MCC Construction Zone - September 2022

MCC Construction Zone

Proactive Advice for Construction and Real Estate Professionals

In This Issue

In this issue of MCC Construction Zone, we provide recommendations on saving money and managing your resources through this turbulent time. Although we are not officially in a recession, many experts predict that the overall economy will get worse before it gets better. Some economists go as far as declaring that the housing industry is already in a recession.

Two articles in this issue will help save money on your taxes 10 Tax Planning Strategies for Contractors to Reduce Taxes and 7 Tax Saving Opportunities for Real Estate Investors. Another article, How You Can Benefit from Our Client Accounting Services will provide you with viable accounting solutions to help save money.

Invest in Qualified Opportunity Zones Through Qualified Opportunity Funds, and Cash Flow Considerations in the Bidding Process review ways to save or earn money.

There is much discussion on what makes a good leader. Read Construction Leaders Make a Greater Company Impact Than Managers to learn why. Finally, we introduce you to Stephanie Knowles, director of our Client Accounting Services (CAS) Group.

We hope you enjoy our latest issue; please contact us with any questions regarding the material.

Marty McCarthy, CPA, CCIFP Managing Partner

Marty McCarthy, CPA, CCIFP

10 Tax Planning Strategies for Contractors to Reduce Taxes

Andrew Russo, CPA, MST

Many provisions have been implemented under legislation in the past several years to help businesses and individuals reduce their tax obligation. Here are ten tax planning strategies for contractors to consider:

Use the Right Accounting Method. Contractors should ensure that the tax reporting method for each contract is appropriate by determining which projects are not considered long term (more than one year). Most contractors must use the percentage of completion method for long term contracts, but exceptions exist. For example, residential builders generally qualify to use a different tax reporting method. In addition, contractors may be eligible for other elections for pay if paid contract language, unit price contracts, Guaranteed Maximum Price contracts, and retainage receivable. Under the Tax Cuts & Jobs Act (TCJA), tax accounting methods previously available only to smaller contractors can generally be used by contractors with average annual gross receipts of up to $26 million (adjusted for inflation). Choosing the appropriate method for each contract to reduce taxes is an overlooked tax planning tool.

Qualify as a Real Estate Professional. Rental activities and income are largely considered passive income unless the investor qualifies as a real estate professional for tax purposes. Then it is treated as non passive income. Losses can be deducted if the real estate professional materially participates in the rental activity. More than 50% of the person’s time and 750 hours must be spent on real estate activities. Holding a real estate license is not required. Other rules apply. Generally, contractors qualify for this provision under the Internal Revenue Code.

Depreciate Properties. According to the IRS, the lifespan of a residential building is 27.5 years. Therefore, owners can deduct 1/27.5 of the property’s building value each year for the first 27.5 years they own the property. Capital improvements to the property can also be depreciated. However, when the property is sold, the owner may owe taxes for “depreciation recapture” on profits they previously avoided paying taxes on through depreciation. Land cannot be depreciated or the costs of clearing, planting, and landscaping. Those activities are considered part of the cost of the land and not the buildings. Real estate investors that acquired renovated or built a building should consider a cost segregation study to determine if the property qualifies for accelerated depreciation. Personal property acquired as part of a building may be eligible for immediate expensing under TCJA by claiming 100% bonus depreciation.

Take Advantage of the 20% Pass Through Deduction. A TCJA provision allows small business owners to deduct 20% of domestic qualified business income (QBI) from a pass-through entity. The deduction is taken on the net amount of qualified items of income, gain, deduction, and loss concerning any qualified trade or business of the taxpayer. The deduction cannot exceed taxable income. Rules apply.

Take the Employee Retention Credit (ERC). The Employee Retention Credit (ERC) can still be claimed in 2022, even though the program ended last October. Employers can go back to March 13, 2020, and claim wages until October 1, 2021. This refundable tax credit can be taken against certain employment taxes. Federal income tax withholdings, the employee’s share of Social Security and Medicare taxes, and the employer's share of Social Security and Medicare tax can be claimed up to the amount of the credit Employer paid health insurance costs may also be eligible, even if the employer has furloughed workers and is not otherwise paying wages. A maximum of $7,000 per employee per quarter for a total of $28,000 can be claimed by qualified employers in 2021, and $5,000 for the third and fourth quarters of 2020 for a total of $33,000 per employee. Generally, businesses can qualify for the ERC even if they receive funding through the Paycheck Protection Program (PPP).

