Contractors Need Help Understanding Role of Accountants
Contractors should have two primary accountants. One is the Tax Accountant the other is your Construction Accountant. Tax Accountant who does the Annual tax return for your business and your personal tax return.
Why You Need A Tax Accountant?
It is the role of the Tax Accountant to Roll Your Numbers up into a tax return. The first (2) pages of your annual tax return is a summary of all the pages, worksheets that follow. Everything must roll up to those two pages. That means that you could have multiple numbers from multiple pages that might go on a single line. The Tax Accountant manages those numbers.
Remember when you were single and could use the EZ form?
Then you got married and maybe were still able to file using the EZ form.
Add buying a house, and having children and things got a little more complicated.
Now you are a business owner. You owe more taxes.
The bottom line is that every missed personal deduction; every missed business expense costs you money.
The Tax Accountant takes all of the summary numbers from your business return (the 1120s – S-Corp) and put them in the appropriate places on your personal return. If you are a Sole Proprietor or an LLC that is taxed as a Sole Proprietor than a Schedule C is part of your personal tax return.
When you are a Sole Proprietor or an LLC that is taxed as a Sole Proprietor, you will have the additional taxes in the form of Self Employment Taxes. Self-Employment Taxes are payroll taxes on your net profit.
Self-Employment Tax is a separate tax from your Federal Income Taxes. You could owe “No Federal Tax” after all of your personal deductions are applied but still owe Self Employment Tax. It is a Different Line.
The Tax Accountant has one goal – Roll all the numbers up (no matter how many pages it takes) to find the answer to How Much Do You The Contractor Owe In Taxes?
Taxes from one year impacts the Estimated Taxes Due The Following Year. The IRS has an expectation you will do equal to or better than the previous year and need to pay Estimated Taxes accordingly.
Sharie’s Nickname for Self-Employment Tax is “sneaker tax” Almost every Contractor knows how much their Federal Income Tax Rate is and can project about what the tax owed is. The Self Employment Tax is often a forgotten tax and comes as HUGE Surprise (unlike Christmas morning – it is not a fun surprise when you owe money instead of getting a refund to something fun).
Based on the tidiness of your paperwork how easy it is for the Tax Accountant to do their job. The last thing any Tax Accountant knows about let alone wants to show their lack of understanding about what you do is to talk about is your job costing, job profitability reports or anything else related to your numbers.
Why You Need A Construction Accountant?
Now let’s chat about what should be the Other Accountant in your life. We are Construction Accountants, and our role with your numbers is exactly the opposite of the Tax Accountant.
QuickBooks is designed to serve a dual function.
Roll up the numbers for the Tax Accountant. Be able to drill down on any number or group of numbers to give the Tax Accountant the answers needed to be able to take every deduction allowed.
The more important part of a Construction Accountant is making the numbers so you The Contractor can see quickly see the numbers in a way that makes sense to you. The answers are in QuickBooks.
The good (money in), the bad (money out), the ugly (maybe more unpaid bills are left over than cash in the bank)
Many contractors run their accounting software like an “overgrown checkbook, ” and this method does get most of everything the tax accountant needs to file the annual taxes.
What The Checkbook And Shoebox Method Doesn’t Tell You:
- Did you remember to bill all your clients?
- Did you remember to bill for the change order?
- Are you sure someone isn’t using your wholesale account?
- Are you sure someone isn’t using your equipment after hours?
- Are you sure your employees are on the job when they say they are?
- Are you sure someone isn’t driving your company vehicle two states away on the weekend?
- If you are unable to track who you billed, then how do you know if you have collected from them?
There are many online invoice programs and some really inexpensive accounting programs.
Contractors call me every day and say; “I chose this program to get me by” and now I am ready to learn more about my business so I can make better decisions to grow.
States that allowed 1099 Contractors are now enforcing the rules about employees.
Many Worker’s Comp Programs want details about Subcontractors including Certificate of Insurance
Sales Tax is happening in more states. In Washington, not Collecting and Remitting Sales Tax is by exception. Add in Sales Tax being destination based and needs to be tracked by the city, town, county across the entire state. And yes, the individual cities may vote to increase their sales tax rates during the year.
Taxes are one of the reasons to track more; be aware of more is a way of life to Construction Contractors. If a Contractor focused on doing everything about their paperwork perfectly 100% of the time the paperwork would take all of their time. – And the jobs would Never Get Done!
Professional Construction Accounting Helps Contractors Make Every Neighborhood A Better Place To Live. As Construction Accountants, We Focus On What You Need To Run Your Business Better.
Looking forward to getting started.
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
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.
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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.
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PS: For The Do-It-Yourself Construction Bookkeeper Our Store Has Chock-Full Of QuickBooks Setup Templates, QuickBooks Chart of Accounts And More.
Most Contractors Setup QuickBooks Desktop Version In One Of Three Ways:
#1 EZ Step Interview inside QuickBooks Setup
#2 Asked Their Tax Accountant To Setup QuickBooks
#3 They Attended A How To Setup QuickBooks Class Or Seminar
And QuickBooks Does Not Work The Way They Want It Too!
The Answer:
#1 Click Here To Buy An Entire QuickBooks Setup For Your Specific Contracting Company
#2 Click Here To Buy Just The Chart Of Accounts For Your Specific Contracting Company
