Bookkeeping For Construction Companies
Keeping up with payroll, expenses, taxes, and profits can be challenging for any company, but contractors and small construction businesses have an increased hurdle when it comes to bookkeeping. Your construction company has to deal with a lot of moving parts – making your bookkeeping a lot more complex than it is for most other businesses.
We help many small business contractors and construction companies manage taxes, payroll, and financial growth strategies for their companies. Read on to learn a bit more about construction bookkeeping and some considerations to make processes easier and more profitable for your construction company.
Read More: Accounting Tips For Small Businesses
Why Is Construction Bookkeeping So Complicated?
Because of the nature of the work, construction bookkeeping involves many moving parts, including:
- Project-based work: Construction work is cyclical – a project has a beginning, a middle, and an end. This makes construction bookkeeping very different from industries like manufacturing, where the business is consistent and largely predictable.
- Long-term contracts: Your construction company may manage both short and long term contracts – and no two end dates are the same. And because payment is delivered upon completion of a project, it’s likely that your income and expenses will vary greatly month-to-month.
- Distributed production: Projects usually take place across state lines or in widely distributed job sites. And because projects vary with the season or location, planning for equipment and labor costs can prove tricky.
When combined, these factors mean that bookkeeping for construction companies can be quite the challenge. Thankfully, there are some best practices you can put into place for your construction company.
Tips For Construction Bookkeeping
While managing all the moving parts of your construction business might seem daunting, there are a few easy steps you can take to make your bookkeeping a bit less complicated.
Keep Daily Records
Your accounting software and spreadsheets aren’t just for long-term projects; using them daily is a great way to keep better track of your transactions. For example, you might start recording accounts payable, including rent, utilities, and insurance, to ultimately simplify your monthly bookkeeping.
Leverage Job Costing
Job costing is a powerful bookkeeping tool for construction companies, who often do project or contract based work. Simply put, job costing is a method of calculating the true cost of a construction project by breaking it down into small, specific tasks. Job costing can help your construction company track progress, stay on budget, and be more efficient in your work.
Keeping backups of your transactions and books is crucial for auditing and for avoiding mistakes in your bookkeeping. You might choose to keep paper copies of invoices and receipts in a secure location, or digital copies for easy access from any location. While backing up your books is a best practice for any bookkeeper, it’s especially important in the complex world of construction bookkeeping.
Outsourcing Your Bookkeeping
You’ve got a lot to manage at your construction company – you shouldn’t have to worry about your bookkeeping, too. At 4Corner Business Services, we’re here to handle your construction company’s bookkeeping needs. Our team provides precise bookkeeping and comprehensive payroll services, and can assist you with all your accounting needs. Contact us today to learn more about how we can support your construction company’s bookkeeping needs!
Bookkeeping Services With 4Corner
Our team helps business owners and managers establish a streamlined accounting system through bookkeeping and payroll.