How to Use Class Accounting in Construction
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
Class accounting is a form of accounting whereby the revenues and direct costs are grouped into divisions within the company. It is a very effective form of accounting in construction. Learning how to use class accounting in construction is easy and works extremely well with phase accounting.
The following describes class accounting especially as it relates to residential construction. In addition, it illustrates how to use class accounting with phases to manage projects and the particular form of construction. It is important for the reader to understand that class accounting is functional for the revenue section and the direct costs section of the profit and loss statement. Indirect costs such as project management costs, transportation, communications can not be assigned a class in your small construction companies. This is because these types of expenses including overhead expenses are spread across the entire group. So there is no need to assign them a class designation.
Most residential contractors do more than just build houses; they also do additions and often do remodeling work. See The Different Types of Residential Contractors for information about the different types of contractors. When a
© 2013 – 2022, David J Hoare MSA. All rights reserved.