Ontario’s construction industry has grown by more than 50 percent since 2002 and employs over 400,000 workers in Ontario alone. Below are some accounting tips on how to cut costs, speed up your accounting process and remain competitive in today’s construction industry.
Our professional team of accountants at GMSPC specialize in providing tax, accounting, and consulting services to businesses within the construction industry.
Contact a representative from GMSPC today for a free consultation.
Here are 5 Accounting Tips for Your Construction Company
Make accounting part of your daily workflow routine
Every day it is essential to update your accounting software with expense reviews, cash flow, employee information and generated invoices. If you fall behind in your accounts, your books can quickly get out of hand. Construction is a fast-moving industry, and it is vital to implement accounting into your workflow.
This doesn’t have to be difficult.
Modern accounting tools are cloud-based, meaning that they are online and you can access them from a smartphone even when you’re working on site. Implement accounting software (such as Sage or Quickbooks) and make sure you use habitually use it. Quickbooks is easy to learn and is a cost-effective way to keep your accounting practices in order.
By doing this, you’ll avoid undercharging due to missed expenses. You’ll also make the most of your business tax allowances, and if you are audited, you’ll reduce the risk of any nasty surprises.
Use Automation Software and Applications
Advances in technology have made it simple and easy to store backups of your documents. Cloud-based technology offers nearly unlimited storage capabilities at affordable prices. By keeping backups in the cloud, you’ll make sure that your contracting business will have access to the information it needs to function no matter where you happen to be.
Automation software is the key to success in today’s business environment. Automating administrative tasks will undoubtedly make your office staff more productive. Even if automation software only works to save your employees a few minutes per day, those minutes will add up to days worth of added productivity in the long run.
Applications such as Get Jobber offer amazing automation software dedicated to residential and commercial construction companies. Get Jobber will track employee location, automate time-sheets, track project time and material, and much more. Learn more at getjobber.com
Estimating: Profitability, Expenses & Overhead
Improving your accounting procedures starts with an understanding of the different types of costs you can incur working on a project. As your construction business continues to grow, you’ll learn which jobs lead to the most profit and which ones probably aren’t worth your time.
In regular businesses, the distinction between Cost of Goods Sold and Overhead is quite straight forward. In the construction industry, this is not the case. Every construction project or service call is unique, meaning there are varying overhead and profit margins between each job.
It is vital to your business that your project estimators calculate accurate bids consistently. Underbidding on a large-scale project can lead to incurred losses ranging in the hundreds-of-thousands of dollars.
The best way to ensure accurate accounting is to implement a software solution that allows workers at your firm to easily submit data on costing through a platform which integrates with your accounting software. The next step is to categorize those costs effectively, understanding the nuances between expenses/overhead and cost of goods sold, and appreciating the complexity of the projects of which your firm is capable.
Make sure you’re working efficiently and cost-effectively by balancing out your job profits and job costs. This practice will save time on paperwork and ensure that valuable data is never lost, making your firm more profitable as a result.
Know Your Tax Breaks and Deductions
Construction companies may be eligible for several tax deductions, some of which are inclusive in scope, while others are a bit more niche. Below is a list of three tax credits that your construction company may be eligible to receive:
- The Apprenticeship Job Creation Tax Credit (AJCTC) is a non-refundable tax credit, and the maximum an employer can claim is $2,000 per year for each eligible apprentice.
- The Summer Work Experience Program (SWEP) provides wage subsidies to employers in private sector organizations with 50 or fewer full-time employees, to create quality summer work experiences for young people aged 15 to 30 years. Last year in Ontario, the SWEP created 25,914 Summer jobs and subsidized Ontario employers $79,696,623 in wages.
- The Apprenticeship Training Tax Credit (ATTC) is a refundable tax credit and is available to employers who hire and train apprentices in certain skilled trades. To be eligible for the ATTC, the apprenticeship program would have had to start on or before November 14, 2017.
Know Your Friendly Tax and Accounting Experts at GMSPC
If you work in the construction industry, time is in short supply, and you probably don’t have the time to bury yourself in accounting and tax law. Your best bet is to talk to the professionals in the know.
Our team at GMSPC is are here for all of your tax and accounting needs. We help small and medium-sized businesses, including construction companies, organize their financials, train their accounting staffs, and of course, prepare taxes. We can also help you understand and qualify for tax breaks!