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Construction CPAs are a team of knowledgeable and experienced professionals who provide superior accounting and tax services to construction contractors in Southern California.

We’re covered, right? Additional insured provision doesn’t guarantee protection

Construction subcontracts often contain “additional insured” provisions. This legal language requires a subcontractor to name the owner, general contractor (GC) and higher-tier subcontractors (if applicable) as additional insureds under the subcontractor’s commercial general liability (CGL) policy. These provisions are designed to protect the other parties from liability in connection with the subcontractor’s activities on the [...]

Tax Court Sets Boundaries on Commuting Deductions

Although you usually can't deduct typical "commuting" expenses from home, you may qualify for a special exception if you're away working on temporary assignments. But the IRS and the U.S. Tax Court won't allow borderline deductions, as evidenced by one case involving a construction worker. "A taxpayer's costs of commuting between his or her [...]

IRS Increases Annual Gift Tax Exclusion for 2018

The IRS has announced that the annual gift tax exclusion is increasing next year due to inflation. After five years of being stuck at $14,000, the exclusion will be $15,000 per recipient for 2018 — its highest point ever. Section 529 Plans: Make Five Years of Gifts in a Year Normally, a gift made directly to [...]

Public projects: Leverage fringe benefits to reduce costs

Construction is a highly competitive industry in the private sector. But when it comes to public projects, winning a job can be even more cutthroat. That’s because government jobs are often subject to prevailing wage laws, such as the federal Davis-Bacon Act or the “little Davis-Bacon acts” that have been adopted in many states. Government [...]

Use Caution When Hiring Workers Under 18

Be careful when hiring teenagers to work for your company after school and during the summer months. Violating Child Labor Laws A contractor and the leasing company that supplied its workers were each fined $10,000 for violating child labor laws after a 17-year-old employee was killed in an accident. The teenager died after a construction trench [...]

Important Considerations When Buying Another Construction Firm

Buying another construction firm can be an attractive way to grow your company's revenue base. A merger or an acquisition can allow you to: Add a new subcontracting specialty, Acquire an experienced labor force to reach new markets, and Deepen your penetration into the market your firm already serves. But there's more to mergers and acquisitions [...]

New AIA contracts emphasize insurance requirements

The construction contract documents published by the American Institute of Architects (AIA) are among the most commonly used forms on both commercial and residential projects in the United States. Although parties are free to modify these forms to suit their needs, it’s important to understand what the standard documents contain in order to negotiate appropriate [...]

Use Financial Statements to Make a Solid First Impression

Financial statements are a must-have for any organization. The balance sheet reveals how much its assets and liabilities are worth based on historic costs. The income statement tells investors and lenders how profitably and efficiently the company has performed during the accounting period. The statement of cash flows details sources and uses of cash from operating, [...]

How Much Will Social Security Recipients Collect Monthly in 2018?

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 66 million Americans will increase just 2.0% in 2018, the federal government recently announced. The 2.0% cost-of-living adjustment (COLA) will begin with benefits that more than 61 million Social Security beneficiaries will receive in January 2018. Increased payments to more than 8 million SSI [...]

Employers Affected by Recent Hurricanes Get a Valuable Tax Credit

A new law, signed by President Trump on September 29, 2017, provides various tax breaks for victims of Hurricanes Harvey, Irma, and Maria. Among them is a valuable tax credit for eligible employers affected by the devastating hurricanes. The Disaster Tax Relief and Airport and Airway Extension Act of 2017 allows an "employee retention credit". In [...]

Reviewing retainage, in concept and practice

Even the simplest construction project involves some degree of risk. Because of this, and the obviously higher risk applicable to more complex jobs, owners will always seek to protect themselves financially. One way they continue to do so is through retainage. As you're no doubt aware, under the concept of retainage, an owner withholds a [...]

Putting ESOPs to Work for You and Your Employees

Employee stock ownership plans (ESOPs) provide tax-saving opportunities for business owners who want to exit the business and are committed to employee ownership. A business valuation is the first step to determining whether this option makes sense for you. How ESOPs Save Taxes When business owners sell C corporation stock for a big profit, they usually qualify [...]

Coming Soon: Deadline to Reverse 2016 Roth Conversions

Do you regret converting your traditional IRA into a Roth IRA? Fortunately, a taxpayer-friendly aspect of the Roth conversion rules is that you have until October 15 (adjusted for weekends) of the year following the year of a conversion to reverse it. In other words, the deadline for reversing any 2016 Roth conversions is October 16, [...]

Work Opportunity Tax Credit: What Business Owners Need to Know

The Work Opportunity tax credit (WOTC) is a federal income tax credit that's available to businesses that hire members of certain "targeted" groups. Here's how your business may be able to benefit from this potentially lucrative tax break. WOTC at Work Calculating the Work Opportunity tax credit (WOTC) can be confusing. Here's an example to illustrate [...]

Take Control of Your Firm’s Debt

Creating a formal debt management plan, rather than borrowing haphazardly, can save your firm thousands or even tens of thousands of dollars in interest. Following certain best practices and using a structured approach to your company's debt plan is part of an effective construction finance, accounting and tax strategy. First, create a table that lists all [...]

Per Diems vs. “High-Low” Rates

The process of submitting and approving expense reports for business travel can be an administrative hassle if your business reimburses employees for actual travel expenses. Fortunately, the IRS offers simplified alternatives that can save time and reduce recordkeeping. Per Diems vs. "High-Low" Rates Instead of reimbursing employees for their actual expenses for lodging, meals and incidentals while traveling, [...]

Weigh the pros and cons of IPD and BIM

There’s been a lot of talk in the construction industry lately about integrated project delivery (IPD). IPD is a collaborative approach to construction projects that can help reduce costs, eliminate errors and delays, minimize waste, enhance efficiency and generally make projects more successful and profitable. IPD usually goes hand-in-hand with building information modeling (BIM), a [...]

Year-end tax planning: Explore 2017’s key areas

As we approach the end of 2017, it’s once again time to explore strategies for reducing your construction company’s tax bill. Because every business is different, it’s important to work directly with your CPA to determine the right moves for you. Nonetheless, here are some key areas to explore when looking for savings. Deferrals and [...]

Preparing Your Business For Sale

Unlike selling a car or even your home, it is not possible to make your business look better by sprucing it up or window dressing it.  Years of planning should go into selling your business. Before you even decide how to prepare your business for sale you have to go through the following basic and [...]

Federal Contractors Get a Minimum Wage Increase in 2018

The U.S. Department of Labor's Wage and Hour Division (WHD) has announced that the minimum wage rate for federal contractors will increase from $10.20 per hour to $10.35 per hour, effective January 1, 2018. Background Information The U.S. Department of Labor's Wage and Hour Division (WHD) has announced that the minimum wage rate for federal contractors [...]