Tax time is upon us all. For help, Todd Taggart, partner and co-leader of Grant Thornton LLP's construction industry practice, offers these helpful tax tips for construction contractors wanting to save money now and in the long run:
- Examine your capital asset depreciation methods and lives. "Catch-up" deductions are possible on under-depreciated existing assets. You may be able to write off 100 percent of the under-depreciated amount in the current tax year without amending past returns by filing an automatic change in accounting method.
- Obtain a marketing edge by offering your customers more. Work with a tax advisor to provide a turnkey cost segregation study to your customer with your completed project. Your tax advisor can assist in analyzing and appropriately classifying capital assets associated with the project into the most tax-beneficial depreciable lives.
- Analyze the structure of your business. How your business is organized can have a major impact on the amount of taxes you pay, especially in the areas of state, local and unemployment taxation. Consider the benefits of restructuring your business (for example, by establishing a partnership to provide intercompany services), while at the same time potentially reducing state, local and unemployment tax liabilities.
- Consider establishing a separate entity to own and lease fixed assets used in your business. Often referred to as "leasing companies" or "procurement companies," these entities help manage your assets and may significantly reduce your sales and use tax — a tax you collect and remit regardless of whether your company is profitable.
- Review your accounting methods. The operations of contractors can result in the need for multiple methods of accounting. Be sure that you are using appropriate and advantageous methods. Also, ask Grant Thornton how we may assist you to defer revenue on projects where you use subcontractors.
Grant Thornton's Construction, Real Estate and Hospitality Industry group has developed 10 tax tips for construction contractors. To receive a copy of the tax tips, go to www.GrantThornton.com/taxtips or e-mail CRH@gt.com.
For technology help, Reed Construction Data (the publisher of Constructioneer) is offering a new service focused on building information modeling, or BIM. RCD has acquired Tectonic Partners Inc., a leading developer and service provider of building information modeling (BIM) for the architectural, engineering and construction industries. The acquisition will formally close Feb. 1, 2008.
The acquisition represents a significant strategic move by Reed Construction Data to become a leader in the emerging building information modeling space and complements the strategic partnership with RCMS Group announced earlier this year.
The combination of Reed Construction Data and Tectonic will give architects, engineers and contractors (AEC) a powerful set of solutions for creating and managing BIM content on their desktops, as well as integrating RSMeans' industry-leading cost data into the objects and the drawings themselves.
Tectonic provides several unique products and services, including BIM Library Manager, a software application for the organization and management of Autodesk Revit families, which helps assist in efficient creation of BIM. The emerging BIM technology provides consumers with the ability to improve visualization, coordination, simulation and optimization, which translates into direct advantages such as cost savings, fewer errors, productivity gains, and the ability to manage building information throughout a project's entire lifecycle.