Accounting for Builders

 

The building and construction industry is a critical part of the Australian economy. In fact, it drives the wider economy including steel and concrete manufacturers, material suppliers, trades people and of course wages for labourers and contractors. The spending of those wages then flows through to another round of consumption in other areas of the economy.

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The importance of the construction industry can not be overstated but running a building business is hard work and full of operational challenges. There are the obvious physical demands but as a builder you need to have planning, scheduling and financial skills. You have to manage your cash flow, apprentices and sub-contractors plus you have to contend with the long hours, travel and strict regulations.

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It's not easy and it's no surprise to find that a lot of builders struggle to manage their bookkeeping and administration. While GST, BAS and tax payments often represent some of the largest financial obligations for a self employed builder, many end up paying too much tax and incur fines for non-compliance.

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Here at Sheridans Accountant for Tradies we understand the building industry - from plans to lock up and eventual sale. Make no mistake, having an accountant who understands the mechanics of the building industry can mean the difference between just surviving and potentially thriving. Apart from the usual small business compliance issues of GST, BAS, PAYG and superannuation, we can assist you to manage your cash flow and select the right software to prepare quotes, invoices and manage your staff and apprentices.

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Over the past decade, we have mentored dozens of builders through the various stages of their business life cycle, from start up right through to sale. We offer you experience, technical tax knowledge and most importantly, an intimate understanding of the building trades.

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THINKING OF STARTING A BUILDING BUSINESS

Over the years we have mentored hundreds of business owners through the start-up phase of their business and built a reputation as business start-up specialists.

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If you are looking to start a building or property development business or buy into an existing operation, there are numerous issues to consider. You need to establish your business structure, complete tax and GST registrations, consider insurances, select an accounting software program and possibly explore your finance options. It can be a maze of issues but as accountants and business advisors we can assist you in all of these areas. We can also provide advice on the preparation of a business plan, marketing plan and a cash flow budget. If you are contemplating employing staff we can also assist you with human resource matters including payroll, WorkCover and superannuation guarantee obligations.

 

Over the past twenty plus years our team of accountants have helped dozens of builders get their business off to a flying start. We offer you experience, technical tax knowledge, marketing expertise and most importantly, an intimate understanding of the building industry.

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In some respects, starting a business is a bit like building a house. You need solid foundations that include the right tax structure and accounting software, adequate and appropriate insurances together with a marketing plan and a lead generation website. As a builder, your choice of business structure is absolutely critical and there are a number of different options including sole trader, partnership, company and trust. When deciding on a business structure we always recommend you ‘start with the end in mind’ because Australian tax laws are complex and changing your business structure at some point in the future can trigger a capital gains tax event that could prove very costly.

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Whenever we provide advice on business structures we always take into account:

• Income Tax Minimisation

• Maximize Asset Protection

• Allow for the Admission of New Business Partners or Investors

• Comply with all Legal Requirements in your Industry

• The Risk Profile of Your Industry

• Consider Future Entitlement to Discount Capital Gains Tax Concessions

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As a consequence, we often find the business structure is a compromise based on the relative importance of each of these issues.

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Another brick in your business foundations is your choice of accounting software. Poor record keeping is one of the biggest causes of business failure in this country and up to date, accurate financial records let you to make informed business decisions. The wrong choice of software can be a big issue and too often we find builders produce what we describe as ‘computerised shoebox’ records that cause frustration, waste time and create unnecessary additional fees. This conflicts with our mission of helping you slash the time and cost associated with bookkeeping and GST compliance.

 

Here at Sheridans, we want to be your accountants and business advisors, not just a bookkeeping service. We do more than just ‘keep the score’ for our clients and when selecting the most appropriate accounting software for your business we always try and match your business needs with your level of accounting skill. You’ll find we support a range of different software programs but we do have a preference for cloud based solutions like Xero because of their flexibility and the fact that you can access your financial data via the internet and invite your accountant or bookkeeper to view your accounts at the same time.

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This means you can get bookkeeping support and valuable advice in real-time because you can log-in anytime, anywhere on your Mac, PC, tablet or smart phone to get a real-time view of your cash flow. Your data is automatically backed up and users have access to the latest version of your financial data plus you never need to worry about installing software or program updates.

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To build a house you also need the right tools and when 'constructing' your business we have developed a number of tools including a start-up expense checklist broken down into various categories including: 

-  tools and equipment
-  professional advice and software
-  information technology costs – software and hardware
-  marketing and signage
-  vehicle and trailer costs

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This checklist will help you identify all your potential establishment costs and these figures then feed through to our cash flow budget template and allow us to produce a projected profit and loss statement for your first year of trading. These reports can also tuck neatly into our business plan template that is designed to help you secure funding from external sources like a bank.

 

Another useful tool is our business start-up checklist that walks you through key business registrations you might require, insurance options, legal issues, branding and domain name registrations for your website.

 

For a builder, your vehicle is arguably your most important business tool. To learn more about the alternative methods of claiming your vehicle expenses and the distinction between a business and private trip for tax purposes, talk to us about your motor vehicle use and we'll help you work out your deductions.  

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In summary, if you're contemplating starting a business you don't need to reinvent the wheel as we have all the tools and resources to help you get off to a flying start.

 

In fact, that’s just the beginning because as accountants we can do some financial modelling and prepare some ‘what if’ calculations so you know your business’ best and worst case profit scenarios. Next, using industry benchmarks we can compare the performance of your building or property development business against your competitors so you understand what is working in the business and what areas need working on.

 

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We will help you understand the four ways to grow a business plus identify the key profit drivers in your business. We can walk you through a number of profit improvement strategies and even quantify the profit improvement potential in your business. Our role is to make sure you know your numbers and don't leave any profit or tax savings on the table.

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That’s really just the beginning and we offer you a range of accounting, taxation, marketing and business coaching services including:

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• Start-Up Business Advice for Builders

• Advice regarding the Purchase or Sale of your Building Business

• Advice and Assistance with the Establishment of Your Business Structure - Company, Trust, Partnership

• Tax Registrations including ABN, TFN, GST, WorkCover etc.

• Preparation of Business Plans, Cash Flow Budgets and Profit Projections

• Accounting Software Selection and Training – Bookkeeping, Invoicing, Quotes & Payroll

• Preparation and Analysis of Financial Statements

• Preparation of Finance Applications - Loans to Buy a Business or Property Development

• Bookkeeping and Payroll Services - 

• Wealth Creation Strategies and Financial Planning Services including Transition to Retirement

• Industry Benchmarking and Management of Key Performance Indicators (KPI's)

• Self Managed Superannuation - Establishment and Management

• Monitoring and Controlling Labour and Sub-Contractor Costs

• Advice & Assistance with Pricing your Services and Claiming Motor Vehicle Expenses

• Advice regarding Employee Relations and Workplace Laws

• Business & Risk Insurances (Income Protection, Life Insurance etc.)

• Business Succession Planning

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In summary, we are so much more than just tax accountants. We are business and profit builders who strive to deliver practical, cost effective advice that could give you a serious competitive edge in your industry. Our marketing strategies are designed to help you grow your business and over the past 20 years builders have become a niche area within our firm.

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We invite you to book a FREE, one hour introductory consultation to discuss your business needs. You can expect an hour of practical business, tax, marketing and financial advice that could have a profound effect on your future business profits. To book a time, contact us today and let's get to work on your business so it's more profitable, valuable and saleable.

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