9 Essential Steps for Setting Up a Construction Accounting System

However, these essential traits of a successful construction business don’t end on the job site. If you can bring the same excellence to your accounting, you’ll begin to see the results of your growth firsthand. They offer an insightful dashboard that allows you to keep an eye on expenses and incomes, integrated payments, human customer support agents, and a simple, easy-to-use interface to top it all off. FreshBooks contractor accounting software programs strike the ideal balance between ease of use and functionality. You’ll be able to use it like a pro in no time—no accounting knowledge necessary. FreshBooks also offers mobile apps for both Android and iOS, providing the same functionality as its desktop How Construction Bookkeeping Services Can Streamline Your Projects accounting software.

Best Construction Accounting Software (

A construction accounting solution will focus more on reporting, financial statements, and job costing. This can sometimes be defined as any accounting solution designed to be used by a construction company. This will include the AP, AR, and GL features, along with job costing and progress billing capabilities. While the double-entry bookkeeping system provides benefits like better accuracy and detailed financial tracking, it does come with challenges.

• Especially when dealing with contractors, accurate payroll management is crucial for compliance and cost control.
• They also set new clients up with a call with one of their QuickBooks experts for a free, guided set-up.
• This could mean they book a virtual appointment with you, purchase an accounting package, or fill out a submission form with their contact details – depending on what your business and website offer.
• Non-US business owners can also benefit from its multi-currency support and ability to generate reports in various languages.

Best Construction Accounting Software for 2025

Every contractor has to be able to answer the question, “How much of the money in my bank account is actually mine? ” You might see $300k in your checking account, but how much of that is for your credit cards, owed to vendors, or client’s money you plan to spend later on their project? Its simplicity usually means lower construction accounting costs than accrual accounting, which provides a clear overview of the company’s actual cash position. Cash flow management is critical for construction companies because they often have large expenses and long payment cycles. To manage cash flow effectively, companies need to https://www.merchantcircle.com/blogs/raheemhanan-deltona-fl/2024/12/How-Construction-Bookkeeping-Services-Can-Streamline-Your-Projects/2874359 track their cash inflows and outflows and forecast their future cash needs.

Managing Payroll and Expenses

You’ll also use the contract’s total cost and scope of work to develop the project’s schedule of values, which breaks down individual billable tasks and their value. The thing is, whatever doesn’t hit your P&L (for example, the principal part of a loan payment), goes on your balance sheet. If you pay yourself through a draw instead of having an S corp election, this also hits the balance sheet as equity.

Tips for Handling Your Construction Accounting Processes

Maintaining well-organized construction accounting is not easy, especially for small construction companies. Careful construction accounting may not be a top priority if you are trying to grow your business while keeping track of a fluid project schedule and a constantly changing workforce. However, failure to establish a well-organized construction accounting process can lead to losing control of the project’s cost and tax issues.

• This robust feature set — as well as training on how to use it — makes Foundation a good fit for a wide range of construction companies.
• Like I mentioned earlier, tracking your cash flow and how money in the bank is actually yours is harder than it seems.
• Joint ventures are when companies collaborate to pool resources and share risks.
• Permits are required for some types of work and often come with fees, so it’s important to factor these into the budget.
• Every project is affected by different site conditions and regional variables such as workforce, material costs, and laws.
• Many construction companies suggest a close review of an AIA billing contract to ensure that all parties involved are receiving equal advantages.

Proper bookkeeping ensures transparency, improves financial management, and enables contracting companies to gauge the health of their operations. This step-by-step guide is tailored for beginners in the construction industry, offering insights that make the journey smoother. Financial statements are a summary of a company’s financial transactions and include the balance sheet, income statement, and cash flow statement. The balance sheet shows the company’s assets, liabilities, and equity at a specific point in time. The income statement shows the company’s revenue and expenses over a period of time, and the cash flow statement shows the inflows and outflows of cash during that period. Construction bookkeeping is critical for tracking finances, maintaining project profitability, and making informed decisions.

• It is also a complicated software and is not popular in the US, so it might not be easy to find a bookkeeper who is knowledgeable about the software.
• You can track revenue recognition using Retainage practices for long-term contracts paid overtime.
• Each plan offers the basics needed to run your construction business, including scheduling, daily logs and a to-do list.
• Union contract partners face the same situation as collective bargaining agreement partners.
• However, QuickBooks Online lacks construction management features, like equipment management and construction billing.
• Labor costs include the wages or salaries of the workers who will be involved in the project, as well as any benefits or incentives.

Jonas Premier can help you tackle all three of those tasks—and many more—but construction accounting isn’t a one-size-fits-all situation. If you’re looking for a complete HR system to support your growing employee base, CMiC could be a better option. There’s also COINS for extensive construction bookkeeping features, Buildertrend for great customer management, and Sage 100 Contractor for smaller contracting companies just getting underway. Accounting software for construction companies and contractors does more than help you pay bills on time and send batch invoices. A construction management software will have more of a focus on non-accounting features such as estimating, scheduling, and project management. A construction management software may sometimes lack a traditional accounting setup of accounts payable, accounts receivable, and a general ledger.