When it comes to construction accounting, the numbers are crunched a little differently than in other businesses. In most businesses, you will get paid right then for the service or product that you provided, you will subtract the actual cost of what it costs you (the business owner), then boom! You have your net profit.
However, in construction where you can have multiple projects going, and some of them having the potential to take over a year, the numbers aren’t so easy to deal with.
For this reason, it’s important that you not only understand that contractor accounting differs from other business models, but also to be aware that you will need to be a lot more strict with how the money handling takes place. This usually means following one of two routes. Let’s take a look at em!…
Hiring An Accounting Firm
In the world of construction, there are numbers constantly being shifted around, prices constantly being changed or negotiated, subcontractors frequently coming in, and…well, you get the point. There is constant changing and shifting. This creates a huge mess of a desk, and not to mention frustration for any accountant that might be trying to work for you.
This is where an accounting firm comes in. Not only will an accounting firm often be cheaper than having your own bookkeeping employee for your construction accounting, but it will also be a lot easier to have all of your financial needs taken care of more efficiently, they can answer any questions that you may have when it comes to finances, and can even help you with personal financial matters if that need ever arises. Let’s not forget either that there are multiple employees at every firm, so you are getting the expertise of several different accountants.
Accounting firms have employees who are trained to deal with business finances, but more importantly, deal with specific types of businesses, such as a contracting business, where it’s important to know where the money is flowing in and out of at all times.
Anyone in the business world knows just how valuable and time-saving this is, so the fact that it’s usually cheaper to hire an accounting firm than to have a full time employee hired on, is just icing on the cake.
Using Accounting Software
Sometimes an even more low cost route than an accounting firm, is using software for your construction accounting.
Accounting software can be used by anyone but will probably be best for contractors who are just starting out, have a smaller budget, have smaller or fewer projects, and/or those who have the time to input everything into the software and learn how to use the software efficiently.
Now there are many different types of software for accounting, but you would be better off by going with one that is specifically made for contractor accounting. These types of software are well aware of the challenges that construction brings when it comes to keeping up with numbers, and have adapted everything around those challenges.
This can also prove to be just as effective at saving time as hiring an accounting firm for your contractor accounting (like we talked about above) but also save some money in the process.
Final Thoughts On Construction Accounting
In the end, when choosing whether to go with an accounting firm, or accounting software, it all comes down to your situation and your preference.
However, not going with at least one of these options would almost be insensible. Things such as outsourcing and software, as a business owner, will make your life not only ten times easier, but will also save a ton of time, and possibly money.
Now that you know you need these things, and even know where to find a few, stop procrastinating! As a business owner, if there is time and money to be saved like there is here, you need to jump all over the opportunity! Go do it!