Bookkeeping isn’t usually a builder’s favourite job but it’s a vital one.
Between managing changing teams, fluctuating wage rates and multiple projects on the go, keeping your accounts in order can quickly become a challenge.
The good news is, accounting for contractors and construction businesses doesn’t have to be complicated.
With a few smart systems in place, you can save time, stay compliant and keep your projects profitable.
Here are five practical tips to make your construction bookkeeping simpler and more effective.
1. Keep personal and business finances separate
One of the first steps contractors and construction businesses can take is to keep a separate bank account just for the business. Simply approach your local bank to open a new account which fits your needs and that’s it.
Setting it up is pretty easy too – just take your driver’s license or passport, along with your business registration and license documents, and you’re done.
2. Open several bank accounts
Tracking expenses and revenue can become easier if you have dedicated bank accounts for specific functions. For example, you could have one for payroll, one for customer payments, another one as a cash reserve, and so on.
This will allow you to better track how much money is coming into the business each month.
Did you know that most modern digital banks here let you set up ‘spaces’ or ‘pots’, allowing you to divide off your bank account so that you can set spaces aside for paying wages, for example?
3. Do a little job costing
Construction accounting is always project-focused, so you need to be proactive and find a way to track, categorise and report transactions for every job – otherwise known as job costing – which is an effective way to allocate expenses and revenue to each job.
This will provide accurate accounting in terms of profitability for every contract and help you prepare for tax time.
Job costing or total job cost can be calculated by adding up direct labour, direct materials and applied overhead.
There is software out there that can help you achieve this, although working with a financial accountant is a far better option.
4. Hold on to the minor details
In the habit of discarding business receipts? Don’t!
Receipts offer a proof of expense in case your company is ever audited and also provide insight into where all the money has been going. Also, as a golden rule: try not to pay for anything by cash because you can’t track it as easily.
Instead, use cloud accounting tools to make things easier for yourself.
For example, you can use Dext to take a photo of your business receipts. (Here at Jenner’s we can also train you how to use the software)
This way, you’ll never lose them as everything will be in your accounting system instead of having to store them and write everything down manually.
5. Reconcile your bank and supplier statements
As you get a monthly income and expenses report from your bank, you should reconcile your transactions to make sure that everything falls in line with your internal accounting system, payments, invoices etc.
Jenner’s can help you set up your accounting system and manage your bookkeeping, payroll or VAT returns.
This will free up more time for you to do what you do best, whilst also making it easy to get invoices out on time and take payments digitally on site when needed.
Keeping on top of your books doesn’t have to be a headache — with the right systems in place, you can stay organised, compliant and confident about your numbers. At Jenners Tax & Business Advisers, we specialise in supporting contractors and construction businesses across the UK with bookkeeping, payroll, VAT and tax planning that works in the real world.
📞 Get in touch on 01432 379988 or visit our Contact Us page to find out how we can help simplify your accounts and keep your projects running smoothly.