How to Do Accounting for Your Construction Business 8 Steps

However, you’ll have to integrate with QuickBooks Time, a separate product that comes with its own costs, to track employees’ hours. To compare various construction accounting software platforms, we collected a proprietary set of data points to compare and contrast. This included looking at cost, the types and quality of features the software offered, third-party ratings and reviews and a combination of metrics put together by our staff of experts. We looked at a total of 22 https://www.inkl.com/news/the-significance-of-construction-bookkeeping-for-streamlining-projects different metrics across five separate categories to reach our conclusion. Here are some of the categories we used to rank the providers that made the top of the list.

Reconcile Bank Statements Monthly:

Construction bookkeeping services can help in setting up systems to track income and expenses efficiently, providing timely reports to help you stay on top of your finances. Writing a business plan and conducting market research are your core first steps to establishing a construction. Ultimately, implementing accounting software to streamline your job costing, client invoicing and the relationship between these two needs is key to successful financial management.

• In simple terms, the earned value report allows contractors to respond to project-wise issues more quickly as they can identify them sooner.
• These costs are typically quite low compared to those of other types of construction business software.
• Standout features include time-tracking tools and real-time reporting data that integrates with most accounting software.
• To record a construction cost, debit the construction in the process column and credit the cash column.
• He has earned a finance undergraduate degree, the Indianapolis Business Journal’s Forty Under 40 award, and Arizona’s 35 under 35 award.
• We believe everyone should be able to make financial decisions with confidence.

What is Construction Accounting?‍

• We also like that, unlike with other accounting software vendors, FreshBooks includes client communication tools in its mobile app.
• It provides detailed insights into all project-related costs, aiding in accurate cost estimation, budgeting, and profitability analysis.
• If you run your own construction company, you already know how much time and focus the job takes.
• As we mentioned, Sage’s simple, easy-to-interpret interface is a strong point.
• We appreciate that the platform is highly user-friendly, with its narrow suite of features, intuitive interface and low costs affordably streamlining your accounting fundamentals.

Acumatica’s payroll solution is fairly flexible, catering to requirements like multiple unions, classes, complex wages, and benefits packages. Additionally, the software also provides tools for creating and tracking subcontract status, purchase orders, and budget comparisons. This helps automate project commitments and change order processes, helping to control cost overruns. Acumatica Construction Edition is a scalable option for both small contractors and larger construction companies.

Revenue recognition method #2: Completed-contract method (CCM)

• These features include invoicing, customizable reporting and job costing, as well as direct integrations with industry-specific software such as Buildertrend and Housecall Pro.
• Jonas Construction Software is a comprehensive tool designed specifically for construction companies and specialty contractors.
• And if you forget your laptop, no worries — you can borrow someone else’s and log in through the web browser.
• This improves communication, opens up lease opportunities and can accommodate most real estate situations.
• You’ll also appreciate its huge network of QuickBooks ProAdvisors, making it easy for you to enlist professional help when needed.

Contract retainage, which is the amount of money that customers can withhold until they are satisfied with a project, is typically 5-10% of a contract’s value. You can go to a bank or credit union to set up a company checking account that suits the needs of your firm. This can make it difficult to track expenses and effectively calculate the profit generated from each service category. Everyone from administrative employees working in the office to construction workers on the jobsite need to be able to understand and use the software.

Tip 2: Use job costing to manage project costs and general business ledgers

In most cases, the percentage-of-completion method works in stages or payment milestones. It’s also true that this method is flexible and simple, leading to less confusion in financial statements. That’s unlike a construction project, where accountants need to take into account — pun intended — labor costs in different states and localities (more on that later).

Best Construction Accounting Software Shortlist

• Whether it’s tracking expenses, setting aside money for taxes, or preparing for growth, keeping your finances in order is key to success in the construction industry.
• Top ERP products for construction include Viewpoint Vista, Jonas Enterprise, and Procore.
• Standout features of CMiC include its plan distribution and viewing platform, which lets you compare different versions of site specifications and design plans from a mobile device in the field.
• You should also look for platforms through which you can add your branding to all these documents.
• This software platform is best for contractors seeking detailed bids from subcontractors and vendors to have the most comprehensive preproject data.
• It’s important to note that, while Procore does offer financial management tools and reporting, it’s more of a project management solution than a true accounting software.

Construction bookkeeping, while challenging, is an essential part of running a construction company. In other words, Jonas Premier likely won’t work for startups or contracting businesses with a revenue beneath $3 million. Janet Berry-Johnson, CPA, is a freelance writer How to leverage construction bookkeeping to streamline financial control with over a decade of experience working on both the tax and audit sides of an accounting firm. She’s passionate about helping people make sense of complicated tax and accounting topics.

Fluctuating Overhead Costs

Additionally, it takes the lead for ease of use as it has a streamlined user interface, and it’s easy to seek support through its vast support network of QuickBooks ProAdvisors. This makes QuickBooks Online ideal for contractors who manage their own books. It took a hit in pricing because the one-time implementation fees are a bit expensive, especially for small contractors. Also, its mobile app could have earned a higher mark if it had accounting features instead of focusing only on project management. We awarded it an above-average score for ease of use because it’s a complicated software, and many new users may easily get overwhelmed by its user interface. If you’re searching for a powerful yet easy-to-use construction accounting software program, look no further than FreshBooks.