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...
Each type of project takes planning and skill.
Doing a teardown and then building a new house? Oh, maybe the zoning does not allow for a new house so technically it is a major remodel keeping a certain amount of square footage of the original house.
A brand-new contractor without a background in larger projects typically is not going to immediately jump into a large remodel. Someone who has done lots of remodels may not be comfortable building a new house from the ground up.
Decisions in any project are what level of quality of the work, how much detail, the size and the material needed to complete the job Decides How Much It Costs. Is a Cottage or a Mansion?
The area of the country makes a difference. For Example, a $500,000 house in one part of the country could be a two story, 4 bedrooms, 2.5 baths and a wraparound porch. In another part of the country, it may be a 3-bedroom rambler and a carport.
The cost of material may not be a lot cheaper in one area over another. The price of sheetrock and lumber increased in Seattle after Hurricane Sandy and Hurricane Katrina. Local labor may be different.
The skillset needs to complete the Handyman Repair, Installation of Plumbing, Heating, Electrical, Roofs, building the Additions on a House, creating a whole house remodel or building a new house are not the same as being able to track all of the expenses and do all of the bookkeeping properly.
Construction Accounting and Regular Accounting require entirely different skill sets.
With an Excel Spreadsheet, quite a lot can be done to know your costs and track the bills that need to be paid. Many contractors have done this for years. Turning in the spreadsheet and a pile of paperwork to the Tax Accountant to file the annual taxes.
If the Tax Accountant has worked with you for years; they understand your method and figure out a workaround. Some will setup QuickBooks Desktop or some other software to create monthly, quarterly numbers leading them to the annual Profit & Loss and Balance Sheet needed to file your annual taxes
Your Banker is not quite so willing to do “try to figure out” your financials. They have a limited amount of time to make a presentation to a Loan Committee. Financial Statements from QuickBooks make it easy for your Banker and the Loan Committee to compare financial statements between applicants.
Some contractors have the benefit of being in a small town, where their banker has known them for years. The decision process is more informal. As Bank Regulators have gotten involved with the decision process – what was a simple “Yes” decision may suddenly be “No”. A lot of Home Builders got caught up in that loop and lost property because could neither sell or refinance.
Are you counting on “The Kindness of Others” (to quote slightly from a classic movie) for solutions to your lack of good bookkeeping? Sometimes it is harder to avoid doing something than it would be to find a qualified “Construction Bookkeeper” to do the Bookkeeping for your Construction Company.
Here is my parental side showing. Many times our kids would spend more time avoiding their homework, cleaning up their rooms, doing chores and explaining “Why It Wasn’t Done” or “Why They Shouldn’t Have To Do It” In many cases more time was spent explaining than it would have taken to do it.
As Construction Accountants, we understand there are “Too Many Tasks” and not enough time in the day. This is “Why we develop processes, procedures, use Software and app’s” to make it as easy as possible for our clients.
As Contractors, it is not that you can’t do it but is it the “Highest And Best Use of Your Time” Wow – I’m positive you can enter in fuel slips into QuickBooks.
Might be a better use of your time talking to a prospect, looking at a job, creating an estimate, writing up the invoice, or collecting The Money, going to the Bank to deposit the Money, paying your insurance, cleaning your truck and even sleeping.
The Basics in our world is the Five Key Performance Indicators plus Job Costing. Sometimes a contractor is so busy trying to get super detailed that they miss the basics. I make recommendations on what I call Sharie’s Cash Management 101 – Get the Money. Think about the Five Key Performance Indicators like the dials on your truck dashboard.
Washington State it is a sales tax driven state.
One issue Contractors discover is that Sales Tax is due at the time of purchase unless they have a Reseller Permit (issued by the State of Washington) Sales tax reports are due monthly, quarterly or annually. Some items purchased is considered “Consumables” – Suppliers have the exact list.
If a purchase is made on April 1st with sales tax paid to the source (supplier) and if the Tax Return is paid Quarterly – it is due on July 31st, therefore, sales tax was paid months earlier than necessary.
Construction Bookkeeping is more than Balancing the Check Book (which is important)
Receiving actual bills from your subcontractors. Have you set a schedule on “How and When” you are paying subcontractors? Is it tied to the same schedule you are billing your client?
