It’s an accepted fact that CPAs understand the intricacies of financial statements, ever-changing tax laws, and various accounting standards and methodologies. But is that a sufficient background for an owner in a particular industry to hire someone as its CPA? When you’re in the construction industry, the knowledge and experience of your CPA can make all the difference.
“A CPA should really understand the nuts and bolts of the construction industry if a contractor is truly going to have a valuable business partner in its corner,” says Warren E. Hennagin, longtime director of Glenn M. Gelman & Associates, Certified Public Accountants and Business Consultants.
Smart Business asked Hennagin about the value CPAs provide when they thoroughly understand your industry.
What is the value of a CPA who both understands your industry and is aware of current trends and issues affecting it?
The client-CPA relationship should be seen in broad rather than narrow terms. A CPA that thoroughly understands your business can function not only by preparing taxes and financial statements but also by being a valued business consultant and ‘quasi’ partner. In the construction business, that means understanding virtually anything that has a financial impact on a project or a company. Some of these factors include being able to evaluate various accounting software packages as well as internal company procedures so that proper estimating, bidding, job cost control, change orders and burden allocations are easily and properly handled.
There are also many federally sponsored programs, each with its own set of complex regulations that your CPA might be able to help you navigate through. One such initiative is the Small Business Administration (SBA) 8(a) program for small ‘disadvantaged’ businesses. Ideally, the CPA firm should also assist the company with its long-term planning, so that the type of entity, systems and other resources will be appropriate for the goals of the company.