Do I need a bookkeeper who understands construction?
The short answer is yes, especially if your business does any kind of job-based work where you need to track profitability by project.
Construction accounting has requirements that don’t exist in most other industries. Job costing, progress billing, retainage, WIP schedules, and change order tracking are all standard for contractors. A general bookkeeper who’s great at categorizing expenses and reconciling accounts can still struggle with the specific needs of a construction business.
Job costing is the big one. You need to know what each project actually cost you in labor, materials, equipment, and subs. Without accurate job costs, you’re guessing on future bids. Guess too high and you lose work. Guess too low and you win jobs that lose money. A bookkeeper who doesn’t understand how to allocate costs to jobs can’t give you the numbers you need to bid with confidence.
Progress billing adds another layer. If you’re billing based on percentage of completion, your books need to reflect what’s been billed versus what’s been earned. These aren’t always the same. A bookkeeper unfamiliar with construction might record revenue when you invoice rather than when the work is completed, which throws off your profitability picture and can create problems with your tax timing.
Retainage is something most industries never deal with. That 5-10% held back until project completion needs to be tracked separately. It’s revenue you’ve earned but haven’t collected. It affects your cash flow projections and your balance sheet. A bookkeeper who doesn’t know to track retainage will have your receivables wrong.
If you’re bonded or trying to get bonded, your financial statements matter. Bonding companies look at your books closely. They want to see WIP schedules, accurate job costing, and clean receivables. A bookkeeper who doesn’t understand what bonding companies look for can produce statements that hurt your bonding capacity even if your actual financial position is strong.
Subcontractor management means tracking who you’ve paid, issuing 1099s correctly, and making sure you have documentation for compliance. This isn’t unique to construction, but the volume and frequency of sub payments makes it more complex than the occasional contractor payment in other businesses.
The real question is whether your business is complex enough that general bookkeeping won’t cut it. If you’re a one-person handyman doing small jobs and billing when complete, you might be fine with standard bookkeeping. If you’re running multiple projects, dealing with progress billing and retainage, bidding on jobs based on historical costs, or working toward bonding, you need someone who gets how construction works.
Our Phoenix area bookkeeping services include contractors who face exactly these challenges. The difference between a bookkeeper who understands construction and one who doesn’t shows up in the quality of information you get back. One gives you a record of what happened. The other gives you data you can actually use to run your business better.
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More Questions
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