Assess NOL Carryback vs. Carryforward. The CARES Act permits net operating losses (NOLs) to be carried back to obtain refunds of prior year taxes. While appealing, business owners should assess the implications of this tax provision before deciding to take an NOL carryback or carryforward. It is important to determine if it is more advantageous to take a carryback and refund in a year with a lower tax rate or have the NOL available for future years when income tax rates are expected to be higher. Evaluate current working capital needs and the company’s long term financial stability before deciding.

Take advantage of bonus depreciation changes. The CARES Act includes a technical correction to TCJA that permits 100% bonus depreciation for eligible Qualified Improvement Property (QIP) placed in service after December 31, 2017, and before January 1, 2023. Taxpayers who placed eligible QIP in service during 2018 and 2019 may be eligible to claim 100% bonus depreciation REITs, manufacturers, and other businesses that own certain non residential real estate improvements on leased land may also be eligible.

Take the Energy Efficient Building Deduction. The Consolidated Appropriations Act (CAA) of 2021 made the Energy Efficient Building Deduction (Section 179D) permanent. Business owners and government contractors can deduct energy efficient improvements to commercial and government buildings. A tax deduction is available to new or existing building owners who install interior lighting, building envelope, heating, cooling, ventilation, or hot water systems that reduce energy and power costs by 50% or more. Any accrued tax deductions from these buildings can be carried back two tax years or forwarded for up to 20 years. The Inflation Reduction Act (the Act) increases the value of the section 179D tax deduction to $5.00 (up from $1.88) per square foot. Contractors can qualify for the full deduction by designing and installing qualified energy-efficient systems in certain buildings,

provided they meet prevailing wage and apprenticeship requirements. Certain nonprofit organizations, schools and universities, churches, and other public entities are now eligible for this deduction under the Act. Eligible designers and builders (such as architects, engineers, contractors, environmental consultants, and energy service providers) can qualify for 179D under a special rule for public property.

Take the 45L Energy Efficient Home Tax Credit. The Act also expands upon section 45L of the Internal Revenue Code, where eligible builders of energy efficient apartment buildings could receive a tax credit of up to $5,000 per dwelling unit.

Buy an Electric Vehicle. The Act includes a $4,000 tax credit to purchase used electric vehicles and up to $7,500 in tax credits for new ones. These tax credits apply to any “clean vehicle,” including hydrogen fuel cell cars. In addition, the Act extends existing electric vehicle tax credits for 10 years until December 2032.

The Inflation Reduction Act introduces new renewable energy tax credits and extends others. These include incentives to companies and consumers who make cleaner energy choices, a tax credit for energy efficiency in commercial buildings, and grants and loans to help companies reduce gas methane emissions from oil and gas. The Act also creates a $1 billion incentive program for energy efficient affordable housing and $3 billion to improve roads.

Taking tax credits in one area of the business may offset the benefits of another. So, it is important to take a holistic approach to tax planning. Contractors must weigh the costs versus the benefits of each credit or incentive before implementing a strategy.

About the Author

Andrew Russo, CPA, MST, is the director of tax strategies for McCarthy & Company. Andy helps clients by providing them with a strategic approach to tax planning to reduce their income tax liability. He can be contacted at 610.828.1900 or andrew.russo@mccarthy.cpa

Andy Russo, CPA, MST

7 Tax Saving Opportunities for Real Estate Investors

David E. Gibbs, CPA, CCIFP, CRE, MBA

Real estate investors must think about the tax implication of any transaction. Investors can save a substantial amount of money on their taxes if they implement the right tax planning strategies. Here are seven recommendations to consider:

1. Establish a self directed IRA account. Holders of a self directed IRA may fund real estate purchases from their IRA. There is no penalty for being under age 65. The non financed portion of the purchase is sheltered from taxes by the IRA. A custodian or trust company must administer the self directed IRA. Other rules apply.

