Top 10 Construction Bookkeeping Problems
As specialists in bookkeeping for building and construction, we see some common issues that frequently need correcting or improving. It’s essential to ensure that these areas of your accounts and financial management are accurate.
Your business may have other areas needing attention, and we’d discuss those with you after our initial review of your current general ledger.
How confident are you that your current bookkeeping systems are following best practice in these top 10 trouble areas?
- Payroll – an important aspect of your business to get right. We reference the applicable award or agreement in conjunction with Employment Hero to provide payroll services and HR advice relevant for the building and construction industry. We’ll also manage the portable long service leave scheme for your employees and all payroll liabilities as well as state payroll tax.
- Are you working with contractors? Whether companies or sole traders, we’ll help you stay on top of contractor costs including voluntary withholding, superannuation and allocating payment for labour and materials.
- Taxable Payments Annual Report (TPAR) – this is mandatory for contractors paid for building and construction services. For the TPAR to be easy and accurate, contractors and their invoices need to be set up and managed correctly within Xero.
- Job costing – if you want to keep track of each project to report on job costs and profitability, then accurate tracking is essential. Again, this can easily be managed in Xero.
- ATO liability planning – with cash flow often being problematic, we see many businesses who don’t plan for GST, PAYGW, superannuation or other liabilities. We’ll recommend strategies to plan ahead for liabilities and compliance reporting.
- Work-in-progress and progressive billing – depending on the nature of your projects, you may need to upgrade your systems and tools to increase the efficiency and flexibility of your invoicing and client communications.
- Retentions – we’ll keep track of retentions per the proprietor-builder agreement and account for the retentions in the right general ledger accounts, so you always know where you stand with expected payments.
- Accounts payable management – managing your cash flow is crucial, so we’ll work with you to manage cash flow within the terms of agreements with your suppliers and communicate with them on your behalf. Using an add-on such as Dext will streamline the process.
- Accounts receivable management – often overlooked, we’ll allocate payments correctly and chase up overdue payments on your behalf.
- Asset register – Xero has an excellent asset register built into it, which makes end of year asset reconciliation a breeze for your tax agent. It’s quick and easy to set up and another service we offer.
Construction Bookkeeping and Payroll
Payroll is one of the most challenging areas for a business owner in any industry. The building and construction industry has one of the most complicated awards out of the 200+ modern awards we currently use for Australian payroll.
Modern awards are updated every year, and sometimes more than once. Rules for casuals, overtime, penalty rates and allowances are just some of the award aspects that need particular attention. The building and construction industry has special regulations for redundancy, site allowances, weather, accidents and more.
There has been a lot of media attention in recent years on underpayment of wages and incorrect classification of workers, with hefty penalties for businesses. Victoria has recently introduced new laws that make deliberate underpayment of wages a criminal offence with other states set to follow suit. Getting your payroll organized and managed by construction bookkeeping and payroll specialists will minimize the chance of getting penalised. It’s one less headache for you as the business owner.
Check out the case study of work we did with a construction company to fix their payroll chaos.
On The Money Bookkeeping – Construction Bookkeepers Helping to Build your Business
Your industry is stressful enough without adding the burden of needing to understand specialised tax laws, accounting and compliance. Let us help you streamline your administration and construction bookkeeping processes to give you more time and energy for your business.
Talk to us today for a review of your current bookkeeping and business systems. Let’s discuss what you need to take your business to the next level of profitability.