Taxes: What Your Contractor Business Can Do

contractor business

We can say goodbye and good riddance to 2020. It’s time to put that puppy to bed and plan for better business. And it’s time to pay taxes.

“The construction industry is unique in that contractors are expected to use different methods of accounting in order to pay the least amount of taxes possible and, at the same time… present a robust financial picture to lenders and other stakeholders,” says accountant James Lundy Jr., Marcum LLP.

Contractor Business Accounting Tips (and Taking Investors Into Account)

You need to grow your business, and you can’t do that if your potential clients, lenders, and investors see shaky finances. Lundy says all contractors must use the percentage-of-completion method of accounting for financial reporting.

Those are the books your investors and clients see. 

But for tax returns, there are several types of accounting methods:

  • Accrual
  • Accrual/excluding retainage
  • Cash

Long-term contracts’ accounting (started in ’20 to-be-completed in ’21, for example) include:

  • Completed contract
  • Completion percentage
  • Completion tax percentage
  • Completion-capitalized cost percentage

Many contractors maximize taxes by stalling accounts receivables. Paying out year-end bonuses and getting all accounts payable current by December 31 also decreases taxes.

Construction Monitor: We Help Your Contractor Business Succeed

Tax legislation impacting your contractor business for 2021 is dependent on which party controls the Senate. And we still don’t know which direction that wind’s going to blow. But you can put business development plans in place regardless of politics.

Targeted marketing will be even more important in 2021 and beyond. Our world has gotten smaller, and along with that came a renewed focus on your local market. That’s just one way we help your contractor business.

Construction Monitor provides information:

  • City-specific
  • Contractor business development/resources
  • Contractor business licensing
  • Homebuilders associations
  • Industry-oriented

We believe knowledge is power and we have some powerful information for your contractor business. Contact us today to learn more.

You must pay taxes. But there’s no law that says
you gotta leave a tip.
-Morgan Stanley

5 Ways Contractor Business Owners Can Manage Stop-Work Orders

contractor business

At least this time, you recognize the clues:

  • Business hours of operation are more tightly controlled.
  • Curfews are put back in place.
  • Gatherings of more than 10 people are legally prohibited in some areas.
  • Restaurants’ hours are restricted.
  • Schools return to virtual classes only.

Your city or county is about to enforce a lockdown that will impact your construction contractor business.

Contractor Business Owners Can Prepare

Because safety is a priority, promptly adhering to stop-work requests is important. But if you see it coming, you can “make hay while the sun shines.”

To prepare your contractor business for another pandemic-related work stoppage:

  1. Accelerate timelines – Normally, overtime costs are wasteful. But these are not normal times. Finishing a project ahead of schedule when a shutdown is looming may be better management of time and money.
  2. Be prepared – Keep project progress documentation up-to-the-minute if possible. Take photos to verify completion percentages.
  3. Do what you can – You can get materials delivered now and store them. When work begins again, you won’t be waiting for deliveries. Keep your project alive.
  4. Maintain interactions – Include subcontractors in virtual meetings during the shutdown. When they maintain a connection to your project, they’ll be less likely to seek work elsewhere.
  5. Secure assets – Photograph equipment that will be left onsite and winterize if you’re in a part of the country that has extreme winter weather.

Construction writer Joe Bosquin says you can use downtime to prepare your construction contractor business for the big boom that’s coming. And the anticipated work increase poses yet another challenge for 2021.

Business Leads for Your Construction Contractor Business

A construction industry boom may be forthcoming, but that doesn’t mean you should sit back and wait for it to happen. Now is the best time to begin developing leads for your construction contractor business development.

Use the information available from Construction Monitor data to ensure you’re in a position to get the jobs you want with the profit margin you need.

Contact us today to learn more.

Future-Proof Your Contractor Business

contractor business

If nothing else, 2020 verified what most of us already knew:

  1. Construction is an essential business.
  2. You can’t predict the future.

If you have a construction contractor business, here are some tips to protect yourself from future surprises. For Construction Pros calls it “future-proofing your business.”

What Your Contractor Business Can (and Can’t) Control

There’s nothing you can do to control the global economy. A contractor business may not be able to influence global politics, but it can up its game technologically.

BIM + ERP = Greater Profits

Building information management (BIM) and enterprise resource planning (ERP) are software technologies that are perhaps used in your contractor business to manage financials and human resources. But when working together, they can deliver much more.

ERP empowers companies to predict project performance, lower costs, and deliver projects on-time “at a high quality and with minimum risk.” But it needs data to make this happen.

Implement IoT for Servitization

“Servitization” is a transformation journey, said Cambridge’s Andy Neely. It’s developing the capabilities you need to provide services and solutions that supplement traditional product offerings.

A servitized arrangement puts you in a partnership with the project owner. It increases your risk but the Internet of things (IoT) can be used to track performance and increase compensation.

Utilize Off-Site Construction

What’s not to like? Off-site fabrication makes better use of labor and materials. It lowers costs, makes timelines more attainable, and a contractor business doesn’t have to work around the weather. We may see an increase in materials’ and parts’ standardization.

Secure the Future of Your Contractor Business

Transformational technologies are basically software programs that enable new opportunities. Construction Monitor provides transformational technology benefits to your construction business every time we sort building permit information for you. Our service maximizes your time by giving you customized information that is in real-time and relevant to your contractor business. 

You can use it for leads.

Use it for more competitive bids.

You can use it to partner with other companies.

You’ve got to use it.

Contact Construction Monitor to put our future-proofing information to work.