Construction Accounting: Learn From the Common Mistakes of Construction Companies
Ever made a mistake that bothered your business results?
It’s alright. Everybody does that. It would cause you no harm if you add cornflakes to the bottle of milk. But it is not okay if you make a serious mistake that can disturb your construction business with major losses.
So, let’s straight away dive into the top common mistakes that construction business owners do and how to come out clean.
Organized management serves the best
Ask yourself if you have organized your business well and if not, you are going to be in long time trouble. Construction accounting basics could be a difficult chapter to read when you have just started your business. Especially working on accounting for a construction company could be a tough road if you have never taken it in the past.
Accounting for the construction industry could be an eye-opener for construction business owners. So, if you are serious about making things work and stop doing mistakes in accounting for construction business you must keep everything organized.
That said working alone with no experience will lead you to the troubled waters and there are chances that you might end up with losses. When you know nothing about accounting for the construction industry, it is always better to work with a professional who is an expert in construction accounting. This will for sure help you with your business accounting and fetch your desired results.
Unexpected job costs
You must have heard of the accrual accounting that includes accounts payable and accounts receivables. We all know what the theory says. This not just bothers construction accounting basics but can also hit the non-construction companies. It is usually the result of the missed out costs that are incurred at the time of reporting.
This calls for maintaining a proper record of the vouchers of all the costs noted as liabilities; this will help you dodge the accounting mistakes. Once the vouchers are recorded correctly they can be matched with the accounts payable records.
Vague job overhead
Most of construction business owners make use of overhead rate to allocate their indirect costs to individuals and their jobs. This considers a %age that is multiplied by the direct labor or material cost whichever required. Also, the direct labor costs do not consider a few variables accounted for.
It is important to determine the overhead rate carefully to make sure if it exactly represents overhead costs or not. It will allow you to run through both under and overhead costs.
This error can easily be avoided by making sure you revisit the rates regularly. This will not only ensure the correct usage of the rates and also the usage of the right and appropriate method. Depending upon the labor, material, and costs of the business, accounting for construction projects must be done with appropriate methods.
No track of lost contracts
Most of the contractors make use of a percentage of completion technique which is used to define the revenue. An error usually occurs while using this technique; multiplied by the amount of contract and it does not even consider if that particular job is revenue or loss.
This is when most of the contractors search for “how to do accounting for construction business”. Usually, most of the accounting principles need a complete loss contract when the loss is determined.
If you are monitoring all the records of the total job revenue, you are going to save your business. And, when you have calculated the exact loss, it will be easy to determine the accrual for the loss.
Inappropriate recognition of joint venture operations
Accounting for the construction industry can be startling because the joint venture operations are majorly misunderstood. This is one of the reasons to use the right accounting for a construction company to track the exact records for the business. Construction accounting goes best when QuickBooks comes to the rescue.
QuickBooks is one such software that helps every business understand their accounting needs. This is because accounting for a construction business is never easy. To keep them free from the accounting errors it is important to seek advice from the professionals accounting experts. Using QuickBooks can be complicated as well but if there is QuickBooks, there is QuickBooks support as well.
Construction accounting with QuickBooks
Construction accounting software, QuickBooks work for you as and when you want. It doesn’t ask you to be at a particular place. No matter you are at site or office, all you need to have is the QuickBooks software. You can choose from the various available options like QuickBooks Plus ($35/mo) and QuickBooks Advanced ($60/mo). Is there something better than cloud-based construction accounting?
Here’s what it would do for your construction business:
Job costs management
It will be easier for the users to track expenses and time for every project. You can also fetch job costs reports that help you analyze your business whenever you want.
Automated construction accounting
If you hate dealing with papers, QuickBooks has got you. Excluding all your manual construction accounting problems, you can easily rely on QuickBooks for accounting and bookkeeping.
While doing business, saving time is the most important thing anyone would want. That’s what QuickBooks does for you. Saving time for all 1099s and if you are a sub-contractor, you can add their tax ID and W9 information on sending a request.
Easy tax preparation
Income and expenses can easily be organized into tax categories. You can easily import and export your tax documents.
QuickBooks is easy to use be it from work or home but if not known well, it can complicate things more than you expect them to be. If you are dealing with this already it is alright but doesn’t make it for long. Reach QuickBooks online support and get a solution to all your problems in no time.
We deal with all types of QuickBooks errors and even if you stuck in the downloads we have got you. We never allow you to struggle with your business accounting and bookkeeping. So, when you search for “how to do accounting for construction business” look for QuickBooks software and when you are mad at QuickBooks for troubling you, we are just a call away.