While bookkeeping in the construction industry can be challenging due to its many considerations, it’s an essential part of successfully running a construction firm. Here’s what you need to know about bookkeeping for construction companies.

Bookkeeping in construction is a unique kind of financial management and accounting. Not only is it used for tracking each job, but it allows you to analyze how expenses are affecting the firm as a whole. With proper bookkeeping (i.e., tracking and recording all payments and costs), firms will have a deeper and more informed understanding of their financial situation, allowing them to act accordingly.

Construction bookkeeping is important since projects in this industry tend to be complex. Calculating revenue can be difficult without the right information, especially when your firm works on multiple projects. All costs must be tied together in bookkeeping, including expenses from labor, equipment, materials, transportation, and insurance.

There are several factors that distinguish bookkeeping in construction from other industries.

For one, payroll for construction is more complex, and involves much more than agreeing on a flat rate for every project. Projects like government-funded projects require you to pay a prevailing wage, a minimum hourly rate that’s typically higher and determined by each state’s Department of Labor. Paying any lower than what’s legally mandated can result in penalties—and even jail time.

You’ll also need to take into consideration things like taxes, travel pay, and union rates.

Keep reading this blog on gobridgit.com