MCC Construction Zone 7. Discuss strategic tax planning with your accountant. Analyze the cost vs. the benefit of every transaction from an income tax perspective. It might make sense to invest in developing new technology to improve operations if that investment qualifies for a research and development (R&D) tax credit. 8. Focus efforts on the 20% of the business that generates 80% of the profits.
An increase in revenue does not always mean an increase in profit. Although most people use the words in the same sentence, the terms have quite different meanings and implications. A company with growing revenue may actually realize decreasing profits. The opposite can also be true. Both metrics – revenue and profitability, tell a story about the business and its operations. It is prudent to pay attention to both, as well as costs. The numbers can help identify the best course of action to achieve the desire results. About the Author Richard P. Higgins, CPA, is the managing partner in the New Jersey office of McCarthy & Company. Contractors trust Rich to assist them with a strategy to achieve their goals by looking at key indicators such as productivity, job costing, profit margins and cash flow. Rich helps contractors establish realistic benchmarks to assess how well they are doing or to alert them to issues that need to be addressed. He can be contacted at 732.341.3893 ext. 17 or Richard.Higgins@McCarthy.CPA.
A version of this article was originally available in the June 2022 issue of Utility Transportation Contractor published by the Utility and Transportation Contractors Association (UTCA).
Disclaimer: This article is for informational purposes only and should not be relied upon for tax or accounting advice. We strongly advise you to seek professional assistance concerning your specific issue(s).
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Rich Higgins, CPA
McCarthy.CPA
