Dec 16, 2016
Most Contractors Setup QuickBooks Desktop Version In One Of Three Ways:
#1 EZ Step Interview inside QuickBooks
#2 Asked Their Tax Accountant To Setup QuickBooks
#3 They Attended A How To Setup QuickBooks Class Or Seminar
And they all run into the same problem
QuickBooks does not work the way they want it too.
Or Keep Reading And Find Out Why QuickBooks Is Not Working And How Our Do-It-Yourself Solution May Be The Answer You have been searching for long and hard.
Our QuickBooks Setup and Stand Alone Chart of Accounts Store For
Construction Contractors has packages with 200 to 1100 accounts
specifically designed for Contractors all across the USA Including
Alaska and Hawaii and cover a wide spectrum of contractor
The Chart of Accounts In The EZ Step Interview Is Designed To Sell QuickBooks, Not For You To Use QuickBooks
The EZ Step Interview For Contractors Chart Of Accounts Has 33 Accounts, And It Does Not Have:
1. Fixed Asset Accounts to track Vehicles, Tools, Equipment and Accumulated Depreciation.
2. Other Asset Accounts to track Security Deposits, Notes Receivable, and Retention.
3. Credit Card Accounts to track Purchases, Payments, and outstanding balances.
4. Other Current Liabilities Accounts to record Loans, and Customer Job Deposits.
5. Long Term Liabilities Accounts to track Vehicle / Equipment Loans, Back Taxes, Lines of Credit.
6. Equity Accounts to track your Net Worth and Owners Time On Jobs for Job Costing purposes.
7. Income Accounts to track Sales, Change Orders, Reimbursed Costs, Overhead & Profit, Markup, Refunds, Mileage, Consulting, Discounts, and more.
8. Cost of Goods Sold Accounts to track Direct and Indirect Costs, Labor, Material, Other Costs, Subcontractors, Disposal Fees, Fuel, Vehicle Repairs, Small Tools, Depreciation and more.
9. Expense Accounts to track Marketing, Technology, Travel and Entertainment, Shop Rent, Personal Development Seminars, Books, DVD, Online Training, and many more expenses.
10. Other Income Accounts to track money that comes into your business but not directly related to the type of Contracting work you do. For example Gain on Sale of Assets, Trade Discounts, Fee Income, Bonus From Customer, Scrap Metal, Interest Income, and Rebates.
11. Other Expense Accounts to track money that goes out of your Contracting Company but not directly related to the type of work you do. For Example Loss on Sale of Assets, Credit Card Interest, Loan Interest, Penalties, Late Fees, and more.
Tax Accountants Are Wonderful People With One Purpose; Prepare And File Your Annual Income Tax Returns.
Tax Accountants Typically set up QuickBooks Chart of Accounts to map directly into their tax software which makes it easy to download from the bank which can destroy a Contractor's Company because nothing ends up in QuickBooks where it is supposed too and causes Contractors to make bad decisions based upon bad Financial and Job Costing Report.
Tax Accountants Can kill more cash flow and profit in your construction company in less than an hour using a messed up QuickBooks file to prepare your construction company annual tax return than you can make up for in sales and hard work six months, if not six years. Saving you money on your tax bill is not what they are paid to do; they are paid to fill out tax returns.
This is not a bad thing; it is just business 101, people and companies do what they are paid to do. Tax Accountants do not understand construction because that is not what they are not paid to do.
Helping you save money on your tax bill is not what they paid to do; they get paid to fill out as many tax returns as possible in the shortest amount of time during the harvest season between January 1 and April 15th.
Tax Accountants are good people and have their place; however, the should never be doing anything with regular accounting or worse yet contractors bookkeeping and accounting.
Construction Accountants are good people too and should never be preparing annual tax returns because nobody can serve two masters.
Either be a tax accountant and serve the interests and desires of tax collection agencies or be a construction accountant who understands the difference between Construction Accounting and Regular Accounting and serves contractors like you.
There is an old adage "Those who can't do teach." In some cases this is true; however, some of the best instructors I have ever had came from a Project Management, Math and Science backgrounds.
Unfortunately when it comes to accounting most skilled accountants can earn up to 5X more than their counterparts who teach accounting.
There is a massive difference between what happens in a textbook or handout and the real world.
The biggest problem is most classes and seminars teach regular accounting because Regular Accounting is roughly 80% of all accounting. Construction Accounting is roughly 15% and manufacturing accounting at roughly 5%.
Again instructors go where the demand is highest.
