Construction Bookkeeping: Essential Tools & Tips

Every transaction should be recorded, whether it’s for buying fuel for the company vehicle or receiving a large shipment of lumber. The size of the transaction does not matter; Each transaction is important to keeping accurate bookkeeping records. Bridgit Bench is a workforce planning platform built to help construction professionals, including accountants.

• Construction projects involve varied costs – labor, materials, machinery, subcontractors, and more.
• Implementing bookkeeping for your construction business may seem overwhelming, but it’s doable.
• Perform regular reconciliations to ensure that bank statements, credit card statements, and accounts match your records.
• A growing business requires financial systems that can handle increased transaction volume and complexity.

Record Day-to-Day Financial Transactions

On the other hand, if it’s super easy to use but doesn’t provide the flexibility you need, you should consider trying a different one. Here are some things to look for when choosing the right bookkeeping software for your construction business. If you don’t have a highly accurate and efficient construction bookkeeping system, the rest of your business will suffer.

Tip 2: Use job costing to manage project costs and general business ledgers

Whether you’re an owner of a commercial or industrial cleaning company, or running a residential business, it’s only natural that you’re always on the lookout for new ways to… Set limits, turn tracked time into automated timesheets, and send invoices with Hubstaff. Opting for a solution that requires extensive training before you can use it is not only going to cost you time but also risk frustrating both you and your employees.

Track Labor and Material Costs Separately

Botkeeper is a bookkeeping solution that uses artificial intelligence and machine learning combined with human accountants to deliver a comprehensive bookkeeping service. This method of revenue recognition allows you to recognize your gains and losses related to the project in every reporting period during which the project is active. Keeping all your company’s money in a single bank account makes it harder to understand how you’re doing financially because all the money in the bank account might not necessarily be yours. You should also add your income and expenses from each project into a general ledger to get an accurate overview of your gross and net income. Whether you decide to do job costing manually or using software, the same steps apply.

Tax Optimization and Compliance

In these cases, there’s a risk that you won’t collect the full payment, so it’s wise to wait until you actually receive the payment to recognize it as income. You can use this method of revenue recognition even if you’ve received payments during the contract period. With the completed contract method, you recognize revenue only after completing a project. Construction companies often use this method for short-term contracts, especially those where contract costs can be hard to estimate. The main benefit of charging a client in milestone payments is that you don’t need to wait until you fully complete the job to get paid. It’s not uncommon for circumstances beyond your control to impact the price of materials, equipment, and labor costs.

Top Benefits of Hiring Professional Construction Bookkeeping Services

Professional bookkeepers ensure that all compliance issues are met, and they help maintain accurate records for audits or regulatory checks. With their expertise, they ensure businesses adhere to local, state, and federal construction bookkeeping services requirements, minimizing legal and financial risks. Detailed and accurate reports, such as profit and loss statements and cash flow analyses, provide insights into a business’s financial health. These reports enable informed decision-making and long-term strategic planning.

• With accurate and real-time financial data at your fingertips, you can make smarter decisions about business expansion, hiring, investment opportunities, and cost-cutting strategies.
• The unique challenges of construction, such as fluctuating material costs, project-based accounting, and complex payroll systems, make professional bookkeeping indispensable for success.
• Infrastructure projects like roads, bridges, and utility installations require careful tracking of large-scale equipment costs, labor, and materials.
• It’s important to pay attention to job costing, as it can allow project managers and supervisors to accurately budget for future projects and determine how to improve estimates.
• Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an accounting firm.
• These insights help inform key decisions, including budgeting, forecasting, and managing cash flow effectively.

Construction contracts are longer

• There are other aspects of construction accounting that make it unique from general accounting, as well.
• Bookkeeping services help ensure that these deductions are properly recorded and claimed, minimizing tax obligations.
• Develop an easy-to-follow system and create a habit of recording each transaction at the end of each workday.
• She’s passionate about helping people make sense of complicated tax and accounting topics.
• All businesses need to have strong bookkeeping systems in place, but bookkeeping for construction companies is different from other businesses.
• Consistently generating these reports allows contractors to make informed financial decisions and adjust project strategies if needed.

These platforms are specifically designed to manage project costs, subcontractor payments, and financial reporting for construction companies. A bookkeeper experienced with such software can provide more accurate and streamlined services. From tracking project expenses to handling vendor payments, there’s no shortage of detailed accounting tasks that require precise attention.