As with many specialized industries, accountants tend to have their own language. To help you navigate the discussions here is a list of concepts and questions that will help you to understand our process more easily:
Can you work with Canada Revenue Agency?
Understanding the systems and priorities of CRA, we are able to plan our client’s financial calendar and accounting. The result is having the CRA content the business is meeting their filing obligations.
What are Change Orders?
Customer’s requirements or other conditions frequently change during a project. This will change the actual costs, what extra expenses to expect from changes, nor what to bill the customer.
What is a Completed Contract Method?
This method is useful when your costs are well known and not subject to change. Generally these contracts are completed within a month. It is still important to track your costs to ensure your costs remain “well known.”
Why do you use Milestones in your accounting process?
Milestones are major steps in a project. These can be very useful for estimating percentage of work completed. For example, in new home construction, milestones can include: clearing property, pouring basement, completing framing, roofing, lock-up, drywall, electrical, plumbing, cabinet work and finish work. By knowing the approximate cost for each milestone, customers can be invoiced in realistic stages.
Can this method help me with Tax Avoidance?
If you are attempting to maximize your tax deductions and not worrying about actual project accounting, your business efficiency will probably suffer in the long run. Short-term tax avoidance may distort your information for the long term because your focus is not on growing your business.
Why is Percentage of Completion part of your accounting practice?
Unlike the Completed Contract Method, percentage of completed contract accounting is used when the costs are variable and the milestones may not be easily defined. This is frequently used in a project that is a process such as land development or developing a sub-division.