QuickBooks users are generally not stumped by the software; they are confused by the accounting information necessary to complete the transactions. Quick access to correct information is essential to maintain the accuracy of your financial records.
There are no limits to the number of items that can be entered into QuickBooks improperly. Messy files build transaction by transaction or merely put invoice by invoice, receipt by receipt can all be entered into QuickBooks incorrectly. No pop-up will say, "This Is WRONG" – Do It Over.
Many contractors practice the keep it simple method for bookkeeping. Put all of the receipts in the drawer, out of sight and out of mind. The drawer is next to the computer with the QuickBooks for Contractors or other bookkeeping software on it.
Using the power of wishful thinking; the hope is that the transactions will "Magically Appear" into the Bookkeeping software without any additional assistance from them.
Unfortunately, with all of the technology available; it still requires the help of a "Real Person" with skills to know where to put the transaction into the system.
Does income exceed outgo? Short answer - yes, there is still money in the bank, and ALL of the bills are paid. Problems come from not knowing what to do.
The bank only knows what has been deposited, what has cleared and the balance left in the account. Without an accounting system that tracks all of the income and expenses, how will you know? It is easy to put everything on Auto Pay and forget it.
Unfortunately, your clients have higher expectations and may not be willing to pay you based on when your auto-pays will be coming out of the checking account. Throw enough money in the checkbook, and everything will be OK – right?
In the short term, all is great. It is called "Robbing Peter To Pay Paul." In other words, you are paying yesterday's bills with tomorrow's money. This works perfectly when the economy is booming, and work is plentiful. You can take that job deposit and go to the nearest Truck Dealership and buy a New Truck.
Money is coming in fast like a spring thaw; no end in sight. No big deal with supplier bills or subcontractor being paid twice. There is enough money for everyone.
Unfortunately, that was not the way it works forever. Outside forces can cause the world of Construction to go from a Boom to a Bust in minutes, and recovery usually takes longer than a few days.
A good bookkeeping system can help you stay on top of your debts, figure out where your profits and losses are coming from, prepare you for tax season, and braces your company for future potential growth, or worse collapse and bankruptcy.
See how easy it is to do your bookkeeping in QuickBooks. Enroll in our Construction Accounting Academy class and gain actionable tips to streamline your bookkeeping process.
In conclusion
Proper bookkeeping leads to informed decisions. Your construction company's financial health relies on correctly recorded transactions and data. Stop playing catch-up and start keeping up-to-date financial records of your construction company.
About The Author:
Sharie DeHart, QPAis the co-founder of Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com
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