Sep 22, 2017
You could spend all of your time seeing a report in QuickBooks
and trying to find the way to populate numbers in the report.
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.
It is not practical or recommended for the Small Contractor or
Handyman to track inventory. For most contractors, the material
goes from the supplier directly to the job which is not the
definition of inventory. Inventory is what goes into the warehouse
and stays, and stays and stays.
Most contractors do not have the money to invest in inventory.
Your supplier is just down the street. They have on-demand
inventory – what you need when you need it.
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.
#1
Cash
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?
From someone doing their accounting, it seems simpler to create an invoice for the whole job and then takes payments on it. The problem is that the balance is aging nicely and give a false impression of the company’s financial position. Add the time it takes to determine what is owed to you.
After a short while, QuickBooks becomes a real MESS. Then your
banker asks for financials, and you are trying to explain to the
Banker that your Accounts Receivable includes work not started or
completed. Bankers want to know How Much Money can you expect to
collect 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.
Fuel costs have increased everywhere due to recent Hurricanes
(if they didn’t work in your area – you are one of the lucky
few).
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.
Making decisions and being adaptable happens every day when you
are in business. We understand Contractors and Construction
Accounting from your side; what you need and why you need it! Why,
because we have been there. It is impossible for us to think from
any position then from management.
When you are ready – We are here to help.
Sharie
About The
Author:
https://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
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 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 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 sharie@fasteasyaccounting.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 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:
https://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
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