Dec 18, 2020

This Podcast Is Episode Number 0398, And It's About How To Avoid Overpaying Your Construction Business Tax

Contractors want to maintain control without making any changes. "Keep doing the same thing but expecting a different result." 

Throwing the receipts in a shoebox (behind or under the seat in the truck) is the favorite way to deal with paperwork. This is "Under Managing" and frustrates everyone around them who is playing "Where's Waldo?" Job costing is nonexistent; bills are usually paid late, customers are unbilled, lost, and forgotten.

On the other hand, micromanaging every detail is an over-reaction from years of doing as little bookkeeping as possible to prepare the tax return. Knowing what to do, however, will stop you from making a big mess of it.

Year-end phone conversations are usually out of frustration. 

Contractors will call and say:

• I can't get any reports
• I don't like the reports I am getting
• My tax accountant is not answering all of my questions
• How can I improve my business?

In-house bookkeepers will call and say:

• Bookkeepers inherit the "CRAP" from everyone who worked in QuickBooks before they arrived and are expected to produce useful reports.
• Bookkeepers are expected to use:
• • Old Equipment
  • One Or Two Tiny Monitors
  • Dot Matrix Printer (or equal – the noise an old printer makes when printing is unforgettable)

Frustrated Spouses Call Me because spouses usually get "Seagull Management" from the Contractor. The in-house Bookkeeper gets that and "Zap Management." That is when people learn what to do by doing something wrong and getting "Zapped" by the Contractor in the form of an insult or nasty comment, and the process continues until the Bookkeeper shuts down and doesn't do much or anything at all.

Under both styles, the core problem does not lie with whoever is doing the Contractor bookkeeping. The source is the Contractor and how the Contractor thinks about their business. How the Contractor reacts at the moment to a crisis? Making dozens or hundreds of decisions (moment by moment activity) every day is part of what being a Contractor is all about. In a way that non-contractors or even their employees do not understand. Embrace it, and decisions will come easier.   

Simply put - the wrong Bookkeeper will cause you to overpay your taxes. 

Your tax bill is based on reports produced by your accounting system. The old saying garbage in = garbage out is absolutely true here. Only it means Garbage In = You Overpaid Your Taxes! 

If your Bookkeeper is an Untrained Bookkeeper who attended a one-day seminar, watched some videos, took an online class, spent a few months working in an accounting firm, or is self-taught and believes in learning by experience (this means when they make a mistake, you get to pay for it) then you almost certainly are spending a whole lot more in taxes than you should.

10,000 Hours Of Practice Are Required - To master a skill, according to Malcolm Gladwell, the author of the book "Outlier." His book has examples like the Beatles playing nearly 10,000 hours together in Germany before they emerged as "The Beatles," Tiger Woods invested 10,000 hours on the golf course before turning 21, Bill Gates as a kid put in 10,000 hours on his PC.

Professional Bookkeepers - Are people who have invested at least 10,000 hours in practicing and learning their trade because that is what it takes at least that long to become a master construction bookkeeper.

We scan your receipts and invoices and give you back a "CPA-ready packet for your tax return." If your Bookkeeper put all those receipts in as expenses, you could be overpaying your taxes by at least $5,000 and probably more.

Putting receipts inside QuickBooks is easy! Putting them in the right account, so the reports are accurate, the business owner can trust them, and when the taxes are filed, you will pay the least amount possible - that is where the professional Bookkeeper earns their money.

Final thoughts

If you think your Tax Preparer - will catch the bookkeeping errors, think again! That is not what they are paid to do! Most of them are paid on commission to prepare as many tax returns as fast as possible! This means most of them will not spend the time and effort to review the details of hundreds or thousands of transactions to make sure the amounts have been put in the right accounts. 

You don't have to go through this alone. We can help you a little or a lot depending on your construction business needs. Let me know how I can help you by filling out the form or reaching out to me.

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. Call 1-800-361-1770 or sharie@fasteasyaccounting.com