Construction Newsletter

Fall 2018
Year-end Tax Planning more important than ever
Partner-in-Charge: B&C Construction Services
rmt@bcpllc.com
315.234.8157

As the third quarter has come to an end and most contractors are moving full steam ahead into a very busy fourth quarter, it is a good idea to pause and evaluate where you have been and where you will end up at the end of the year. Tax planning should be a top priority during the fourth quarter due to the changes in tax law resulting from the passage of the Tax Cuts and Jobs Act at the end of 2017. You may have to make some changes by the end of the year to ensure you are able to take advantage of all the benefits of the new tax law.

In this issue of the newsletter we provide some insight into the new 20% tax deduction for owners of pass-through entities. We also provide a practical case study on why accurately maintaining and updating the Work-in-Process schedules are so important. Lastly, we offer some tips to increase profitability. I hope you enjoy this issue of our newsletter and as always, if you have any questions please feel free to reach out.
  
New tax law offers opportunity to "pass-through" owners
Late last year, Congress passed and the president signed into law the Tax Cuts and Jobs Act. One of its most notable changes is a new tax deduction available to owners of pass-through entities. This article explains how the new tax break works. 

Like most construction company owners, you probably followed the news closely this past December when Congress passed major tax legislation and the president signed it into law. The Tax Cuts and Jobs Act (TCJA) contains a variety of significant provisions. Near the top of the list is a substantial deduction for owners of "pass-through" entities. This substantial deduction applies to what is known as "Qualified Business Income".

First, let's define a "Pass-through" entity. This entity "passes through" the business income to owners' personal returns, where federal income tax liability is then assessed. Examples of "pass-through" entities include sole proprietorships, partnerships, S corporations, single-member limited liability companies (LLCs) and some multimember LLCs as well.      Learn More

Contractor gets crackin' on better WIP reports?
This article features a commercial HVAC contractor who was consistently experiencing cash-flow problems as his jobs neared completion. He sat down with his CPA, who told him he needed to update his work in progress reports and make better use of them.

A commercial HVAC contractor was consistently experiencing cash-flow problems as his projects were winding down. Jobs that had promised to be highly profitable at the outset were just breaking even by the time they were completed. Not only was the contractor himself concerned about the situation, but his surety was also beginning to question his company's financial soundness. He asked his CPA for help.

After examining his records, the CPA was able to identify the major source of the contractor's trouble. She told him he needed to update his work in progress (WIP) reports and make better use of them. 

Profitability tips for today's construction companies
To be truly successful, every contractor must play to win. And this means always looking to improve the many aspects of a construction business that either hurt or help profitability. This article discusses the importance of pricing and change orders when it comes to turning a strong profit. A sidebar looks at the importance of professional development in discovering how to be more profitable

In the construction business, like most others, the focus is on "being competitive." But what does this really mean? For many contractors, it means staying in the game - turning a profit when you can but at the very least breaking even. This is particularly the case when jobs are scarce or perhaps you run into a string of bad luck.

Yet being competitive should mean so much more. To be truly successful, you've got to play to win. And that means always looking to improve the many aspects of your business that either hurt or help profitability. Here are some tips on keeping those margins strong.   Learn More >>>

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