Oct 9, 2020
This Podcast Is Episode Number 0388, And It's About What Does Your Accounting System Say About Your Construction Business?
How many times a day do you hear
from someone saying, “It’s Boring", or "I’m Bored.” It is a red
flag that should light up your “Oh Crap” meter. Moreover, more
important, whenever an employee says it. Because this usually means
they are shortcutting the work versus the fact that you have so
many right processes in place that the work is genuinely dull.
Being bored is a factor in manufacturing jobs.
I saw a special where a manufacturer described how the process is
that they moved employees on a scheduled basis between workstations
to help them avoid boredom and stay fresh throughout their workday.
Proved to be a Win-Win for everyone. Studies found that alert
employees have fewer accidents, which in turn reduces your cost of
doing business and raises cash flow and profits.
In accounting, you want to be boring. Good to be bored from the standpoint that everything is going smoothly. Anytime it is not, then it is moments of frustration, anxiety, and sometimes sheer terror.
Whenever something is going wrong, the instant reaction is to assign blame. Don’t do this! It does not help anything and takes up energy. We review lots of issues; it’s by exception that it is YOUR FAULT!
Remember every time you decide; look at a job, meet a customer, hire an employee, and make the best decision possible with the information at hand. Information changes, circumstances change, and sound judgment; good fit yesterday may not be tomorrow or the day after.
Common issues in any accounting file - QuickBooks Desktop, QuickBooks Online, or other software is:
- The initial setup of your QuickBooks file using EZ Setup is designed for everyone regardless of the type of business or size - it is easy to do and hard to use. It may be the software for many people in software moving, changing, “aka” – fixing everything.
- You have grown and have
changed the services you provide. Education and training are
needed. You need help from other professionals.
- As with all software, QuickBooks Desktop had come a long way from when we first started using it. At one time, it had only one sales tax location and rate, which was OK until States like Washington State changed the reporting rules for Sales Tax. It changed from your business location to destination-based.
Thank goodness for Excel, as Randal developed one of many Excel workbooks to give me the information I needed to fill out the Sales Tax form each quarter manually. - QuickBooks Desktop releases
a new version each year.
You can buy the software, install it on your computer, and immediately start using it. You can pick and choose which features you want to begin using:
- Setup Check Register
- Create Estimates
- Create Invoices
During one of our construction company periods, we did service and repair with lots of daily invoices. Completing the sales tax report pre-Randal’s Excel workbooks was super awful; with the Excel sheet, it moved to just awful. Life became awesome when QuickBooks improved with the ability to track sales tax and produce a useful report. Better yet, giving credit where credit is due – Randal fixed it!
Having the proper tools is the key to everything, regardless if it is in the field, on the job, or in the office. You, your spouse, or your staff can do the work if you have the proper tools. The appropriate setup of a sound accounting system is one of the means for office. We recommend QuickBooks Desktop as the primary software for contractors. It will grow with you and your business, and many tax accountants use QuickBooks Desktop:
- QuickBooks Pro
- QuickBooks Premier
- QuickBooks Enterprise
We have found a way to use QuickBooks Desktop in a cloud environment and enjoy all the benefits of QuickBooks Online without the hassles and lack of reporting ability.
We found moving QuickBooks back and forth between the client’s computer and ours lead to problems of data put into two different QuickBooks files and no way to merge them. Hint - Online banking provides cloud access, but the actual data is resting on a server somewhere, and it does not work well for contractors.
The next step is thinking about the details of your business:
- What do you want to know about your business?
- What kind of reports are you receiving now?
- Do you understand the reports?
- Who does the reports?
Our focus is on helping you be successful by knowing your numbers and making you get it easier.
Everything about construction accounting for contractors comes back to a few of the basics.
Can you give your tax accountant all the info needed without it becoming a massive project?
If someone else is doing your bookkeeping:
- Do you know what to look for in QuickBooks?
- Do you know which customers and jobs are the good ones?
- Are you making money or losing money?
- Are you able to do Job Costing?
We are looking at contractor accounting files regularly, and we speak the language of construction and construction accounting.
Final thoughts
We are not just “Idea People”; we have an active Accounting Practice offering multiple services. If you could ask your bookkeeper, accountant, advisor any question – What would that question be? In reverse – What question do they ask you regularly that you cannot quickly answer?
About The Author:
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. Call
1-800-361-1770 or sharie@fasteasyaccounting.com