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Back office support can make or break your construction company and that’s where we come in. We can do you the most good by bringing order to your chaotic contractors bookkeeping mess! Most of our clients come to us because they believed they needed someone to straighten up their contractors bookkeeping services system, help them get current or quarterly payroll tax filings, sales tax returns and a variety of other tax issues. That is only the tip of the iceberg! 

The real value in working with us is not just getting you out of trouble now but keeping you out of trouble in the future so that you can focus your time and energy where it will do you the most good…acquiring profitable and pleasant customers and clients and satisfying their needs. 

 

Warm Regards,

Randal DeHart | Premier Contractors Accountant

 

This is one more example of how Fast Easy Accounting is helping construction company owners just like you 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 sharie@fasteasyaccounting.com

 

Thinking About Outsourcing Your Contractors Bookkeeping Services?

Click On The Link Below:

www.FastEasyAccounting.com/hs

Need Help Now?

Call Sharie 206-361-3950

sharie@fasteasyaccounting.com

Oct 27, 2017

 

This Podcast Is Episode Number 0240 And It Will Be About Construction Accounting Secrets For New Contractors

Construction Accounting Basics For Construction Contractors

Construction Accounting is not a natural mindset for Construction Contractors. Construction Accounting has own language. Regular Accounting the language is Income Minus Expenses Equals Net Profit.

Construction Accounting is Income Minus Cost of Goods Minus Overhead Equals Net Profit. That simple little thing called Cost of Goods Sold is the primary difference between Regular Accounting and Construction Accounting.

Understanding that difference and how it relates to Job Costing and Job Profitability can get contractors like you firmly on the road to financial freedom.

Then comes Construction Accounting.

  • Income is added up to have Total Income.
  • Cost of Goods Sold included more than the cost of material.
  • Total Income less Total of Cost of Goods Sold equals Gross Profit.  
  • Expenses include a variety of overhead related items.
  • Gross Profit less Total Expenses equals Net Ordinary Income.  
  • Net Ordinary Income Plus Other Income and Less Other Expenses equals Net Income.

When Is It Income For Construction Contractors

Financial Reports have a lot of information on them. Your tax accountant will calculate the depreciation.
When a contractor purchases a small tool, and it is an expense. What determines whether a tool is an asset or expense is the cost of the tool (not its size of the tool or piece of equipment)

Any tool or equipment that costs less than Five Hundred Dollars is considered an expense.
The Internal Revenue Service expects that it will last less than one year and not repairable or the cost of purchasing a new tool will be less than the cost to repair it most of the time it is not feasible to repair.

These days it is hard to find anyone who can do repairs on small tools. The neighborhood hardware store is usually a True Value Hardware or Ace Hardware. I can only think of a few larger Hardware Store that might send the tool out for repairs. Smaller communities may have repairs as a common option.       

As a contractor you may purchase a tiny tool (in size) but huge in price meaning it cost over Five Hundred Dollars.  These type of tools need to be depreciated. Congress approves an accelerated depreciation (Section 179) where most items can be depreciated at a 100% in a single year.

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This benefits small contractors as the annual threshold is usually higher than they spend on tools and equipment. Each of these larger tools needs to be listed in the Accounting Software (we use QuickBooks Desktop In the Cloud) and we can setup QuickBooks for Contractors in a way that makes it fast and easy for the day to day contractor bookkeeping to get done.
Why – Because the Tax Accountant decides on what can group and which tools and equipment need to be itemized individually. The rules differ depending on the item on how much can be depreciated on a single line and which items may have internal caps.  

Short Answer - In other words, How many lines and How many pages does it take to get to 100%. If taking all of the depreciation available does not make sense to take it a single year the Tax Accountant may decide to use traditional depreciation rules. Using the thought that if taking 100% of the available depreciation doesn’t help you – don’t waste the depreciation deduction. Spread it out over several years.

What is Cost of Goods Sold In Construction Accounting?

Cost of Goods Sold In Construction Accounting

Contractors often ask us can they buy our Chart of Accounts with Cost of Goods Sold and import them into their QuickBooks Desktop file or their QuickBooks Online file. The answer is yes!

Click Here for QuickBooks Desktop Chart of Accounts With Cost of Goods Sold

Click Here for QuickBooks Online Chart of Accounts With Cost of Goods Sold

Direct Costs are tied to the jobs (field labor, material, and other cost items) Office material (pencils, paper, toner, etc. are overhead) Yes, an Accountant could say these many pencils are used in the field, and that notepad is used in the truck.

The answer is the dividing line of what the DIRECT COSTS to the job and those are Cost of goods sold (COGS).

