D Deduction”.  The 179D deduction is available to the owner of a building that meets certain energy efficiency guidelines. More importantly for those of you who own or manage a construction, engineering or architecture firm; the government has the ability to allocate a 179D deduction to a contractor, engineer or architect who designed a newly constructed building or upgraded building system.

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How to Increase the Quality of your Construction Contract Work

[fa icon="calendar'] Dec 29, 2016 12:07:07 AM / by Brian Finley posted in Construction Industry

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The main goal for a construction contracting company is to carry out a construction project’s work in a way that meets the project’s objectives, at a high level of quality. It is up to the project manager to meet these objectives, which can occur through the completion of four phases: initiation, planning, execution, and closing. Once these phases are finished, the contract is deemed complete.

Together, these four phases are known as the contract life cycle. One important aspect that runs across the four is effective management. Aspects of management that include communication, documentation, and budgeting are all critical to a successful project.

Here, I’ll explain each of the phases of the life cycle in greater detail, along with a discussion of some of the benefits of using life cycle management.

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The Secret Sauce to Construction Billing

[fa icon="calendar'] Nov 8, 2016 1:17:50 PM / by Jennifer Barrett posted in Construction Industry

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Proper billing is an important aspect of both job management and cash flow management. Without proper billing, and by that term I mean billing that is sent out on time and is correct and complete, how can you expect to receive proper payment for all of your work?

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What Red Flags Keep you from Getting a Surety Bond?

[fa icon="calendar'] Sep 14, 2016 2:50:09 PM / by Jeff Rubin posted in Construction Industry

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A surety bond is a guarantee of a contractor’s performance. If a contractor fails to perform under a construction contract, the surety pays the owner for the damages (or provides some other remedy). In turn, the contractor is obligated to reimburse the surety company for these payments. It is because of this relationship that a surety bond functions like a credit guarantee.

Since the surety assumes significant financial responsibility if the contractor fails to perform, it scrutinizes the financial statements, along with the experience and the character, of the contractor. The surety, in most cases, will not provide bonding for a contractor that that they believe will not have the ability to repay.

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Do you have a true picture of your construction company’s financial position?

[fa icon="calendar'] Aug 24, 2016 12:00:00 PM / by Brian Finley posted in Construction Industry

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As the owner of a construction company, it can sometimes be difficult for you to get an accurate understanding of the financial position of your company; at the same time, it is so important because it is the key to operating a successful business.

One issue accountants see with construction companies is that the actual net income the company derives for each project does not always comply with accounting standards. We provide the assurance that the financials are in line with the standards, bringing the revenue amount to where it should be. But, the solution is not always what the company wants to hear, because often the income is decreased as a result, and the company is less profitable than expected.

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You’re Leaving Money on the Table by Ignoring Indirect Costs

[fa icon="calendar'] May 19, 2016 11:00:05 AM / by admin posted in Construction Industry

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If you’re including all of your costs in your job estimates and billing, you are more than likely pricing your jobs correctly, and in turn, maximizing your profits. But are you truly including all of your costs?

The easy part is accounting for all of your “typical” construction project costs and the specific costs for a unique project. You and your team are well aware of those. But indirect costs, which can be significant in the construction industry, are often overlooked in the planning and budgeting process. As a result, so is the true assessment of what the costs, and therefore pricing, should be.

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Whip your WIP report into shape

[fa icon="calendar'] Mar 16, 2016 2:09:59 PM / by admin posted in Construction Industry

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Is your profitability lagging? Does your surety seem a bit more hesitant than usual?

If so, there may be a number of things you need to do. But one of the most important is a reassessment of your work-in-progress (WIP) report.

As you know, your WIP report is intended to provide a real-time snapshot of how jobs underway are doing and what’s coming up on the horizon. Yet the breadth of detail and accuracy of data in this critical report can often suffer over time.

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