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search for solutions by category, industries, insights, and people.
search for solutions by category, industries, insights, and people.
search for solutions by category, industries, insights, and people.
If there’s one thing our broad experience has taught us, it’s this: One size does not fit all.
Accounting Today
Accounting Today
Southeast’s fastest growing hubs as well as Bengaluru, India
A locally owned construction company, led by its founder, experienced steady growth over nearly a decade. As a younger owner planning to operate the business long term, he pursued expansion opportunities beyond the company’s original market to capture new growth.
As the company expanded, profitability declined. Despite strong demand and increased activity, the owner struggled to understand why cash was tightening and bills were becoming harder to pay. With financials prepared on a cash basis, the owner lacked visibility into true profitability, job-level margins, and the timing of revenues and costs.
The company was not appropriately tracking accounts payable, accounts receivable, or accrued and deferred expenses, including interest. Job costing relied on manual processes, forcing the team to sort through receipts and allocate expenses after the fact, leading to administrative overwhelm and delayed commission payments. Without reliable accrual-based financials, the company was unable to clearly tell its financial story to its bank, restricting access to capital.
Concerned by declining results, leadership scaled back operations and simplified the business to stabilize performance. While this downsizing reduced risk, it also made future growth decisions more difficult without reliable financial insight.
Cash-basis reporting failed to reflect when work was performed, costs were incurred, and revenue was earned, making it difficult to assess job-level profitability and monthly performance trends. Elliott Davis worked with the company to transition its financial reporting and operational systems to an accrual-based, job-focused model that aligned revenue and costs in the period work was performed.
The goal was to replace fragmented, manual processes with integrated systems that supported accurate reporting, real-time insight, and informed decision-making. Key components of the solution included:
The team converted the company from cash-basis to accrual accounting, enabling accurate monthly reporting of revenues, costs, and margins. Leadership could now see completed jobs, associated costs, and margins within the same reporting period, allowing performance issues to be identified and addressed earlier.
Elliott Davis supported the implementation and integration of several tools to replace spreadsheet-driven workflows, including:
With these tools, foremen and job-site personnel could upload receipts immediately and assign costs to specific jobs, eliminating delays, manual reconciliation, and data gaps.
By automating receipt capture and expense allocation, the company gained timely, accurate job cost data. Leadership could now evaluate all jobs completed in a month alongside related revenues, costs, and margins, and calculate commissions using reliable financial information rather than estimates or delayed reporting.
Elliott Davis assumed the CFO and controller functions, establishing a structured communication cadence with consistent check-ins throughout the close process and ad hoc touchpoints as needed. The firm also provided strategic guidance informed by construction industry best practices, supporting both day-to-day decisions and longer-term planning.
The company completed system onboarding within approximately 60 days, eliminating manual workflows and introducing integrated, automated processes. As the engagement progressed, those systems laid the groundwork for a successful transition to accrual accounting over the next year, providing leadership with more reliable financial insight and operational control. Measurable outcomes included:
Leadership now has clear, accrual-based insight into profitability by job and by month, enabling faster, better-informed decisions and allowing management to identify margin pressure early and take corrective action before issues escalate.
The improved quality and consistency of reporting supported clearer lender discussions and more efficient access to financing. The company could now present well-organized financial statements and pursue a line of credit to support future growth.
Automation eliminated manual job-costing tasks previously handled in spreadsheets. One internal accounting role was transitioned into higher-value accounts payable and strategic accounting responsibilities, effectively adding capacity without increasing headcount.
With accurate financial reporting and aligned systems, the company has regained confidence in evaluating expansion opportunities. The owner can now assess new markets with a clear understanding of profitability and risk.
Elliott Davis helped establish a scalable finance function while positioning the internal team to be self-reliant in day-to-day operations. The relationship has evolved toward strategic forecasting and planning, with opportunities to expand into tax, transaction advisory, and other services over time.
By moving from cash-basis reporting to accrual accounting and implementing integrated, construction-focused technology, the company replaced uncertainty with reliable financial insight. With real-time visibility, stronger controls, and a trusted advisory relationship, leadership is now positioned to pursue growth with confidence.
To retain talent and incentivize performance, businesses often grant equity compensation to their employees. Granting an equity interest to an employee in a partnership has significant tax implications that should be understood by both the company and the employee before equity is granted. A partnership can be a general partnership, limited partnership, limited liability partnership, or a limited liability corporation classified as a partnership.
