Creating A Business Tax Plan for Your Construction or Real Estate Development Firm? Don’t Forget About Your Accountant
As a contractor or real estate developer, you know your trade well. You go into a build knowing it needs a solid foundation. Maybe you have to spend a little time silently correcting those who refer to the concrete slab as “cement,” but the point is, you know the project’s long-term structural integrity depends on the right mixture of compounds. Similarly, CPAs understand that a business tax plan also needs to start with a solid foundation. That foundation requires a well-balanced mixture of services, meaning the right business tax plan covers more than filing your tax forms.
Since many previously tried-and-true business strategies are not battle-tested against today’s new and emerging vulnerabilities, it may be time to reevaluate your plans. Even if your firm has a long-established business tax plan in place, the industry’s new normal may mean it could use a little CPA-approved fortification.
Ensure your business tax plan goes beyond compliance.
Sure, you have to go through certain motions for the sake of compliance, but that’s not always cut and dry. For real estate developers, tax complexities grow exponentially when multiple, embedded entities with management fees passing through and between are involved. Compliance, maximizing your tax benefits, and minimizing your tax burden are, of course, essential accounting functions, but you should also be able to use your business tax plan to leverage other opportunities along the way.
Ensure your plan positions your firm to make strategic business adjustments when necessary.
Even though COVID-19 has presented the industry with new challenges and vulnerabilities, there is an up-side. Many businesses have harnessed fear, threat, and change and used them to discover new opportunities and create and circulate innovative ideas, systems, and procedures to improve efficiency and productivity.
I help contractors and real estate developers take a look inward to ensure effective job costing, proper revenue recognition, and accuracy in metrics for gauging financial success. We also help these firms leverage outside resources and knowledge by providing them with industry best practices, trends, and market data.
Include strategies that support your growth goals.
It is essential to structure your business tax plan in the manner that best supports your firm’s growth goals. It’s helpful to have a CPA firm with industry knowledge help with budgeting, cash flow projections, and forecasting. Seeking professional acquisition and disposition analyses and assistance with structuring transactions can also help you ensure receipt of the maximum financial benefit as you buy and sell assets.
Include strategies that align with your succession plans.
It is never too early to plan for the way your taxes will interplay with your succession plans. If a change in ownership is set to occur, think about what that looks like down the road based on your industry, various company attributes, the type of transaction, and the owner’s personal succession goals. If you plan to transfer ownership to a child, lowering your child’s tax burden and maintaining your company’s brand and legacy may be the focus. On the other hand, if your plan is a third-party sale, the focus may be more on increasing your business’s value and minimizing your tax burden resulting from the sale.
Contact Livingston & Haynes.
The construction and real estate professionals at L&H provide comprehensive accounting, advisory, and tax planning, compliance, and preparation services. Because we specialize in the construction and real estate development industries, we can help contractors and real estate developers create business tax plans that take all the necessary components of their business’s finances and operations into consideration.
Whether you’re ready to overhaul, create, or enhance your firm’s business tax plan, I’d like to help. Contact me today to get started.
by Steven Haynes, MBA
Steven J. Haynes, MBA, is an administrative partner at Livingston & Haynes and specializes in bookkeeping, payroll, and business advisory services for privately held businesses, including construction firms. Steve’s firm, Emerging Business Partners (EBPI), became an affiliate of L&H in 2007. EBPI was founded in September 1992, and, today, broadens the bookkeeping, payroll, and tax consulting services available to L&H clients.