2. Hold properties for more than a year. Investors who own properties for more than a year are taxed at the capital gains rate instead of their ordinary income tax rate. The capital gain tax rate is 0%, 15%, or 20%, depending on the investor’s tax bracket. If the investor lives in the property for at least two years, the first $250,000 of capital gains are tax free for singles and $500,000 for married couples. Holding property for more than a year also reduces the chance that the IRS will classify the investor as a “dealer.” Earnings for dealers are generally subject to double FICA taxes because they are considered self employed. The investor would pay 15.3% towards social security and Medicare taxes instead of 7.25%.

3. Defer taxes with a like kind exchange. IRC Section 1031 allows investors to defer paying taxes on the gain from the sale of a property if the proceeds are reinvested in a similar property. There is no limit on the number of times or frequency of doing a 1031 exchange. Business or investment properties generally qualify.

4. Qualify as a real estate professional. Rental activities and income are generally considered passive income unless the investor qualifies as a real estate professional for tax purposes. Then it is treated as non passive income. Losses can be deducted if the real estate professional

materially participates in the rental activity. More than 50% of the person’s time and 750 hours must be spent on real estate activities. Holding a real estate license is not required. Other rules apply.

5. Write off ordinary and necessary business expenses. Ordinary and necessary business expenses are generally deductible for for profit entities. The IRS defines an ordinary expense as one that is common and accepted in a trade or business. A necessary expense is one that is helpful and appropriate. An expense does not have to be indispensable to be considered necessary. The cost of goods sold, capital expenses, and personal expenses must be treated separately. Other rules apply.

6. Depreciate properties. According to the IRS, the lifespan of a residential building is 27.5 years. Owners can deduct 1/27.5 of the property’s building value each year for the first 27.5 years they own it. Capital improvements to the property can also be depreciated. However, when the property is sold, the owner may owe taxes for “depreciation recapture” on profits they previously avoided paying taxes on through depreciation. Land cannot be depreciated or the costs of clearing, planting, and landscaping. Those activities are considered part of the cost of the land and not the buildings. Real estate investors that acquired renovated or built a building should consider a cost segregation study to determine if the property qualifies for accelerated depreciation. Personal property acquired as part of a building may be eligible for immediate expensing by claiming 100% bonus depreciation under TCJA.

7. Take Advantage of the 20% Pass Through Deduction. A provision of the Tax Cuts and Jobs Act (TCJA) of 2017 allows small business owners to deduct 20% of domestic qualified business income (QBI) from a pass through entity. The deduction is taken on the net amount of qualified items of income, gain, deduction, and loss for any qualified trade or business of the taxpayer. The deduction cannot exceed taxable income. Rules apply.

There are many other tax elections that real estate investors could consider. It would help if you considered contemplated transactions before recommending one tax savings strategy over another. In certain circumstances, taking a deduction for one reason may not make sense when looking at every transaction’s tax implications

About the Author

David E. Gibbs, CPA, CCIFP, CRE, MBA, is the partner in charge of the firm’s Real Estate Services Group. He works with real estate professionals in various commercial, industrial, and residential sectors. Clients benefit from David’s profound knowledge of the unique tax elections for real estate professionals. David holds the well respected Certified Construction Industry Financial Professional (CCIFP) designation from the Institute of Certified Construction Industry Financial Professionals (ICCIFP), as well as the elite Counselors of Real Estate (CRE) designation. He can be contacted at 610.828.1900 or david.gibbs@mccarthy.cpa.

This article will be published in the fall issue of New Jersey CPA magazine.

David Gibbs, CPA, CCIFP, CRE, MBA

How You Can Benefit from Our Client Accounting Services

Stephanie Knowles

Outsourcing your accounting function can help your business save time and money. Outsourcing can also allow you to control your expenditures and scale up and down when necessary. In addition, it can help you cut down on personnel costs because you don't have to hire and train new employees. Furthermore, you won't have to worry about keeping up with the tax law or learning a new accounting program because you will have a team of professionals working for you.

Outsourcing your accounting function can be a smart decision for small to medium sized businesses. It will allow you to automate routine accounting tasks, provide real time insight into key performance indicators (KPIs), and access top notch accounting talent. While your in house staff is focused on the growth of your business, an outside company can handle all the details and get the job done with great speed.

