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Job Costing

Do you have to use job costing for your construction bookkeeping clients? Also, can they be classified as cash basis? Thanks.

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Best answer 06-10-2019

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Super Contributor **

Re: Job Costing

Yes, my construction clients book all construction costs to Customer/Job in the "name" field.  They use Job numbers to make the data entry easier.  While they aren't "required" to use job costing, it helps them to have a profit/loss per job to see how the job does and to calculate sales commissions.

A contractor with sales under $10 million can *generally* use cash basis accounting.  However IRS requires taxpayers to use percentage of completion method (an accrual method) if they are doing long-term contracts and work is in-progress at year end. 

Mark Wagner, CPA

2 Comments
Super Contributor **

Re: Job Costing

Yes, my construction clients book all construction costs to Customer/Job in the "name" field.  They use Job numbers to make the data entry easier.  While they aren't "required" to use job costing, it helps them to have a profit/loss per job to see how the job does and to calculate sales commissions.

A contractor with sales under $10 million can *generally* use cash basis accounting.  However IRS requires taxpayers to use percentage of completion method (an accrual method) if they are doing long-term contracts and work is in-progress at year end. 

Mark Wagner, CPA

Community Explorer **

Re: Job Costing

Thanks Mark!