Construction Bookkeeping Tips to Maximize Contractor Success

Construction companies usually need to pay their workers what’s known as a prevailing wage. 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. According to the Construction Financial Management Association, pre-tax net profits average between just 1.4% and 3.5% for contractors and subcontractors. Construction companies often face complex tax regulations, especially when operating across multiple jurisdictions.

The Growing Massachusetts Construction Industry

DB&B’s outsourced construction accounting simplifies and streamlines your accounting. With DB&B, you don’t have to deal with recruiting, hiring, training and managing trusted, qualified talent. Construction Industries of Massachusetts (CIM) is an association representing all aspects of the transportation and public works construction industry in Massachusetts. Outside of traditional construction businesses, we work with accounting firms, law firms, insurance companies, and more. Using Hubstaff’s time tracking app for construction businesses, you can automatically generate time cards for your workers. This ensures payroll receives accurate data for the time workers spend on-site, as well as time spent traveling.

Tip 6: Choose the right revenue recognition method

First, break down the project into phases, and then list all the tasks needed to complete each phase. In most industries, commissioned contractors get paid upon delivery of a product or service. Discover how we can help you have better finances with a personalized demo from a Bench expert, ready to answer all your questions. By subscribing you agree to with our Privacy Policy and provide consent to receive updates from our company.

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• We use Plaid, which lets you securely connect your financial accounts to Bench in seconds.
• For contractors managing several projects simultaneously, tracking costs and ensuring profitability for each one can be overwhelming.
• And, whether you need help with job budgets, certified payroll, cash flow, or getting accurate reporting, FOUNDATION has the solutions for you.
• Construction bookkeeping services can assist in streamlining this process and ensuring that all expenses are properly documented.

Founded in 1921, CIM is one of the most active and effective construction trade organizations in the nation. We have been working hard to advance the growth of the industry for more than 100 years. Set limits, turn tracked time into automated timesheets, and send invoices with Hubstaff. Opting for a solution that requires extensive https://www.inkl.com/news/the-significance-of-construction-bookkeeping-for-streamlining-projects training before you can use it is not only going to cost you time but also risk frustrating both you and your employees.

Sales Tax Reporting

Professional construction bookkeeping services can offer expert guidance, ensuring that your finances are in order, taxes are managed efficiently, and business growth is well-supported. Cash flow is the lifeblood of any business, and general contractors must monitor it closely. By reviewing your cash flow regularly, you can ensure there are sufficient funds to meet current and future expenses. 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. With accounting controls, construction general ledger software improves compliance and financial management. Our software delivers the tools and insights construction businesses need to streamline accounting, make data-driven decisions, and drive profitability.

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• Our automated system reduces the risk of errors that can lead to fines or litigation.
• Get free guides, articles, tools and calculators to help you navigate the financial side of your business with ease.
• Unfortunately, it’s not as simple as agreeing on compensation with a worker and paying them the same rate per project.
• With our cutting-edge accounting software, you can connect the jobsite to the construction office to help you manage costs and grow your business.
• Proper tax planning is a vital component of construction accounting, and construction bookkeeping services can help general contractors comply with tax regulations and avoid penalties.
• Apart from giving you insight into where your money is going, receipts also serve as proof of your business expenses in case you ever get audited.

Our team of pros is familiar with Massachusetts tax rules and will customize their approach to your business’ How to leverage construction bookkeeping to streamline financial control unique needs. Our team takes the time to deeply understand your business, answer your questions, help you link your accounts, and show you how Bench works. With DB&B as your construction accounting partner, enhanced transparency and budgeting empowers more opportunities.

Lastly, as Hubstaff records workers’ arrival and departure times, there is no need for them to note down this information manually. This means that they can dedicate more time to completing their work duties. Businesses have different bookkeeping needs which vary based on industry, company size, federal and state regulations, as well as a number of other factors. Revenue recognition is the process of officially recording how and when your business generates revenue.

The FOUNDATION Payroll Software Module helps contractors pay their crews on time — even with multiple prevailing wage, union, fringe, and tax rates on each construction project. Even with all these benefits, some contractors opt for off-the-shelf accounting software, but for the complexities you face, you need software designed for your business. Ready to take control of your job costing and build a thriving construction business in Massachusetts? But one of the often-overlooked aspects of scaling your business is construction software.

LedgersOnline Services

Using milestone payments also makes it easier to identify payment problems, which, in turn, enables you to stop working until you receive payment for a milestone. Milestone payments are payments paid out after achieving a defined stage of progress on a project. As we mentioned earlier, contract retainage can account for 5 to 10 percent of your contract value. This helps you get a better idea of how much money is coming in and going out of your business every month. It allows you to estimate labor, material, and overhead cost, as well as determine how much you should charge for the project.