Bookkeeping for Construction Companies

If receipts and reconciliation reports aren’t your thing, let the experts take care of balancing your books. You focus on earning money, and we’ll let you know if you’re spending too much.

What is the difference between accounting and bookkeeping?

Bookkeeping

Bookkeeping and accounting are both essential for businesses and overlap in many ways. The key difference is that bookkeeping tends to be more administrative – keeping track of each individual transaction and recording every penny spent or earnt. Think of it as the day-to-day stuff, tracking what goes in and what goes out.

Accounting

Accounting is bigger picture – it’s about analysing the financial data and using it to plan and forecast.

Accounting is also about reporting and presenting data. That can be for internal use (to help with strategy), for compliance purposes (tax returns for HMRC), or to attract investors (or buyers if you plan on selling your business).

What exactly does a bookkeeper do?

Depending on the complexity of the business, a bookkeeper’s role will vary. A bookkeeper will usually track business expenses, record transactions, reconcile bank transactions, and maintain your financial records.

Other duties may include creating and sending invoices, taking care of credit control, managing your payroll, generating expense reports, overseeing accounts receivable and accounts payable, updating your bookkeeping software and assisting with tax returns.

If you are a small business, a single individual may be able to take care of all the above. However, larger businesses may need a team to take care of the different finance roles.   

Can you do your own bookkeeping?

There is no legal requirement for businesses to use a dedicated bookkeeper. Many small businesses manage their own books or delegate it to a member of their team. Larger companies might hire an in-house finance person or outsource to a freelance bookkeeper.

However, with the many complexities of the construction industry, large firms find it more beneficial to work with a virtual finance team, such as Empowered by Cloud.

Rather than having one individual with a general knowledge of different finance functions, you have a team of people, each with specialist knowledge.

We ensure your accounting system and accounting software are effective and efficient. And as well as taking care of your core accounting functions, we provide proactive support to help you grow.

Where should you record transactions?

There are two main methods for bookkeeping: manual and computerised (or cloud-based bookkeeping).

Manual bookkeeping refers to non-digital record keeping. You keep track of transactions in physical books, journals or ledgers and file receipts, invoices and bank statements in files or folders.

However, with the government’s focus on Making Tax Digital, the increasing number of excellent accounting software products on offer, and the many benefits of keeping online accounts, most businesses are moving to digital bookkeeping.

Cloud-based bookkeeping is the most sensible option for a construction business.

What is the best construction accounting software for the construction industry?

Although it is possible to keep paper-based records or use a basic spreadsheet to record transactions, there are so many benefits to using cloud-based construction accounting software. It’s cost-effective, time-saving, and way more efficient. 

At Empowered by Cloud, we recommend Xero. It is the best accounting software for construction businesses. It is easy to use and offers everything you need for good bookkeeping.   

Not only does it allow you to record and reconcile day-to-day transactions, but it also allows you to send quotes and invoices from the system and manage your VAT and CIS returns digitally.

It integrates with many other useful apps, making financial management a breeze. Plus, you can run all kinds of reports to get up-to-the-minute information on your financial position. This helps you manage project costs and track expenses.

If you’re not already using Xero, our team will get you up and running and train you on all aspects of Xero so you can use it with confidence.

What are the different types of bookkeeping?

There are two types of bookkeeping: single entry and double entry.

Single-Entry System

Single-entry bookkeeping is more suited to businesses that have minimal transactions or straightforward finances.

It is used to record sales and expenditures as they occur. Sales are recorded in the sales journal, payments are recorded in the disbursements journal, and everything is reconciled to your bank statements. 

Double-Entry System

Double-entry bookkeeping is used where businesses have a high volume of transactions or more complex transactions. Double-entry has two equal and opposite sides – debit and credit.

On the surface, double-entry bookkeeping may sound complicated, but it is a more structured and systematic approach and gives you a more comprehensive view of your accounts.

If you are unsure which is right for you, speak to our team. We’re experts in construction bookkeeping and construction accounting systems.

Why is construction bookkeeping different?

