The 12 Non-Negotiables of Contractor Bookkeeping | CFC 298

Do not attempt DIY bookkeeping for complex construction businesses; hire a professional. This avoids inaccurate information that can sabotage all other business efforts.

Implement double-entry bookkeeping and accrual accounting. Double-entry tracks where money comes from and goes, while accrual accounting ensures timely and complete financial information by recording transactions when they occur.

Maintain a viable chart of accounts to segment income and expenses effectively, providing useful visibility for decision-making without creating overwhelming detail.

Require source documents (receipts, invoices, leases) for every transaction to validate its origin and provide essential verification, especially for IRS scrutiny.

Ensure daily entries for all transactions to prevent missing details, maintain accuracy, and keep financial records current, avoiding overwhelming batch processing at month-end.

Reconcile every balance sheet account (bank, credit cards) monthly with an outside entity to establish an aligned, single source of truth for all transactions.

Utilize proper cost accounting for every project to measure profitability and identify whether individual jobs are hitting their financial targets, enabling continuous improvement.