Category: Accounting

Construction businesses generally have money moving in and out at different stages of a project. Materials and subcontractors need payment before a client makes the next progress payment.

Basic bookkeeping records these transactions, but construction businesses also need to know which job the payment belongs to, invoices, outstanding amounts and profitability of the project. This is where specialised bookkeeping services help keep project costs, progress payments and retentions organised.

When these figures are managed by project, business owners get a clearer picture of the money in each job and the cash they can expect to receive.

How Job Costing Helps Track the True Cost of a Project

A construction project seems profitable based on its quoted price, but the actual margin depends on what you spend to complete the job. Job costing helps you track these costs against each project instead of treating all business expenses as a single unit.

For each job, you can record direct costs like:

• Materials: Timber, concrete, steel, fittings and other supplies.
• Labour: Wages and other labour costs directly linked to the project.
• Subcontractors: Payments to electricians, plumbers, carpenters and other trades.
• Plant and equipment: Project-based equipment hire and related costs.
• Other job costs: Delivery, waste removal and other expenses for the project.

Comparing these actual costs with the original quote or budget shows whether a project is tracking as expected. If material costs rise or labour hours exceed the initial estimate, you can identify the difference while the project is still underway rather than discovering it after completion.

This also makes it easier to understand the actual profit margin of each project. It also differentiates between jobs that are generating healthy returns and those where costs are exceeding the margin.

Managing Progress Payments and Progress Claims

Construction projects usually run for weeks or months, so waiting until the entire job is finished to receive payment puts pressure on your cash flow. Progress payments allow you to invoice the client at agreed stages of the project, based on work completed or milestones reached.

From a bookkeeping perspective, each progress claim must be recorded against the correct project and matched with the payment when it is received. This gives you a clear record of what has already been billed, what has been paid and what remains outstanding.

Keeping progress payments organised also helps you identify overdue amounts before they become a larger cash flow problem. When your books clearly show upcoming and outstanding claims, you can better anticipate when money should come into the business and plan your expenses around those expected payments.

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How Retentions Affect Construction Bookkeeping 

A retention is an amount a client holds from a construction payment until an agreed stage of the project is reached. It gives the client some protection if defects or outstanding work need to be addressed, but it also means your business may have completed the work without receiving the full amount invoiced.

For bookkeeping purposes, it is important to differentiate between the amount invoiced, the amount received and the retention still owed. 

For example, if you invoice $50,000 and the client retains 5%, you receive $47,500 while the remaining $2,500 stays outstanding until the retention is released.

Keeping these amounts clearly recorded helps you avoid treating the retained money as a normal overdue invoice or overlooking it altogether. You can also track when each retention is due for release and include those expected receipts when reviewing the project’s cash flow.

GST on Construction Materials and Labour 

For construction businesses registered for GST, keeping GST records accurate is important because both project income and many business purchases can involve GST. GST-registered businesses generally charge GST on taxable sales and may claim GST credits for eligible business purchases.

Materials such as building supplies may include GST when purchased from a GST-registered supplier. If the purchase meets the requirements for a GST credit, the business can claim the GST paid in its activity statement. Labour must also be recorded correctly when subcontractors complete work. 

The GST treatment depends on the subcontractor’s circumstances and the nature of the supply, so invoices and supplier records should be checked rather than assuming every payment is treated the same way.

Keeping material, labour and subcontractor costs properly recorded also makes it easier to reconcile GST and prepare accurate BAS records. Construction businesses should also be aware that payments to contractors may have separate reporting obligations under the Taxable Payments Annual Report (TPAR).

Managing Construction Cash Flow When Payments Are Delayed

Construction businesses have to cover wages, supplier invoices, subcontractor payments and other project costs before receiving the next progress payment from a client. Retentions can extend this gap further, leaving money tied up in completed work. Without a clear view of what is due and when it is expected, a business can have a healthy project pipeline but still struggle to meet short-term expenses.

Northern Beaches bookkeeping services for construction companies can help you keep progress payments organised by recording invoices against the correct projects, tracking outstanding amounts and managing payments as they come in. Contact us to know more about how you can setup your business payments through bookkeeping.

Running an automotive workshop means keeping track of jobs, parts, labour, suppliers and customer payments every day. With so many transactions moving through the business, small accounting oversights quickly turn into cash flow issues or unexpected problems at tax time.

This is where accounting for automotive businesses becomes important. Building a few simple accounting habits help workshop owners keep their records accurate, understand job profitability and avoid any surprises at the end of the financial year.

Accounting Habits That Automotive Owners Should Build

Keeping your accounts under control starts with knowing exactly where your money is going. One of the simplest ways to do this is to reconcile your accounts regularly. 

1. Re-check your bank and workshop accounts regularly

Make time each week to match your bank transactions with the records in your accounting software. Check customer payments, supplier bills, card transactions and workshop expenses to make sure nothing is missing, duplicated or recorded incorrectly.

Regular reconciliation makes it simpler to spot errors while the transactions are still fresh. It also gives you a clearer picture of your workshop’s cash position, helping you avoid re-working to correct months of unreconciled transactions when the financial year ends.

