Cash accounting records revenue and expenses when cash changes hands. Ideal for small construction firms, it simplifies tracking by focusing on actual cash flow. However, it may not reflect long-term project costs accurately. This method suits businesses with straightforward financial needs.

Understanding job costs and overhead expenses is key to construction profitability. Job costs include direct expenses like materials and labor for specific projects. Overhead covers indirect costs like office rent and utilities. Tracking these separately with cost codes ensures accurate project pricing and business sustainability.

Cost codes are vital for organizing expenses in residential construction. They categorize costs like labor, materials, and equipment by project phase. For example, “101-Labor” might track worker wages. Using cost codes with software like Buildertrend improves tracking and budgeting accuracy. This system helps contractors identify overspending early.

Every month, residential construction businesses must complete key reporting tasks to maintain financial clarity. This includes generating profit and loss statements, balance sheets, and cash flow reports. Accurate job cost summaries and percentage of completion (POCM) updates are essential. Ensure all invoices are logged, expenses reconciled, and payroll processed. Timely reporting helps track profitability and meet tax obligations. Ready to streamline your month-end reporting? Learn more about contractors team solutions!