Sep 25, 2015
So You Are Starting A Construction Company. Perhaps yours will be House Builder, Handyman Company, Specialty Contractor like a Plumber, Electrician, HVAC, Concrete Contractor or Landscape Company.
Whatever it is congratulations you have or will be taking a big step toward being the Master of Your Own Destiny!
I Trust This List of Five Accounting Tips For Contractor Startups Will Help You
Many surveys and reports show nearly half of all new construction companies close their doors within the first five years of opening them. When we speak with contractors who failed most of them say it was due to lack of cash flow. Pretty obvious and yet when questioned all of them said they were "Blind-Sided" and were not aware they were running out of cash until it was too late.
There is a point when a contracting company starts to fail and nothing short of a massive cash infusion can stop it and a domino effect begins which is when a series of similar or related events occurring as a direct and inevitable result of one initial event.
Lack of cash holds up material deliveries, which causes labor to be idle and continue costing money and then payroll checks bounce and your construction workers take your tools and equipment to the pawn shop to get paid that way and the contracting company spirals down to its final end.
Tip #01 - Open Three Business Checking Accounts
If you were to ask a lot of contractors about the big mistakes that they made when they first started out one of them are they wished that they had kept their business and personal expenses completely separate. Not only does it make the day-to-day contractor bookkeeping easier but it also makes monthly, quarterly and annual tax preparation smoother.
Checking Account 01 - Your primary checking account should not have any credit or debit cards attached to it. All money is deposited into this account and you make transfers into the other two accounts as needed. Order a small supply of three part voucher checks. It is a fast easy way to keep track of who was paid and have a reference of their Invoice number, dates and amounts.
Checking Account 02 - Payroll checking account should have just enough money in it to cover payroll with perhaps a small cushion of $100. This limits exposure to payroll fraud and this account should not have any credit or debit cards attached to it. You can transfer funds into this account to as needed from your primary account. No need for paper checks.
Checking Account 03 - Petty Cash checking account with $500 +/- this account should have debit cards that work like credit cards attached to it for making small purchases in the field. If you want to provide your foreman and forewomen with a debit card to be used as a credit card you can. NEVER give out the PIN number. You can transfer funds into this account to as needed from your primary account. No need for paper checks.
Tip #02 - QuickBooks Desktop Version In The
There are thousands of accounting programs on the market and we have tried dozens of them including free ones like Wave and GnuCash, one of the more popular ones for contractors, is QuickBooks. If you are a contractor I strongly suggest QuickBooks desktop version in the cloud because it gives you all the flexibility to access QuickBooks remotely from a tablet, laptop, notebook, desktop and some phones. It is the Windows version of QuickBooks; however, it can be accessed from most Apple devices.
Tip #03 - Backup Your Paper Records In The
This includes keeping the invoices that you send and receive, your paper and electronic receipts, keeping your employees’ records up to date and having proof of all of your expenses from equipment that you purchase, traveling you do and the office supplies that you’ve bought.
There are several cloud based services to choose from. We use a paperless server version which allows us to scan a paper document and attach it to the individual transaction in QuickBooks for easy retrieval.
You Can Drag And Drop Documents From Your Desktop, Laptop Or Tablet Into Our Paperless Server
In addition to all the ways listed in How To Get Paperwork To Us we have recently added Drag and Drop which if it only saves you ten minutes a day on your contractor bookkeeping could be worth hundreds or thousands of dollars annually to your bottom line! For more on how Ten Minutes A Day can make or break your construction company Click Here
Tip #04 - Focus On Profitable Customers And
The 80/20 rule says that most contractors spend 8 out of 10 hours doing things that drive almost no value to the bottom line. The biggest drain is trying to save money doing your contractor bookkeeping instead of spending five minutes a day reviewing the Key Performance Indicator (KPI) Reports.
Especially now when they can be accessed 24/7 without opening QuickBooks for Contractors.
By generating daily reports that uncover the best customers, jobs, services, or products, you will soon see how you can refocus your internal efforts on doing more good work.
This is the great contribution a company receives from good QuickBooks® data and from using QuickBooks® the ‘right-way’.
What are you good at and what do they love to pay you money to do for them? What jobs have you done that made a positive difference in people lives?
What projects did you have so much fun doing that time seemed to fly by?
Tip #05 - Develop A Business Plan
Develop Your Business Plan - Using the Eleven Steps Program and pay close attention to the marketing section because that is where you will decide what niche of the construction market you will dominate. Know that in time your company will become legendary to such a degree you clients will be raving fans and referrals will be part of your marketing strategy. Nordstrom has been very successful at this and it would be wise to learn from the leaders.
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 firstname.lastname@example.org
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
Need Help Now?
Call Sharie 206-361-3950
In closing, I want to caution you that we may or may not be a good fit for your contracting company. This guide will help you learn what to look for in outsourced construction accounting.
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