What to Know About Accounting & Bookkeeping in Construction - Our Guide
Accounting and financial management is essential in the business landscape as it is what keeps industries - whether large or small - accountable for the organization’s transactions. It also summarizes records and compiles financial statements of the company, which is what determines the financial health of a business.
Without it, organizations cannot represent in front of stakeholders, including investors, creditors, debtors, government, customers, and employees.
It’s safe to say that accounting is a crucial aspect of any business and is undoubtedly challenging, especially in the construction industry. Accounting in construction involves financial management on varying projects, contracts, and a workforce that varies in number and size.
Consequently, allocating direct and indirect revenues and expenses across multiple construction projects becomes a much more painstaking task. If you’re new to the industry, nailing down the practice is vital, which is why we’ve laid down the ropes on how to cover accounting in an unconventional industry such as construction.
Tip #1: Bookkeeping is Key
Bookkeeping is all about tracking financial transactions and staying on top of payrolls, which is what keeps a business running smoothly.
Accounting is essential in any industry as it is what determines business decisions, especially in construction wherein projects often involve multiple parties that vary in workload and duration. For that reason, having your organization’s financial books in order is key to staying transparent and maintaining financial health.
Tip #2: Estimate Profitability, Expenses and Overhead
Accounting involves having a clear overview of the varying types of costs within a given project. In a large-scale production within the construction industry, it’s highly essential to have a keen eye on the unique overhead and profit margins that vary between each job to note which projects lead to the most profit.
The consequences of inaccurate bids, unfortunately, can incur significant losses. To keep your business in line with profitable projects, make sure to categorize different costs effectively, and note the subtle differences between expenses and the costs of goods sold to save time on paperwork.
Tip #3: Be Consistent with Tax Deadlines
Maintaining a consistent overview of tax deadlines can be challenging for any business but keeping records accurate and prompt allows an organization to ensure that returns are delivered on the dot. It’s good practice to avoid any errors in the documents to avoid unwanted penalties, which can only cause unnecessary spending and a loss of time.
Tip #4: Stay on Top of Daily Records
Accounting in the construction industry involves crunching numbers daily, which is why it’s crucial to construct a system that can accurately take care of the company’s day-to-day records.
This requires multiple expenditures within various projects, from tracking materials down to labor costs. To stay on top of all the numbers, try easy-to-use apps that do bookkeeping on the go simple even for non-tech savvy accountants.
If you’re looking for Bookkeeping by QuickBooks Certified ProAdvisors, get in touch today! We’re happy to help.