Bookkeeping for Construction Companies: The Ultimate Guide

Record wages, tax deductions, and benefits to ensure compliance with labor laws and avoid penalties. Construction businesses must navigate a range of industry-specific regulations, including bonding, licensing, and insurance requirements. Professional bookkeepers ensure that all compliance issues are met, and they help maintain accurate records for audits or regulatory checks. With their expertise, they ensure businesses adhere to local, state, and federal requirements, minimizing legal and financial risks. Budgeting and forecasting are essential for construction companies because they often have large, complex projects that require significant resources. To budget effectively, companies need to estimate their costs accurately and allocate resources accordingly.

• Data synchronization across the entire organization is easier with the software.
• The category or cost head level collapsed budget view allows you to review at the top level how the project cost categories are performing and which are profitable.
• Regular businesses typically offer 1-5 different types of products or services, whereas construction businesses offer a wide range of services.
• To simplify this process, many construction companies use payroll software that can automatically calculate wages and taxes.
• NerdWallet’s construction accounting software roundup favors products that have industry-specific features or integrations and prioritize job costing tools.

What to consider when looking for accounting software

This may include service work, design services, consulting, engineering, sourcing materials, and more. FreshBooks Select is a custom plan built to save time and money, and ensure your growing construction business has the accounting solution it needs. Award-winning support means talking to a real person for the help and info you need because we provide so much more than just online accounting software for construction professionals.

Use project-specific cost-tracking

With these tools, you’ll always know which construction materials you have on hand and in what quantities. This way, you can continue serving your clients without the tedious work of manually checking your stock counts. Below are 7 of the best construction accounting software platforms for contractors to manage their budgets and stay on track.

Accurate Job Costing and Profitability Tracking

• Job costing and budgeting to track material costs, labor, and other project expenses.
• You’ll pay a set subscription fee per month, with add-on fees per user for some platforms, for your accounting software.
• Standout features include the ability to organize, store, and retrieve a wide range of construction-related paperwork.
• Something like QuickBooks might be the most affordable option, but it won’t include all the accounting features needed for the construction industry.

Those are in addition to built-in standard accounting functions such as reporting (including customizable reports), invoicing, audit trails and accountant access. These features include invoicing, customizable reporting and job costing, as well as direct integrations with industry-specific software such as Buildertrend and Housecall Pro. However, you’ll have to integrate with QuickBooks Time, a separate product that comes with its own costs, to track employees’ hours. You naturally plan to grow your business with time, so why not plan for your accounting solution to do the same? Some construction accounting solutions offer limited scalability, meaning you’ll be forced to make do or make the switch eventually. Tools like FreshBooks allow you to customize and upgrade your plan as needed to ensure you’re always ready to take on more work.

Project Management Capabilities

Make sure that any changes to the scope of work are documented, billed appropriately, and included in financial records. Through regular, up-to-date financial reports, contractors gain a clear understanding of their business’s performance. Real-time insights into expenses, revenue, and profits enable informed decision-making. These insights allow contractors to adjust project plans, manage resources more effectively, and ensure that they maintain healthy profit margins. Choosing the right bookkeeping services for your construction business is crucial for maintaining financial accuracy and ensuring the smooth operation of your projects. Detailed and accurate reports, such as profit and loss statements and cash flow analyses, provide insights into a business’s financial health.

We also looked at pricing and plans to find the platforms with the best value on the market. Finally, we gathered customer feedback to find out how real-life contractors used each platform and how their experiences lined up with our testing. Touted as America’s #1 construction accounting software, Foundation is another popular option for contractors and small or medium-sized construction businesses. They offer detailed job tracking for time, money, and materials, reporting on demand, payroll, and more. Foundation strives to serve construction companies of all sizes, ranging from small businesses to large enterprises.

Why do I need construction bookkeeping services?

The Work In Progress (WIP) schedule is an accounting schedule that’s a component of a company’s balance sheet. We are a subcontractor and the GC we are working for is asking us to sign and notarize progress payment line waivers for amounts they have not paid us construction bookkeeping for, is this legal? It has a strong reputation as a reliable brand within the construction industry. The online pricing comes at different subscription levels depending on what you need. Explore the possibilities with Access Coins today and experience how it can empower your construction business to thrive.

Companies from the construction industry struggle to optimize convoluted processes using traditional management approaches. A failure to expedite workflows and fulfill obligations results in poor resource management and severe legal consequences. Developing an efficient strategy aimed at eliminating delays requires optimizing the budget and allocating the available finances wisely to maintain a constant money flow. Running reports such as profit and loss statements can help you assess your financial health and make key operational decisions. Look for accounting software that either auto-generates these reports or guides you through doing so in a few clicks. Analyze these reports’ trends to identify opportunities for operational changes that cut your costs and drive your revenue.

• Tools like automated invoicing, payroll systems, and real-time job tracking help streamline processes, allowing your team to focus on critical tasks rather than repetitive bookkeeping.
• #2 Xero projects construction cost control software is a well-known accounting system teams use to track time and costs on a job or project.
• Raise purchase orders, batch bills with orders, and track order payment summaries to eliminate the risk of over-expenditure.
• Option to keep internal communication in one place that integrates with Salesforce and e-mail accounts.
• Internal controls are procedures and policies that construction companies put in place to ensure the accuracy and integrity of their financial records.
• This helps identify discrepancies early and ensures the accuracy of financial reports.
• QuickBooks is also comparatively feature-rich at all price points, with its reporting suite outperforming competitors at every tier.

Sage Paperless Construction

While human error will always play some role in security breaches, you can be confident https://digitaledge.org/the-role-of-construction-bookkeeping-in-improving-business-efficiency/ in your accounting platform when it comes to keeping your information safe. Construction accounting places a lot of focus on accurate job estimating and costing. It uses a cash basis accounting and construction contractors should consult with a tax advisor to get the best tax strategy for their business. For pricing, we looked at the starting price for the software and whether the company was transparent with its pricing.