Mar 10, 2017
Contractors View Of The Numbers And Tax Accountants View Are Different
Tax Accountants
Review Financial Statements After The Year Has
Ended
The Tax Accountant’s Role Is To Review The Previous Year
Financial History based on the information provided create
and file the Annual Federal Tax Return, Annual State Tax Return,
and other Local or Payroll Returns. Washington State is a sales tax
driven state. Other states have a State Income Tax, and others yet
have a blend of both.
The Contractors Role Is To Review What Is Happening Now and make Strategic Decisions about what to know in order to have a brighter financial future. The best way to do that is to have QuickBooks Setup to deliver your 5 Key Performance Indicators (KPI) in 5 minutes a day at 5 pm or whatever time is best for you. We call them the 5 At 5 For 5, and we can set them up in your QuickBooks for you! Click here to learn more.
Every Construction
Contractor Should Have A Tax Accountant Prepare And File Your
Annual Tax Returns
Congress passes a ton of laws which each one could have zillion
pages with addendums and other attachments that will make all the
individual bills even harder to understand. Tax Accountants need to
keep track of all of these changes. Changes – Question is What
impacts Yesterday, Today and Tomorrow. A single bill may include
all three possibilities.
The condensed Version of the U.S. Master Tax Guide [year]
(copies provided by your local Payroll Services) is very similar to
size and font of the OSHA Book. In other words, the U.S. Master Tax
Guide is “Fat” like how the telephone books used to be. When
discussing the U.S. Master Tax Guide, it is a book and can be
described as a “Thick Book With Very Tiny Print.”
Just The Book that everyone wants to read on a warm, cold, hot,
sunny, rainy, cloudy Saturday afternoon. (Not - for those who might
be missing my humor). I have copies of several years of U.S. Master
Tax Guides, and every one of them is 1000 pages. Remember this is
the condensed version referencing only the Most Common tax issues.
I expect my Tax Accountant to know The Answer to everything that I
may encounter and how to properly deal with it on my annual tax
return.
Once The Tax Accountant Has
Your Financial Statements It Is All “After The Fact”
Accounting.
The end of the year has passed. Many of us automatically file an
extension so it may be closer to September so “The Past” really is
the past. Way past time to say, I wish I had done this
instead. You can say it – It just won’t change the outcome of
previous decisions.
There are limited “things” the Tax Accountant can move, change or
adjust. The year is over. The real question is “How Much Do I Have
To Pay?” If you have paid into the Internal Revenue Service via W-2
or Estimated Taxes, hopefully, the amount due will be close to
Zero.
Tax Accountants Are Busy, And
Everyone Wants Their Returns Filed. Yes, you can be
the first one on your block to get your taxes done but is that a
good idea? In my opinion, as a business owner, you do not want your
Tax Accountant to roar through your tax return, get it done quick,
without really reviewing your individual circumstances. Side note,
those with College Students on Financial Aid always need to have
their returns completed early to meet the Federal
Deadlines.
Everyone usually receives from their Tax Accountant a “Tax Booklet”
with check sheets to help prepare for documents the Tax Accountant
needs to complete the Annual Tax Return. Usually, this Tax Booklet
is geared towards what the Tax Accountant needs to complete the
Personal Return.
Tax Accountant is hoping everything is in the Business Financial
Statements and there are just a few things left to do to be able to
complete the annual Business Return.
Tax Accountants Are Paid To
Fill Out Tax Returns Not Save You Money Or Mentor
You
We Are Paid To Do Your
Contractor Bookkeeping Your Profit And Growth
Mentor
· Figure Out The Vehicle and Equipment Depreciation
· Look for missing expenses (usually not very hard)
· Ask for Cash Receipts (only in passing)
· Review Meals and Entertainment (big-ticket meals or excessive
meals)
· Review for items that are really Owner Draws, Loan to Members or
Loans To Shareholders
· Owner Equity put into the company (only if they see it)
· Other Assets (Job Deposits | WIP)
· Other Liabilities (Short or Long Term Notes)
· Petty Cash (will ask if you have Cash On Hand)
· Suspense (should be cleared out to Zero)
· Ask My Accountant (need to have receipts and details to help
identify who, what it is for)
· Anything that looks Odd (Tax Accountant does not want an audit,
so it is better you overpay taxes)
Tax Accountants Work With Messy And Incomplete Records To Do Their Job
They appreciate a good set of Financials from a Contractors Bookkeeping Services (Fast Easy
Accounting). Sometimes Tax Accountants have to be the “Big
Person” and refuse future service until the bookkeeping is in a
more organized set of financials that they can use. The last thing
a Tax Accountant wants is an audit.
Finally, the Tax Accountant is ready to start all over and review
your Personal Income and Deductions, and then they are able to
produce for you two Annual Tax Returns. Depends on the individual
returns, and when you are filing whether you can file the returns
electronically. Hopefully, you have paid enough in personally to be
able to receive a refund.
Tax Accountants Rarely Have Time To Give You More Than The Basics
toward Tax Planning beyond the different IRA’s and 401K’s. The
Reality is that most of the time The Contractor is ready to leave
because the whole process is similar to going to The Doctor. The
entire experience of taxes leaves you the Contractor feeling
exposed. You know that funny feeling where you have on “The Gown”
and your blood pressure immediately rises when the doctor walks in
and closes the door.
Contractors are just a little bit annoyed if they want real
answers about their business and discover the Tax Accountant is
really good at rolling up the numbers and having a Tidy Tax Return
but most of them are clueless about construction.
The Contractor wonders why if they are both looking at the same
numbers on the Financial Statements that the Tax Accountant cannot
or will not be more helpful with answers needed in running their
business.
