Unless you already have experience, you may be forgiven for thinking that accounting for construction workers and the construction industry as a whole was easy.
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However, the truth is, due to the fast pace of the industry and the fact that the rules, regulations and legislations keep changing, it is perhaps one of the hardest industries to get accountancy right while staying fully compliant. Especially if you try to handle your accounting.
It would be difficult to run a successful business while managing your accounts at the same time as staying on top of all the complicated legislation. You could end up wasting lots of your valuable time, time that could be spent on what you do best – running your business.
That’s where Tax Bite come in.
A normal accountant who has a broad range of expertise in accountancy will be adequate for simple businesses. However, for your construction business, you are better off turning to a qualified accountant who works with construction businesses all day, every day.
They have a better understanding of what is required within the industry and can help your limited company improve its cash flow and meet its financial goals.
Do you know what CIS and WIP mean? Neither does the average accountant without specialist construction industry knowledge and training.
CIS is short for Construction Industry Scheme and under it, construction contractors deduct the money they get from their subcontractor payments and then pass it on to HMRC. These deductions contribute to advanced payments on the subcontractor’s national insurance and income tax bills.
CIS covers the vast majority of construction work and activities, like building works, electrical works, plastering, roofing, and plumbing.
WIP or Work in Progress is the value of any work completed for which there has not been an invoice sent out yet. As an example, if a construction team is halfway through one particular project that has an estimated value of £20,000, the appropriate VIP would be £10,000The problem is that, although we made that seem simple, calculating WIP and related assets is never quite as simple as you may imagine.
If you have any questions about CIS, WIP or anything else about business, tax and accounting legalisations within the construction industry, please contact the team here at Tax Bite today.
As we have discussed, construction is a complicated one, particularly when it comes to accountants. Don’t take the risk and waste time, money and your business by trying to take care of your construction business accountants yourself. Speak to one of the team here at Tax Bite and take advantage of the following financial services:
Tax Bite has served the property and construction sector for a number of years now, and in that time, we have developed a first-rate level of service. In our capacity as specialist construction accountants, we have helped businesses big and small, with everything from tax services and tax planning to business structure, optimising cash flow and everything related to the Construction Industry Scheme CIS.
There are so many different services a construction accountant can offer you – they can process all your purchase invoices, prepare and submit VAT returns and also take care of CIS returns. With cloud accounting software, TaxBite can also take care of your cash flow forecasting, business plans, and bookkeeping. They can help with developing your onsite budget to make sure you can see where cash may run out and keep track of all your orders.
A more generally qualified accountant will be able to provide the most basic accountancy services but will lack the industry-specific knowledge and experience that a construction accountant can bring to the table such as any special tax rules. As you may already be aware, depending on how long you have been active in construction, the industry is a fast-paced one and there are regular updates and changes to the legislation, rules and regulations.
When you align yourself with an accountant for construction workers, like one of our team here at Tax Bite, you give your business the best chance of staying on top of the legislative and industry changes to make sure you stay compliant.
At Tax Bite, we understand the complex workings of CIS and the common challenges construction businesses face when it comes to cash flow. Our dedicated construction accountants only spend time working with trades and construction businesses, so know the best advice to give and actions to take when you are trying to build a successful and tax-efficient business.
In line with CIS legislation, construction work covers everything including site preparation, demolition, repairs, decoration and all other related tasks. Both the party making the payments for the work and the party receiving the payments to conduct the work need to be registered with CIS.
When you are filling out your CIS tax return, you can make a claim for expenses that HMRC deem allowable. As the list is exhaustive, to say the least, a few of the most common CIS expenses you can claim include purchase receipts, bank statements, mileage, CIS earnings statements and invoices.
For more information about what you can and cannot claim on your CIS tax return as business expenses, please contact Tax Bite today.
It normally takes anything from 4 to 8 weeks for your UTR number to be issued to you if you are registered with CIS. You can speed up the process by having a full record of your earnings.
The term Work in Progress or WIP for short refers to all the overhead costs, labour, and materials that are generated for products at a variety of different stages in production. These costs are then transferred to the account that covers the finished goods and then to the eventual cost of sales.
When you are accounting for the costs in the WIP inventory account, your construction accountant assigns all raw materials connected to the work project, then compile the associated labour costs for the work conducted on the WIP inventory, assigns associated overhead costs and makes a record of the asset entry to summarise these costs.
The WIP reports we have completed here at Tax Bite normally include the following details over/under billings, earned revenue, billed revenue, percentage of work completed, costs to date, estimated costs, and contract amount.
We cover five construction industry sectors – environmental construction, industrial construction, heavy civil construction, and commercial building. In addition to these sectors, we can also provide tax advice to kitchen fitters, gas engineers, and plumbers.
The construction industry is a complex and difficult one to navigate through. While you may be tempted to take on the responsibility of dealing with your accounts by yourself. Even if you have some level of accountancy experience, it will be nothing when compared to the level of insider knowledge and experience Tax Bite have.
Contact Our TeamFor more information about our construction accounting services, to get your free quote or if you have any other questions about our team, please get in contact with TaxBite today.
