Four Construction Bookkeeping Pitfalls

The construction industry has many moving pieces and there are many unique challenges to be aware of. Bookkeeping errors can easily occur so we’re laying out four common pitfalls to avoid. 

Disorganization: If you’re not outsourcing, organized in-house bookkeeping is essential otherwise you can fail to keep tabs on project costs and that will lead to tax issues.

Poor job cost estimates: For companies using the percentage of completion method, poor estimates can cause problems with revenue recognition. To create accurate job cost estimates, develop a good understanding of all the components of job costs — which include overhead, labor and materials.

Incorrect overhead calculations: It’s important to regularly review all costs and ensure they’re included in overhead calculations. Overhead may include office costs, insurance, maintenance and training.

Mismanaged change orders: Even though it can be time-consuming, it’s important to perform a thorough estimate of costs and get each change order documented and approved before starting work.

If you need to outsource your bookkeeping, get a free estimate today!