Construction Accountants and CPAs

How Porte Brown Can Help Construction Companies with their Finances

When considering a CPA contractor, construction companies should be extra careful. Because of its complexities, construction accounting can be incredibly challenging and is something a conventional accounting firm is ill-equipped to handle. You need to get the services of an accounting firm specializing in the construction industry, like Porte Brown. 

As a premier construction accounting firm with a team of six Certified Construction Industry Financial Professionals (CCIFPs), our Chicago CPA firm provides comprehensive construction tax and accounting services.

A Porte Brown CPA for contractors can help you with tax compliance, cash flow management, and financial reports. We also help with other areas of your business with contractor accounting services like bidding analysis, cost segregation studies, and trend analysis. Our dedicated construction CPAs have deep expertise in accounting for construction and understand the full scope of issues unique to this field. They’ll also provide powerful bookkeeping solutions that enable business owners and financial managers to boost overall performance and ensure their accounts are in pitch-perfect working order.

As a proud Chicago construction accounting firm that has been in business for over 75 years, Porte Brown knows the unique accounting needs of construction companies, engineering firms, and general contractors and how to address them effectively.

Proud to serve:

• General Commercial and Building Contractors
• Heavy Highway Contractors
• Excavating and Demolition Contractors
• Paving, Concrete and Masonry Contractors
• Homebuilders and Commercial/Residential Real Estate Developers
• Specialty Trade Contractors
• Architects and Engineers

Services include:

• Timely and Accurate Certified Audits, Reviews and Compilation Reporting
• Understanding Complex Tax and Financial Reporting Requirements
• Preparation and Analysis of Completed Contract and Percentage of Completion Schedules
• Assist in Securing Adequate Financing and Bonding Requirements
• Cash Flow Management
• Benchmark and Trend Analysis
• Seminars and Workshops
• Bidding Analysis and Implementation
• Bond Insurance Financial Reporting
• Cost Segregations Studies
• Entity Structure
• Private Placement Memorandums (PPM)
• Construction Project Accounting

What is Construction Accounting?

The construction industry is structured very differently from other businesses. They have their own particular needs because the industry deals exclusively in long-term contracts and production cycles. These circumstances make regular accounting practices unsuitable.

That's why accounting for a construction company, contractor, or home builder needs a new set of methods and principles. This is called construction accounting.

However, what makes construction accounting different from regular accounting?

For one, construction accounting is project-based. Every construction project is treated as a "mini-company" with its own costs and revenue. This signifies that every project must establish an accounting approach that thoroughly considers the list of distinct variables pertinent to its particular situation.

Second, a long-term approach is preferred because payments typically take longer than 90 days. That means construction accountants need an alternative method to accurately track, manage, and analyze a company's cash flow and revenue over this time.

Lastly, construction accounting is mostly a decentralized process. Labor and materials move from one site to another, unlike factories or other businesses that stay in one place. This puts special consideration on mobilization costs. For this reason, construction clients need the help of an experienced accountant for construction to keep on top of these processes.

What are the Key Construction Accounting Principles?

Construction accounting has unique principles that differ from standard business practices. Our construction accountants focus on these critical areas:

• Job Costing & Revenue Recognition: Accurately tracking project costs and revenue is essential to assessing financial health and managing tax liability.
• Retainage: Funds are withheld until a project is complete, protecting clients while requiring careful oversight from a construction company's accountant.
• Billing Methods: Construction accountants help you select and apply the right approach, from fixed price and time-and-material to AIA progress billing.
• State and Local Tax (SALT): Construction firms often operate across jurisdictions, making SALT compliance a key principle of practical accounting.
• Industry Standards: Active involvement in groups like the Construction Financial Management Association ensures our team stays ahead of best practices.

By following these principles, Porte Brown helps construction firms build stronger financial foundations and achieve long-term stability.

Revenue Recognition and Job Costing

Construction accounting firms emphasize the importance of revenue recognition as it details how income and expenses are tracked in a construction project. There are three methods to choose from.

The cash method is the simplest. It recognizes revenue only when the cash hits the company's bank account and notes expenses only when the firm pays them. While straightforward, not every company can use this method. The IRS, for example, has a set of criteria on who can use the cash method for tax purposes.

On the flip side of the cash method is the completed contract method (CCM), wherein all income and expenses are recorded only when the project is completed. This has several tax advantages, such as deferring taxable revenue. Like the cash method, the IRS restricts who can use this method.

Lastly, you have the percentage of completion method (PCM), which records income and expenses as the project progresses. While it can be the most accurate method, it's also the most complex. A construction project will need a qualified construction tax accountant who can use several billing methods and techniques to track revenue accurately.

Construction Accounting Best Practices

Despite its challenges, construction accounting becomes more manageable when firms follow proven best practices. Our construction accountants recommend:

• Prioritize Tax Compliance: Decide on the right tax strategies early and stick with them. A knowledgeable partner ensures you remain compliant and minimize risk.
• Plan for State, Local, and Federal Taxation: Work with experts who understand complex regulations and can reduce risks through proactive planning.
• Set Clear Job Costing Goals: Job costing is essential for tracking profitability. Provide staff with clear timelines and explain why accurate reporting matters.
• Use the Right Accounting Software: Adopt tools designed for construction to automate repetitive tasks, simplify reporting, and better manage cash flow and taxes.
• Partner with Trusted Construction Accountants: Having specialists on your side helps improve financial statements, mitigate risks, and create strategies that strengthen operations and long-term profitability.

By following these practices, construction firms can stay compliant, improve efficiency, and lay a stronger foundation for growth.

Partner with Porte Brown for Contractor Accounting Services

Construction accounting is complicated, and failure to adhere to key principles can mean your business pays more each year than is necessary. Take advantage of top accountants for construction firms who can decode the terms that influence how you manage your operations and file your taxes. 

Gain the services of a qualified CCIFP with years of experience and an accountant for construction companies who can mitigate your tax burden and ensure complete regulatory compliance. Mitigate your operating costs by utilizing state and federal tax credits to enhance your annual profitability.

Negotiate the challenges of the construction industry with construction accountants who manage countless clients, ranging from small building companies to household names. A top accountant for a contractor embraces the latest technology, stays abreast of the latest regulations, and finds ways for you to keep more of your profits.

As one of the leading construction accounting firms, our team consistently offers our clients the high standard of service they expect by providing tailored packages that meet the required obligations of construction companies nationwide. We take pride in delivering the highest quality accounting for a contractor, focused on the unique obstacles those in the construction business face.

Get in touch with Porte Brown to learn more about the benefits of employing professional construction accountants.

Active Industry Associations

• Construction Financial Management Association (CFMA)
• Illinois Road and Transportation Builders Association (IRTBA)
• Federation of Women Contractors (FWC)
• Association for Subcontractors and Affiliates (ASA)