Each month your bank will send you a record of your income and expenses. You can use that bank statement to reconcile your transactions to make sure they match up with your own accounting system, invoices, payments, etc. If your construction business follows generally accepted accounting principles, you should use the percentage of completion method for financial statements as well. Each business needs to have a general ledger and records of accounts payable and receivable. General accounting requires people to use Generally Accepted Accounting Principles (GAAP), as does construction accounting.

Why Do General Contractors Need Construction Accounting Software?

For example, https://www.inkl.com/news/the-significance-of-construction-bookkeeping-for-streamlining-projects knowing the exact cost of materials and labor helps in quoting accurate project estimates. Reliable financial data also simplifies tax preparation and compliance, reducing the risk of audits or penalties. Maintaining precise books allows contractors to secure loans or lines of credit more easily, as lenders require transparent financial documentation. QuickBooks is one of the most popular accounting software options for a variety of businesses.

Customer Reviews and Testimonials

Develop an easy-to-follow system and create a habit of recording each transaction at the end of each workday. The construction industry is highly susceptible to political and economic fluctuations that disrupt the supply chain. Things can happen beyond your control to destabilize your cash flow, such as bad weather conditions or a piece of equipment breaking down. If you don’t have a highly accurate and efficient construction bookkeeping system, the rest of your business will suffer. This guide to construction bookkeeping construction bookkeeping will give you the best practices when managing your books and performing accounting tasks.

Exceptional Tax & Accounting services

If you don’t intend to hire a professional, follow these best practices for construction bookkeeping to keep your financial records updated. Construction has a unique type of payment structure that includes retainage, Retainage is the amount of money that clients withhold until they are satisfied with a project. When you have multiple projects going on, you need reliable and strong retainage management to ensure you have capital in case the client withholds the money. Obviously, this cannot be accomplished without strong bookkeeping practices.

• Save the reports as back-up so you know what data your spreadsheet is based on.
• You can connect with a licensed CPA or EA who can file your business tax returns.
• In general, a construction business with gross receipts (also known as Business Tax Receipts) over $10 million must use the percentage of completion revenue recognition method for tax purposes.
• Using a cloud-based service also ensures the security of your information because it is encrypted and safe from hackers, power outages, disasters, or computer malfunctions.

The Advanced plan adds business analytics with Excel, the ability to manage employee expenses and the ability to batch invoices and expenses. The Advanced plan also has task automation, reducing the amount of time you spend on data entry. Get a dedicated account team to help you with problems and provide on-demand online training. While in the preconstruction phase of a project, you can perform prequalification of clients, do bid management and create comprehensive estimating. When in the project management segment, you can incorporate quality and safety standards, have design coordination and oversee the entire project. Resource management solutions include a labor chart and field productivity data.

You can connect with a licensed CPA or EA who can file your business tax returns. Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice.

• It provides comprehensive job costing, time tracking, and payroll features, all essential for managing construction projects.
• Increase your desired income on your desired schedule by using Taxfyle’s platform to pick up tax filing, consultation, and bookkeeping jobs.
• Accounts Payable (AP) is a fairly easy fix – you short pay the invoices that need to have retention held.
• This software is best for contractors who have multiple projects happening simultaneously.
• Construction bookkeeping services can help in setting up systems to track income and expenses efficiently, providing timely reports to help you stay on top of your finances.
• Sage Intacct Construction and Sage Intacct Real Estate is designed for contractors and owners to be able to manage properties and projects effectively.

Bookkeeping for construction companies helps you accurately track your income and expenses, so you can easily make adjustments when needed and better manage your projects. Without good bookkeeping, you risk going over budget on projects and not having the cash flow to cover your expenses. Quickbooks is a good, solid accounting system for most construction businesses when they are starting out. If you are using WIP reporting, start your spreadsheet early so you don’t have to go back and recreate it later. And take some time to learn workarounds for retention and certified payroll if you need them.

Planning for growth and expansion is essential for general contractors looking to scale their business. This involves creating a budget, forecasting future revenue and expenses, and identifying investment opportunities. By developing a strategic growth plan, contractors can allocate resources effectively, mitigate risks, and seize new expansion opportunities.