The Short Answer Is There Is A Vast Difference Between Regular
Accounting and Construction Accounting. Tax Accountants are a
generalist and understand Regular Accounting. Tax Accountants have
to be to be able to complete the maximum number of client’s tax
return. In their world, the expenses are similar for all
businesses. It starts out with Income – Expenses = Net Income or
Net Loss. The bottom line number on a Schedule C is Net Income or
Loss and is the same for all the businesses. S-Corps have its own
return with the numbers passing through to your personal annual Tax
Return.
My opinion is Tax Accountants like Personal Tax Returns better
because they are like sweet, decadent desserts; whereas
Contractor's Business Tax Returns are the vegetables (which is
great if you love vegetables) because they have to deal with the
Contract's Business Tax Return before they can get to the fun
stuff. Or maybe it is just a business decision because everyone has
a Personal Tax Return and only some of us have a Business Tax
Return.
All phases of accounting and bookkeeping are a specialty including
Tax Accounting, General Accounting, and Construction
Accounting.
Generally, Contractors Are Not Trying To Play “Stump The Wizard”
when they are asking the Tax Accountant questions about their
Financial Statements. Many contractors will have their Tax
Accountant prepare Payroll, Payroll Tax Reports, State and Local
Tax Reports (sales tax). Does the Tax Accountant understand your
business, even a little bit? If the Tax Accountant does not work
with sales tax issues on a regular basis, the contractor may have
to explain the rules that impact them to their Tax Accountant.
Each state is different is what and how they collect State and
Local taxes. The most common thing is that “They Do.” The most
basic question Contractors ask is “Am I Making Money Or Losing
Money”? The next question is “Where Did I Make Money? It should be
an easy question to answer.
Unfortunately, when everyone is doing everything but tracking the
paperwork and the money there are no answers to be found.
Without A System, It Is
Impossible To Know If Your Employees Are Wasting Time And If
Material Is Being Wasted
This does not mean having a drone flying overhead watching their
every move to start with by asking 5 simple questions:
1. Do they have the Right Tools and
Equipment?
2. Do they know your expectations?
3. Do they feel they are being paid fairly?
4. Are they a Willing Worker and doing the
job?
5. Will they use an electronic Time Card? (T-Sheets)
Part of the role of Management is knowing “What 10
Minutes Waste Costs You”In Washington State, the Worker’s
Compensation rate is set by the individual tasks and then
calculated by the hours worked. Other states have similar ways to
calculate Workers Compensation or Insurance.
In most states, Laborers and Apprentices have the exact same
Worker’s Compensation rate as the Lead Person on the job.
Skill level is different, and the Contractor is always balancing
the Cost of Wages against Value of The Skill of Each Worker.
Contractors are always faced with variables including costs that
continue to rise after the bid has been accepted. One little
hurricane can impact the cost of building material across the
country. One little snow storm and delay truckers and the goods
they carry. One little bit of sunshine is okay for days but months
and months where is it not normal can be a huge deal. In Winter,
you expect snow in the mountains to go skiing, rain in the Spring
for flowers, the sun in the Summer to play, and a little frost in
the Fall on the pumpkins.
With changing weather patterns, we all need to adapt. We are in the
greater Puget Sound (Seattle area), and for years it was 350 days
of rain, winter rain, spring rain, fall rain, maybe 15 days of
summer. Today it snowed! Last week it snowed and the week before it
snowed. Good News, the snow did not stay long and for the most part
did not impact schools. At the same time, other places around the
USA had different experiences.
Contractors Play A Type Of Sports Game Every Day Without The
Rewards Of A Fat Guaranteed Contract.
They go Up To Bat, Jump Through Hoops, Run Down The Field all in
hopes of securing The Call, Creating The Bid, Closing The Sale,
Preforming The Work, Getting Paid. Have a Life.
Contractors want to know “Are I Making Money” or “Losing Money” now
“Which Job?”
Should I be doing “More of This” and “Less of That?”
Sometimes is a little hard for The Contractor to be Happy and Full
of Smiles when a project Goes Over Budget, you have Given Away Free
Change Orders to Keep The Customer Happy and Discovered Material Is
Way Over Budget.
If The Contractor has 30 day accounts the final bills are still
coming in after the project is complete. If it is a Time and
Material billing and the final invoice was created too soon; it is
almost impossible to get additional funds from the customer. It is
by exception, that additional funds can be collected and always get
signed Change Orders and paid promptly over waiting to the end of
the project.
Many times, Contractors think they have made money based on the
fact that all the bills got paid and there was some money left
over. With poor bookkeeping, it is hard to know because the
checking account may be reflecting checks that have not cleared,
deposits from the next job, personal funds deposited back into the
account to cover last minutes’ expenses and forgotten.
Good Construction Bookkeeping is the solution
A little bit of effort towards Job Costing can be very helpful in
understanding the numbers. The Key is asking the Right Professional
the right question. Tax Accountants understand how to roll all the
numbers up from the different aspects of your personal and business
life into a summary Tax Return for the Internal Revenue
Service.
Construction Accountants understands the numbers in your business
and where to properly put them. Your Banker looks at both sets of
numbers and decides if you are credit worthy for a loan. Get a
Board of Advisors NOW!
The Contractor and Contractor’s Spouse look at the numbers and
either Smile and say “WOW” or Frown and Say “Ouch” “Oh Crap” or
something much more descriptive.
No matter which way the numbers are from Fantastic to In The Toilet
The Next Step is Now What Do We Do?
We are here to help. Let’s Chat!
Wishing You The Best Every Day.
Sincerely,
Sharie DeHart
Sharie 206-361-3950
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.
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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.
Warm Regards,
Randal DeHart | The Contractors Accountant
#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
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