Running a construction company comes with unique challenges, from managing projects to adhering to complex financial regulations. Selecting a Certified Public Accountant (CPA) who understands your industry is essential to ensure your company thrives financially. Here’s an expanded guide to help you choose the right CPA for your construction company.
1. Look for Construction Industry Expertise
The construction industry has distinct financial challenges that require specialized knowledge. A CPA with construction experience understands issues like:
- Job costing and overhead allocation: Properly tracking labor, materials and other costs for each project ensures profitability and helps with accurate reporting
- Revenue recognition standards (ASC 606): The construction industry must follow specific guidelines for recognizing income, often based on the percentage of project completion or performance obligations
- Retainage accounting: Retainage involves withheld payments until project milestones are met. Managing this accurately is critical for cash flow and financial planning
Ask prospective CPAs how they’ve assisted other construction businesses with these tasks. Real-world examples of overcoming challenges similar to yours are a strong indicator of their suitability.
2. Evaluate Their Knowledge of Tax Regulations
Construction companies face intricate tax requirements due to:
- Multistate operations and varying tax jurisdictions
- Equipment depreciation schedules
- Classification of workers (employees vs. subcontractors)
An experienced CPA will ensure compliance while identifying opportunities to minimize tax liabilities. Some key tax considerations include:
- Multistate tax filings: If your projects span multiple states, the CPA should know how to handle each state’s tax requirements, avoiding penalties for non-compliance
- Tax credits: They should be well-versed in credits like the R&D credit for innovative building techniques or green energy incentives
Their expertise in navigating these rules can save your company significant money and headaches.
3. Assess Their Technology Expertise
The construction industry increasingly relies on technology like construction accounting software to streamline accounting and financial processes. A CPA who understands and can leverage these tools will provide you with better data and improved efficiencies.
Key areas of technology expertise to look for:
- Accounting software integration: Ensure they are proficient in platforms like Deltek ComputerEase, tailored for construction accounting
- Cloud-based systems: A CPA familiar with cloud technology can help you access real-time financial data and collaborate effectively from anywhere
- Job costing tools: They should understand job costing, how to track expenses per job, and provide regular cost breakdowns to improve decision-making
Ask about their experience with these tools and whether they can recommend additional software to improve your workflow.
4. Check for Strong Communication Skills
Your CPA should act as more than just a number cruncher—they should be a partner who clearly explains financial matters and helps you make informed decisions.
Signs of effective communication include:
- Transparency: They explain complex tax rules, budgets or projections in a way that’s easy to understand
- Responsiveness: They are readily available to answer your questions and respond to inquiries promptly
- Proactive advice: They regularly offer insights or suggestions to improve your financial standing instead of waiting for you to ask
Consider scheduling a consultation to gauge their communication style and ensure it aligns with your expectations.
5. Verify Their Credentials and Reputation
It’s crucial to verify that your CPA is properly licensed and qualified. Check their background for:
- Licensure and certifications: Ensure they hold an active CPA license and look for additional certifications like the Certified Construction Industry Financial Professional (CCIFP)
- Memberships in professional organizations: Being part of the Construction Financial Management Association (CFMA) or similar groups indicates a commitment to staying updated on industry best practices
- Client references and reviews: Request references from other construction clients and review their feedback to gauge satisfaction with the CPA’s services
Researching their professional reputation ensures you’re hiring someone reliable and knowledgeable.
6. Consider Their Availability and Commitment
A construction company’s financial needs don’t end after tax season. Unexpected challenges like project delays, cost overruns or audits can arise at any time. Your CPA should be available year-round to address such issues.
Questions to ask:
- Are you accessible outside of tax season?
- How quickly do you respond to urgent financial inquiries?
- Do you offer ongoing advisory services?
Having a CPA who is available to provide timely assistance can be the difference between resolving an issue quickly or facing costly delays.
7. Evaluate Their Strategic Insight
A skilled CPA does more than handle taxes—they act as a strategic partner to help your construction business grow. Depending on the size and complexity of your company, you might require a team of CPAs to handle your needs (between tax and strategy) so picking the right CPA firm(s) and not just a CPA might be important.
Examples of strategic services include:
- Financial forecasting: They help predict future revenue and expenses to ensure you have adequate cash flow for upcoming projects
- Cash flow management: A CPA who understands construction can advise on balancing expenses with project income, especially when dealing with retainage
- Bonding and financing advice: They can guide you in improving financial statements to secure better bonding capacity or attract investors
A CPA with strategic insight will help you make data-driven decisions that align with your long-term business goals.
8. Compare Fees and Services
Cost is always a consideration, but focusing solely on fees can lead to hiring someone who doesn’t meet your needs. Instead, consider the value they bring.
Key factors to evaluate include:
- Range of services offered: Does the CPA handle everything you need, from tax preparation and audits to financial planning and payroll? If you require a review or audit, a one-stop shop might not be an option so you might need to consider all of your needs and how the team you need to support your growing company.
- Customized solutions: Do they offer packages tailored to construction companies?
- Potential savings: Consider how their expertise might save you money in taxes or operational costs over time.
Request a detailed breakdown of their pricing and compare it with their level of service to determine if they’re a good fit.
Choosing the right CPA or CPA firm for your construction company is one of the most important decisions you can make for your business’s financial health. By focusing on their industry expertise, tax knowledge, technology proficiency and strategic insight, you can find a CPA who will not only manage your finances but also help your company thrive.
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