Finding an accountant for your business can be a challenge. But finding the best construction accountant for your company? Now that’s a mission.
Because construction accounting is incredibly complex! Not only do you have to manage large amounts of data, create strategies and forecasts and prep for audits and tax returns (plus much, much more) – you also have to do so whilst working with ever-changing variables!
So, where do you begin to search for such a highly-skilled professional? Allow us to share our advice!
Throughout this article, we are going to cover everything you need to know about searching for a construction accountant. From deciding whether or not you actually need a construction accountant in the first place (spoiler: you do) to how to find the most qualified (and most affordable) accountant for your construction company!
Do you need a construction accountant?
We cannot definitively say whether or not you need a construction accountant. But we would strongly recommend that you get one! Why? Because accounting for construction companies can be incredibly challenging.
Unlike other industries, construction relies on a lot of variables. For example, you have to manage various projects, contractors, and resources – and they all come with their own contracts, costs and timelines. Therefore, you have to be extremely diligent with your bookkeeping and accounting. But to do so whilst also managing a business is a lot to undertake.
So that’s why we recommend hiring an accountant – because doing it yourself is rarely worth the stress (and that’s without mentioning any of the additional benefits or the repercussions of making costly mistakes).
How is construction accounting different from regular accounting?
We touched on this briefly in the previous point, but for those who are interested, we wanted to provide a more in-depth explanation. After all, you’re probably thinking, “how different can construction accounting be?” Well, allow us to explain.
Here are a few reasons how construction accounting varies from ordinary accounting:
Project-based – unlike other industries, in construction, you’re not selling the same product or service over and over again. Instead, every project is unique. Therefore, your accountant has to manage each project individually and (often) adapt your original plans and budget.
Long-term contracts – some projects can take years to complete. So your accountant has to manage data that spans back years to create forecasts and develop strategies. And even then, these can easily be thrown off kilter due to material shortages or poor weather conditions.
Ever-changing costs – you only have to look back at the last six months to realise how quickly the economy can change. So you can only imagine how difficult it is for an accountant to predict the changing cost of labour, equipment and materials.
Contractors – unlike other industries, construction companies usually hire contractors instead of employees. So rather than paying a predetermined wage to your employees each month, your accountant has to manage individual invoices from each of your contractors. (The price of which can vary from month to month.)
Difficulty predicting profits – as we said before, the construction industry relies on many variables – so it can be incredibly difficult to predict how profitable a project may be. Thankfully, construction accountants are trained to create accurate forecasts despite all the fluctuating factors.
So to summarise, working as an accountant for construction companies is quite a unique specialism. It is far from straightforward. In fact, it requires your accountant to perform a constant balancing act to manage all the industry-related variables.
(It also requires accurate job costing to turn a profit, extreme organisation to manage each job individually, and cash-based accounting to optimise tax efficiency.)
Should you opt for an in-house or outsourced accountant?
As a business owner, you call the shots. So the same goes for this scenario. However, to help you make your decision, we’re briefly going to discuss some of the pros and cons of an in-house accountant vs an outsourced accountant.
In-house construction accountants
The pros of hiring an in-house accountant are:
- If you hire in-house, you can set the expectations. So you don’t have to pay unexpected fees for additional services.
- Having someone working for you day in and day out will ensure they know all the ins and outs of your company. (They won’t be distracted by other clients.)
- You have someone working on your accounts all year long, ensuring your finances are always in order.
However, the cons are:
- Hiring in-house costs a lot more money. Not only do you have to pay their salary, but you also have to pay for recruiting, training, software etc.
- You’re limited to one person’s knowledge and skill set. So if you ever encounter a problem they’re not familiar with, you will probably have to outsource help anyway.
- You’re paying someone year-round despite the fact you may not need their services every day.
Outsourced construction accountants
Alternatively, the pros of hiring an outsourced accountant are:
- They’re incredibly cost-effective. They can fulfil all of your accounting needs for just a fraction of the cost of hiring in-house.
- You gain access to an entire firm’s advice and expertise.
- They will cater to your exact needs, offering you as much or little support as you need.
Yet, outsourcing still comes with some cons. For example:
- You may receive unexpected fees for additional services.
- You won’t be their only client, so you may not always be their top priority.
- If you don’t consciously and effectively communicate with one another, it’s easy to get your wires crossed.
How to find the best construction accountant for your business
Now that we understand the importance of a construction accountant – let’s discuss how to find the best accountant for your business!
1. Assess their qualifications
As we mentioned previously, accounting for construction companies is no mean feat. Therefore, you want to ensure the accountant you’re employing has all the necessary training and qualifications to help you grow and expand your successful construction company.
So what should you be looking for?
