5 Pitfalls Contractors Face (And How to Solve Them)

WAUKESHA, WI -- If you're an independent tradesman or large general contractor, you know that keeping up with your books is a critical task.

Time is a limited resource, and if you're a small business, you may find the need to balance bookkeeping with work in the field in a way that limits time to take on additional jobs.

Michael K. Golden, is a certified public account who has been working in the construction industry for more than 20 years in the Waukesha area. Golden sat down with Waukesha Patch to talk about about how to utilize a CPA to help free up hours for the projects that keep your business running.

"Watching my father build his small business from the ground up inspired me to help other contractors in the industry by removing any of the barriers that might be holding them back," he said. "By sharing my knowledge and expertise in the business and accounting realm this allows them to focus on what they are best at—building and improving things."

"A construction accountant can help you avoid these 5 common barriers small contractors face so that you can focus on what really matters - building things well and growing your business," he said.

Here are 5 pitfalls contractors face (and how to solve them) by Michael K. Golden:

1. The Cost to build is unknown or undetermined.

Technology is a beautiful thing. And lucky for you a skilled construction accountant can utilize and manage all the programs and apps available to provide contractors with up to the minute information for each project and job site.

This allows time, materials and expenses to be traced easily and organized into bookkeeping software to reference at any time for this particular project, or if a similar one were to arise in the future to compare.

2. The cost of expansion is difficult to predict

If contractors collect information about the jobs they have done in the past, predicting the cost and time for future projects is done more easily and more importantly accurately. If you know how much it will cost you to increase your workload while still taking into account an increased payroll and material cost expansion and increased workload is effortless.

Oftentimes if these estimations and bids aren’t carefully constructed you can be hit with interest and finance charges while waiting to get paid for previous jobs while you have taken on more financial obligations. A construction accountant can help you easily breakdown all of the factors that go into building the project and compare the final numbers to those of your bid.

3. Physical work and getting the job done is first. Paperwork is second… or third…

When paperwork is avoided or pushed back for a small contractor in can cost you money in the long run. Payroll can be tedious and unenjoyable— leave it for your construction accountant. Money can be saved by having payroll tabulated— the tax benefits are numerous.

While cash for services can be quick and easy the potential penalties can make it less appealing. Not to mention you are leaving tax deductions and money on the table.

4. Finding the next project or additional work where you are working.

The best way for contractors to make more money is to find additional work on projects. Because your crew and equipment are already there it is in your best financial interest.

If the paperwork and bookkeeping are handled this allows more time for the contractor to closely examine plans and offer additional services. At the same time if the business side of things are taken care of and the plan and materials are determined, the opportunity is then available to seek out or plan the next job.

5. The paperwork required with new clients and customers.

Any time you work with someone new there is a risk involved. This can be a lot for a small business to take on in the midst of a large project, especially if they are trying to expand and grow.

By utilizing a construction accountant all of your business information is organized and ready to provide to any potential customers, including bookkeeping records, insurance, bonding and basic information. Your accountant is also ready to get the same information from new sources of revenue.

Image Courtesy Michael K. Golden, MPA, CPA