Many reports are designed for specific things. Take for example the view of the Home Page. Just because the feature is on the Home Page in QuickBooks does not mean it is useful for every contractor.
Plumbers, Electricians, and HVAC Contractors tend to have a certain amount of inventory, and it is better to do a physical inventory a couple of times a year. (End of year and maybe mid-point of the year and enter as bulk numbers) There are specialty programs that are an add-on to QuickBooks for those larger companies who need to track inventory. Most inventory programs only work with QuickBooks Enterprise.
Trying to keep track of each item in the job can be overwhelming and not practical for smaller jobs. If it is a Cost+ or Time and Material job then be sure you only purchase what you need and assign that receipt to that specific job.
Five Key Performance Indicator Reports that are useful to every contractor regardless of their size.
How much cash is in the bank. Why because you have bills to pay, material to purchase and upcoming expenses.
#2 Accounts Receivable
How much work have I completed and billed the customer? Contractors get confused and think that the signed contract is for “X Amount” and therefore they have that much coming before the job starts.
Accounts Receivable is for completed work that you bill your customer or client. In other words, how much can you expect to pick up a check for today?
#3 Accounts Payable
What bills do I have coming up? Accounts Payable is where you track all your supplier invoices, match against the month end statement and your subcontractor bills. It is not the place to track your monthly payments to your credit cards, your payroll or other tax payments to State and Federal Agencies. These items are in other places as liabilities in your QuickBooks file.
Please Note: All transactions on your credit cards need to be entered into QuickBooks (not just the month in balance with payment due).
#4 Profit and Loss
Profit and Loss are keeping track of your income and expenses and will reflect the Gross Profit and Net Profit of the business. This report is date specific.
Please Note: Expenses are broken down between the Cost of Goods Sold (direct costs to jobs) and Expenses (which tend to be overhead related). QuickBooks by default is on the accrual method. Reports are converted to the Cash Method for Sales Tax and Federal and State Income Tax Reports.
#5 Balance Sheet
The Balance Sheet is tracking the overall health of the company. Assets include Cash, Accounts Receivable, Undeposited Funds and Inventory. Yes – the Government treats those piles, boxes, and pallets of unsold material as an asset. (Which increases profit).
Unless you are have magical skills, it is impossible to trade that box of treasures for a tank of gas, lunch, bag of groceries. Having a good relationship with your suppliers is key. Good suppliers will encourage the return of material. Even with a restocking charge – Cash is more useful.
Liabilities is tracking the amount that is due to others. Short term is Accounts Payable and Credit Cards. Long-term is your Truck Loan, Equipment Loan, Loans to yourself or others.
Please Note: Track all money you lend to your company. You cannot get it back out without it being considered income unless you document you put it into the company. Startup costs by nature are funds lent to the business because unless a contractor has been doing “side work” the business did not have any income before it began to cover the initial costs of setting up your contracting company.
Equity is the value you have into the company. The net difference Assets – Liabilities = Equity. I recommend you take as little as possible out of the company. It is designed to grow and take care of your needs. Think company first. Many expenses are company expenses that as an individual you were paying personally.
It is much easier for the company to pay for all business expenses. Your tax accountant can easily review and assign a percentage that may be personal. (This is better than the mad scramble of finding missing receipts at tax time).
Contractors Favorite Job Costing Reports
Job Profitability Reports are the easiest and most practical to track. Contractors can see job by job; did these jobs make a profit? From this report, you can drill down to more specifics about the job.
Because of every small job, every remodel is different and knowing how much the plumber, the electrician, the framer charged is not always relevant.
It gets back to over tracking versus practical information you can see and process at a glance.
Estimating Many contractors are finding it is helpful in bidding the jobs to use a detailed estimating program. Some Estimating Programs link to industry-specific cost codebooks.
Please Note: If your estimate is several pages long it is not practical to enter this type of estimate in QuickBooks line-by-line.
QuickBooks can be set up to do many things. QuickBooks can have as much detail or as little detail as the user wants or needs. Can be used as an electronic checkbook to a real accounting program with reports.
When you are ready – We are here to help.
Sharie
About The Author:
#2 Asked Their Tax Accountant To Setup QuickBooks
#3 They Attended A How To Setup QuickBooks Class Or Seminar