Construction Bookkeeping: Essential Tools & Tips

Their expertise ensures that construction companies stay organized, avoid costly mistakes, and make informed business decisions. Construction bookkeeping services ensure accurate financial records, help track job costs, manage cash flow, and ensure tax compliance. They provide detailed reports that help you make informed decisions, avoid costly mistakes, and streamline operations, ultimately leading to better project profitability and business growth. To do bookkeeping for a construction company, track job costs, record all project-related expenses, and separate business and personal finances.

Regularly Reconciling Accounts

Construction payroll can be particularly challenging, especially with varying pay rates, overtime, and seasonal workers. Additionally, handling subcontractor payments—often with complex contract terms—requires precise record-keeping to avoid disputes and ensure compliance with labor laws. The construction industry often faces delayed payments from clients or contractors, creating cash flow issues. Managing progress payments, retainage, and balancing accounts payable and receivable is crucial. A business may have completed work but not receive payment for several months, leading to cash shortages that can delay operations.

Handling Change Orders and Variance Tracking

This can make it difficult to track expenses and effectively calculate the profit generated from each service category. For these reasons, construction companies may need to generate separate profit and loss (P&L) statements for each project. Below are the key ways in which construction accounting differs from other types of accounting. One of the most significant challenges in construction is dealing with fluctuating material and labor costs. Market conditions, supply chain disruptions, and seasonal variations can cause unexpected cost increases, making it difficult to stick to budgets. These days, there’s a time management method for virtually every scenario, from handling last-minute projects to planning for bi…

Reconciliation of Accounts

Integration with QuickBooks, enabling seamless data flow for accounting purposes. Shoeboxed allows users to digitize these receipts by taking photos with their mobile devices and using Shoeboxed’s app to upload receipt data into a designated account. Then, place a second set of numbers that reflect the retainage amount, which should be shown as a credit. You should also ensure it’s compatible with the size and type of company you have.

• These systems can track multiple projects simultaneously, account for various types of expenses, and handle the complexity of job costing and labor tracking.
• Our mission is simple — help contractors streamline operations and navigate workforce planning complexities.
• One of the key roles of a construction bookkeeper is tracking all project-related expenses—labor, materials, equipment, and subcontractors.
• Make sure that any changes to the scope of work are documented, billed appropriately, and included in financial records.
• Business owners can significantly simplify and streamline construction bookkeeping by automating receipt management, organizing expenses, and integrating with accounting software.
• If your construction business follows generally accepted accounting principles, you should use the percentage of completion method for financial statements as well.
• QuickBooks Online is one example of accounting software that automates the bookkeeping process.

By estimating job costs such as overhead, labor, and material costs, you can determine how much to charge for each project. This process, once understood and implemented, will give you a clear and confident understanding of your project costs, empowering you to make informed financial decisions. Use a journal, spreadsheets, or construction accounting software to record day-to-day transactions like accounts payable, accounts receivable, labor costs, and material costs incurred. You’ll want to include a description of each transaction, the date of the transaction, and the revenue received. Tools like Planyard simplify the process The Role of Construction Bookkeeping in Improving Business Efficiency by automating routine tasks, providing real-time financial visibility, and integrating with existing accounting software.

Construction Accounting Vs. General Accounting

• From tracking project expenses to handling vendor payments, there’s no shortage of detailed accounting tasks that require precise attention.
• There’s also the option of emailing digital receipts to an Expensify email address to import expenses that way.
• Tools like Planyard simplify the process by automating routine tasks, providing real-time financial visibility, and integrating with existing accounting software.
• Professional bookkeepers implement systems that automate routine tasks such as expense tracking, invoicing, and report generation.
• You can stuff your receipts into one of our Magic Envelopes (prepaid postage within the US).
• These insights enable project managers to adjust timelines, resources, or budgets, ensuring projects stay on track and within financial limits.

These insights allow contractors to adjust project plans, manage resources more effectively, and ensure that they maintain healthy profit margins. Commercial projects, such as office buildings, retail spaces, and industrial facilities, involve higher complexity and larger budgets. Job costing is critical here to allocate costs to specific areas or phases of the project.

• Lien waivers and retention management, ensuring compliance with legal requirements and preventing payment disputes.
• Construction companies often face complex tax regulations, especially when operating across multiple jurisdictions.
• Many construction firms enter into government contracts, where paperwork and records are essential to getting paid.
• First, break down the project into phases, and then list all the tasks needed to complete each phase.
• By creating separate accounts for each project, bookkeepers can track project-specific expenses and budgets with greater accuracy.
• Bridgit Bench is the #1 workforce planning software built for the construction industry.

Using Hubstaff’s time tracking app for construction businesses, you can automatically generate time cards for your workers. This ensures payroll receives accurate data for the time workers spend on-site, as well as time spent traveling. Construction bookkeeping is a form of bookkeeping unique to the construction industry. Its purpose is to enable construction companies to have a better understanding of their financial situation through tracking and recording both expenses and incoming payments. Sage 300 is best suited for larger construction firms dealing with multiple projects, multiple currencies, and detailed financial reporting needs. Project management tools to create estimates, track expenses, and manage cash flow across multiple jobs.