Our New eBook is out! More than 15 pages filled with Marketing, Accounting, and Production tips, checklists, and best practices that you can use year-round for your construction business success.
Free Download here.

FEA Randal And Train
Call Us At 1-800-361-1770
Bookkeeping Trial Test Drive
Outsourced Accounting
Contractor Bookkeeping Templates For QuickBooks And Xero
Construction Accounting Academy
  • There are no suggestions because the search field is empty.

The Difference Between A Construction Accountant And A Tax Accountant

Posted by Sharie DeHart on Fri, Feb 17, 2023

How often have you hired someone with the expectation that they know how construction works, and then you found out they did not know about it? You are a master in the construction industry, so you recognize what to look for in your particular field and quickly observe if someone has the skillsets, and you proceed accordingly.

You know what happens when you send your best Rough Carpenter that you pay piece work for framing spec from the ground up in all kinds of weather and working conditions to install some custom-made cherry wood cabinets with gold plated pulls and knobs in the home of your best client (who happens to be in the wealthiest neighborhood in your town). It is not a pretty sight.

Have you pictured a crew with muddy work gear and boots stepping onto your client's pristine floors? The dirty secret is that Tax Accountants operate like Rough Carpenters because they work fast and furious, and they are paid piece work. The main difference is that they earn the bulk of their annual income in three and a half months. This means they do not waste any time going through your receipts to ensure you get all the deductions you are entitled to.
 

The Difference Betweeen A Construction Accountant and A Tax Accountant

Both Groups Are Important, And Each One Fills A Need

Project Management Construction Accounting Professionals (PMP) work above the line and focus on generating positive outcomes and results for contractors:

  • Increase Sales
  • Reduces Expenses
  • Increase Net Income

Certified Public Accountants (CPA) work below the line focused on filling out annual income tax forms, ensuring contractors pay their fair share of taxes, preparing certified financial statements, and performing audits on your QuickBooks contractor file. 

Three Times Construction Contractors Need A CPA In Their QuickBooks For Contractors File:

  • You apply for a large loan or line of credit over a million dollars
  • You need certified financial statements to get a performance bond
  • Your construction company is so large that you are required to have an annual audit

Most construction contractors with annual sales under $10,000,000 and less than 20 employees will never have those issues.

Preparing end-of-year reports and filing taxes can be complicated. If you're not doing it right, you could be liable for penalties or, at the very least, not take advantage of tax gains and financial opportunities. A Construction Accountant can ensure your business remains compliant (and pay as little tax as possible), help you analyze your business performance, and work with you to achieve your goals.

On the other hand, Tax Accountants can kill more cash flow and profit in your construction business (in less than an hour) by preparing your annual tax return using a messed up QuickBooks file than you can make up for with hard work in several months, if not years. This is because saving you money on your tax bill is not what they are paid to do; they are paid to fill out tax returns.

Why does it need to be separate?

Trust but verify! When you need financing, most bankers and finance sources like to see a separation of duties. They want to see two different firms involved because it reduces the chance of errors, collusion, cover-up, and fraud. They may not say a word to you; however, we often hear about it!

We insist our construction contractor clients use an outside CPA or tax preparer to review the QuickBooks Contractor's bookkeeping services that we have performed and prepare the annual income tax return. As a result, we have developed good working relationships with several CPA firms and yearly qualified tax preparers.

It is good to know our contractor clients trust us and know that we have their best interest in our minds and hearts; however, we are human, make mistakes, and welcome input from CPAs and tax preparers. It is all about teamwork and people working together to ensure everything in your construction accounting system works correctly.

Bottomline: Construction Accountants should not be preparing annual tax returns because nobody can serve two masters. Either be a Tax Accountant and serve the interests of the tax collection agencies or be a Construction Accountant and serve the interests of contractors.

Please don't think we are too hard on Tax Accountants. Understand that we have great relationships with them. We have had Tax Accountants review our QuickBooks and prepare our business and personal returns for over thirty years, and we refer many businesses to various Tax Accounting and Preparation companies.

What you need to look for is someone who is experienced, capable, and understanding. You should feel they'll be a good advisor and are interested in developing a long-term professional relationship with you.

Having the right Construction Accountant for your business leaves you free to focus on why you started the construction company in the first place – to see it grow and become profitable. A Construction Accountant and a Tax Accountant are integral to this because they'll keep your finances on track. Which, in the end, is the whole point.

About The Author:

Sharie_DeHart_President_Fast_Easy_Accounting_Serving_Contractors_All_Across_The_USA_Including_Alaska_And_Hawaii-1Sharie DeHart, QPA, is the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

 

OUTSOURCED ACCOUNTING FOR 
THE BUSY CONTRACTOR
IN A MOBILE ENVIRONMENT

Bookkeeping Trial Test Drive Contractor Bookkeeping Templates For QuickBooks And Xero
Outsourced Accounting 1-800-361-1770


Download the Contractors APP today
 from the 
App Store or Android Store

Access Code: FEAHEROS

Click here to download the App on Android:

Click here to download the App on iOS:

Simply scan the QR code or search for ‘MyAccountants’ in the App Store and enter the Access code: FEAHEROS to utilize the powerful App features and capabilities and benefit from having our Construction Accounting App at your fingertips, 24/7."

PS: Even if you are not a Construction Contractor, you will find plenty of benefits in the app, so we invite you to download it too! It's Free so why not?

Topics: CPA Vs Construction Accountant, When Contractors Need A CPA, Construction Bookkeeping, Construction Bookkeeping And Accounting, Construction Accountant Who Listens, CPA, Contractor Tips

QuickBooks Setup And Chart of Accounts For DIY Contractors
Download Our Free App For Construction Contractors

click to download the Contractors APP now from the App Storeclick to download the Contractors APP now from the Android store

Access Code: FEAHEROS

accounting articles

Subscribe by Email

How Can We Help?

 
Contractors Bookkeeping And Accounting Services

Who We Help

How We Help

Next Step

FAQ's

Contractors Bookkeeping And Accounting Services

Outsourced Construction Accounting Services For Contractors All Across The U.S.A. By Fast Easy Accounting 206-361-3950

Serving Construction Contractors
Across The U.S.A
Including Alaska
And Hawaii

Podcast On iTunes
 
Click Here To Listen In iTunes
Contractor  Success M.A.P.
Contractors Bookkeeping And Accounting Services

Remote Access Your QuickBooks  Using Secure Servers

Outsourced Bookkeeping Services For Contractors At Fast Easy Accounting

Highly Recommended by Locals On Alignable

Most Popular Posts

Read the Latest:

Browse by Tag

badge

Blog Suggestion Box

We Remove Contractor's Unique Paperwork Frustrations

Quickbooks certified proadvisor

Xero-Accounting-Services-Fast-Easy-Accounting

Financial-Intelligence-And-Performance-Reporting-Tool-Fast-Easy-Accounting Hubdoc-Document-Collection-and-Management-System MBA Member Fast Easy Accounting 206-361-3950
 
contractor-success-map-podcast-listen
 
Don't forget, you can hire our services at FastEasyAccounting.com
 
 
How To Use Our Services