Best Construction Accounting Software 2025

Automation reduces manual errors and saves time in construction bookkeeping. Automated systems streamline invoice collection, approval workflows, and expense tracking, allowing bookkeepers to process financial data more efficiently. By understanding these fundamental concepts, you can establish a solid foundation for effective bookkeeping practices tailored to the unique needs of your general contracting business. The best way construction bookkeeping to stay organized is tracking your day-to-day transactions, reconcile your accounts on a regular basis, and use construction accounting software.

• Liabilities are any legal responsibility you hold to pay debts or fulfill contractual obligations; loans, deferred revenues, or other accrued expenses.
• When you have accurate financial information that you really understand, you have the tools and confidence you need to unlock the true potential and profitability of your construction business.
• Expenses are the costs incurred in the process of running and managing your business.
• However, with a construction business, these expenses stretch far and wide.

Which accounting method should be used in Bookkeeping for General Contractors?

They’re only required to use the percentage of completion method for construction contracts that extend over two years. This category looked at the most common features sought by construction contractors and defined which companies provided them. Those that had all features provided for contractors without additional fees fared better than those that required you to choose a higher subscription service to unlock them. This included features, such as offering quotes and estimates, job costing, PO management, budgeting, billing and invoicing and accounts payable (A/P). Foundation breaks its software down into modules that you can put into a custom solution.

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Job costing is a special feature of construction bookkeeping that some find useful. It need not be explained that the costs of each job containing the cost of materials, labor cost, equipment cost, and cost of non-ownership subcontractors are specific. This guide covers key aspects of construction bookkeeping, including the role of a construction bookkeeper, recording expenses, and industry-specific accounting methods. By mastering these practices, construction companies can gain better control of their financial performance and reduce inefficiencies in managing costs. Proper bookkeeping allows you to track income and expenses, manage cash flow, monitor project profitability, and make informed decisions.

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Develop training for all teams—not just finance and accounting—that could play a role in an audit. This might include projects, purchasing, human resources, information technology, etc. Sureties and lenders often require them to verify a subcontractor’s financial data before they issue a bond or loan. Property owners and general contractors may also request an audit before they award a contract. For those working to create healthier financial outlooks, it’s beneficial to conduct internal audits more proactively. We talk to a lot of subs with more rigorous accounting processes that make it a best practice to complete financial audits annually.

IRS Audits

• Internal audits are initiated internally for the purpose of improving financial processes.
• From this reason, a company can tailor its chart of accounts to suit its specific purposes and add accounts as needed.
• If you opt to keep control of this essential part of your organization, it is important to consider how much time you’ll need to manage that.
• Construction payroll is more complex than in many other industries, as it involves tracking multiple workers, contractors, and varying pay rates.

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. Using the principles of accrual accounting, percentage of completion and the completed contract method are both heavily utilized within the construction industry. Below we’ll take a look at what to keep in mind for both when structuring your chart of accounts. All project or job costs will also fall under expenses such as labor, material, equipment, and permits. Together, these expenses are essential for a successful construction project and enable the company to work competitively and productively.