Additionally, a tax professional can help construction companies stay up-to-date with changing tax laws and regulations. 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. Dave Nevogt is an American entrepreneur and the co-founder of Hubstaff, a workforce management software company. He has earned a finance undergraduate degree, the Indianapolis Business Journal’s Forty Under 40 award, and Arizona’s How Construction Bookkeeping Services Can Streamline Your Projects 35 under 35 award. Although it’s sometimes challenging, you can significantly simplify bookkeeping by hiring a bookkeeper or accountant to handle it for you.

Account types and expenses

One effective way to track expenses is to use accounting software specifically designed for construction companies. Programs such as Sage 100 Contractor and ProContractor by Viewpoint can help with everything from job costing to managing purchase orders. These programs can also help with tracking expenses by project, which can be especially useful for larger construction companies. A well-designed chart of accounts can help construction companies track expenses and revenue more accurately, which is essential for effective job costing. Choosing the right accounting method for your construction company depends on your business needs and goals.

Record Day-to-Day Financial Transactions

Calculating revenue can be difficult without the right information, especially when your firm works on multiple projects. All costs must be tied together in bookkeeping, including expenses from labor, equipment, materials, transportation, and insurance. 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. Invoices help ensure that both parties clearly understand what services the contractor has provided, when, and for how much. Contractor invoices provide a written record of any payment disagreements and you can use them in dispute resolution if necessary.

• This method of revenue recognition allows you to recognize your gains and losses related to the project in every reporting period during which the project is active.
• With over a decade of editorial experience, Rob Watts breaks down complex topics for small businesses that want to grow and succeed.
• With that said, the chart of accounts then lists all accounts so you can record and organize all activity happening in your general ledger.
• 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.
• Things like suppliers, labor, and leased equipment are considered direct expenses.

Pay your team

There are several factors that distinguish bookkeeping in construction from other industries. Construction payroll wages can vary greatly depending on the location of the job, the size of the job, and the individual skill level of the employee. Common construction payroll wages range from minimum wage in some areas to more than $50 per hour for experienced workers such as carpenters or electricians.

• Accurate cost tracking is essential for job costing and profitability analysis.
• Our mission is simple — help contractors streamline operations and navigate workforce planning complexities.
• This allows project managers to spot when things aren’t going according to plan.
• Knowify and its integration with QuickBooks Online helps construction contractors create and use a chart of accounts by automatically synchronizing data between Knowify and QuickBooks Online.
• The first is the Essential plan starting at $199  for the first month, which then moves up to $499 per month.
• For contractors, having robust bookkeeping practices helps maintain profitability and control over each project.

Those offering transparent pricing fared better than those forcing you to provide data to get a custom quote. We also looked at the range of costs between the various pricing tiers that a provider offered and the value that those plans offered to users. This software is best for those who manage construction projects on real estate that they own or lease.

The system also allows you to scan and organize receipts so that all project expenses are kept in one place. The reporting will enable you to track the profitability of each project so that you can stay ahead of costly mistakes. The Advanced plan adds the ability to create accurate estimates and provide full financial transparency. The Complete plan builds on the first two plans by centralizing complex processes and allowing businesses to have complete control of projects from beginning to end.

Additionally, invoices provide necessary tax information for the client and contractor, allowing them to keep accurate records and file their taxes on time. At Stratlign, we proudly serve businesses in construction and the trades as financial management partner. As you grow, we’ll provide the accounting and bookkeeping services that you need to manage your revenue and expenses while remaining compliant with all local, state and federal regulations.