Constrcution Bookkeeping Expense Tracking

QuickBooks Expense Tracking Tips for Construction Firms

QuickBooks Tips for Tracking Business Expenses and Reimbursements in Construction

As a construction business owner or contractor, keeping track of expenses and reimbursements is crucial for maintaining a healthy bottom line. QuickBooks is a powerful tool that can help you manage your finances effectively. In this article, we’ll explore essential QuickBooks tips for tracking business expenses and reimbursements in the construction industry.

1. Set Up Your Chart of Accounts

Before diving into expense tracking, it’s important to set up your chart of accounts correctly. This will help you categorize your expenses and income accurately.

Tips for setting up your chart of accounts:

  • Create specific expense categories for construction-related costs (e.g., materials, equipment rentals, subcontractor fees)
  • Use subcategories to further break down expenses (e.g., under “Materials,” you can have subcategories like “Lumber,” “Concrete,” and “Electrical Supplies”)
  • Include a separate category for reimbursable expenses

2. Use Classes to Track Job-Specific Expenses

QuickBooks’ class feature allows you to track expenses for specific jobs or projects. This is especially useful in the construction industry, where you often work on multiple projects simultaneously.

How to use classes effectively:

  • Create a class for each project or job
  • Assign expenses to the appropriate class when entering transactions
  • Run reports filtered by class to see expenses for individual projects

3. Utilize the Vehicles Expense Tracker

Construction businesses often have multiple vehicles on the road. QuickBooks’ vehicle expense tracker can help you monitor fuel costs, maintenance, and mileage.

Steps to set up vehicle expense tracking:

  1. Go to “Company” > “Lists” > “Fixed Asset Item List”
  2. Add your vehicles as fixed assets
  3. Create expense categories for vehicle-related costs
  4. Use the mileage tracker feature to log business miles

4. Set Up Vendor Bills for Accurate Expense Tracking

Properly entering vendor bills ensures that your expenses are recorded accurately and on time.

Best practices for managing vendor bills:

  • Enter bills as soon as you receive them
  • Use the “Bill” feature instead of “Check” when paying expenses
  • Assign expenses to the correct categories and classes
  • Set up recurring bills for regular expenses (e.g., rent, utilities)

5. Implement Job Costing

Job costing is essential for construction businesses to track profitability on individual projects.

Steps to set up job costing in QuickBooks:

  1. Create estimates for each job
  2. Use items to track materials and labor costs
  3. Assign expenses and income to specific jobs
  4. Run job profitability reports to analyze performance

6. Use Purchase Orders for Material Expenses

Purchase orders help you track material expenses and manage your inventory effectively.

Tips for using purchase orders:

  • Create purchase orders for all material orders
  • Link purchase orders to bills when they arrive
  • Use the “Receive Items” feature to update inventory
  • Run reports to track open purchase orders and expected expenses

7. Track Employee Expenses and Reimbursements

Construction workers often incur out-of-pocket expenses that need to be reimbursed. QuickBooks can help you manage this process efficiently.

Steps to track employee expenses and reimbursements:

  1. Set up an “Employee Reimbursement” expense category
  2. Create a “Reimbursable Expense” item
  3. Enter employee expenses as bills
  4. Use the “Pay Bills” feature to reimburse employees
  5. Run reports to track reimbursements by employee or job

8. Utilize the Bank Feed Feature

The bank feed feature in QuickBooks can save you time and reduce data entry errors when tracking expenses.

How to make the most of bank feeds:

  • Connect your business bank accounts and credit cards to QuickBooks
  • Review and categorize transactions regularly
  • Set up rules to automatically categorize recurring expenses
  • Reconcile your accounts monthly to ensure accuracy

9. Use the Mobile App for On-the-Go Expense Tracking

The QuickBooks mobile app allows you to track expenses and manage your finances from job sites or while traveling.

Features of the QuickBooks mobile app:

  • Capture and upload receipts
  • Create and send invoices
  • Track mileage
  • View financial reports
  • Manage employee time

10. Set Up Approval Workflows for Expenses

Implementing approval workflows can help you maintain control over expenses, especially in larger construction companies.

Steps to set up approval workflows:

  1. Define expense approval policies
  2. Assign roles and permissions to employees
  3. Use QuickBooks’ built-in approval feature or integrate with third-party apps
  4. Set up notifications for pending approvals

11. Customize Reports for Better Insights

QuickBooks offers a wide range of reports that can be customized to provide valuable insights into your construction business expenses.

Essential reports for expense tracking:

  • Profit and Loss by Job
  • Job Profitability Detail
  • Expenses by Vendor Summary
  • Budget vs. Actual
  • Vehicle Mileage Report

12. Integrate with Construction-Specific Apps

QuickBooks integrates with various construction-specific apps to enhance its functionality for expense tracking and project management.

Popular QuickBooks integrations for construction:

  • Procore: Project management and job costing
  • Buildertrend: Project management and customer communication
  • TSheets: Time tracking and scheduling
  • Knowify: Job costing and project management

13. Regularly Review and Adjust Your Expense Tracking System

As your construction business grows and changes, it’s important to review and adjust your expense tracking system in QuickBooks.

Tips for maintaining an effective expense tracking system:

  • Conduct quarterly reviews of your chart of accounts and expense categories
  • Solicit feedback from employees on the expense tracking process
  • Stay up-to-date with QuickBooks updates and new features
  • Attend QuickBooks training sessions or webinars to improve your skills

Conclusion

Effective expense tracking and reimbursement management are crucial for the success of any construction business. By implementing these QuickBooks tips, you can streamline your financial processes, gain better insights into your expenses, and make more informed business decisions. Remember to regularly review and adjust your system to ensure it continues to meet the evolving needs of your construction company.



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