Good bookkeeping practices are beneficial in any business, but the construction industry has a unique set of financial challenges.

Managing overhead expenses can be tough when materials need to be purchased in advance, but payment for work won’t be received until after a job has been completed.

Not only is managing cash flow a challenge, the reverse VAT charge means managing VAT is more complex than in other industries.

And as if that wasn’t enough, many construction companies have the added headache of managing CIS deductions when they work with subcontractors.

With so many extra complexities, it’s important that large contractors have the right support for bookkeeping and accounting. Empowered by Cloud can provide that support.

Why do construction companies need their bookkeeping done?

Many construction businesses fail because they lose control of their finances. Not surprising when you consider the size and volume of transactions, the unique tax rules, and the many different assets and liabilities that need to be accounted for.

Implementing good bookkeeping practices and an effective accounting system will keep your construction business compliant with HMRC and help you make better business decisions, avoid unmanageable debt, and stay profitable.

Empowered by Cloud specialises in construction bookkeeping and construction accounting.

You get access to a whole finance department with expert knowledge of the construction industry and construction accounting software.

Why choose Empowered by Cloud for your construction bookkeeping services?

When you work with Empowered by Cloud, you get a whole team of finance specialists. This is far more cost-effective than employing a full-time bookkeeper, credit controller, payroll manager, accountant and finance director.

And because we only work with construction companies, we understand the complexities of the construction industry and how to interpret data.

This allows us to provide proactive advice, spot potential cash flow issues before they occur, improve your job costing processes and find ways to reduce your tax liabilities.

What is included in our construction accounting service?

All our accounting and bookkeeping services are tailored to your business. We’re your virtual finance department with a team of experts covering all finance specialisms, including bookkeeping, credit control, payroll, VAT, CIS, and accounting.

You also have access to an expert finance director who will help you grow your construction company profitably and sustainably.  

The first step is understanding your business and your goals so we can create a finance package that works for you.

This can cover everything from automating your accounting systems and taking care of your payroll management to supporting you with job costing, forecasting, investment, and tax preparation.

How our bookkeeping service can help your construction company?

We only work with construction businesses and trades, so we know the sector inside out. While a generalist accountant may understand the broader aspects of accounting, we understand the unique financial challenges of the construction sector.

This means we are up to date with the latest tax laws, CIS rules and accounting systems for the construction industry. We help you control your cash flow, save time and plan for growth.  

We’re also big fans of automation, so we’ll get your finance systems running efficiently and effectively.

Most importantly, we’ll help you understand what your accounts are telling you so you feel in control of your cash and can invest with confidence.

Are your books a mess?

Don’t panic if you haven’t been particularly organised with your books until now. We understand how hard it can be to keep on top of your finances when you’re busy trying to run a business.

Job costing can be tricky, especially when you are managing multiple projects, have high material costs and don’t account for those indirect costs.

Maybe you’ve had help, but things are getting too complex for one person to manage. It happens.

Whatever state your books are in, we can help. In fact, the more muddled, the better – we love a challenge. The important thing is not to ignore the problem any longer.

Our first priority will be getting your books in order and ensuring you’re on the right side of HMRC and the bank manager.

Next, we’ll get to the good stuff of automating your processes and planning your business growth.

Are we the right construction accounting team for you?

You probably don’t want to trust just anybody with your financial information, and you shouldn’t.

It’s important you choose the right finance team for your business – a team that can help you achieve your goals.

That’s where we excel – helping construction businesses achieve their goals. But, like you, we don’t just want to work with anyone.

Unlike some other accountancy firms, we aren’t interested in working with companies who just want us to complete their tax returns each year and then leave them in peace.

We want to work with ambitious construction businesses. Businesses that want to grow and thrive.

If you want to become a successful construction company that can confidently manage multiple construction projects, get started with Empowered by Cloud.

Contact Empowered by Cloud today

Ready to find out more? Call us on 01592 800325 or email us at hello@empoweredbycloud.co.uk or fill out our handy online form to request a call back:

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