Money In and Money Out.
Just because you have money in the bank from the last project does not mean you should delay or ignore billing on your current projects. Remember you have outstanding liabilities coming.
Here is what is coming: Material Suppliers on 30-day accounts, Credit Card payment for purchases paid for, Payroll Liabilities, Sales Tax Liabilities, Worker’s Compensation, Liability Insurance, Vehicle Insurance.
Bigger costs like Vehicle Repairs, Down Payment on a newer vehicle.
That marketing budget for business cards, flyers, online advertising, upgrading or updating your website. Adding GPS tracking, software, and your Construction Accountant.
It all takes money from someplace.
Even if it is from a line of credit; the bank wants to see financials not some scribbled notes on the back of a brown paper bag.
Frequently Asked Questions From Contractors:
Am I too small for you to help? I am just getting started.
My answer is No - You Are Not Too Small. We have a plan for the Brand New and Existing Small Contractors.
Shouldn’t I learn how to do all of my own bookkeeping before turning it over to you?
My Answer Is No – It is not possible to be an expert in everything we do.
Learning what receipts to keep is more important than learning “How To Put Them Into QuickBooks
When I hire you – Will do everything for me?
My Answer Is No – You will continue to control the money.
We are here to help, but all final decisions on How Much To Bid the job.
What, When and How Much to Invoice your client is your decision.
Who to pay and when to pay them is also your decision.
We have a Document Management System that links to your banks and credit card companies.
We receive feeds (copies of the transactions) after they have cleared the bank, plus the monthly statements.
We will still need to receive Customer Invoices. Currently, provide to our clients a Stand Alone invoice built on Excel.
Coming Soon: We are evaluating a web-based software that works with QuickBooks Desktop for Dispatching and Invoicing for everyone’s convenience. Will keep you posted on our progress.
Not all software works as well as advertised which is why we test, test, test before using it or recommending it.
The only money we touch is our own Fees.
Auto receives for Monthly Outsourced Accounting and Bookkeeping Services on the 1st day of each month.
Auto receives for Weekly Outsourced Accounting and Bookkeeping Services on Monday of each week.
Other Customer Service Options Available
Cloud Hosting is available for clients who want to do their own Accounting And Bookkeeping but be on our server for web-based access; occasional review and support.
FastEasyAccountingStore.com is available for all contractors who want to purchase QuickBooks Setup and / or QuickBooks Chart of Accounts to enhance their existing QuickBooks accounting systems.
Consulting is available to Outsourced Accounting Clients, Hosted Clients and FastEasyAccountingStore.com and all contractors around the world.
Looking forward to being of assistance as you choose the options that best fit your needs.
Enjoy your day.
Sharie
When You Become A Client - Then we can tap into our resources of knowledge and strategy banks. We use the reports hidden in your QuickBooks in order to diagnose and understand your construction business and develop plans and help you implement a path to success for you and you alone because every contractor has unique Strengths, Weaknesses, Opportunities and Threats (S.W.O.T. Analysis) that when understood can lead to a Strategic Roadmap which cannot help but make a lot of money.
For Construction Company Owners who do not need the full power of a QuickBooks for contractors and want 24/7 online access we offer Xero Accounting Online, and we have a custom setup for construction companies. Click Here For More.
This Is One More Example of how Fast Easy Accounting is helping construction company owners all across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that, and a lot more valuable to people like you so stop missing out! Call Sharie 206-361-3950 or sharie@fasteasyaccounting.com and schedule your no charge one-hour consultation.
Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time, and now you know about it too!
Thank You For Reading This Far, And I Hope You Understand we really do care about you and all contractors regardless of whether or not you ever hire our services.
We Scan Your Receipts, And Invoices link the appropriate transactions to QuickBooks or Xero Accounting Online depending on the construction accounting service you are using and provide ongoing Cloud Based Contractors Bookkeeping Services by accountants who understand construction.
About The Author:
Sharie DeHart, QPA is 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. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or sharie@fasteasyaccounting.com
#1 EZ Step Interview inside QuickBooks Setup
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