Savings from outsourcing your accounting function can be substantial. Some businesses need full time accounting support, while others only require part time assistance. Outsourcing your accounting function allows you to keep costs low while freeing time for more important aspects of your business. You can focus on your customers instead of your accounting department.

Outsourcing can also increase your efficiency. Outsourcing experts can handle your accounting needs in a short amount of time, making your business run more smoothly. Outsourcing accounting can even help you reduce errors and maximize profitability.

Reduce Costs and Have Better Outcomes

Outsourcing your accounting function is a great way to reduce costs. An outsourcing firm has a team of financial experts who ensure the work is done correctly These professionals have a detailed knowledge of accounting and transactional processes and tax law principles. They also know how to handle payroll processing. This knowledge reduces the risk of making costly mistakes.

Hiring a full time accountant is expensive, especially if you have a small business. In addition to salaries, you need to pay for their insurance and benefits. Investing in staff training is also expensive.

Finding the Right Partner

When choosing an outsourcing partner, remember that they should be a part of your team, not just another vendor. A mutual understanding of your values and culture can make communication and conflict resolution much more manageable You also want a partner with the appropriate tools and equipment to provide the service you need.

Finding a partner who understands your requirements, can deliver on time, and knows your business is crucial. In choosing an accounting service provider, you should consider the kind of services that you need. Whether you need a basic bookkeeping service or more advanced services such as business valuation or financial modeling, you should look for a partner with specialized skills and experience. However, you should never settle for subpar service or low prices. Remember that choosing an outsourcing partner is an investment in your business and should be a long term commitment.

The price of outsourcing your accounting function depends on many factors. The best partner will be able to meet your needs and be within your budget. They should also be reliable and provide quality service. Check the outsourcing partner's website and reputation to get an idea of how reliable they are. Typically, outsourcing contracts are long term, but you can extend or end them anytime.

Outsourced Accounting Experience

McCarthy & Company works with entrepreneurs and small businesses by offering scalable bookkeeping, accounting, and financial leadership services to address immediate issues and long term needs. Our Client Accounting Services (CAS) team has the technical expertise and practical experience to manage even the most complex challenges. So, whether it’s bookkeeping, monthly accounting, or more complex needs, the McCarthy CAS team is here to assist with improving efficiency, saving time, and giving you an accurate picture of your financial performance.

Meet the Author

Stephanie Knowles is the director of the Client Accounting Services (CAS) Group. Stephanie and her team provide clients with controller level advisory support, routine accounting operations, and detailed financial packages. Stephanie can be contacted at 610.828.1900 or stephanie.knowles@mccarthy.cpa.

Stephanie Knowles

MCC Construction Zone

Invest in Qualified Opportunity Zones Through Qualified Opportunity Funds

Brian Marron, CPA

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced incentives for taxpayers to defer capital gains by investing in low income areas. Certain taxpayers can benefit if they make a long term investment in the Qualified Opportunity Zone (QOZ) through a Qualified Opportunity Fund (QOF)

Investment Opportunities

QOZs were created under TCJA to encourage investment in low income communities. Thousands of QOZs are designated in all 50 states, the District of Columbia, and five U.S. territories. Partnerships or corporations are typically formed to run and manage QOFs. Ninety percent of QOFs must be invested in QOZs.

Taxes on capital gains and qualified 1231 gains (gains from the disposition of depreciable assets held by the business for longer than one year) may be temporarily deferred. The gains must be recognized before January 1, 2027, for federal income tax purposes and cannot be from a transaction with a related person.

One of the benefits of investing in a QOF is that there is a basis (amount of the investment) step up by 10% of the deferred gain for investments held for five years and an additional 5% (15% in total) for investments held for seven years if met by December 31, 2026. For most taxpayers, this benefit has timed out. However, there is an exception for pass through entities to still reinvest 2021 gains through September 11, 2022.

Even though the basis step up is no longer available for most taxpayers, there is still a significant benefit remaining. If the investment is held for 10 years, the asset's appreciation will be a tax free sale; this includes any depreciation recapture that otherwise would have been recognized at that time.

