A contractor with a small number of monthly transactions and a few straightforward jobs may need relatively little bookkeeping time. A construction company processing hundreds or thousands of transactions while running payroll, paying subcontractors and tracking costs across many active jobs is a completely different bookkeeping operation.

That is why a single “average construction bookkeeping price” is not particularly useful. The better way to understand cost is to look at what actually creates the workload.

Transaction Volume Is a Major Cost Driver

One of the biggest factors is the number of transactions that need to be reviewed, categorized and reconciled each month. More transactions generally mean more bookkeeping work.

But transaction count is only the starting point in construction. Two contractors with the same number of transactions can require very different amounts of bookkeeping depending on how those transactions need to be tracked.

Job Costing Changes the Equation

Good construction bookkeeping does more than tell you how much money came in and went out. It should help show what individual jobs are actually costing you.

Labor, materials, subcontractors, equipment and other costs may need to be assigned to the correct projects. The more jobs you run simultaneously—and the more detailed the job-costing system—the more bookkeeping work may be required.

This is one reason contractor bookkeeping should not be compared solely on price. Saving money on bookkeeping while losing visibility into job profitability can be an expensive trade.

Other Factors That Affect Construction Bookkeeping Cost

• Payroll: especially when labor needs to be allocated among jobs.
• Subcontractors: vendor records, payments and 1099-related tracking add activity.
• Progress billing: billing customers over the life of a project can create additional bookkeeping complexity.
• Retainage: amounts withheld until project milestones or completion need to be tracked correctly.
• Materials and equipment: costs may need to be assigned to particular jobs rather than simply recorded as general expenses.
• Multiple bank and credit-card accounts: each account must be reconciled and maintained.
• Number of active projects: more simultaneous jobs can mean more allocation and tracking.
• Condition of the existing books: inaccurate or months-behind records may require cleanup before normal monthly bookkeeping begins.

Cheap Bookkeeping Can Be Expensive If Your Job Costing Is Wrong

A contractor can have a profitable company on paper while unknowingly losing money on particular types of jobs. If labor, materials and subcontractor costs are not being assigned properly, management may be making bidding and pricing decisions using bad information.

The value of construction bookkeeping is not simply getting transactions entered. It is creating financial records that help the owner understand where the business is making money.

Do You Need a Full-Time Construction Bookkeeper?

Some larger contractors genuinely have enough financial and administrative work to justify a full-time employee. Many smaller and midsize construction companies do not.

If the business needs professional bookkeeping every month but does not have 40 hours of bookkeeping work every week, outsourcing can avoid paying for unused employee capacity. It can also eliminate some of the recruiting, training, payroll-tax, benefit, vacation and turnover costs associated with another employee.

See our guide to outsourced vs. in-house bookkeeping for a more detailed comparison.

What If the Construction Books Are Already a Mess?

That is not unusual. Growing contractors often reach a point where the bookkeeping system that worked when the company was smaller no longer provides the information the owner needs.

You do not have to clean everything up before getting professional help. Existing records can be reviewed, corrected and brought current before an ongoing monthly process is established. Learn more about bookkeeping cleanup and catch-up services.

Construction Bookkeeping Experience Matters

Capacity has extensive experience working with contractors and construction companies. Our team understands job costing, subcontractors and 1099s, payroll, progress billing, retainage, multiple simultaneous jobs, labor and material allocation, and equipment and vehicle expenses.

Learn more about our bookkeeping services for contractors and construction companies.