Dec 11, 2020
This Podcast Is Episode Number 0397, And It's About The Value Of Time And Bookkeeping For Construction Business Success
Keeping track of sales, earnings, expenses, and purchases are fundamental to your construction business's overall health and sustainability. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals. But despite their proven importance, many business owners dread and avoid accounting tasks.
Smart Contractors know their time is more valuable spent meeting prospective clients, putting together bids, managing job sites, and many other things other than bookkeeping. So they find someone else to do it.
Any bookkeeping and accounting firm that does not know how to calculate complex algorithms that take into account fluctuations in the workload and generate a monthly fee that is fair to you and them they need to go back to school and take those courses on Decision Modeling, Statistical Analysis, and Business Process Management.
All Professional Construction Bookkeeping and Accounting Services have formulas for calculating fee structures. It is not rocket science, but it does take a deep understanding of accounting:
- How many employees do you have? From that, we know how much time and effort it will require to process payroll and do the tax reports.
- What type of construction do you do? New, remodel, service, residential, commercial? From the number of employees and the kind of work you do, we know how much time and effort it will require to do all the bookkeeping, bank and vendor reconciliations, and the rest. Because we have a system.
Wondering if it's really worth the aggravation?
Here are three reminders of how effective bookkeeping is and why it is the cornerstone of small business success.
Keeping track of reimbursable expenses
A reliable system for tracking reimbursable expenses ensures you reap all the benefits you're entitled to when filing your taxes. Expenditures sorted into categories, such as "food," "travel," and "office supplies," can be cataloged quite merely using our LMOS system - Labor, Materials, Other costs, Subcontractors, granted that your construction bookkeeping is set up correctly.
Using a dedicated credit card for business expenses, and updating your records every month, will put money back in your pocket come tax time.
Measuring profitability and planning for the future
To grow your business, you must track and compare its finances from one year to the next.
In addition to reconciling the books and bank statements every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:
- measure year over year profits;
- identify opportunities to cut costs;
- plan for major expenses (such as new office space, equipment, or staff); and
- develop data-based strategies for expansion.
Preparing for tax season
Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation can lead to severe penalties, fines, and even an audit.
Save money and get peace of mind with sound bookkeeping. You'll be assured of compliance with regulations and will receive a reliable estimate of amounts owing long before your tax bill is due.
Final thoughts
Most contractors are passionate about developing new business ideas – not crunching numbers. Not to mention your daily workload is stacked high up with not enough time to deal with it. Outsourcing a professional bookkeeper, even on a part-time or as-needed basis, can help optimize your accounting and increase overall profitability. Do what you do best because your time is valued more than anything.
It's well worth it. Invest in effective bookkeeping, and you'll build a solid foundation for a resilient, forward-moving construction business.
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