Working as accountants with a large number of clients within the construction industry, it is interesting to reflect and look forward - both from a business and accounting point of view. Although many remained open most of the time since the first lockdown in March 2020, construction companies have continued to have their own challenges.
There are many construction clients reporting delays in the supply chain with materials that you would not expect to be difficult to obtain, such as bricks and plaster board, as well as struggling to find skilled workers to undertake the work that they win.
Due to the lack of skilled workers and materials, some construction companies are even having to adjust their lead times for clients - sometimes by up to 6 months. This dilemma has also led to existing on-going projects being setback, with some reporting penalties for delayed or late completion of work in accordance with the original contracts that were agreed and in place before these issues arose.
The recent report from the government with regards to the first half of 2021 shows that although output in the construction industry was still down slightly compared with pre-pandemic levels, output for both new work and repair and maintenance has grown. It would be interesting to know that if the supply chain was in better shape, how much better the growth could have been!
Running a small business in the construction industry from an accounting perspective is different to regular business accounting and needs some specialist advice - an area RIFT Accounting Ltd has years of experience and expertise in and is ready and able to assist with.
Apart from the usual accounting transactions, construction companies may also need to consider retentions and progress invoices, as well as CIS (Construction Industry Scheme) DRC (Domestic Reverse Charge) VAT and whether this may mean it would be advantageous to complete monthly, rather than quarterly, VAT returns.
There are also other considerations around VAT depending on the type of work undertaken. Is it a new build or a conversion of a property from an office to a residential dwelling, for instance? All of this must be treated in certain ways.
Accountancy for construction needs to be tailored, whether you are a sole trader using CIS, you are a limited company with a couple of workers or your turnover has grown significantly.
Using an accountancy practice with experience of working with clients in construction, such as RIFT Accounting Ltd, is an advantage to construction business owners to ensure all of these various options are considered and advised on accordingly.