In this blog, we will be discussing how to find the best accountant for your construction business.
An accountant is someone who analyses, verifies and prepares financial statements for individuals and businesses, ensuring that all financial documents are compliant and legal. They will organise all of the documentation and create accurate financial statements to back up your income and expenses.
Having an accountant that understands your business can help you minimise unnecessary expenses. They can make sure that your business finances are going in the right direction so that you can carry out future projects and grow your business even further.
Accountants/account departments are vital parts of a business so making sure that you hire an accountant that is best suited to your business can provide a great foundation of growth within your chosen industry. However, if you don’t instruct a knowledgeable accountant you might find that your budgets and finances are allocated incorrectly and end up costing your business a significant amount – doing the opposite of what you want to do!
The construction industry is an extremely competitive one. So making sure that the business is not only attractive through the services you offer it is also extremely important to make sure that the administration side is streamlined and effective.
Why should you hire an accountant who specialises in construction?
Finding an accountant for your construction business can be tricky. Accounting in construction is a specialised practice as there are different methods and rules due to the long-term contracts, unique deliverables and disconnected billing. Furthermore, tax is done in a completely different way and the recent changes in the regulatory standards issued by bodies and the government mean that there are new methods, such as:
- VAT domestic reverse change.
- New processes for submitting tax returns.
- New requirements for processing payments in CIS.
By hiring an accountant that specialises in construction, it means that they will be able to plan ahead and deal with challenges that occur within this competitive and fast-changing industry. Having an experienced accountant can highlight issues and adjustments such as the VAT changes and ensure that the businesses they work for are prepared for this update, ensuring that they have the correct resources to tackle this issue.
What is the VAT domestic reverse charge?
This VAT charge is for services within the building and construction industry and is a change in how VAT is handled for construction services in the UK. However, this doesn’t include businesses that supply materials to the building and construction industry.
This VAT reverse charge is effectively an extension of the CIS – Construction Industry Scheme. This charge only applies for transactions that are reported under CIS and are between VAT registered contractors and sub-contractors. The process for determining who is responsible for paying the VAT depends on who is the end user of each job.
How is construction accounting different?
Finding an accountant for your construction business is really important. Construction accounting has its own rules and regulations when it comes to generally accepted accounting principles (GAAP) and taxes to ensure that they fit the construction industry. This includes project-based workstyle, production and operations of the jobs.
In the construction industry, the revenue comes from complicated contracts and job costing will have to be used where the project is split into different profit areas, meaning that there are different expenses and revenues for each project. This process of job costing is very different from other industries that have a typical manufacturer as the job costing covers costs like materials and labour which are direct costs but also equipment and utilities which are indirect costs.
All of these costs, indirect and direct, have to be carefully managed to ensure the job is reaching profitability.
Even though you are looking for an accountant that specialises in construction you should still ensure that you are hiring a professional that is suited to your business and that has a reputable practising licence.
However, anyone is able to start up their own accountancy practice without having any experience, skills, knowledge or qualifications in the UK. So it is important to ensure that you ensure that the accountant you are hiring is registered to a professional body.
What types of questions should you ask your potential accountant?
Working within the construction industry you may be unfamiliar with the questions you should be asking to ensure that you hire the right accountant for your business. It is important that you correctly fill the position with the correct person as they can help develop your business leading it to grow even further. You want to highlight what their experience is, their services and if they match the value of your business.
Below are some questions that you should be asking:
- Are you a member of a professional accounting industry body?
- What qualifications do you have?
- How long have you been working within the industry?
- Do you have any examples of working with a business similar to ours?
- What construction accounting experience do you have?
- How do you keep up to date with the changes and challenges within construction accountancy?
- What other services could you provide our business?
- If an issue occurs, how quickly will we be able to get hold of you for help?
- What is the fee structure and are there any additional costs I should be aware of?
- What are your opening hours?
- How many people will handle my accounts?
- How will you help with the growth of my business?
How to find the best accountant for your construction business in the construction industry
Finding the right accountant for your business will be an important step in its growth and success, due to the competitive and fast-paced construction industry. So make sure you do not rush this process and ensure that you are highlighting issues within your business that you would like this accountant to solve.
Having an accountant you can trust means you can lean on them for advice and support allowing your business to grow by ensuring that you are correctly doing your books so no legal issue occurs down the line. All of this can be a proven invaluable asset within an accounting firm.
When searching for your accountant, make sure you are asking the right questions that suit your business, ensure that they are knowledgeable and they will benefit your business no matter what. Make sure that they understand that your growth will lead to theirs.
If you are looking for more information about an accountant for your construction businesses, contact Calathea Accounting!
