Does tracking expenses, managing payments, and staying tax compliant cause you more headaches than jackhammering? You’re not alone! Construction accounting is a whole other beast compared to regular business finances. But ignoring it can crumble your business faster than misaligned brickwork.
At NorthStar Bookkeeping, we specialize in helping construction firms gain clarity and control over their finances. We’ve seen how effective construction accounting, particularly when outsourced, can transform a business. Let’s explore construction accounting more and determine the best way for you to manage it.
What is the Difference Between Construction Accounting and Regular Accounting?
While core accounting principles apply across businesses, construction accounting has its own specific wrinkles. Unlike other sectors, construction companies often focus heavily on project-based finances, with several factors demanding expert attention:
- Progress Payments: Tracking client payments tied to project milestones is crucial for cash flow management.
- Retainage: Managing the withheld portions of payments is complex and impacts your bottom line.
- Job Pricing: Managing costs tied to each project reveals true profitability.
- Long-Term Projects: Accounting for revenue and expenses over extended timelines requires specialized methods.
- Change Orders: Monitoring contract modifications and their financial impact is essential to stay on budget.
What is GAAP Construction Accounting?
GAAP stands for Generally Accepted Accounting Principles. It’s a standardized framework for reporting and presenting a company’s financial records. These principles are designed to promote transparency and consistency, making comparing financials across different construction firms easier. Following GAAP is considered a must—it ensures accuracy, transparency, and comparability within the construction industry.
Can I Use QuickBooks for Construction Accounting?
QuickBooks is a popular accounting software used by many businesses, and there’s even a “QuickBooks for Contractors” version. While these tools can be helpful for basic accounting tasks, they are most effective when a construction accounting expert customizes the setup and guides regular updates.
For instance, QuickBooks can help you track your expenses and generate basic financial reports. However, complex tasks like allocating costs across projects, managing retainage calculations, and generating specialized reports often require in-depth accounting expertise that QuickBooks may not provide.
Related Article: Can My Construction Company Use QuickBooks?
Should I Outsource My Construction Accounting
Many construction firms have discovered that outsourcing their bookkeeping can significantly improve construction accounting. The benefits are numerous:
- Save Time: Regain the hours lost in spreadsheets and paperwork to focus on managing your business.
- Reduce Errors: Minimize costly errors caused by juggling financials alongside project management.
- Tax-Season Relief: Hand tax season to professionals, removing the stress and potential for missed deadlines.
- Financial Clarity: Gain accurate reports that give you real-time insights to make smart, timely business choices.
- Increased Cash Flow: Outsourcing to firms that specialize in optimizing cash flow strategies specific to the construction industry helps you see more cash flow.
Outsource Your Construction Accounting to NorthStar Bookkeeping
“Our role is to prevent surprises, not just report them. By working closely with construction firms, we identify potential cash flow bottlenecks, optimize job pricing, and prepare for those all-important tax deadlines.”
- Heather Kirstein, Co-Owner, NorthStar Bookkeeping
At NorthStar Bookkeeping, we’re more than just a numbers provider. We’re partners in your construction company’s success. Our team will craft tailored solutions to your needs, ensuring your financial foundation is as strong as the structures you create.
Ready to streamline your financials and prioritize growth? Our team is here to answer your questions, provide expert analysis, and help you realize the impact that optimized construction accounting can have on your business. Contact us today and discover the power of stress-free financials, leading to more remarkable growth.