Construction accounting is job-level accounting. A contractor can be profitable overall and losing money on half the work, and a company-level profit-and-loss statement will not show it. The records that make jobs visible are the ones worth getting right.
This guide covers job-level costing, how revenue is recognized on long jobs, and the change-order and retainage records that decide whether a contract was actually profitable. Services depend on the firm accepting the engagement and the facts of your situation.
Job costing
Costs have to reach the job they belong to — labor, burden, materials and subcontractors — or every downstream report is approximate. Labor burden in particular is where estimates and actuals separate quietly.
Revenue recognition on long jobs
Percentage-of-completion accounting depends on data a contractor must track throughout the job rather than reconstruct at the end. Work in progress should reconcile to the project reports the team is already producing.
Change orders
Unpriced or undocumented change orders are the most common way earned revenue goes unbilled. Protecting revenue means recording the change when it happens and connecting it to job-cost accuracy.
Retainage
Amounts earned but not yet payable sit on the balance sheet and age differently from ordinary receivables. Retainage receivable needs its own aging and its own collection follow-up.
Lender funding
Draw schedules have to reconcile to job costs, or funding falls out of step with the work. That reconciliation is also what a lender will ask to see.
Florida-specific documentation
Contractors buying materials for resale and materials consumed on a job are treated differently, and resale certificates carry documentation risk when the paperwork does not match the purchase. Subcontractor insurance and tax certificates are worth keeping in one centralized system.
Frequently asked questions
Why does my company profit look nothing like my jobs?
Because company-level reporting averages jobs together. A contractor can be profitable overall while losing money on half the work, and only job-level costing shows which half.
When should a change order be recorded?
When it happens, not when it is finally priced. Unpriced and undocumented change orders are the most common way earned revenue goes unbilled altogether.
Should retainage sit in accounts receivable?
It can, but it needs its own aging. Retainage follows the contract rather than ordinary payment terms, so blending it into the standard receivables aging hides the condition of both.
Discuss your contracting business
Use the free 20-minute consultation to describe the trade, the typical job length and how costs are currently tracked. You will finish the call knowing what the work would involve and whether CPA Firm South Florida is the right firm for it.