How Construction Accounting is Different from Bookkeeping

Posted by Amit Gupta on January 6th, 2024

Construction firms have specialised accounting needs due to the nature of their projects. To navigate these challenges effectively, it's crucial to partner with construction accountants who are well-versed in industry-specific guidelines and practices.

Why construction accounting is different

Construction accounting is distinct from general accounting in several ways. Unlike standard accounting, which is often periodic, construction accounting focuses on individual projects that may span long durations. This project-centric approach means that construction companies deal with varied and customised sales transactions.

Additionally, the decentralised nature of construction work complicates management control, impacting overall profitability. Factors such as long-term production cycles, retainage, and other industry-specific practices make accounting even more complex.

Key distinctions between accounting and bookkeeping

When hiring construction accountants, it's important to understand the difference between accounting and bookkeeping within the context of the construction industry.

• Definition - Bookkeeping involves the systematic recording and measurement of financial transactions. Accounting, on the other hand, interprets, summarises, and communicates these transactions.
• Objectives - Construction accounting focuses on assessing a project's financial health to guide informed decision-making. It includes the preparation of financial statements. Bookkeeping aims to systematically record financial transactions so that they can later be interpreted and compiled into reports.
• Decision-making - While bookkeeping data serves as raw information, accounting data is synthesised to facilitate essential business decisions.

Optimising your construction business with accounting services

Construction accountants offer more than just crunching numbers; they serve as financial advisors and risk analysts, providing a holistic view of a company's financial landscape. Services extend beyond basic accounting and include cash flow management, project planning, funding options, payroll services, taxation advice, and business consultation. The goal is to tailor these services to meet the unique requirements of construction companies, simplifying complexities that could otherwise have adverse effects on tax liabilities and profitability.

Trust the experts for your accounting needs.

Don't get bogged down by the intricacies of construction accounting and bookkeeping. Let the construction accountants at Allenby Accountants handle these complexities, allowing you to focus on your core business. Their expertise covers a broad range of services, from accounting and bookkeeping to risk analysis and financial advising. To learn how construction accountants can enhance your business, request a free, no-obligation consultation by calling 0208 914 8887 or visit AllenbyAccountants.co.uk for a quote.

About the Company:

Amit Gupta, Director, Allenby Accountants.

Allenby Accountants is an independent accounting firm in Uxbridge, the western part of London. Our team provides financial services and professional advice to assist you in achieving your business goals. We cater to various small and medium-sized businesses across London and assist them in maximising their wealth and minimising their expenses. Our services encompass bookkeeping, accounting, VAT management, tax management, tax planning, succession planning, inheritance tax, capital gains tax, and more. Our specialisations include serving sectors such as professional services, retail industry, medical and healthcare, property and construction industry, charity, and not-for-profit organisations.