Construction & Contractor Accounting

Knowing there’s money in the bank doesn’t tell you whether the business is profitable. For a contractor running three jobs at once, that gap between “cash on hand” and “actually making money” is where a lot of the real financial risk hides.

Job costing is the whole ballgame

A contractor with three projects underway might see $500,000 in revenue and $400,000 in costs for the year, a healthy-looking number. But without job costing, there’s no way to know whether one project generated all of that profit while another lost money. Job costing breaks revenue and expenses out by project, so you can compare estimated labor and materials against what a job actually cost, and catch a problem while the project is still underway instead of after it’s finished.

Busy isn’t the same as profitable

A $200,000 job that costs $190,000 to complete made less money than a $150,000 job that cost $100,000, even though the first number looks bigger on paper. We’ve found that contractors who track profitability by job, not just by total revenue, make noticeably better bidding decisions the next time around.

Receivables can hide a cash problem

Construction work often gets paid weeks or months after it’s completed, while payroll, subcontractors, and material suppliers still need to be paid now. That gap is exactly why a contractor can look profitable on paper and still come up short on cash. Keeping a close eye on receivables, and on what’s owed to vendors, is often what catches that problem early enough to do something about it.

Payroll, subcontractors, and equipment

Labor should be tied to the job that used it, or your financials will tell you total payroll spend without telling you which project actually consumed it. The same goes for subcontractor costs, which can represent a meaningful share of project expense and need to be tracked with the same discipline as employee labor. And when it’s time for a truck, excavator, or skid steer, the tax and accounting implications are worth a conversation before the purchase, not after.

Growing past your current system

The bookkeeping approach that worked with two employees usually doesn’t hold up at fifteen or twenty. More projects, more subcontractors, more receivables, more payable. At some point, bookkeeping stops being an administrative task and becomes something that needs real structure behind it.

Construction accounting in Mid-Missouri

We provide monthly accounting, job costing, tax planning, and tax preparation for general contractors, subcontractors, remodelers, and specialty contractors throughout Columbia, Jefferson City, Ashland, Lake of the Ozarks, and the surrounding area.

If tax season is the first time you find out whether last year was actually profitable, let’s build something better before the next one starts.