Contractors often say with pride that they make a 20% margin or more on every project they perform. But when we look more closely at the numbers, we find margins are often much lower. The culprit often is a failure to properly capture indirect job costs in the job schedules. Indirect costs like equipment depreciation, equipment repairs, salaries and benefit…
The economic changes over the past 12 months have been especially challenging for the construction industry. The increased cost of materials, equipment rental, insurance costs, and labor shortage have made 2022 a challenging year. Looking ahead, it is likely there will be similar issues leading to a potential slowdown in 2023. Despite this, there are ye…
The tax savings available through the Federal Research & Development (R&D) Tax Credit reward businesses that invest in research and innovation. The misconception that only large companies with R&D departments can claim the credit has led many small- and medium-sized businesses to dismiss this opportunity. This assumption is simply untr…
The widespread distribution of the COVID-19 vaccination and lifting of restrictive government orders means many Los Angeles businesses are well on the way to a full recovery. When combined with the various federal economic relief packages, 2021 is projected to be a year of near-record growth for the California economy. In fact, it is estimated that the st…
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In Brief Choosing the right entity type is not a one-size-fits-all decision; it depends on ownership, risk, revenue, and long-term goals. Sole proprietorships are the simplest starting point but offer no liability protection and can trigger IRS scrutiny once sales exceed $100,000. LLCs provide liability protection, tax flexibility, and credibility…
Year-end tax planning typically relies on understanding current tax law and assuming that it will remain substantially the same in the following year. But this year is different. President-elect Donald Trump is expected to make significant changes in the tax code that could be in place soon after his January 20, 2025, inauguration. Consequently, year-e…
Construction companies should monitor their AR performance through Key Performance Indicators (KPIs). One common tool for monitoring AR is the Aging Report. This report categorizes outstanding invoices based on how long they have been overdue, typically segmented into 30-day intervals (0-30 days, 31-60 days, and over 90 days). By analyzing the AR agi…
Accounts Receivable (AR) refers to the money a business is owed for completed work that has not yet been paid. In construction, the AR function is especially critical due to complex payment structures and the extended time between project milestones and payments. Effective AR management ensures contractors maintain steady cash flow, pay suppliers, cov…
California’s business climate recently worsened when the state enacted legislation suspending the net operating loss deduction for tax years beginning on or after January 1, 2024, and before January 1, 2027. The suspension applies to taxpayers with more than $1 million in net income for the tax year. The suspension was enacted retroactively from June of…
By Brett Layton
Qualifying as a Real Estate Professional offers significant federal tax advantages that can significantly benefit those in the real estate industry. By achieving this status, you can offset real property rental losses against other sources of income and exclude real estate gains and revenue from the Net Investment Income Tax. These unique tax exceptio…