2. Check job pricing against actual costs

Review completed jobs by comparing the original quote with the actual cost of parts, labour and other expenses. If a repair takes longer than expected or a part costs more than originally estimated, record the difference rather than relying on the initial job price.

Doing this regularly shows which types of jobs are delivering healthy margins and where your pricing may need to change. It also helps prevent a common year-end surprise like discovering that strong workshop revenue has not translated into the profit you expected.

3. Keep Insurance Jobs Separate and Clearly Tracked 

Record each insurance job separately and keep track of the insurer’s approved amount, work completed, invoices issued and any customer contribution or excess. Review outstanding insurer payments regularly so delayed claims do not get mistaken for completed or settled jobs.

This gives you a clearer view of money still owed to the workshop and makes it easier to follow up on unpaid claims. It also creates a cleaner record for your accountant or bookkeeper when reviewing the business accounts.

4. Stay on top of supplier bills and customer payments

Keep supplier invoices, customer invoices and payments recorded as they occur rather than letting them pile up. Regularly review what customers still owe you alongside upcoming payments to parts suppliers, equipment providers and other business expenses.

 

This helps you see potential cash flow gaps before they become a problem. It also reduces the risk of missing an overdue customer payment or an important supplier bill, giving you a more accurate picture of the workshop’s finances throughout the year.

5. Review your numbers before the end of the financial year 

Do not leave your workshop’s financial review until tax time. Before the end of the financial year, review your revenue, expenses, outstanding invoices and major costs to check whether your accounts reflect the business accurately.

Look for unusual expenses, overdue payments, changes in job margins or gaps in your records. Reviewing these figures early gives you time to correct errors and discuss any concerns with your accountant or bookkeeper before finalising your accounts.
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How Can You Keep Your Workshop’s Accounts Under Control? 

Good accounting habits make it simpler to keep track of workshop income, expenses, job profitability and outstanding payments across the year. Instead of leaving reconciliation and financial reviews until tax time, regular checks help you spot issues while there is still time to address them.

For workshop owners who do not have the time to manage these tasks themselves, ongoing bookkeeping support can keep records updated and financial information organised. This gives you a clearer picture of your business while allowing you to focus on running the workshop.

Setting up an SMSF includes more than deciding how the fund will invest. You also need to pick who will act as its trustee: the members as individual trustees, or a company as a corporate trustee.

Both structures work in their own ways, but they differ in setup costs, administration, liability, and how easily the fund can adapt to future changes. Understanding these differences helps you choose a structure that fits your situation and long-term plans, while professional SMSF accounting services can help you manage the setup and ongoing requirements.

What Is the Difference Between an Individual and Corporate Trustee? 

Before we jump into the nitty-gritty of how these structures work, let’s compare the two in overview.

Every SMSF needs a trustee to manage the fund and its assets. Both these structures helps in doing that. 

With an individual trustee structure, the members of the SMSF are appointed as trustees in their own names. With a corporate trustee, a company is appointed as the trustee, while the SMSF members usually become directors of that company.

Both structures help manage an SMSF, but they differ in areas like setup and ongoing costs, administration, liability and the ease of the fund handling changes to its membership. This pertains to the general dynamic between the two.

The main differences between the two structures include:

 

Factor	Individual Trustee	Corporate Trustee
Setup costs	Generally lower	Higher due to company establishment costs
Ongoing costs	No ASIC company annual review fee	ASIC annual review and company costs apply
Administration	Members act as trustees personally	Company acts as the trustee
Membership changes	Changes require updates to trustee and asset ownership arrangements	Generally simpler when members join or leave
Liability	Individuals act as trustees and can have personal liability	The company acts as the trustee, creating a separate legal entity

Both structures can be suitable for an SMSF. The choice comes down to your fund’s membership, costs, administrative requirements and longer-term plans.

When Does Each Structure Make Sense?

The right trustee structure depends on your SMSF’s current circumstances and how you expect it to change over time.

An individual trustee suits you if:

• You have a simple SMSF structure with few members.
• The fund is unlikely to have changes in membership.
• You want to keep initial setup costs lower.
• Your fund’s administration is relatively direct.

A corporate trustee suits you if:

• Your SMSF has multiple members or membership may change in the future.
• You want the trustee to be a separate legal entity.
• You want a structure that can make changes to membership and trustee arrangements more direct.
• Succession or estate planning is a necessity for your SMSF.

The most suitable structure will depend on your circumstances, so consider seeking professional advice before establishing your SMSF.
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Which SMSF Trustee Structure Should You Choose? 

There is no single trustee structure that suits every SMSF. Consider your fund’s current membership, setup and costs, administrative requirements and future plans before picking between an individual or corporate trustee. Getting professional advice before establishing the fund also helps in avoiding structural changes and additional costs later.

Northern Beaches Accountancy makes the process simpler by helping you understand your options and set up your SMSF structure based on your circumstances. Our SMSF accounting services also support you with the accounting and compliance requirements of your fund.