Four Signs You've Outgrown Your Construction Accounting Firm
Sustainable growth is one of the best things that can happen to a construction company, but it comes with its own set of challenges. You'll probably need to change your pricing and pay structure, distribution, logistics, and set new expectations for many parts of your business. Perhaps most importantly, you'll need to give a critical eye to your accounting firm to make sure they're still the right fit for your construction company.
Ryan Everhart, CPA, Audit Partner and Client Manager at Redpath, says some accountants are more forthcoming about their ability to handle more work. "It's easy for a growing construction company to quickly become too financially complex for some accounting firms," Ryan says. "The organizations may have deep personal relationships, but the accounting firm needs to say, 'We don't have the capacity.'"
Why you need a construction accounting firm that fits your company
Your accounting firm should be able to match the volume and nuances of your work, and it should also specialize in construction accounting. Here are a few scenarios where you may consider looking for a new construction accounting firm.
- Expanding out of state. Multi-state tax issues are often beyond the scope of smaller CPAs. "So if you have somebody outgrowing their CPA firm, maybe they've always been in Minnesota," Ryan says. "And now, they're branching out to other states or, in some cases, other countries. That's a trigger for them to look for a new firm with specific multi-state industry expertise."
- Mergers and acquisitions. Acquiring or being acquired by another company brings its own set of accounting opportunities and challenges. You need someone with the capacity and expertise to handle all the details of the merger or acquisition, as well as the future business challenges.
- Managing increased cash flow. When your revenue increases, you need to know that someone is accounting and tax planning for every dollar earned to keep your margins strong and your tax liabilities at a minimum.
- Surety and bonding. Confidence is key to securing bonding insurance. Only an accounting firm with a strong understanding of the details can provide confidence to banks, bonding agents, and accounting sureties.
- Financial statement requirements. Most smaller CPAs simply don't do in-depth reviews and audits. Your firm needs to follow specific rules and standards while conducting a review or audit to gain the financial statement user's trust. Without that deep understanding of your business's finances, your construction accounting could risk inaccurate or untimely financial reporting.
Four signs you've outgrown your construction accounting firm
Obviously, the easiest way to tell you need increased accounting help is when you see revenue increasing. But there are several less-obvious giveaways that your current CPA isn't up to the challenges your construction business is likely to face as you grow. Some business owners are genuinely surprised about everything their previous CPA wasn't doing for their business – and they might never have found out if they hadn't switched.
Here are a few common signs you need to look for a bigger CPA for your construction company.
- They only meet with you around tax time. Your accounting firm can only really help you when they know what's going on with your business. Regular check-ins and meetings are a must to track your growth and find the solutions that will help you sustain it. Your accountant should insist on meeting no less frequently than once a quarter – we meet with some clients monthly or even more frequently.
- You're constantly missing financial opportunities. Is your CPA well-versed in R&D tax credit opportunities to ensure you're getting credit for your innovation? What about the Section 179D deduction? Have they helped you qualify for the Work Opportunity Tax Credit (WOTC)? Ryan says that hearing about opportunities their accounting firm didn't seize upon is a "light bulb" for business owners – "They say, 'Well, my accounting firm isn't telling me about this,'" he notes. The construction industry offers plenty of tax opportunities, and your CPA should have the industry expertise and capacity to help you qualify for as many of them as possible.
- You're getting the bare minimum service. Maybe your current CPA prepares your tax return on time every year, or helps you through financial statement compliance. That's passable – but is that the extent of the value they bring to your company? Do they go out of their way to learn more about your specific challenges so they can find ways to overcome them? So often, construction business owners are looking for more proactive service – someone who really understands their business, what opportunities to pursue, and how to best position their business to achieve them.
- They don't bring new ideas to the table. You deserve an accounting firm that's always looking for new ways to bring value to your construction business. That means not just knowing the intricacies, nuances, and ins and outs of construction accounting, but how to apply them specifically to your business to achieve your goals. "You want a firm with a dedicated team that understands your business the way you know it," Ryan says. "It's not your job to train the accountants." Making sure the trains leave on time is one thing, but finding ways to support your growth takes a specialist.
Of course, it can be hard to notice these things while you're busy running a growing business. But they can mean the difference between maintaining a confident growth strategy with expert accounting help and just getting by with the CPA you've always used.