Preview Mode Links will not work in preview mode

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

© 2018 Fast Easy Accounting     (206) 361-3950 | Disclaimer | Privacy Policy | Security Policy | Terms Of Service | Contact Us | Refer A Friend

Oct 23, 2020

This Podcast Is Episode Number 0390, And It's About Contractors Need KPI, Not Get-Me-By

Being in your own business can be the best time in your life. Alternatively, the worst time! No one starts a business, especially a contracting business, and have it rolling perfectly with a profit every step of the way. Between regulations, economic uncertainty, and other outside forces; always a learning curve.

Picking a Get-Me-By Contractor's Bookkeeping Solution in many cases is using an Excel Spreadsheet and a shoebox, file folders all dumped into a file box and looking at the Online Banking once in a while. This accounting method is the "I still got money, so I must be okay."

When you use today's Job Deposit To Pay For the material, labor, and subcontractors from the last job, it is also known as "Rob Peter To Pay Paul." Cash flow is never a problem until the sales stop; then it doesn't matter if it is the economy (your customers get laid off), domino effect (their customer didn't pay them), or you are unable to work due to being hurt on the job or get sick (flu or more serious illness).

Problems Arise When You Want To Do Any One Of The Following:

  • Get a Line of Credit at the bank to expand or buy equipment
  • Attempt to get a commercial lease for equipment
  • Setup a 30 Day account at a major supplier
  • Buy a new vehicle for personal or for the company
  • Buy a new house or Refinance existing home
  • Answer questions on Liability Insurance Audit

The Insurance Audit

The insurance company may want copies of quarterly and monthly tax reports. The Low Premium is based on "low sales" and "low payroll"; at audit time, it is the adjustment in the "Actual" Premium. If all the numbers are equal or less, there is not usually a credit. To verify income, Insurance companies will want to see copies of State Revenue Reports and payroll reports. 

State Agencies May Want To Do An Audit On Your Business

Some states suggest you get a "Voluntary Review." Depending on the auditor, this may go smoothly. In other cases, it can turn into a full-blown audit. The audit can have a date range of several years, not just the current or previous year. In addition to Quarterly Tax Returns, you, the contractor can be asked to provide the Check Register, Customer Invoices, Employee Timecards and Paystubs, plus the State Revenue and State and Federal Payroll reports. In other words, they want everything to cross-check what you told one agency over another. State agencies are looking at your customer and vendor list to add to their companies' plans to go after next.

Banks Want Detailed And Summary Financial Statements

Bank wants current and Year to date financial statements and previous Year's tax Federal Tax Returns. In most cases, the loan officer will ask for the application, and financials be provided even when they know that the bank is not lending to anyone for whatever you are asking for. (Example: Working Capital). See Unique Construction Company Financing Secrets Revealed.

The Application Process Can Be Many Pages Long

And they can feel very intrusive. Before you invest time and energy - verify the bank is lending to contractors. Then ask if the bank is lending for Working Capital, Vehicles, Equipment, or Whatever you need the loan for. What is the debt to income ratios and more? Don't Be Afraid To Ask: What is the bank looking for to say YES!

Tax Accountant Uses Your "Get-Me-By Documents."

When your Construction Company is small, you may find a tax accountant willing to take your "Get Me By Documents" and do a workaround to file your taxes. Don't expect them to do that Year, After Year, After Year when suddenly you have grown to make over $100,000 in sales and above. They have the reasonable expectation that you are getting it together, and if you don't, then the burden of finding all of your deductions is not on others. Every missed receipt may be a business deduction missed and causing you, the contractor, to pay more taxes than necessary. 

Get You By Contractor's Bookkeeping Can Be Easily Solved

We have clients who are Brand New Companies: Weekend Warriors, Handyman, Trade Contractors, and General Contractors. In this economy, many seasoned contractors had larger companies and are now starting over. The staff that used to be there and the specialty software to run their business is gone. QuickBooks Desktop is an excellent program to meet the needs of Contactors.

The Five KPI (Key Performance Reports)

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.

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," Therefore, they have that much coming before the job starts. 

3. Accounts Payable

What bills do I have coming up? Accounts Payable is where you track all your supplier invoices and match your subcontractor bills' month-end statement. It is not the place to track your monthly payments to your credit cards, payroll, or other tax payments to State and Federal Agencies. These items are in different areas 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 track your income and expenses and 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 have magical skills, it is impossible to trade that box of treasures for a gas tank, lunch, bag of groceries. Having a good relationship with your suppliers is critical. Suitable suppliers will encourage the return of material. Even with a restocking charge – Cash is more useful. 

Final thoughts

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. It can be used as an electronic checkbook to a simple accounting program with reports. The goal is to have access to useful information you can read and interpret before making any decisions.

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. We can't think from any position than from management.

When you are ready – We are here to help.

About The Author:

Sharie_DeHart_President_Fast_Easy_Accounting_Serving_Contractors_All_Across_The_USA_Including_Alaska_And_Hawaii-1Sharie 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