Category: Construction Industry Standards
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Capitalization of Overhead in Construction – Section 263(a)
There are two exceptions allowed for small business residential contractors to escape the requirements of Section 263(a) – Capitalization of Overhead. The first is the $50,000,000 in sales per year threshold.
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Profit Standards for Residential Contractors
Profit standards for residential contractors vary depending on the type of contractor. In general, the net profit standard for contractors in the upper tier of performance range from 5.8% to as high as 9.6% of sales.
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Using Cash in Construction
There is a notion in business that using cash to pay for materials or service is illegal. IT IS NOT ILLEGAL TO PAY FOR MATERIALS OR SERVICE WITH CASH. It is illegal to do this if you do not properly document the transaction.
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Work in Process as a Control Account
A control account in the Chart of Accounts is used when there is a need to separate multiple third parties with a similar function. Work in process works perfectly as a control account.
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Job Cost Reports – Balance Sheet Set
Construction accounting uses job cost reports to inform management of progress and existing issues with projects. There are several different sets of reports. The balance sheet set functions as an overall financial picture for the company.
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Roofer – Business Dynamics
Business dynamics for roofers depend heavily on labor to accomplish their task. They are also highly susceptible to weather conditions and dangerous variables.
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Markup Percentage for Remodelers
In the construction industry, remodelers face a different set of criteria than your traditional new home builder. Because of these issues the markup percentage on costs is generally much higher than other forms of construction.
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Phase Codes and Cost Codes with QuickBooks and Construction Accounting
Phase codes are functional groups of costs with the residential construction industry.
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Construction Accounting Terminology
In construction accounting, accountants and bookkeepers use certain terms and there are distinct meanings associated with these terms. This article is designed to introduce beginner accountants and contractors to these terms from the perspective of financial reporting.
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Margins in Construction
I’ve been asked to identify the average margins in the construction industry. Honestly, there is no such thing. I tried and after several hours of research I couldn’t even get one of the types of contractors to have consistency in their numbers.