What kind of accounting does a construction company need?
Construction companies need job costing that tracks every dollar by project. Labor, materials, subcontractors, permits, equipment rental all get coded to specific jobs so you can see actual costs versus estimates and know which types of work make money.
Without job-level tracking, you’re looking at total revenue and total expenses for the month. That tells you whether the business is profitable overall but hides which projects made money and which lost it. You end up bidding more work at rates that don’t actually work because you don’t know what the last similar job really cost.
Contractors and home services businesses also need proper revenue recognition for progress billing. When you bill a customer for work completed, that revenue should be recognized even if you haven’t been paid yet. Retainage gets tracked as an asset until it’s released. Your P&L should reflect work completed, not just cash collected.
Subcontractor management matters for 1099 compliance. You need to track who got paid what and issue 1099-NEC forms at year end. Miss those filings and the IRS comes looking. Payroll for your crew needs to handle varying schedules and overtime correctly.
Tax preparation should capture Section 179 depreciation on trucks and equipment, mileage deductions, and home office if you run the business from there. Quarterly estimates prevent surprise tax bills in April when you had a profitable year but didn’t set money aside.
Most Phoenix bookkeeping services don’t understand construction-specific requirements. Job costing, progress billing, and subcontractor tracking aren’t standard bookkeeping. They require systems set up specifically for how contractors operate.
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