A HOLDING COMPANY FOR YOUR SHOP AND YARD OWN IT SEPARATELY, LEASE IT BACK.
Owning the shop and yard in a separate LLC and leasing it to the construction company keeps the property apart from the operating company's job risk, builds equity for the owner outside the business and makes the company easier to sell, because the buyer can lease the property in place of buying it. It only works when the rent is set at a fair market rate, the lease is in writing and both companies keep separate books and bank accounts.
The operating company is where the risk lives: bonded jobs, warranty claims, injuries and unpaid suppliers. A building owned by that company is an asset its creditors can reach. Owned by a separate entity, the building is a lease the company pays each month, and the property belongs to the owner's family. The rent is overhead the company would pay to any landlord, so it belongs in the overhead rate and in every bid. The structure has costs and rules, and the CPA and attorney should set it up together.
WHAT IT MEANS.
A real estate holding company is a separate entity, usually an LLC owned by the business owner, that owns the shop, yard or equipment and leases it to the operating construction company at a fair market rent.
Sureties and lenders will often ask the owner to guarantee or subordinate the related lease, and some will look at the combined picture. The separation still helps, and it should be set up with the surety's expectations in mind.
WHERE THE HOLDING COMPANY STOPS PROTECTING ANYTHING.
The rent is whatever the company can afford that month
A rent that goes up in good months and disappears in bad ones tells a court, the IRS and a buyer that the two companies are really one. Set a written lease at a fair market rent, with terms a stranger would accept, and pay it every month.
The money moves between the two companies with no paper
The operating company pays the holding company's property tax, the holding company covers a payroll shortfall, and no one records either as a loan. Mixed money is the fastest way to lose the separation the structure was set up to create. Each transfer between the two needs a document and an entry in both sets of books.
The rent is left out of the overhead rate
When the owner owns the building, the company sometimes stops treating occupancy as a cost. The bids get cheaper, the jobs look more profitable and the owner is paying for the building out of profit that was never in the price. Fair rent is overhead, and it belongs in every bid.
WHAT IT LOOKS LIKE IN DOLLARS.
A fair market rent under a written lease, recorded as overhead and included in the overhead rate used for bidding.
The real estate and, in some setups, major equipment, with its own bank account, books, insurance and tax filing.
The buyer can buy the operating company and lease the property, so the owner keeps the real estate and the rent after the sale.
THREE RULES THAT KEEP THE TWO COMPANIES SEPARATE.
Get a rent figure from a local commercial broker or appraiser, write a lease with normal terms for maintenance, taxes and insurance, and have both companies sign it. Review the rent every few years the way any landlord would.
The holding company needs its own bank account, its own books and its own property insurance. Every payment between the two companies goes through the lease or a written loan, and both sets of books record it.
Include the full rent in the operating company's overhead budget and the overhead rate used in estimating. The company's margins then reflect what it would cost to operate in a building it does not own, which is the number a buyer and a surety want to see.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