Confusion always comes about the material. A Construction Contractor may purchase material and resell it to their customer at cost. Thereby thinking it is a reimbursable expense. (Lose money when doing this).  

Remember all invoices to the Customer (Retail, General Contractor, Spec Builder, Developer) is income.  Washington State has a clear explanation. If the words are on the invoice, then the invoice is either taxable or non-taxable based on other factors. Every line item on a customer invoice is All INCOME.  

Purchases for the material are Cost Of Goods Sold or are expenses if you are shortcutting your accounting. I have seen financial statements that are backed out because they will reflect reimbursable income as a negative number and thereby show it as a deduction. (Net effect is double dipping on the expense side) The cause is the accounting software like QuickBooks is not properly set up. We fix bad QuickBooks Setup For Construction Contractors.
 
New Construction Home Building is another area of confusion.  
In the mind of many Construction Contractors, a Spec home is any new house that is being built for resale. That is true; it is a New Construction House. The question is on the Construction Accounting side. For the Owner and Developer (who might be the General Contractor running the job) it is a Spec Home.

For the General Contractor who is building a New Construction Home for a Developer, it is NOT a Spec Home. Why it might seem the same as both are New Construction Houses. Question to be answered is Who owns the house?  It is a Spec House in the Accounting System for THE OWNER.    

If the General Contractor Does Not Own the house then from an accounting side for that specific General Contractor, the house is a Custom Home who has an owner who is Not The General Contractor.  

If the General Contractor, Developer who Owns the new House being built then it is a Spec House in the Accounting System. All costs roll up into WIP and covert to COGS when the house is sold not before. Recognize expenses when the house sells. Otherwise, expenses one year; sale the next equals TAXES.   

In Washington State, all Construction Contractors working for a Spec Builder need to collect sales tax on all services (labor and material) when billed from the General and Trade Construction Contractors.
   
In Washington State, all Construction Contractors working on a Custom Home, Residential or Commercial Projects, Large or Small Remodels, Handyman Projects can accept reseller permit from the General Contractor.  Sales Tax is billed and collected from the Owner by the General Contractor.  

In Washington State, Contractors need to collect sales tax on all retail project including Labor, Material, Other. Sales tax must be collected on every line item. Customer Discounts can be given for any reason.

One quick word about hiring subcontractors. Make sure they are licensed and bonded based on the rules of your state. Review and make sure you are not their only customer. As Construction Contractor, you Do Not Want for any Government Agency (State or Federal) to re-classify them as your employee. Government Agencies share names, and there are Payroll taxes for everyone.  

Part of rules, a 1099 Contractor must work for more than one person or company. Get a signed W-9. Internal Revenue wants to have 1099’s issued for everyone who received over six hundred dollars in a single calendar year.

If you have employees, Use a payroll service that will electronically file Quarterly and Annual Returns.  Many will also file the 1099’s. Keep your reporting simple and easy. Easier to prove you filed on time. Having an outside Construction Accountant makes meeting the rules as a contractor versus an employee easier.


Fast Easy Accounting does the bookkeeping, accounting, payroll and offers business coaching for small, brand new Construction Contractors who are General Contractors, Trade Contractors, and Handyman all across the USA including Alaska and Hawaii. Do the parts that only you can do; leave the rest to us.  

You are never too small for us to help and we can help beginning with your first day in business.   
Looking forward to being of assistance.  

Trick Or Treat – Happy Halloween
See you at the Mall – Our Fun Place to watch all the kids from newborns to over xxx (shhh I can’t count that high) filled with the Kids At Heart dressed up in cute, funny costumes. Food Court has the best view. It is one of the few days everyone gets to have fun no matter how old they are the rest of the year.       

Enjoy your day.  

About The Author:

Sharie DeHart, Fast Easy Accounting Client Support Specialisthttps://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping

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

Contractor Bookkeeping Services All Across The USA Including Alaska And Hawaii

I trust this podcast helps you understand that outsourcing your contractor's bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking a holistic approach to your entire construction company and helping support you as a contractor and as a person.

We Remove Contractor's Unique Paperwork Frustrations

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 to this far please do me the honor of commenting and rating the 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.

You Deserve To Be Wealthy Because You Bring Value To Other People's Lives!

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 sharie@fasteasyaccounting.com

Contractor Bookkeeping Done For You!

Construction Accounting Specialists At Fast Easy Accounting 206-361-3950

Thinking About Outsourcing Your Contractors Bookkeeping Services?

Click On The Link Below:

www.FastEasyAccounting.com/hs

This guide will help you learn what to look for in outsourced construction accounting.

Need Help Now?

Call Sharie 206-361-3950

sharie@fasteasyaccounting.com

Thank you very much, and I hope you understand we 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.


Enjoy your day.  
 
