Professional Bookkeeping for General Contractors
Keep Your Finances in Order
As a general contractor, managing your projects, materials, and labor is already a full-time job. Keeping track of your finances shouldn’t add extra stress to your plate. Effective bookkeeping is essential to running a profitable business, maintaining cash flow, and ensuring compliance with tax regulations. Here’s what you need to know about bookkeeping for general contractors and how it can help streamline your business operations.
Why Bookkeeping is Crucial for General Contractors
1. Accurate Job Costing
Every project comes with unique costs, from materials and labor to permits and subcontractor fees. Proper bookkeeping ensures you track these expenses accurately, allowing you to determine profitability on each job and adjust bids for future projects.
2. Cash Flow Management
Construction projects often have fluctuating income and expenses, making cash flow management critical. By maintaining accurate financial records, you can monitor incoming payments, schedule outgoing expenses, and ensure you always have funds available for payroll and materials.
3. Tax Compliance and Deductions
General contractors must handle various tax obligations, including income tax, payroll tax, and sales tax. Proper bookkeeping helps track deductible expenses, ensuring you minimize your tax liability while remaining compliant with IRS regulations.
4. Improved Financial Decision-Making
When you have a clear picture of your financial health, you can make informed decisions about hiring, purchasing equipment, or expanding your business. Bookkeeping provides the data you need to set realistic financial goals and measure progress.
5. Managing Subcontractors and Vendor Payments
Many general contractors work with subcontractors, suppliers, and vendors. Keeping detailed records of contracts, invoices, and payment schedules ensures that you maintain good relationships and avoid legal or financial disputes.
6. Budgeting for Future Projects
Accurate bookkeeping helps you forecast costs for upcoming jobs, ensuring you have the necessary funds to complete projects without unexpected financial shortfalls.
Hiring a Bookkeeping Professional
If bookkeeping feels overwhelming, consider hiring a professional bookkeeper or accountant specializing in construction businesses. They can handle everything from financial reporting to tax preparation, allowing you to focus on running your business. Outsourcing this task can save time and reduce costly financial errors.
- Avoid cash flow problems.
- Identify your most profitable projects.
- Plan for equipment purchases and expansions.
- Meet tax and legal obligations with confidence.
Essential Bookkeeping Tips for General Contractors
Use Construction-Specific Accounting Software
General accounting software might not meet your needs. Tools like QuickBooks Contractor Edition, Buildertrend, or CoConstruct offer job costing, invoicing, and expense tracking features tailored for contractors.
Track All Expenses and Receipts
Keep records of every expense related to your projects, including material purchases, subcontractor payments, and travel costs. Digital apps like Expensify or Hubdoc can help automate receipt tracking and storage.
Separate Business and Personal Finances
Open a dedicated business bank account and credit card to ensure clear financial separation. This makes tax filing easier and reduces the risk of financial mismanagement.
Implement a System for Invoicing and Payments
Timely invoicing and follow-ups on unpaid invoices ensure you maintain steady cash flow. Using automated invoicing systems helps contractors get paid on time and track outstanding payments effortlessly.
Stay on Top of Payroll and Subcontractor Payments
Paying employees and subcontractors correctly and on time is crucial. Proper record-keeping helps you comply with labor laws and ensures smooth business operations.
Review Financial Reports Regularly
Analyze your profit and loss statements, balance sheets, and job costing reports monthly. This helps you spot financial issues early and adjust strategies to improve profitability.
Understand Retainage Accounting
Many construction contracts include retainage, which is a portion of payment withheld until project completion. Properly tracking retainage ensures you accurately record income and expenses.
Plan for Seasonal Fluctuations
The construction industry often experiences seasonal highs and lows. Smart bookkeeping allows you to set aside funds during peak months to cover slow periods.
Set Up an Emergency Fund
Unexpected costs can arise in any project. Maintaining a financial cushion helps you handle unforeseen expenses without disrupting your business operations.
Maintain Compliance with Insurance and Licensing
Ensure your bookkeeping records reflect payments for liability insurance, workers’ compensation, and required licensing fees. This keeps your business protected and compliant.
HEALTHIER BOOKKEEPING
Take Control of Your Business Finances
Bookkeeping for general contractors doesn’t have to be a headache. With the right systems in place, you can maintain financial stability, improve profitability, and stay compliant with tax regulations. Whether you manage bookkeeping yourself or hire a professional, staying organized will set your contracting business up for long-term success.
Get Your Books in Shape
You focus on running your business. We’ll focus on getting you the information you need to do it. Schedule your consultation to ask us how we can help.
01.
Consultation & Proposal
We’ll listen to your needs and help you determine what services will accomplish your goals.
02.
Letter of Engagement
We’ll dot the i’s, cross the t’s, and sign the dotted lines with no long-term contracts. Consider this our “permission slip.”
03.
Intake Form & HEALTHIER BOOKS
We will gather the information we need to learn about your business, then get your books into shape.
Survive. Thrive. Grow.
Ready to see the differences a partner who specializes in your industry can make? Get a partner who can help you achieve your goals.
