Should I be using construction in progress accounts if I am a GC whose client recently got a construction loan and is getting disbursement payments for work in progress? I need to maintain the books for this account but I'm confused as to how I should make the entries. Should I be using WIP accounts for the expenses? Or just enter each transaction as COGS/EXP into the P & L? I would appreciate a tutorial that I can learn from.
Either way works. You have expenses and you get income for the job. Since you do not own the constructed domicile at any point in time you do not necessarily to my mind need WIP since you are never recording assets of your own. Same as a remodel but bigger.
You did give too much information- the new homeowners mortgage has nothing to do with you
Yes. Keep in mind that by issuing invoices or sales receipts along the way you are tracking your income in exchange for money deposited to your accounts. The biggest reason in construction to using an Estimate or an original Invoice for the entire job is to match up to the contract and that there is no confusion on how much you are to get paid for the work you perform. Progress invoicing from an estimate allows for change orders along the way
If I'm not doing markups on sub labor, just a fixed fee contract, do I enter checks made payable to me as Construction Income as well? Since the bank account is in my name, I'm technically writing a check to myself and was confused whether I had to assign disbursement payments and checks made payable to myself as Construction Income. This is the first time I'm doing this, thanks for all your help.
This is a complex question and depends on the nature of your business and projects - especially the length of the project and the timelines for payment from your customer relative to the timeline for the purchases you make and expenses you incur. WIP accounting is used if you want to have accurate monthly income statements during long term contracts with infrequent payments. Its a lot of work and requires more advances QB and accounting skills. If most of your projects are quick and/or have monthly payments related to your costs then WIP accounting is probably not needed.
YES, I need to get trained and there's limited training on quickbooks for contractors. I usually try to have to an expert on QB look over my books. For now, what I'm doing is using expense accounts for projects that are loan based and receiving disbursements, and using the WIP for my own lots that I'll be developing and building on. I may be doing it wrong, but hope to iron the details as I go. If anyone has any good resources for training materials, please let me know, and THANKS.
Allow me to hop in and share the training materials you're looking for! QuickBooks has free online training and guides about proper ways of recording your transactions and other best practices. You can visit our website to see them.
Here's the link: https://quickbooks.intuit.com/tutorials/webinars/.
You can also check out our QuickBooks Resource Center in this link: https://quickbooks.intuit.com/r/.
Always swing by anytime if you have questions. The Community is here to help.