No matter what industry your business is in, from construction to catering, good accounting gives you the data your business needs to make better decisions. Construction is an unconventional industry, with a unique business structure. So nailing this important practice is key.
The term accounting covers much more than just bookkeeping. Don’t worry if you’re not sure what the difference is, this blog will explain how to do construction accounting easily.
- Put Your Best Bookkeeping Foot First
- Track Important Expenses
- Take Care of Daily Records
- Be Aware of Tax Deadlines
- Manage Your Cash Flow
1. Put Your Best Bookkeeping Foot First
We understand you’re busy managing apprentices and dealing with emergency call-outs, but having your books in order is essential. Accounting and bookkeeping are two things you really can’t ignore.
Not only does bookkeeping help manage expenses but it allows you to make better business decisions down the line (it’s also very easy!). It includes jobs like recording financial transactions and completing payroll.
2. Track Important Expenses
Tracking business expenses can be tricky. It’s not just tracking materials - it’s labour too. If you don’t have separate accounts or cards for personal spending, important expenditure like this can get mixed in and be difficult to find when it’s time to file returns.
An easy fix for this is opening up a separate account that’s solely for business if you haven’t already. This will help distinguish building materials from your weekly supermarket shop.
3. Take Care of Daily Records
The critical thing to know about construction accounting is that you have to do it regularly. One of the easiest but most important steps to follow is maintaining daily records. It’s a lot more difficult for you to track the financial position of your business if you don’t keep accurate records.
Aim to implement a system and stick to it. Even if you’re away from the desk and working on a job, there are easy-to-use apps that make bookkeeping on the go simple. It’s not just a life hack, it’s compliant with the MTD scheme too.
Keep accurate records every day and there won’t be any mistakes when you’re completing your tax returns.
4. Be Aware of Tax Deadlines
A tax deadline can be tedious for anyone. It’s best practice to set a reminder so that you have enough time to complete your tax returns without any mistakes.
By keeping records accurate, you can ensure returns are sent off by the deadline. HMRC won’t be chasing you up because of any errors either, so you’ll avoid any unwanted penalties.
5. Manage Your Cash Flow
Construction accounting requires some caution. Big expenses for complex jobs should also result in big revenues. Make sure to invoice clients regularly or ask for payment upfront for expensive materials and labour.
If a client decides not to pay for any reason, you should stop work immediately to avoid damaging your cash flow. The majority of small construction companies fail because they’ve neglected this step. However, if you maintain your cash flow carefully, you won’t be one of them.
Now you know the steps to get started with construction accounting, you need to check you’re doing bookkeeping properly too.
Do Bookkeeping the Right Way With a Bookkeeping Checklist
All of the points we’ve mentioned are all great basic ways to get you started, but there’s more to know about how to manage everything as you go along.
That’s why we’ve created a handy checklist so you can conduct bookkeeping like a pro. It’s full of useful tips on why doing your books is important, how you can get started, tips to help improve your efficiency, what to look for in software - and so much more.
Get your free copy using the link below.
