Construction accounting software helps make sure you get all the tax deductions you’re entitled to and streamlines every aspect of managing your business finances
Key Takeaways
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Construction accounting software helps with deduction tracking
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It gives you mobile access to accounting records
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The software categorizes your business deductions
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It tracks costs related to specific jobs and helps create quotes for new jobs
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Accounting software puts your numbers into useful and insightful reports that can help you assess performance and apply for loans
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It reduces errors and simplifies tax prep
Constructions firms have a lot of cash flowing in and out of their doors, and you need to track these numbers carefully if you want to understand your business’s performance and stay compliant with tax regulations. Very small businesses can often meet their accounting needs with spreadsheets or rudimentary bookkeeping software, but as your business grows and takes on big projects, you’ll find it worthwhile to invest in dedicated construction accounting software.
The right software helps ensure that you don’t miss any numbers. It provides you with critical insights about your business and reduces stress at tax time. To help you understand why construction accounting software is so critical, this guide looks at nine benefits of accounting software for construction firms and explains how it helps you stay on top of your tax deductions.
1. Deduction tracking
One of the biggest advantages of construction accounting software is that it helps you track your business deductions. Regardless of the size of your business, you need to be diligent about tracking your deductions. In most cases, income is easy to track, but if you fail to track your deductions, you will end up facing tax on more of your revenue than you should.
Construction accounting software provides you with an easy and consistent way to track all of your deductions, reducing the likelihood that you may forget to report any come tax time.
2. Mobile capabilities
Many construction accounting software options are based in the cloud, which gives you the ability to check on or update accounting records in real-time from anywhere you have an internet connection. For example, if you need to quickly process payroll, but you’re on a job site away from the office, you can initiate the process through your smartphone or using a tablet with a cellular connection.
Mobility can also help with tracking your tax deductions. Depending on the accounting software you choose, you may be able to enter the expense and snap a photograph of your receipt. Whether you’re buying lumber, taking a client out to lunch, or paying a vendor in person, these mobile capabilities help ensure you’ll never forget to record an expense.
3. Categorization
Construction accounting software also helps you categorize your expenses. With most software, when you enter your expenses, you can choose from popular deduction categories such as advertising, car and truck expenses, interest, office expenses, repairs and maintenance, utilities, or you can customize your own categories.
By categorizing your expenses, construction accounting software helps you see where you are spending your money. Then, you can compare outlays from different time periods and assess where you might be able to cut costs.
4. Job costing
Job costing is arguably the number one reason that construction companies need purpose-built construction accounting software rather than a generic solution. With job costing, you get the ability to track expenses related to specific projects, so you can see how much labor, direct expenses, and overhead you incur with each project.
Job costing lets you track different phases of each project, helping you assess the efficiency of different costs and tasks. It also helps you compare estimated and actual costs, improving your ability to generate accurate quotes on future projects. You can also create production reports that show how many labor hours you’re consuming based on different units of measurement.
5. Help with quotes
If you have quoting software, you can sync it with your accounting software to assemble quotes using prices from expenses in your accounting system and then adjust the quotes with job-specific details. Once the quote has been accepted, the software can automatically create an invoice to send to your client.
6. Business insights
Construction accounting software can provide you with business insights that you cannot get from raw data on its own. Your accounting software can turn data about your revenue and deductions into a variety of financial reports. For example, it can give you visibility into business performance in profit and loss statements, assess current financial standing with a balance sheet, or plan your spending and financing needs with cash flow statements.
Work-in-progress reports are especially useful for construction companies because they help you assess if you’re over- or underbilling, and they can help minimize cash flow issues due to billing too much of the project at the beginning. Of course, you can also customize reports based on the information you need.
7. Loan application support
Banks will only lend funds to construction firms that they are confident will repay the loans. If you don’t have clear financial records related to your income and expenses, you won’t be able to access the funding you need. Construction accounting software makes it easy to generate the reports lenders want to see with your loan applications.
8. Error reduction
Regardless of your industry, accounting software helps minimize errors. For example, by automating the reconciliation process with your bank and credit card statements, you reduce errors related to manual entry and can improve the clarity of your records.
9. Streamlining tax prep
Accounting software vastly simplifies tax prep. Rather than having to dig through stacks of receipts and invoices, you can simply print out a few reports and instantly have the numbers you need to populate your tax return. This saves you time and money during tax season, and it also helps to ensure that you are reporting the correct details on your tax return.
Contact Franco Blueprint today
Construction accounting software can improve your financial tracking while saving you time and money, and Franco Blueprint can help you get started. We guide businesses through the process of automating their accounting software, so they can reduce financial risk, increase cash flow, and focus on growing and managing their business. To learn more about how our services can help your construction firm, contact us today for a free consultation.