As A Contractor You Want Reports To Effectively And Efficiently Run Your Business

You are not trying to make decisions by looking in the rear view mirror. You want to get a sense that there is “light at the end of the tunnel and know it is not an oncoming train” (author unknown)

The question is How Much Detail is too much detail? If you are trying to track a job down to the number of 2x4’s, boxes of nails, joist hangers then I would politely suggest that is too much detail. Think in terms of a more broader scope.

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Excited that you are busy and hiring employees. How do I know this is true?

The number of emails I receive about continuing education that reference employees are increasing. The topics you are sharing include wages, access to company funds, providing employee warm and fuzzies and you want to know what is the true cost including payroll taxes of having a Construction Worker on your payroll.

 

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Price And Value

 

VS.

 

 

 

 

 

A Cheap Price does not always give you the “biggest bang for the buck” as the saying goes (author unknown). One of the reasons that we all like unit pricing in the grocery store is that it helps us determine which is the best value when deciding between sizes and between the store brands.

Take for example ice cream. There are several main types: Labeled as Non-Fat, Low Fat, Reduced Fat, Sugar-Free, Creamy, Deluxe, Premium. A quick search on the web shows over 100 flavors is available. 

We all have our favorite brands. I am a Creamy, Deluxe, Premium double chocolate fudge or dark chocolate usually costing a zillion dollars per ounce and an equal number of calories.

Randal and I have brands and flavors we both like, and some flavors only one of us like. Thankfully our Ice Cream budget increased over the years. A low price was important back when we were “starving students” going to college.          

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As A Contractor You Are Either Getting Paid, Paying Someone Or Both

Contracting Is All About The Money And Taxes

Which is better for you, Employees or 1099 Contractors? In the world of the State and Federal Agencies. Someone who works for you is either an Employee (on W-2) or a Subcontractor. You need to be issued 1099 at the end of the year, and you need be able to prove they are legitimate Subcontractors!

What we sometimes forget is the personal side of our life and do not realize we have employees. Nanny tax is for any household employees that you have for yourself, the obvious is the Nanny who provides childcare. It also includes a Housekeeper (unless using a licensed maid service).

Reminder from Tax Accountants is the Elder Care market. If you have an individual who is caring for an elderly parent (they are subject to Nanny tax unless you are using a licensed service.)

Do you have support people? Are they making your life easier or are they a risk to you and your Contracting Company?

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Every Construction Contractor Has Clients Who Want To Help

Part of the reason is that they want to be sure the project is moving and things are being done. Other times the goal is to hopefully save money.  

In many cases, the most helpful thing a client can do on a project is keeping the area clean, pets under control and children out of the way. Anything other than that and you, the contractor could be at risk of losing everything you own or ever will if your client or customer is injured while working on your construction project even though it was their home or business.

There is a reason why most automotive repair shops have a sign like the one shown below and as a construction contractor, you would be wise to have signs professionally made and use them on every construction site.

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Every time the phone rings you need to be willing to question what do they need are how far are you willing to drive to bid the job and do the work. Some types of work accepted or rejected may be based on the location of the job or by the state license.

When starting out one of the first decisions to be made is “What Type Of Contractor Am I?” This decided during the process of the contractor talking to the Bonding Company, Insurance Company and The State Licensing Board who approves the company’s Contractors License.

The Primary Questions to be answered are:

• What level of exposure, risk and your skills?
• How do you want to do these projects?
• Are you most comfortable being a Handyman?
• Are you most comfortable being a Trade or Specialty Contractor?
• Are you most comfortable being a General Contractor?
• Are you most comfortable being a Remodel Contractor?
• Are you most comfortable being a Home Builder?

The Four Types Of Contractors...

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Almost every Contractor understands how to do basic repairs and remodels on a house.  
As the project grows it gets a little more complicated.
Is it a kitchen remodel, a bath remodel, upgrading the laundry area? Building a Deck?
Adding a second story addition? Adding a garage? 

Your Construction Accounting System started small and easy. Perhaps you tracked everything with bank statements and Excel sheets and it worked fine for a while.

Later as your Construction Company grew and you began to wonder where you are making and losing money (Job Costing) and you realized you need to better understand Construction Job Cash Flow you purchased QuickBooks thinking it was "Quick" and that is when the trouble started...

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For Most Construction Contractors Your World Is “Hurry Up” And “Wait.”

• Hurry up and answer the Call from the Customer.  
• Wait to make the appointment.  
• Hurry up and get to the job.  
• Wait for the Customer to come home, to be available.  
• Hurry up and create the proposal.  
• Wait for a decision.  
• In some cases, the Customer says “Yes” and then it is Wait for the Job Deposit.
• Wait to Start The Job

• Contractors doing Insurance Work are expecting to wait for Approval from the Insurance Company
• Wait for the 1st Installment from Insurance Company
• Wait for Inspection By Insurance Company
• Wait to collect Homeowner’s Deductible
• Wait for Final Payment By Insurance Company

All of this Hurry Up and Wait for activity makes it hard for The Contractor to schedule other jobs.
Many contractors are only holding a place open for the customer once a job deposit has been received.

There Is A Better Way - Fill The Funnel And Let Them Clamor To Get On Your Schedule!

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Contractors, Bookkeepers and Tax Accountants are trying to keep everything all in one place. That is great. A single bank account on the surface is the answer in simplicity.

Sharie’s Cash Management 101 Training I Teach Contractors Please Do Not Do This!

Why – when putting everything in one bank account; it could be a FINANCIAL DISASTER.  
Go to Home Depot, Lowes or any other larger store.  
Use your debit card; Drop or lose your debit card,
Someone finds it and buy stuff until he or she have spent all your money!
(may be a little harder with the chip but how many places can you run your debit card as a credit card?)  

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Construction Bookkeepers Without Training Is A Common Problem

Many Construction Bookkeepers start out as Admin Assistants and get promoted to doing the Contractor's Bookkeeping in their free time. They were not hired to be a bookkeeper but as an office person who does a little data entry.

This method not too bad if the employee stays a long time and grows with the company from owner working solo to gradually adding a few employees one at a time because as Randal says:

Growing By The Inch Is A Cinch; Growing By The Yard Is Hard!

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