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How is bookkeeping different for construction companies?

The biggest difference is job costing. Regular bookkeeping tracks income and expenses by category. Construction bookkeeping tracks everything by project. When you buy materials, they get coded to a specific job. When your crew works, those hours hit the project where they were spent. Without this structure, you know if your company made money overall but have no idea which jobs actually made money and which ones lost money.

Progress billing creates accounting complexity that most businesses never deal with. You bill based on percentage of completion, not when work is finished. You might invoice $50,000 this month for work that won’t be complete for another three months. Recognizing revenue correctly requires tracking what’s been billed, what’s been earned, and what’s still in progress.

Retainage is another construction-specific element. Customers often hold back 5-10% of each payment until the project is finished and inspected. That money is earned but not collected. Your books need to track retainage receivable separately so you know what’s actually owed to you and when you can expect it.

Subcontractor management adds a layer that most small businesses don’t have. Contractors often pay more to subs than to their own employees. Each sub needs to be tracked by job, and you’re responsible for collecting W-9s and filing 1099s at year end. Miss a 1099 and you could face IRS penalties.

Equipment creates allocation questions. A piece of equipment might work on three different jobs in a month. Properly allocating those costs to jobs requires either tracking equipment hours or using reasonable allocation methods. Just expensing equipment costs without allocation defeats the purpose of job costing.

Change orders need separate tracking from the original contract. Without separating them, you can’t tell if you went over budget on the original scope or if the additional work was properly approved and billed.

Cash flow timing works differently in construction than in most businesses. You often pay for materials and labor before you bill for them, and you get paid weeks or months after you invoice. Managing this requires understanding your work in progress and committed costs, not just what’s in the bank today.

Generic bookkeeping setup doesn’t work for contractors. The chart of accounts, the project tracking, and the billing structure all need to be configured for how construction companies operate. Macomb, MI bookkeepers who understand these requirements will set up systems that actually tell you which jobs are profitable and where your money is going. Without that construction-specific setup, you’re running blind on the numbers that matter most.

Bookkeeping for Small and Medium Sized Businesses

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More Questions

How do I appeal a denied medical claim successfully?

Successful claim appeals start with understanding exactly why the claim was denied, then gathering supporting documentation and submitting a formal appeal within the payer's deadline. Most denials are overturned when you provide the right evidence and follow the process correctly.

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Do I need a bookkeeper familiar with Michigan tax laws?

It helps, but not for the reasons you might think. Bookkeepers don't file your taxes. They set up your books so your accountant can file accurately. Michigan-specific knowledge matters most for payroll setup and sales tax categorization.

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How do I track lab costs and supplies for a medical practice?

Set up separate expense categories for lab reagents, testing supplies, and general medical supplies. Code each purchase correctly when it happens and review spending monthly to catch cost increases before they hurt your margins.

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Do Michigan LLCs need to file an annual report?

No. Michigan is one of the few states that doesn't require LLCs to file annual reports. This makes ongoing compliance simpler, though you still have other obligations to maintain your LLC in good standing.

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How do I handle accounts receivable for a dental office?

Dental AR requires managing two collection tracks: insurance claims and patient balances. Focus on front-end verification and same-day claims submission to prevent AR problems before they start.

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How does revenue cycle management work for dental practices?

Revenue cycle management covers every step from scheduling to final payment collection. It includes eligibility verification, claims submission with proper CDT codes, payment posting, denial management, and AR follow-up.

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Noor Bookkeeping provides full-service bookkeeping, payroll, and medical billing for small and medium sized businesses.

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