Filing Requirements

An entity must file Form 8996 (Qualified Opportunity Fund) annually with its eligible partnership or corporate federal income tax return. Taxpayers must also (self) certify that the corporation or partnership is organized to invest in QOZ property. This is done by:

• Filing a federal income tax return as a partnership, corporation, or LLC that is treated as a partnership or corporation;

• Organizing for the purpose of investing in QOZ property under the laws in one of the 50 states, the District of Columbia, a U.S. possession or a federally recognized Indigenous tribal government; and

• Holding 90% of its assets in QOZ property.

90% Investment Standard

A QOF must invest 90% of its assets in QOZ property. This is determined by the average of the percentage of QOZ property held in the QOF as measured on:

• The last day of the first six month period of the tax year of the QOF; and

• The last day of the tax year of the QOF.

Taxpayers must report the amount of gain or loss in the tax year it was sold or exchanged on Form 8949, Sales and Other Dispositions of Capital Assets.

Allowable deferment

As noted above, the IRS allows the deferral of all or part of a gain invested into a QOF that would otherwise be included in income. The gain is deferred until the investment is sold or exchanged or December 31, 2026, whichever is earlier. IRS guidance permits tangible property acquired after Dec. 31, 2017, under a market rate lease to qualify as QOZ business property. “Substantially all” (at least 70% of the property) must be used in a QOZ.

The guidance notes there are situations where deferred gains may become taxable if an investor transfers their interest in QOF. For example, if the transfer is done by gift, the deferred gain may become taxable. However, inheritance by a surviving spouse is not a taxable transfer, nor is a transfer, upon death, of an ownership interest in a QOF to an estate or a revocable trust that becomes irrevocable upon death.

Taxpayers need to consider if the tax rate on capital gains is expected to increase or decrease within the investment period. As always, it is good to check with us before making an investment.

Meet the Author

Brian Marron, CPA, is a manager in the firm’s New Jersey office. He helps clients reduce their tax obligation by planning through the tax implications of contemplated transactions. Brian can be contacted at 732.341.3893 or brian.marron@mccarthy.cpa.

Reprinted from ConstructionExec.com, June 6, 2022, a publication of Associated Builders and Contractors (ABC). Copyright 2022. All rights reserved.

Brian Marron, CPA

Cash Flow Considerations in the Bidding Process

Richard P. Higgins, CPA

It is important for a contractor to have a positive cash flow. It can make the difference between having a sustainable company or not. Contractors with a positive cash flow are more likely to survive a business interruption, shutdown, or other challenges.

Cash flow is defined as the movement of cash into (income) or out of (expenditure) a company. Cash inflow comes from the sale of goods and services, the sale of assets, or money obtained from financing. Cash outflow occurs when a contractor purchases materials and equipment; meets payroll; pays rent, insurance, and other business expenses; and makes loan payments.

Positive cash flow occurs when a contractor brings in more money than they are spending during a specific period or over time. Negative cash flow is the opposite. There is not enough cash to cover expenses. Having a positive cash flow position is necessary to have a solvent business. Profitable companies can become insolvent because of uneven cash flow. This could force a contractor to tap into a line of credit or take out a loan to continue operating and meet expenses.

Cash Flow Management

Cash flow management is the process of balancing the inflow and outflow of cash. In construction, cash inflow occurs as incremental payments are made by the owner over the course of the job. Cash outflows are made as the contractor buys materials and supplies, pays subcontractors and employees or pays overhead and equipment costs. The contractor must consider cash flow over the life of a project and during each phase of construction to ensure the money is available to cover the necessary expenses.

It is also essential that the contractor considers cash flow in the bidding process, which can be difficult. A contractor can lose money on the job if the bid is too low or have the bid rejected if it is too high. Accurate estimates are key to managing cash flow.

Payment Schedules

Invoices are typically sent out according to the payment schedule outlined in the contract. Payment schedules are determined by either a percentage of completion or meeting specific milestones. The contractor and the owner must agree on the terms of the payment schedule and how disputes will be resolved. A disruption could cause a payment delay, interrupting cash flow and possibly the contractor’s ability to complete the job.

