5 Best Construction Accounting Software for 2025

As your business grows, you might wish to hire either a full-time or part-time, in-house or outsourced bookkeeper to organize transactions, payroll, payments to vendors, and other tasks. Doing your bookkeeping in Excel is a good option if you don’t want to spend extra money on software since you may already have the program installed on your work computers. Plus, there are tons of free Excel templates available, so you don’t have to reinvent the wheel with your business spreadsheets. You could also use a web-based app like Google Sheets, which functions similarly to Excel.

Why is construction accounting so hard?

Keeping abreast of deductions and credits ensures that businesses optimize their tax strategies. Financial activities and property management goals must align for business success. Synchronized budgeting, data-driven decision-making, and efficient resource allocation are key. These strategies ensure that financial activities support property management objectives. Manual job costing can be very time-intensive, especially when it comes to complex projects. Keeping track of payroll is another element where construction bookkeeping is essential.

Explore what you can do with QuickBooks

Exact features and specifics can vary, but it normally offers reporting, tax preparation, invoicing, and payroll tools. Not all standard accounting software has the features you need for the construction industry. For example, suppose your company uses progress billing on large jobs (where each invoice is charged against the total cost of the job over time until the balance is paid). In that case, your construction accounting software needs to be able to produce a schedule of values to help you track the running total. That’s why so many in the industry are now on the lookout for the best accounting software for construction. When used properly, it can streamline your day-to-day financial processes, help you manage project costs more efficiently, and improve your efficiency across the board.

• With the right process, you can save time on your invoicing, accounting, bookkeeping, and tax preparation, even without previous construction accounting experience.
• This reduces the likelihood of any disagreements with customers over the exact time workers started or ended their shifts.
• Having the bookkeeping done right for a small construction business doesn’t just help the bills; it helps the bottom line, and the company’s chances of success.
• It is also a complicated software and is not popular in the US, so it might not be easy to find a bookkeeper who is knowledgeable about the software.
• Common construction payroll wages range from minimum wage in some areas to more than $50 per hour for experienced workers such as carpenters or electricians.

Long-term Contracts

General contractors should not only focus on current projects but also plan for future growth. Setting financial goals and creating a budget that supports business expansion is key to long-term success. By working with a professional accounting https://digitaledge.org/the-role-of-construction-bookkeeping-in-improving-business-efficiency/ service, you can develop a growth strategy based on sound financial planning and construction bookkeeping principles. Effective construction bookkeeping is not just a compliance necessity; it’s a strategic asset that drives profitability, fuels growth, and empowers informed decision-making. Most construction companies use accrual accounting for larger projects as income and expenses are accounted for when they’re incurred rather than paid.

• In those industries, business is normally the same from day to day, and costs stay relatively constant and predictable over time.
• There are many resources to help you manage bookkeeping for your small business.
• If you truly want to master your construction accounting and avoid costly mishaps, you may want to look into the best construction accounting software.
• Construction bookkeeping services improve cash flow by ensuring timely invoicing, tracking progress billing, and managing expenses.
• Construction contracts are normally paid out on a schedule, as the project progresses, with a portion of it held back until completion.

Reconcile payments

If you operate across state lines, you may also need to account for additional tax payments. The construction accounting software sea is wide—here are two more options for your consideration. However, note that the FASB updated this principle to clarify how contractors should report information from their customer contracts. Topic 606 is an accounting standard update (ASU) that requires public companies to disclose information related to their revenue recognition practices. Overbilling and underbilling can significantly affect job costing in a construction business. This core performance indicator helps track the progress of each job in relation to billing.

• It can also organize and pay bills for you, as well as collect payments and follow up on outstanding invoices.
• This accounting method is great for small construction businesses that don’t have a high volume of sales or complex transactions.
• Simply put, job costing is a method of calculating the true cost of a construction project by breaking it down into small, specific tasks.
• Other similar software, like JOBPOWER, has an unintuitive estimate creation screen with too many fields to complete, and this can be confusing for new users.
• Take a look at the customer support offerings when browsing construction accounting software.
• When setting up your construction accounting system, you’ll first need to decide which type of accounting you’ll use.

It allows adjustments to be made easily and can provide month-end and year-end reporting quickly. This is best for any contractor looking for a comprehensive, ready-to-use solution for accounting and project management. You’ll be able to get into the weeds with budget management tools that allow you to go from budget to change order construction bookkeeping requests instantly.

Paying employees and contractors

It also retains information about POs, time worked and equipment usage for specific sites. Project management is critical to meeting budgets on your construction sites. Premier provides you with a customizable dashboard that gives you the insights you need to manage every aspect of the job. Record electronic signatures for approvals and use the cloud-based document storage tool to keep everything you need one click away.

Main Reasons to Use Construction Bookkeeping Services

Most businesses simply record the cost of the products sold, but construction companies are quite different. Each job incurs direct and indirect costs that may fall into a wide range of categories. It’s essential that contractors have an effective method for keeping track of income and expenses, and for reconciling every transaction. Construction accounting software is any kind of online accounting solution that works for businesses in the construction industry.