Should I renew my lease or buy a home for myself?
This is a guest post from our friend John...
Construction and Real Estate
In a booming economy and hot real estate market, everyone wants to be a real estate developer, general contractor, subcontractor, or investor/landlord. It almost feels like it’s impossible to lose money. Anyone who has been in the business long enough knows this couldn’t be any further from the truth. Whether by finding yourself on the wrong side of the bubble, underbidding a contract or not properly managing change orders, profits can swing to devastating losses in a moment’s time. At LGA, we work with real estate developers, contractors and investors to utilize financial information to manage these risks.
We work with you and your team to make your financial information relevant by switching your internal accounting records from cash to accrual, implementing effective WIP schedules and percentage of completion accounting for long-term contracts, or properly setting-up your internal job cost system. Following this, your interim financial data is then integrated into the tax planning and compliance to drive tax minimization while there is still time left in the year to take action.
4 Pillars to Profitability for Construction and Real Estate Companies
Accrual Method Accounting
Implement an accrual method of accounting system and graduate from the cash-in, cash-out method of accounting that often blurs true job performance.
Accurate WIP Schedules
Avoid missing change order billing opportunities and minimize cost overruns by maintaining accurate WIP schedules
Percentage of Completion for Long-Term Contracts
Use sound estimating processes and accurate WIP schedules to properly recognize revenue for long-term contracts that will highlight problem jobs before it’s too late.
Job Costing
Accurately account for job performance by appropriately capturing revenue and costs by job and learn from the successes and failures real time.
Services
Audit & Assurance Services
At LGA, we transform the financial statement compliance requirement into a value-add engagement by translating the results into actionable financial and process improvement opportunities. We can perform assurance and attest services to meet all of your financial reporting needs, whether those needs are for a bonding company, a bank, an investor or for the owners and management team.
Business Tax Services
Tax planning cannot be a December event; it must be a process that begins in the summer and evolves throughout the final quarter as the year-end results become more certain. We work with real estate and construction companies to get out in front of the tax planning process and provide education and recommendations that capitalize on tax minimization opportunities, while avoiding surprises through the communication of projected tax results timely.
Outsourced Management Accounting Services
Don’t have the horsepower internally to maintain accurate and appropriate accounting records? LGA can supplement your accounting and finance team or assume the entire role. We will ensure that your real estate or construction company is receiving timely, meaningful financial information that you require to proactively manage the business to maximize profitability. Don’t play profit and loss roulette, waiting until the dust settles the following year to know if you made or lost money the prior year. Let our team bring financial focus to your business.
Business Consulting Services
Not sure where to start? LGA can provide business consulting services and work with the owners and managers of real estate and construction companies to understand current processes and procedures and recommend changes and improvements that will lead to a more efficient operation, and ultimately increased profitability. Make your hard work count and ensure that everyone on your team has a clear understanding of how their role impacts the company and its results. Create buy-in and hold your team accountable to the actions and behaviors necessary to drive financial performance and long-term sustainability.
Cost Segregation Studies
The tax rules around cost segregations have changed – many for the better – with the Tax Cuts and Jobs Act. Even if you’ve done a cost segregation study recently, it may be advantageous to do one again. We can help you determine the expected ROI of this investment and walk you through the steps involved.
Like-Kind Exchanges
Tax planning ideas such as like-kind exchanges can be advantageous for real estate organizations that make multiple purchases in a year. Done right, they can be tremendously beneficial come tax time. We can help you understand the rules and stay in compliance when doing a like-kind exchange.
Construction Loan & Financing Proposals
Banks aren’t handing out money for real estate deals on a wink and a smile. LGA can help you craft a financing proposal that will satisfy the banking regulations and give the lenders confidence so that your construction loan is approved and your new project can get started on schedule.
What we’re talking with clients about:
The difference between a capital gain transaction and self-employment income.
The impact of the Tax Cuts and Jobs Act (TCJA) on home builders.
Which costs to immediately deduct and which should be capitalized and carried.
Construction and Real Estate Resources
Audit & Assurance
Business Strategies
Financial Statements
Real Estate & Construction
Resources-Blog
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Tax Considerations for Real Estate Investors
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Cost Segregation Study for Real Estate Investment Companies
Cost segregation is a highly beneficial and...
Construction and Real Estate Team Leader:
John D. Geraci
John works with clients in construction and real estate by helping them manage their risk and financial well being. He has a strong background in accounting and tax planning. With the ever changing tax rules and regulations, he can ensure you and your business stay ahead of the planning process with the latest analysis and recommendations.
Scott Sagan
Scott leads the owner managed business tax group. He has been advising business owners for over 30 years and works closely with these owners throughout the year to stay in front of financial performance and operational matters that can derail short and long-term goals and objectives. Scott focuses on tax minimization and efficiency to enable owners to retain the capital necessary to grow their businesses and meet external family needs.