Managing Costs and Supplies

Increasing labor and material costs are making margins tighter than ever before. Higher than expected costs could put a contractor into a negative cash position. Tariffs, trade wars, and demand for certain materials are adding to escalating prices, as well as supply shortages. Contractors need to consider inflation while preparing a bid and their profit margin to mark up the estimated costs accordingly.

Suppliers are more likely to deliver materials to contractors that are in the position to pay for them. Contractors will need to estimate how much material they will need and include the cost in the contract to ensure that the money is available when needed.

A contractor should account for changes in the costs of materials and labor, as well as the build schedule, to avoid cost overruns. This will help ensure adequate cash flow to complete the job and make a profit. Significant changes to the scope of the project or timeline will need to be addressed. If necessary, the payment schedule will need to be updated.

Cash Flow Cycle

Comparisons should be made to prior periods and similar jobs to determine the company’s cash flow cycle. Having current and historical information on cash flow will help a contractor to:

• understand the company’s cash position;

• prepare for changes in the company’s cash position;

• control accounts receivables;

• manage cash expenditures; and

• make decisions based on what the business can afford.

Managing cash flow allows a contractor to identify issues and take corrective action before a serious problem occurs. By considering cash flow in the bidding process, a contractor should be better prepared to complete each phase of construction based on the inflow and outflow of cash.

About the Author

Richard P. Higgins, CPA, is the managing partner of McCarthy & Company’s New Jersey office. 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. In addition, Rich helps contractors establish realistic benchmarks to assess how well they are doing or to alert them to issues that need addressing. He can be contacted at 732.341.3893 or richard.higgins@mccarthy.cpa.

Reprinted from Construction Executive, January 20, 2021, a publication of Associated Builders and Contractors (ABC). Copyright 2020. All rights reserved.

Rich Higgins, CPA

MCC Construction Zone

Construction Leaders Make a Greater Company Impact Than Managers

Leaders make a vital impact on the economic value of a company. They substantially influence everything from customer satisfaction and loyalty to employee engagement and retention, culture, innovation, and of course profitability. While managers also impact these areas of an organization, true leaders, in most cases, can take things to a higher level.

Gallup's 2021 engagement meta analysis shows an effective leader’s impact on employee engagement drives business improvement with:

• 81% lower absenteeism;

• 18% turnover (in high turnover organizations);

• 43% lower turnover (in low turnover organizations);

• 28% less shrinkage;

• 64% fewer employee safety incidents;

• 41% fewer quality incidents (defects);

• 10% higher customer loyalty/engagement;

• 18% higher productivity;

• 23% higher profitability;

• 66% higher employee wellbeing; and

• 13% higher organizational citizenship.

Marty McCarthy, CPA, CCIFP

Leaders Versus Managers

In his article “Leadership vs. Management: What is the Difference?” (published in Harvard Business School Online Insights), Matt Gavin explains that effective leadership is centered on a vision to guide change. Leaders are more intent on thinking ahead and capitalizing on opportunities. Managers are more focused on achieving organizational goals through implementing processes, such as budgeting, organizational structuring, and staffing.

In his book, “On Becoming a Leader,” Warren Bennis lists the key differences between managers and leaders as:

• The manager administers, and the leader innovates;

• The manager maintains, and the leader develops; and

• The manager focuses on systems and structure, and the leader focuses on people.

Bennis says that leaders focus less on organizing people to get work done and more on finding ways to align and influence them. Conversely, managers pursue goals through coordinated actions and tactical processes or tasks and activities that unfold over stages to reach a specific outcome. For example, they may implement a decision making process when leading a critical meeting or devising a plan to communicate organizational change.

Forbes Coaches Council member Doc Norton states, “Manager is a title. It is a role and set of responsibilities. The best managers are leaders, but the two are not synonymous. Leadership is the result of action. You are a leader if you act in a way that inspires, encourages, or engages others. It doesn't matter your title or position.”

Other members of the Forbes Coaches Council say:

• Leaders want you to win;

• Leaders are visionary while managers are tactical;

• Managers micromanage, leaders inspire;

• Leaders ask "Why?" instead of “How?";

• Leaders guide others toward an outcome;

• Managers train, leaders develop;

• Leaders focus on long term results;

• Leaders lead; managers follow;

• Leaders dare to face what others fear;

• Leaders challenge the status quo;

• Leaders know how to listen;

• Leaders grow people; and

• Leaders give their ‘power' away.

