How to do Construction Accounting?
Construction is a very different industry and has a unique business structure. It is not so easy to do construction accounting as there are many things which we have to take care of on daily basis. A strong accounting is required in each & every industry so that it gives you data by which you can easily make good decisions for your business.
In this blog, we will explain you how to do construction accounting easily –
1. Put your best Bookkeeping foot forward
The most important step which a business should take is to appoint a good bookkeeper. You might be very busy in your business work, meetings, emergency call or even managing your business but there are two things which you really can’t ignore i.e. accounting & bookkeeping. Bookkeeping includes recording of financial transactions & managing of payroll. Bookkeeping not only helps in managing business expenses but also helps you in making better decisions.
2. Record Important Expenses
Recording important business expenses is not an easy task as it not only includes recording of raw material expenses but labour expenses too. Therefore, every business owner should have two separate accounts – one for recording business expenses and other for recording personal expenses. If you are only having one account to record both business & personal expenses, there may be a chance that transactions get mixed up with each other and difficult to find at the time of filing returns. Hence, open a separate account for recording business transaction as it will differentiate your building material (business expense) from your weekly supermarket bill (personal expense).
3. Maintain Daily Records
The most important and the critical thing to do in construction accounting is to maintain records regularly. If you will not maintain your records on daily basis, it will be difficult for you to track the financial position of your business.
If you want to continue in construction industry, you must update your records on daily basis and it should be correct unless you will not be able to track the real financial position of your business.
You can also update your records with the help of easy to use Nomisma mobile app which you can access anytime, anywhere and it is MTD compliant too. If you will update your records daily, then there will be very less chances of doing mistake at the time of filing returns.
4. Be Aware of Tax Deadlines
Tax deadlines are very important in business as you need to submit your tax returns before the deadline reaches. Best technique is to set up a reminder so that you have enough time to complete your returns without any chance of happening mistake.
Update your records, prepare your tax returns much before the deadline and submit it. In case you become late in filing your returns, you may have to face fines, penalties etc.
5. Manage your Cash Flow
Managing cash flow is also very important as construction industry businesses deals in high revenues. It is our responsibility to invoice clients or chase them for payments for expensive raw material & labour.
In case, if client decides not to pay you for any reason, you should stop work immediately in order to save your cash flow position from damaging. Most of the small construction companies are failed as they neglect the step of managing the cash flow.
How Nomisma Cloud Accounting Software helps Construction Industry?
Nomisma cloud accounting software is one of the best accounting software’s for SMEs, Accountants, Sole Traders, Contractors, Agents, self-Employed & Freelancers. It not only provides you data privacy and security but also gives you the clear picture of the current financial situation of your company. This cloud accounting software provides you access to everything in a much easier way in comparison to other software’s. You can easily record important business expenses, maintain your daily records, get reminders about tax deadlines and manage your cash flows with the help of Nomisma cloud accounting software. You will find everything online along with automatic updates and data backup. With the help of Nomisma cloud accounting software, you can run your business from any part of the world.