While there may be many similarities, construction accounting is often vastly different from regular business accounting. In addition to the standard payroll, accounts receivable, and accounts payable, construction companies must account for job costing, progress billings, retention, and much more. These added factors make construction accounting remarkably more complex and require unique processes to be effective. While this may seem like a daunting task, it can easily be achieved with the help of a professional that specializes in construction accounting.
Recording a construction company’s financial transactions are often completed through an approved process called the “double-entry method.” This approach requires two entries made within a ledger to record each transaction that is completed. Some smaller companies might track and record these transactions in a spreadsheet, although accounting software is recommended to make reporting easier. This article will explore some of the critical differences between construction accounting and regular accounting and explain the importance of a good software solution.
Generally Accepted Accounting Principles (GAAP)
Like other accounting processes, construction accounting requires processes and procedures that are approved and accepted by accounting and business industries. Referred to as Generally Accepted Accounting Principles (GAAP), these processes are often the designated rules for accounting that must be followed. Any business that releases public financial statements or is publicly traded likely uses GAAP to complete its accounting practices.
Although construction accounting is relatively similar to standard business accounting, GAAP processes must be adapted to meet the overarching differences that are common within the industry. This includes various cost types such as job costing, work in progress, and cost of goods sold. While the unique cost types will vary between each construction business, these factors vary from standard accounting practices found in other industries.
Dedicated Construction Accounting Software – The Right Tools for the Job
Popular software options exist for construction companies that want to take care of their own accounting; however, working with a construction accounting specialist will ensure these software options are utilized effectively to provide accurate reporting. From Intuit QuickBooks to Microsoft Excel, there are many different options to suit any construction company’s needs.
At Accounting for Construction, we utilize the best accounting software available to meet our clients’ unique needs and goals. Our team provides extensive construction accounting services to meet the needs of any organization within the industry. From contractors to construction empires, investing in expert accounting can help track each job and its impact on the business as a whole.
How Can Construction for Accounting Help?
If you are ready to take the next step, Accounting for Construction is ready to learn more about your financial goals and the current ways you are leveraging your existing processes to achieve them. Because we focus exclusively on construction accounting, we can provide full-service accounting services that focus on the construction industry’s unique challenges. Contact us today to get started or learn more about the ways that Accounting for Construction can help you take control of your finances and bid smarter