Construction Accounting is not the same as Regular Accounting
Business Owners - Need three basic reports, Cash, Profit and Equity
Cash On Hand................(Bank Balance - Un-cleared Checks) = Cash
Profit And Loss Report.........................(Sales - Expenses) = Profit
Balance Sheet Report..........................(Assets - Liabilities) = Equity
Regular Accounting - Is roughly 80% of all accounting and Accounting for businesses in the world.
Its main purpose is to provide basic financial reports for annual tax returns and some very rudimentary management decisions:
#1 Accounts Receivable
#2 Accounts Payable
#3 Profit & Loss
#4 Balance Sheet
It Is Practically All that is taught in schools, colleges, and universities.
Regular Accounting Is Used In Fixed Environments - Where customers come to the place of business or at most you ship or deliver a packaged product. In essence, you are selling a product or a service from a fixed location.
Regular Accounting Has These Things In Common:
#1 Sales - With 1-4 categories
#2 Cost of Goods Sold - If they sell products with 1-4 categories
#3 Expenses - Overhead required to maintain business operations
#4 Breakeven - Is fairly
easy to calculate because there is a direct relationship between
income and expenses on every item. It is easy to run reports to
determine which items are profitable and unprofitable and make
adjustments quickly as needed.
Construction Accounting Is Used In Mobile Environments - Which means having a contractors bookkeeping services system that can track the costs that contractors incur related to doing custom work in a strict mobile environment.
Some of the costs include travel time, mobilization (packing the tools, equipment, labor and material at their warehouse, delivering everything to the job and unpacking it) before starting the work and then demobilization (reversing the entire process when the job is finished).
Construction Accounting Is Built Upon Regular Accounting and shares the same basic financial reports for operating and growing a business and preparing annual tax returns and some very rudimentary management decisions.
Construction accounting adds many complex layers of reporting mechanisms to show the contractor where their best customer are within psychographic and geographic market segmentation boundaries.
Some Of The Reports Successful Contractors Use to operate and grow their construction companies and know which jobs to pursue and which ones to let go:
#1 Accounts Receivable
#2 Accounts Payable
#3 Profit & Loss
#4 Balance Sheet
#5 Cash Balance
#6 Job Costing Reports
#7 Job Profitability Reports
#8 Earned Value Reports
#9 Work-In-Process Reports
#10 Estimates Vs. Actuals Reports
#12 Payment Applications
Construction Accounting Vs. Regular
Construction Accounting Is Used - When the entire place of business is packed up and taken it to the customer. In essence, you are selling, assembling, delivering and installing a customized product from a mobile shop on location. Think of it like shooting a movie on location without all the glamor, resources and money to go with it.
Construction Accounting Has These Things In Common:
#1 Sales - With 1-10 categories
#2 Cost of Goods Sold - Has Direct and Indirect Job Costs with 25 - 200 categories with 1,000s of subcategories
#3 Expenses - Overhead is extremely complex because some expenses in regular Accounting are actually Cost of Goods Sold in construction accounting
#4 Breakeven - Very difficult to calculate because most projects are one-of-a-kind custom jobs. Proactive contractors have systems and cost libraries with pre-priced assemblies for bidding which works in conjunction with Strategic Construction Accounting to provide management with progress invoicing, job costing and job profitability.
#5 Job Costing and Job Profitability Reporting - Is similar to the Company Profit and Loss report except that it is specific to each particular job and has different expense codes.
These reports in combination with the Five Key Performance Indicators are what help the contractor understand which projects to pursue and which ones to ignore. They form the foundation of a Business Process Improvement Plan and Construction Business Strategy.
Shown Below are A Short List Of Titles commonly used for construction accounting and regular accounting. The list is intentionally short in order to make the point without being completely overwhelming.
I trust this podcast helps you understand that outsourcing your contractors bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now and if you have listened this far please do me the honor of commenting and rating podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
I trust this will be of value to you and your feedback is always welcome at www.FastEasyAccounting.com/podcast
This is one more example of how Fast Easy Accounting is helping construction company owners 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 construction contractors like you so stop missing out and call Sharie 206-361-3950 or email email@example.com
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
This guide will help you learn what to look for in outsourced construction accounting.
Need Help Now?
Call Sharie 206-361-3950
Thank you very much and I hope you understand we really do care about you and all contractors regardless of whether or not you ever hire our services.
Bye for now until our next episode here on the Contractors Success MAP Podcast.
Randal DeHart | Contractors Accountant
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