Construction

What happens when you take established legislation, build on it, reconcile 3 bills into one, and then add more than 100 provisions? You get the SECURE Act 2.0, a bill that passed by a vote of 414-5 that was signed into law on December 29, 2022, as part of the Consolidated Appropriations Act of 2023. The overall goal of SECURE 2.0 is to make enrolling in retirement plans and saving for retirement more accessible than ever. While most of the changes impact plan participants, there are several updates and changes that will impact plan sponsors this year alone.

The golden years are a time when the days of the daily grind of the working world are left behind and a new chapter begins. It often means spending more time pursuing hobbies, time with family, or traveling. As lovely as it sounds, this reality may simply be out of reach for many. Most workers do not have enough saved to be able to support themselves, even when coupled with anticipated Social Security payments. According to the U.S. Bureau of Labor and Statistics, only 55% of workers participate in an employer-sponsored retirement plan. This alarming statistic prompted Congress to take action resulting in the passage of the SECURE Act in 2019. The legislation made it easier to save, expanded plan eligibility to part-time employees, and more.

Most Atlanta construction contractors are going into the new year with a positive outlook. This is because of the convergence of positive indicators including sales, profits, staffing, and available jobs. In fact, the Construction Backlog Indicator, which highlights the amount of work companies are contracted to complete in the future is quite positive. It is now at the highest level since 2019. Despite this, many are concerned about the current economic situation and what steps to take should a recession hit in the coming months. While it's unclear what will happen, there are several steps that companies can take now to weather a potential storm.

The recent interest rate increases initiated by the Federal Reserve are designed to counteract increasing prices. While dealing with inflation is certainly important, many contractors are already challenged by the ill effects that it brings. Most notably, there has been an increase in the cost of building materials, equipment rentals, skilled labor, and supplies. The trend of increasing costs has made it difficult for many to thrive. While there are different ways to combat the effects of inflation, one of the most effective is through cash flow planning. Maintaining a consistent cash flow is essential to weathering the storm of economic issues.

The Employee Retention Tax Credit (ERTC) is one of the remaining federal tax incentives left over from the pandemic era. Although the program is no longer in effect, taxpayers can continue to file retroactive claims. This is certainly good news for eligible businesses that previously did not claim the savings. At the same time, it has also opened the door to unscrupulous ERTC mills and others falsely promising huge tax savings to unsuspecting business owners. The result has been a sharp increase in the number of fraudulent ERTC claims. In fact, the IRS has already identified over 11,000 fraudulent returns

Properly managing cash flow is essential for Atlanta contractors and construction companies. It provides the funding needed to start new projects, maintain existing ones, and pay for material, supply, labor, and other expenses. Concurrently, a strong financial position can help manage weather-changing economic conditions. With an expected decrease in new 2023 projects driven by rising interest rates, it’s essential to revisit cash flow management strategies. Implementing best practices now will permit the company to be in a strong position and prepare for the unexpected.

Despite the return to “normal,” many companies are still experiencing residual effects from the pandemic. While Georgia’s economy grew by 10% in March of this year, continuing supply chain issues and rising interest rates have put a damper on the encouraging news. This does not even consider the effects of the Great Resignation, which triggered a 25% increase in the number of resignations. When coupled with the concern about a looming recession, organizations need to leverage every savings opportunity available.

Sustainable building isn’t just the way of the future; it's what’s happening now. Achieving energy-efficient design and construction is a multi-faceted approach involving engineers, architects, builders – and even federal tax incentives. The Section 179D energy efficient tax deduction is one of the main tax incentives for building owners who install qualifying energy-saving systems can leverage. The good news for Atlanta contractors is the recently enacted Inflation Reduction Act contains dozens of new incentives for eligible renewable energy upgrades and purchases.

During the height of the COVID-19 pandemic, many Atlanta businesses were struggling to maintain operations while navigating uncertainty, new safety regulations, and an assortment of government-issued restrictions. One of the federal relief programs offered to help offset the hardships, the Employee Retention Tax Credit (ERC), provided a much-needed cash boost to business owners. However, when the program unexpectedly came to an end 3 months early (end of 3rd quarter of 2021) it created an issue for those who were not expecting to pay employment taxes. Unfortunately, the withheld amount became due, and many employers were simply unable to repay it. Since December 2021, the IRS has been providing relief to these taxpayers and those who filed an amended return but has yet to receive a refund.

Managing a construction company has become an increasingly complex proposition. Not only are the traditional project management challenges still present, but several new complexities have arisen. Primarily the increase in the cost of materials and supply chain issues have made it more difficult to provide estimates and manage work schedules. Similarly, construction accounting is complicated and impacts cash flow, liabilities, and other important information.