What is Construction Bookkeepers and Why Should You Hire One? | Directory of Nationwide Bookkeeping Services: A directory that lists construction bookkeeping services and their pros and cons.
Construction bookkeepers are in charge of making sure that companies in the construction industry keep track of their money and keep accurate records. They take care of the general ledger and all financial transactions, oversee the accounts payables and receivables process, and maintain accurate and up-to-date financial records, tax reports, balance sheets, annual budgets, and financial statements. Bookkeepers in the construction industry work with project managers or general contractors to ensure that accurate time, budget, and cost estimates are made for new jobs. In addition, they confirm that all financial and transactional data and journal entries are entered correctly into accounting software, which keeps financial records and statements, tax reports, and annual budgets.
Most of the time, a construction bookkeeper works in an office. However, they may work part-time or full-time for a construction company or general contractor.
How to Do Construction Accounting in 5 Easy Steps
If you’ve struggled with understanding construction accounting or feel like it’s taking too much time away from the rest of your work, we’re here to help! Here are five easy steps for doing construction accounting:
- Put Your Best Bookkeeping Foot First
- Keep track of essential expenses.
- Keep track of daily paperwork.
- Remember tax deadlines
- Manage your money flow.
1. Put Your Best Bookkeeping Foot First
We know you’re busy with your apprentices and emergency calls, but your books must be in order. You really can’t ignore accounting and keeping books. Bookkeeping not only helps you keep track of your expenses, but it also helps you make better business decisions in the long run. It’s also easy to do! It includes tasks like keeping track of money and making payroll.
2. Keep track of essential expenses
It can take a lot of work to keep track of business expenses. It’s not just tracking materials; it’s also tracking people. In addition, if you don’t have separate accounts or cards for personal spending, it can be hard to find necessary expenses like this when it’s time to file taxes.
3. Keep track of daily paperwork
The most important thing to know about accounting for construction is that it needs to be done regularly. Therefore, keeping daily records is one of the simplest but most important steps.
Keeping good records makes it much easier to determine your business’s financial standing.
Try to set up a plan and stick to it. Even if you’re not at your desk and working on a job, some easy-to-use apps let you keep your books while you’re out and about. It’s not just an excellent way to save time; it also fits with the MTD scheme. If you keep good records daily, you won’t make any mistakes when filling out your tax forms.
4. Remember tax deadlines
Setting a reminder is the best way to ensure you have time to fill out your tax return without mistakes. You can ensure that tax returns are sent on time by keeping accurate records. HMRC won’t come after you for errors, so you won’t have to pay penalties.
5. Manage your money flow
Construction accounting requires some care. If a job is hard and costs a lot, it should also bring in a lot of money. So make sure to bill clients regularly or ask for payment upfront for expensive materials and labor.
If a client decides not to pay for any reason, you should stop working immediately to avoid hurting your cash flow. Unfortunately, most small construction companies fail because they need to do this step. But if you keep track of your cash flow carefully, you won’t be one of them.
Which method of accounting is best for a construction company?
If you’re starting a construction business, you may be wondering which method of accounting is best for your company. The answer is that it depends on how much money you make and how much money you spend.
If your company makes less than $1 million per year in sales, then the cash method of accounting can work well for your business. This method is best if your construction business has few assets or liabilities. For example, if the company owns all of the equipment used in your work, this method could be appropriate for you.
However, if your construction company makes more than $1 million yearly in sales, then accrual accounting may be right for you. This is because accrual accounting requires that companies account for their assets and liabilities regardless of whether they are paid at once or over time (like with an invoice). This means that even if they do not receive payment immediately after completing a job or selling a product, they still must record the value of those transactions as expenses or income on their balance sheet.
How do construction companies maintain accounts?
Construction Business Bookkeeping; bookkeeping services specifically designed for the unique accounting needs of construction firms. There are two main construction companies: those that pay their subcontractors with checks and those that use wire transfers.
The first type of constructor will maintain an account for each subcontractor on which they write checks to purchase materials or services. These accounts are usually held at the bank where the constructor has its checking account, but sometimes they are maintained at another financial institution. The constructor should keep track of all subcontractor payments through an accounting system such as Quickbooks or Xero. This way, they can easily reconcile their records and ensure they have paid all their bills during tax time.
The second type of constructor may use wire transfers to pay their subcontractors rather than checks. In this case, the constructor must maintain accounts at both banks to facilitate these transactions. Again, the constructor should keep track of all payments made through an accounting system such as Quickbooks or Xero so they can reconcile their records and make sure they have paid all their bills when tax time comes around.
What does a bookkeeper do for a construction company?
A bookkeeper for a construction company is responsible for tracking the finances of the company. In addition, they are tasked with creating and maintaining financial records, preparing monthly financial statements, and paying monthly bills.
As a bookkeeper, you will be responsible for creating an accurate record of all transactions that occur within the business. This includes recording revenue generated from sales and expenses incurred during operations.
You must also understand how to use accounting software like QuickBooks or Excel spreadsheets to record these transactions accurately. You will be required to prepare monthly financial statements and submit them to senior management within your company. This will include information such as cash flow projections, profit margins, and other metrics that describe how well your company is performing financially over time.
Conclusion
Computerizing the bookkeeping process can save construction businesses money and time, which translates directly into increased profitability. Utilizing third-party software or in-house development to automate this process makes sense for most small to medium enterprises operating in a competitive market. The cost savings also allow business owners greater flexibility to allocate capital elsewhere.
Construction businesses implementing such software have a competitive edge over rivals without it, and the added benefits more than justify the expense.
Please comment below or email us if you have any suggestions, questions, or comments.
JAY’s Choice:-
- Bookkeepers for small business
- 3 Ways to grow your bookkeeping business
- What are the challenges of the Budget session and solutions to improve it?
- How to identify and avoid problems in Bookkeeping
- 10 Types of Cloud-Based Accounting Services
- 10 Benefits of Outsourced Bookkeeping
- How to hire a top bookkeeper: a comprehensive guide
- 5-Ways Hiring A Bookkeeper Can Make Your Business More Profitable
- Bookkeeping For Non-profits
- Accounting Year-End Checklist for Your Small Business
