A Construction Accounting Teams Guide to Financial Audit Preparation

Working with a certified construction bookkeeping bookkeeper or accountant specializing in construction accounting can greatly benefit your business. These experts possess in-depth knowledge and expertise in handling complex financial responsibilities such as job costing, payroll taxes, and reporting. Among the most popular platforms are Procore and Sage 100 Contractor, which offer a wide range of features and benefits that can streamline various aspects of construction management. The best way to stay organized is tracking your day-to-day transactions, reconcile your accounts on a regular basis, and use construction accounting software.

• It requires an understanding of unique accounting principles and regulations specific to the industry.
• Comprehensive job costing tools for tracking costs across multiple job sites and departments.
• The high price and length of construction projects make payment scheduling and collection unique.
• Develop training for all teams—not just finance and accounting—that could play a role in an audit.
• This means construction bookkeeping must accommodate fluctuating material costs, varying labor rates, and the unique challenges of managing subcontractors.

Bookkeeping for Construction Companies: An Essential Guide

• Whether you decide to do job costing manually or using software, the same steps apply.
• In essence, good accounting practices drive the real estate development firm’s financial health.
• Many times, construction businesses are juggling many projects in various locations.
• This helps ensure that nothing slips through the cracks in the construction process.
• The balance sheet shows the company’s assets, liabilities, and equity at a specific point in time.
• If you don’t want to make the annual commitment, the cost is $249 per month.

The simplest way to account for retainage is to include two sets of information on your invoices. This helps you get a better idea of how much money is coming in and going out of your business every month. Some of it is likely reserved for things like payroll, covering expenses, and paying taxes. Apart from giving you insight into where your money is going, receipts also serve as proof of your business expenses in case you ever get audited.

Accounting Methods

• From this reason, a company can tailor its chart of accounts to suit its specific purposes and add accounts as needed.
• Additionally, many of these software options can integrate with other software, such as payroll software or project management software, to further improve efficiency.
• For example, one employee may be responsible for recording financial transactions, while another employee is responsible for reconciling bank statements.
• This helps make sure that information is current and that nothing is forgotten.
• While bookkeeping tools like QuickBooks will sort this out for you, it’s important to know how everything fits together.

We talk to a lot of subs with more rigorous accounting processes that make it a best practice to complete financial audits annually. Here is a matrix outlining the integration capabilities of each AP software with popular construction accounting and ERP systems. “INT”indicates a direct integration, “CSV” denotes data transfer via CSV import/export, and a blank space means no integration is available. From this reason, a company can tailor its chart of accounts to suit its specific purposes and add accounts as needed. Smaller companies may have a single-page chart of accounts, while larger construction companies may have a ten or 20-page chart of accounts.

Tips for Handling Your Construction Accounting Processes

Deltek ComputerEase, formerly Construction Accounting by Computer Ease, is a software solution that tells you where each job stands in various ways. It can tell you what the real costs are versus the actual costs, the percentage of each job completed, cash flow and profitability. Sage Intacct Construction and Sage Intacct Real Estate is designed for contractors and owners to be able to manage properties and projects effectively. When it comes to real estate management, the platform takes static information, such as lease contracts, and transforms them into dynamic information resources.

Tailored real estate accounting solutions offer agents tools to track and categorize their expenses. Moreover, training sessions help agents optimize their expense management strategies. 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. Contractors can get to the most recent financial records whenever they need them using construction bookkeeping software. Because of this, they can make intelligent choices based on data that is updated in real-time.

Sage 300 is as comprehensive as it gets with prebuild reports; there are more than 1,400 to choose from. This means you can get any detailed report that you can think of with just a couple of clicks, helping you manage all the project costs. Regarding accounting, Safe 300 breaks tasks down into assignments and work orders. It also retains information about POs, time worked and equipment usage for specific sites. Save hours each month on efficient progress billing and better focus on projects. In practice, this means you won’t record any expenses or revenues as the project progresses, even if you buy materials or receive compensation from the project owner.

• These situations can make it difficult to decide when revenues should be recognized.
• Bill.com is widely used for automating AP tasks, offering ease of use and integration capabilities that are helpful for construction companies managing project-based expenses.
• Deltek ComputerEase, formerly Construction Accounting by Computer Ease, is a software solution that tells you where each job stands in various ways.
• Implement a system for tracking inventory levels and reordering supplies as needed.
• They should also use accounting software that can generate financial statements automatically.
• And check out tools like Siteline that centralize all your billing data and give you quick, organized access to your A/R.
• Contractors can get to the most recent financial records whenever they need them using construction bookkeeping software.

By leveraging digital invoice capture and automated approval workflows, you can streamline your invoice processing and payment cycles while eliminating the need for manual data entry. Digitizing your invoice management system allows you to capture invoices electronically, automatically extract data from them, and route them for approval without human intervention. With an automated approval workflow, you can accelerate the payment process and ensure that invoices are approved and paid on time. Additionally, you gain better visibility and control over your invoicing process, which helps you optimize your cash flow and improve your supplier relationships. A construction business with gross receipts under $10 million can use the completed contract method on construction projects that last less than two years.

By doing so, your construction company can avoid tax discrepancies and maintain compliance with tax authorities. An experienced construction bookkeeper will be specialized in construction compliance. That could result in improved tax compliance, a decreased likelihood of mistakes or inconsistencies, and better financial reporting. Outsourcing allows businesses to scale their accounting needs according to what they need at that time, which increases their flexibility.