458: Different Skill Sets Of A Construction Company's Financial Team

This Podcast Is Episode Number 458, And It's About Different Skill Sets Of A Construction Company's Financial Team As your construction business grows, it's essential to have trusted financial professionals managing your books and providing strategic financial advice.    After all, the busier you get, the more complex financial management becomes - and the less time you'll have to maintain your books and try to make sense of all the data.    However, many construction business owners are not sure of the differences between a construction bookkeeper, a construction accountant, a financial planner, and a Certified Public Accountant (CPA) - or whether hiring one or all of them makes the most sense.   Keep in mind that each branch of accounting serves a different function similar to how it works in construction. There are framers, rough carpenters, and finish carpenters, and all three work with lumber, yet in most cases, the skill sets to do everything are rarely found in the same person.  

An established, growth-focused construction company will employ the services of both an accountant and bookkeeper. The two professionals ensure that business financials are updated and accurate and that financial health is carefully monitored.

If you're still in the early days of your business, you might choose to do the bookkeeping yourself or hire a bookkeeper for a couple of hours a month until it makes sense to bring someone on full time. An accountant, however, should be a key player on your team from day one.

Construction Bookkeeper

The primary role is to handle a company's day-to-day financial management. A bookkeeper will take care of the small but essential details necessary for providing an accurate picture of where a business stands at any given moment. 

In addition to a bookkeeper's main job – making sure every financial transaction is accurately recorded in the general ledger – they may also hand over other critical tasks like invoicing, paying suppliers and vendors, and processing payroll. 

Ideally, a construction company's books are updated at the end of each business day, so you always have an accurate account of your sales, expenses, and the bottom line. However, if your business is still in its early stages, without much financial activity or the funds to hire a bookkeeper, you should aim to reconcile your accounts at least once a week.

Construction Accountant

Your accountant is responsible for keeping accurate financial records, making summaries, and undertaking analyses of your financial transactions. Depending on their role or specialty, they may also undertake auditing, inventory accounting, and economic forecasting. 

They'll also help ensure your business is compliant with tax regulations and may advise you on critical financial issues related to your construction business, such as decreasing costs, setting prices or wages, managing expenses, and budgeting. Additionally, they can help you determine the best way to set up your business, how to increase your returns after-tax, and how to grow your construction company.

Further areas accountants can help you include

Payroll Lowering your tax burden Preparing business plans Forensic accounting Selling, buying, or merging a business

Financial planner

Financial planners advise you on your wealth management. Typically, they are specialists in tax planning, managing your portfolio, or retirement planning. They may also advise you on solving your debt or building your long-term wealth. 

People who have specific financial goals in mind can turn to a financial planner to develop the best path forward to achieve those goals and improve their financial wellbeing. 

Specifically, financial planners can help you with

Philanthropic strategies Retirement planning Investing Estate planning Budgeting Inheritance tax planning Cash flow modeling Portfolio construction.

Certified Public Accountant 

The CPA's primary function is to prepare the annual tax return, perform audits, and prepare Certified Financial Statements for bank loans when a construction contractor requires them before issuing a construction bond. Keep in mind that most Certified Public Accountant accounting specialists can do all accounting for most standard businesses that only need regular accounting but not construction accounting. Construction company owners who think it's costly to hire a construction accountant and would instead only seek a CPA's help might be in for more business damage in the long run.

Which services do you need and when?

If you run a construction business, it's a good idea to have a construction bookkeeper for your bookkeeping and a CPA for your tax needs. A construction accountant and a financial planner on your team will also help set you up for success, lessen your risks and develop strategies to enable you to thrive financially. Often, accountants will know of good financial planners to bring onto your team, and vice versa. 

If you feel you can only hire one, that one will be based on your specific needs. If you're working towards long-term wealth or other financial goals, considering investing, or concerned about setting up your estate, talk to a financial planner. If your needs have more to do with running a business, daily transactional economic activities, or dealing with your taxes, a construction accounting specialist can help you. 

Develop relationships

In an ideal situation, you'd have both a construction accountant and a financial planner on your team. Keep in mind that to help you to their best abilities, they need to know you, your plans, and your challenges. By developing a solid relationship with both and being open and transparent about your financial situation and any issues you face, you can better enable both to help guide you toward success.

Final thoughts

When it comes to managing your finances, these professionals can help you understand your numbers and ensure you have a plan to get to where you want to be. They all play an essential role in your financial success.

There are areas where they are similar, of course, as they can help you determine if your financial plans are feasible and can provide you with important strategies for managing your money. And while they can both advise you, neither can make decisions for you. 

A trustworthy bookkeeper's services are essential for a thriving business, and hiring an accountant specializing in the construction industry can do so much more than handle your taxes. Think of your accountant as a trusted business partner - someone whose services you rely on year-round for advice on how to increase profitability as you take steps to achieve your business goals. 

About The Author:

Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com