Preparing for tax season can be daunting. Our monthly bookkeeping services ensure your financial records are well-organised, simplifying the tax preparation process. We collaborate closely with your accountant to provide all necessary documentation.
Why Bookkeeping Matters More in the Construction and Trade Business
Unlike other industries, construction and trade businesses are intricate and often span months, even years. This project-based nature throws a unique curveball at bookkeepers. They must meticulously manage income and expenses for each project, ensuring accurate allocation of costs like materials, labour, subcontractors, and equipment.
Bookkeeping for self-employed tradies is particularly complex due to the project-based nature of their work. To maintain good client relationships, they require reliable tracking systems and careful management of accounts payable.
The construction industry also relies heavily on progress billing and milestone payments. Bookkeepers are vital in tracking project progress and ensuring invoices align with completed work. This precise record-keeping prevents disputes and maintains a healthy cash flow.
Here are some additional aspects that make bookkeeping for tradies unique:
- Retention and Trust Accounting: It is common practice to hold retention funds in trust accounts to cover potential defects. Bookkeepers must handle these funds separately, adhering to stringent trust accounting regulations.
- Variations and Change Orders: Construction projects are rarely static. Change orders and variations necessitate meticulous documentation of these adjustments and corresponding financial record updates. Accurate tracking prevents financial discrepancies.
- Cash Flow Challenges: Construction companies often face fluctuating cash flow. While large lump sums may come in at project milestones, expenses like wages and materials are ongoing.
- Cost Allocation: Accurately allocating costs across projects is critical. Expenses can vary significantly, and bookkeepers need to ensure each project’s profitability is accurately reflected.
- Payroll for a Diverse Workforce: The construction industry employs a diverse workforce – contractors, sub contractors, and casual labourers. Managing various employment types, ensuring compliance with modern awards, and adhering to industrial relations laws further complicate payroll processing.
How Do Small Construction Companies Benefit From A Professional Bookkeeper?
Maintaining accurate and detailed financials offers a multitude of benefits for construction and trade businesses. Providing bookkeeping services specifically tailored to their unique needs ensures that financial management is both effective and efficient:
- Improved Project Management: Bookkeepers provide valuable insights into project profitability, allowing for better resource allocation and cost control. They become financial partners, helping avoid budget overruns and ensuring project success.
- Strategic Decision-Making: With accurate financial data, construction companies can make informed decisions about bidding, pricing, and resource allocation across projects. This data-driven approach fosters long-term business growth.
- Enhanced Cash Flow Management: Bookkeepers help anticipate cash flow fluctuations and develop strategies to mitigate potential shortfalls. This proactive approach ensures smooth operations and timely payments to suppliers and employees.
- Compliance with Regulations: Construction and trade businesses face a complex web of regulations. Bookkeepers ensure adherence to ATO, ASIC, and other relevant regulations, saving businesses from costly penalties and legal troubles.
Bookkeeping Tips for Busy Contractors and Construction Business Owners
Running a trade business is about building dream homes, functional offices, and impressive renovations. But behind every successful construction project lies a strong financial foundation. Tradies running their own business face unique challenges, and effective bookkeeping can help manage these challenges.
Here are some bookkeeping tips specifically for tradies and construction business owners to help you build that strong foundation:
Consider Monthly Bookkeeping Services
As your business grows, the financial complexities can quickly multiply. Outsourcing your monthly bookkeeping services to a specialist versed in the construction industry is a smart investment. These experts ensure your records are accurate, meet legal requirements, and free up your valuable time to focus on what you do best – building! Additionally, accurate bookkeeping helps avoid wasting money on late payment fees and spending money the business doesn’t have.
For smaller businesses, the budget for a dedicated bookkeeper might be tight. However, don’t confuse bookkeeping with administrative tasks. Invest in a consultation with a professional bookkeeper to gain a solid understanding of construction bookkeeping. This equips you to handle basic tasks in-house, with the peace of mind of knowing you have expert guidance readily available.
Stay on Top of Your Projects with Digital Tools
Even minor changes to orders, contracts, or plans in the construction industry can wreak havoc on your finances. Consider these digital tools to stay in the loop across all your projects.
Project Management Software
Numerous online platforms can help you track projects and orders efficiently, such as AroFlo and Fergus, which cater specifically to the construction and trade businesses.
Why AroFlo?
AroFlo is an essential tool for construction and trade businesses of all sizes. It provides a comprehensive solution for streamlining operations and managing projects efficiently.
- Quoting & Estimating: AroFlo’s cloud-based estimating accounting software allows you to create professional quotes for clients on the spot and send them immediately.
- Quick & Easy Scheduling: Schedule field technicians by dragging and dropping them onto the calendar, reducing wasted time in admin and improving productivity.
- Purchase Materials & Labour: Automatically import purchase orders and allocate them to jobs, integrating with leading suppliers for seamless project planning.