Council member Erin Urban maintains, “One must shift out of the ‘me’ focus derived from the traditional power hoarding mindset. True leaders realize their sole existence is to add value to others. The difference between a leader and a manager is determined through demonstrated action to develop trust, credibility and support others in their success.”

Leadership Competencies

Leadership skills can be developed in professionals with the core competencies to become a leader. Dr. Sunnie Giles, president of Quantum Leadership Group, points out in her article, “The Most Important Leadership Competencies According to Leaders Around the World” published in the Harvard Business Review, that the most important leadership qualities are centered around

MCC Construction Zone

soft skills and emotional intelligence. A survey of 195 leaders from more than 30 global organizations suggests that there are five major themes of competencies that strong leaders exhibit, including:

• High ethical standards and providing a safe environment;

• Empowering individuals to self-organize;

• Promoting connection and belonging among employees;

• Open to innovative ideas and experimentation; and

• Commitment to the professional and intellectual growth of employees.

While these competencies may be obvious, Giles asserts they are difficult for professionals to master. It requires them to act against human nature. Individuals are not hardwired to relinquish control or be open to minor failures.

By understanding the characteristics of effective leaders and how leadership differs from management, professionals can develop the skills to inspire and encourage people to make their highest and best contribution to the organization.

About the Author

Marty McCarthy, CPA, CCIFP, is the managing partner of McCarthy & Company. Sureties and bankers respect Marty for his high quality work and profound understanding of the construction industry. Marty helps clients by giving them the insight needed to grow their businesses. He can be contacted at 610.828.1900 or marty.mccarthy@mccarthy.cpa.

Reprinted from ConstructionExec.com, July 10, 2022, a publication of Associated Builders and Contractors (ABC). Copyright 2022. All rights reserved.

Mary McCarthy, CPA, CCIFP

Meet Stephanie Knowles Kerrianne Brady

Stephanie Knowles is the director of the Client Accounting Services (CAS) Group. Stephanie and her team provide clients with controller level advisory support, routine accounting operations, and detailed financial packages. She ensures that the firm maintains routine and immaculate financials for our internal tax team. In addition, CAS provides all encompassing accounting support to businesses and organizations, alleviating the frustration and stress that financial management can put on any small or mid size business owner.

Stephanie has a depth of experience in cloud accounting software and relevant applications. Over the last few years, she has worked directly with clients to streamline their accounting processes and procedures so they can focus on the success of their business and what they love to do and spend less time concerned with accounting complexities and administrative functions.

MCC Construction Zone

An astute business professional, Stephanie has spent most of her professional career in the client service space. She loves speaking with clients, understanding their pain points, and providing effective solutions. However, Stephanie feels the best part of her job is putting systems in place that can simplify the input and provide valuable data so business owners can proactively plan instead of reacting after the fact.

Stephanie has worked with businesses of all sizes and structures to support their financial departments in whatever capacity they need. One lesson from the pandemic was the importance of accessing your financial system from anywhere and creating efficiencies to run the business without a designated office or while working remotely. Stephanie understands the changing world of financial technology and how it can benefit our clients, especially during unprecedented circumstances. For example, we are moving to a more secure, seamless, and digital reporting environment with cloud accounting and available applications.

When Stephanie is not working with clients or leading the CAS team at McCarthy, you can find her staying active in barre class, making home improvements, and spending time with family and friends.

A West Chester University of Pennsylvania graduate, Stephanie earned a Bachelor of Science degree in accounting. Her favorite quote is: “When you want to help people, you tell them the truth” Thomas Sowell. Stephanie can be reached at 610.828.1900 or stephanie.knowles@mccarthy.cpa.

About the Author Kerrianne Brady is the firm administrator at McCarthy & Company. She oversees all human resource programs and policies, including recruiting and hiring, benefits administration, payroll processing, and other projects to support the firm’s strategy. Kerrianne can be contacted at 610. 828.1900 or kerrianne.brady@mccarthy.cpa.

Stephanie Knowles

MCC Zone