To find the best accountant for your business, ideally, you want to be looking at outsourcing a chartered accountant. A chartered accountant is a high-qualified, experienced accountant. They are often members of reputable accounting bodies and have specialised skill sets (perfect for the construction industry).
So how do you identify a chartered accountant?
Typically, you can identify a chartered accountant by their qualifications and memberships to professional accounting bodies. These are often featured on their websites, business cards and LinkedIn profiles (but you can verify their legitimacy by searching for them in their professional bodies’ directory).
The qualifications you want to be looking for are:
Why? Because all of these qualifications are awarded by the following (highly prestigious) professional bodies:
- AAT (the Association of Accounting Technicians)
- ACCA (the Association of Certified Chartered Accountants)
- CIMA (the Chartered Institute of Management Accountants)
- CIOT (the Chartered Institute of Taxation)
- ICAEW (Institute of Chartered Accountants in England and Wales)
Now we know what you’re thinking. Why does it matter whether or not a construction accountant has a bunch of letters on their business card? Let us explain!
In order to become a member of any of the above bodies, each accountant must have the required experience and qualifications. But that’s not all! These bodies also continually assess their members’ performance and behaviour. So you know, if you’re working with a chartered accountant, you’re working with the best of the best!
2. Identify whether they’re up to date on the latest legislation
Tax legislation is a tricky thing – especially in the construction industry. So you want to be sure your accountant has a thorough understanding of the latest rules and regulations.
For example, you may want to assess their understanding of MTD and IR35.
Making Tax Digital (MTD) is a government-led initiative that aims to move VAT tax administration online by 2023. So you want to ensure your accountant has the ability and understanding to ensure your business is MTD compliant by the time it becomes mandatory.
Similarly, plans to repeal IR35 reforms should come to fruition as of April 2023. So you want to ensure your accountant is up to date on the latest news regarding this change, as it will have a huge impact on your business and the wider construction industry.
3. Determine the size of their firm
Now, you may or may not know the size of the accountancy firm you’re researching. And that’s okay! The truth is whether you opt for a large firm, a small one, or an individual accountant – it all comes down to personal preference. However, we wanted to offer up our thoughts so you can make the best decision for your business.
Large firms have a lot to offer – they have lots of employees, a wide array of specialties and skill sets, and they are incredibly reputable. However, that also means you’re probably going to pay a lot for a very impersonal service.
Alternatively, small firms can offer you a highly personal service for an incredibly reasonable price. However, they may have less training and resources than a larger firm – so bear that in mind when making your decision.
4. Research their reputation
Unfortunately, you can’t just rely on a person’s education when hiring a construction accountant. You also need to do your due diligence and look into their reputation. Thankfully, this is a relatively easy thing to do. Simply read reviews online and ask your industry contacts for recommendations. You should soon find out which accountants are industry favourites.
5. Discuss fees
It’s time to get down to money talk.
Before you began searching for an outsourced accountant, you would (or should) have established a budget and a list of requirements for your future accountant. So, your aim is to find an accountant for construction who can fulfil all your accountancy needs within the regions of your predetermined budget.
For example, you may set a budget of £100 per month. In return, you may want your accountant to:
- File your company’s tax returns
- Develop growth strategies
- Create financial reports
- Complete risk assessments
- Ensure all your financial documents are accurate and compliant
So how do you start that discussion?
The quickest and simplest way is to ask for a quote. As part of that quote, you want to know exactly how much you’re expected to pay and what services you can expect in return.
6. Make sure you get along
It may sound trivial, but even if you outsourced the best construction accountant in the industry, they would still be no use to you if you didn’t get along. So don’t overlook this final step! Because despite the fact they are an external party, you will still be working very closely with your outsourced accountant. So set up a meeting, get to know them and learn how they conduct their business. Only then can you confidently decide whether or not they’re the perfect fit for your business.
Accept help from an accountant
So there you have it – our complete guide for finding the best-outsourced accountant for your construction company! Now you have all the tools to take this next step and start delegating your accounts.
With that said, we understand that relinquishing control can be challenging (especially when it comes to trusting someone with your business). But we are confident that hiring a construction accountant can greatly benefit your business. Not only because they will streamline your accounts, free up your time and (hopefully) reduce your stress – but because they are experts at what they do!
So save yourself the struggle of trying to manage your books alone and start searching for an outsourced accountant. We’re sure that with the right amount of research, you can find the perfect accountant for your construction company (and for the perfect price too)!
Accurox areSpecialist Construction Accountants who can save you time and resources with their industry expertise and experience. If you would like to discuss your business requirements, get in touch by calling us right away or send in a form below; we’d love to talk about how we can partner with you.
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