Managing a construction business can be a challenge, from creating accurate estimates and bidding jobs to tracking expenses, change orders, and payments. By taking steps to streamline your construction accounting systems, you can spend more time working in the field and managing the construction process itself.
Here are seven tips that can help:
1. Choose Construction-Specific Software
Whether you do the accounting yourself, you have a CFO, or you work with an outside CPA firm, having quality accounting software that is specific to the construction industry can make it easier to manage your business effectively. It will have features like equipment management, remote employee time tracking, project management, job costing, and more.
2. Manage Project Costs More Effectively
Working with a CPA firm and software that is tailored to the construction industry can help you manage project costs more effectively, from buying materials and controlling inventory to tracking mileage and tool purchases.
3. Outsource Your Payroll
Keeping track of employee pay and benefits can be time-consuming for those who own or manage a construction company. By letting a third party manage payroll, benefits, W2s, and more, you can free up more time to actually run your business.
4. Choose Completed Contract Accounting
Pay is often received for construction projects in several stages, based on milestones outlined in the contract. The Completed Contact method (CCM) of accounting streamlines the accounting process and makes it easier to understand by recording revenue, expenses, and profits only once the entire project is complete.
5. Keep Track of Change Orders
Clients often request changes once the project is underway and long after the contract is drawn up and approved. This can make it difficult to accurately track expenses and profits. By stipulating the change order process in the contract, and following it properly, you can document the costs of these changes effectively and pass them to the client.
6. Classify Workers Correctly
If you do not classify your workers properly, it can create headaches in the future while leading to possible fines or enforcement actions from the IRS and other authorities. When you have workers who are under your full control, they should be classified as employees, complete with the benefits they are entitled to, such as workers’ compensation, social security, and more. When workers set their own schedules and are not directly under your control, they can often be classified as independent contractors.
7. Choose an Experienced CPA Firm
To make your construction accounting as simple as possible, work with a third-party accounting firm that has specific experience in the construction industry. Accounting firms who know the ins and outs of the construction process can help you manage expenses and revenue more effectively, prepare taxes and keep payroll up to date.
Construction Accounting Services in the Dallas Area
When you need an experienced team to manage the accounting for your construction company, talk to our team at Gurian CPA. We offer a full range of construction counting services in Dallas, including comprehensive bookkeeping and accounting, tax planning and preparation, payroll services, business entity formation, and more.
Call (469) 374-3150 to learn how Gurian CPA can help your construction business run more smoothly while boosting your bottom line.