Sharie

About The Author:

Sharie DeHart, Fast Easy Accounting Client Support Specialisthttps://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping

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

Our Workflow Removes Your Paperwork Frustrations

For Contractors Who Prefer

To Do Your Bookkeeping

Fast Easy Accounting Do-It-Yourself
Construction Accounting Store Is Open

QuickBooks Setup Templates, Chart of Accounts and Item Lists for Construction Contractors

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

 

QuickBooks Set Up For Contractors And QuickBooks Chart Of Accounts For Contractors

Short List Of Construction Contractors We Serve

Asphalt ContractorAsphalt Contractor Brand New ContractorBrand New ContractorBrick And Stone ContractorBrick And Stone ContractorCabinet Installation ContractorCabinet Installation ContractorCarpentry ContractorCarpentry ContractorCarpet And Tile ContractorCarpet And Tile ContractorCommercial Tenant Improvement ContractorCommercial Tenant Improvement ContractorConcrete ContractorConcrete ContractorConstruction EmployeesConstruction EmployeesConstruction ManagerConstruction ManagerConstruction Support SpecialistConstruction Support SpecialistCustom Deck ContractorCustom Deck ContractorCustom Home BuilderCustom Home BuilderDemolition ContractorDemolition ContractorDrywall ContractorDrywall ContractorElectrical ContractorElectrical ContractorEmerging ContractorEmerging ContractorExcavation ContractorExcavation ContractorFinish Millwork ContractorFinish Millwork ContractorFlipper House ContractorFlipper House ContractorFlooring ContractorFlooring ContractorFoundation ContractorFoundation ContractorFraming ContractorFraming ContractorGeneral ContractorGeneral ContractorGlass Installation ContractorGlass Installation ContractorGutter ContractorGutter ContractorHandyman ContractorHandyman ContractorHot Tub ContractorHot Tub ContractorHVAC ContractorHVAC ContractorInsulation ContractorInsulation ContractorInterior Designer ContractorInterior Designer ContractorLand Development ContractorLand Development ContractorLandscape ContractorLandscape ContractorLawn And Yard Maintenance ContractorLawn And Yard Maintenance ContractorMasonry ContractorMasonry ContractorMold Remediation ContractorMold Remediation ContractorMoss Removal ContractorMoss Removal ContractorPainting ContractorPainting ContractorPlaster ContractorPlaster ContractorPlaster And Stucco ContractorPlaster And Stucco ContractorPlumbing ContractorPlumbing ContractorPressure Washing ContractorPressure Washing ContractorRemodel ContractorRemodel ContractorRenovation ContractorRenovation ContractorRestoration ContractorRestoration ContractorRoofing ContractorRoofing ContractorSiding ContractorSiding ContractorSpec Home BuilderSpec Home BuilderSpecialty ContractorSpecialty ContractorStone Mason ContractorStone Mason ContractorStucco ContractorStucco ContractorSubcontractorSubcontractorSwimming Pool ContractorSwimming Pool ContractorSwimming Pool And Hot Tub ContractorSwimming Pool And Hot Tub ContractorTile And Carpet ContractorTile And Carpet ContractorTrade ContractorTrade ContractorTree ContractorTree ContractorUnderground ContractorUnderground ContractorUtility ContractorUtility ContractorWaterproofing ContractorWaterproofing ContractorWindow ContractorWindow Contractor

Additional QuickBooks Templates, Resources, And Services

QuickBooks Set Up TemplatesSolopreneurQuickBooks Chart Of AccountsFree StuffQuickBooks Item Lists TemplatesConsulting


We Serve Over 100 Types Of Contractors So If Your Type Of Company Is Not Listed

Please Do Not Be Concerned Because If You Are A Contractor

There Is A Good Chance We Can Help You!

Call Now: 206-361-3950

 

Additional QuickBooks Templates, Resources, And Services

QuickBooks Set Up Templates   Solopreneur

QuickBooks Chart Of Accounts     Free Stuff

QuickBooks Item Lists Templates     Consulting

 

We Serve Over 100 Types Of Contractors So If Your Type Of Company Is Not Listed

Please Do Not Be Concerned Because If You Are A Contractor

There Is A Good Chance We Can Help You!

Call Now: 206-361-3950

QuickBooks Chart Of Accounts Set Up General.png

If you are a blogger, who writes about construction we would like to hear from you.

https://www.fasteasyaccounting.com/guestblogger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractors_Success_MAP, Contractors_Success_Marketing_Accounting_Production, Contractor_Bookkeeping_Services, QuickBooks_For_Contractors, QuickBooks_For_Contractors,Contractors_Success_Map_Construction_Accounting_Secrets_For_New_Contractors