- Fast & Accurate Invoicing: Track all costs against your project, including labour, materials, and expenses, and generate personalised invoices.
- Compliance & OHS: Manage safety documentation and track compliance requirements, ensuring 100% visibility of your OHS compliance.
- Comprehensive Reporting: Customisable reports help track KPIs, billable hours, sales, and client response times, providing valuable insights into your business performance.
Fergus for Job Costing, Quoting, Estimating
Fergus is designed for small businesses and growing teams. Its user-friendly features help you do more work and increase profit.
- Job Costing, Quoting, Estimating & Invoicing: Build templates for frequently done jobs, add markups, and create quick, repeatable quotes.
- Tiered Pricing: Create tiered markups for different client types or job types, adjusting margins to stay competitive or charge more for one-off clients.
- Version Tracking: Track and create multiple quote versions, maintaining a full history of changes and customer requests and ensuring you always have detailed records.
Keeping a digital trail and fostering clear communication allows you to organise your finances and effectively manage project budgets meticulously.
Use Cloud-Based Record-Keeping
Paperwork can be a huge time drain, especially during tax season. Save yourself the hassle by transitioning to cloud-based documentation and record-keeping.
Benefits of Cloud-Based Record-Keeping:
- Saves time and effort
- Simplifies record-keeping for audits (ATO requires records to be kept for 5+ years)
- Easy access from any device
Popular options include online storage drives like Google Suites, OneDrive, or Dropbox. Additionally, cloud-based versions of Microsoft Office and Google tools automatically backup your files, ensuring everything is secure and accessible.
Invest in Accounting Software for Your Construction Business
Utilising accounting software can be a game-changer for managing your finances. These user-friendly platforms offer a central hub for:
- Payroll Management
- Invoice Creation
- Expense Tracking
Popular options include Xero, MYOB, and QuickBooks. At Way Better Books, we offer guidance on starting with Xero, helping you streamline your financial processes and free up even more time to focus on growing your business.
Questions to Ask a Professional Bookkeeper for Your Construction Business
When looking for a professional bookkeeper for your construction and trade business, it’s crucial to ask the right questions to ensure they are a good fit. Here are some questions to consider:
- What experience do you have with bookkeeping for tradies and construction businesses?
Understanding their expertise in the trades industry is vital. Bookkeepers with experience in construction and trade businesses will be familiar with industry-specific challenges.
- Do you provide monthly bookkeeping services, and what do they include?
Clarify the scope of their bookkeeping services to ensure they cover essential tasks like payroll processing, accounts payable, and business activity statements.
- How do you manage cash flow and financial planning for trade businesses?
Effective cash flow management is crucial for trade business success. Ensure they have strategies in place to handle cash flow fluctuations.
- What accounting software do you recommend and why?
The right accounting software can streamline your financial processes. Ask for their recommendations and reasons behind their choices.
- Are you a registered BAS agent?
A registered BAS agent is qualified to handle BAS lodgements and ensure compliance with ATO regulations.
- How do you handle payroll for a diverse workforce?
Managing payroll for contractors, subcontractors, and casual labourers requires expertise. Ensure they are capable of handling these complexities.
- What are your fees, and how do you charge for your services?
Understanding their fee structure is essential to avoid any surprises. Ask about their rates and how they charge for their bookkeeping services.
- Do you stay up to date with industry regulations and best practices?
Ensure they keep their knowledge current with industry standards and best practices.
- Do you provide tax advice, and how can you help optimise the tax situation for self-employed individuals?
Strategic tax planning is essential for business owners, especially self-employed individuals. Confirm if they offer tax advice to help you make informed financial decisions and optimise your tax situation.
How Way Better Books Can Help Your Construction Business
At Way Better Books, we understand the challenges and complexities construction and trade businesses face. Our expertise includes managing the complexity, administration, and compliance challenges unique to the industry. That’s why we offer a wide range of bookkeeping services to meet your needs, including:
- Project-based accounting: We meticulously track income and expenses for each project, ensuring accurate cost allocation and profitability analysis.
- Progress billing and milestone tracking: We streamline the billing process, ensuring timely invoices and healthy cash flow.
- Retention and trust account management: We handle retention funds with strict adherence to trust accounting regulations.
- Payroll processing: We manage payroll for a diverse workforce, ensuring compliance with all relevant regulations.
- Financial reporting and analysis: We provide clear and concise financial reports, giving you valuable insights into your business performance.
- Tax planning and compliance: We work closely with you to minimise your tax burden and ensure complete compliance with ATO regulations.
Maximise The Growth Potential of Your Projects With Expert Bookkeeping
Still struggling with chasing receipts and understanding your finances? Let Way Better Books handle the bookkeeping burden for your construction business. Our team of BAS agents and bookkeepers will streamline your finances, free up your time, and ensure you’re compliant with regulations.
Don’t let messy financials hold you back. Let’s chat and let Way Better Books help you build a stronger, more profitable construction business.