In this article, we will look at dual status concerns and alternative approaches to handle these concerns. The grant of equity to an individual is an incentive award that can be highly tax efficient. Generally, the grant of equity is an appreciation award (meaning the company’s value must increase for the award to become valuable). These awards are commonly classified as profits interests. If properly structured, the individual granted these profit interests will have no income on the grant date and the appreciation has the potential to be taxed at capital gains rates. Please note, there are different types of partnership interests. We will discuss the types of partnership interests and equity compensation in a future article.
Unlike with an S corporation or C corporation, a partner of a partnership cannot also be an employee for employment tax purposes. When an employee is granted an equity interest in a partnership, the individual is no longer considered an employee for employment tax purposes and the individual receives a Schedule K-1 for future pay (rather than a W-2).
Recently finalized regulations also present a new dilemma when a partner of a partnership is an employee of a disregarded entity wholly owned by that same partnership. In this situation, although the partner is an employee of the disregarded entity and not of the partnership, the regulations clarify that the disregarded entity is also disregarded for employment tax purposes. As a result, the partner can no longer be an employee of the disregarded entity and would be subject to the self-employment tax rules as if the disregarded entity did not exist. Therefore, all payments from the disregarded entity to the partner or on behalf of the partner would be recharacterized as guaranteed payments to the partner.
Mischaracterizing partners as employees could entail significant risk in a variety of areas.
Partnerships have developed a variety of approaches to manage dual status concerns.
In this scenario, employee-partners would own their profits interests in another partnership sometimes referred to as a “management aggregator” (the upper tier partnership (UTP)) and the UTP would own these same profits interests in the operating partnership or holding partnership (the lower tier partnership (LTP)) owning the operating disregarded entity. As a result, the employee-partners would be partners of the UTP and can be treated as employees of the disregarded entity wholly owned by the LTP. Please note, the IRS asked for comments on these types of tiered structures. For this tiered structure to be acceptable, it is dependent on respecting the management holding company as a partnership separate from the LTP.
A separate affiliate company of the partnership issues a wage to the employee-partners. The separate affiliate company would receive a management fee from the partnership to supplement the wages paid to these employee-partners. A facts and circumstances analysis should be considered to mitigate the concerns of the employee-partners being viewed as providing services directly to the operating partnership or operating disregarded entity.
In this structure, the employee-partner owns his or her profit interest through an S Corporation. Under this scenario, the employee partner would continue to receive wages from the operating partnership or operating disregarded entity, their new S Corporation would hold their interest in the partnership, and the S Corporation would allocate the employee partner’s earnings to them via an S Corporation K-1. Careful attention to the reasonable compensation rules for S Corporations should be kept here.
The dual status dilemma can be difficult to navigate. The implications of granting equity interests to employees are complex and the effectiveness of these structures depends upon the facts of your situation. If you are considering granting equity compensation to employees or have other questions, please reach out to us for assistance.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
Healthcare organizations remain a frequent target for cybercriminals because patient data is valuable and clinical operations are highly sensitive to downtime. As healthcare systems become more dependent on connected technologies, even a temporary outage can affect patient access, care delivery, operational performance, and regulatory obligations. Ransomware groups understand these pressures and often exploit them to increase leverage during an attack.
A recent high-profile cybersecurity incident offers a clear example of how a cyber event can affect day-to-day healthcare operations. According to public reporting, the malware-related disruption affected systems supporting healthcare delivery, resulting in impacts to communications, patient-facing services, physician offices, imaging locations, and elective procedures while recovery efforts were underway.
For healthcare leaders, cybersecurity is closely tied to business continuity, operational resilience, reputation, and patient safety. The challenge is not simply preventing attacks, but maintaining critical services and supporting patients when key technology systems become unavailable.
Modern healthcare delivery relies heavily on technology. When critical systems are disrupted, the effects can quickly spread across the organization.
Disruptions can affect:
What begins as a cybersecurity event can quickly become an operational resilience challenge with implications for patients, caregivers, and community trust.
Healthcare organizations face growing pressure to protect patient data, support uninterrupted care delivery, and meet regulatory expectations. As cyber threats become more sophisticated and technology environments more complex, many organizations struggle to maintain visibility into risk, validate security controls, and prepare for operational disruptions.
Effective cybersecurity programs are built on a combination of risk management, governance, technical controls, and incident preparedness. Elliott Davis works with healthcare organizations to:
Contact us today to strengthen your cybersecurity posture and safeguard the care your patients depend on.
