Jul 15, 2022
Not connecting all the bank and credit card accounts dedicated to your business
Make sure that you keep all your construction business bank and credit card accounts synced to Xero to ensure that you don't miss any sales or expenses in your reports.
Also, ensure that you separate your business accounts from your personal ones to avoid hassles during tax season. Doing this also helps you make accurate business decisions. Trust us, your accountant and bookkeeper will thank you!
Not reconciling the bank account in Xero to bank statements
Run a reconciliation report in Xero regularly and then compare it to your bank statements to ensure there aren't any errors or duplications.
Many business owners miss this critical step, which means they look at inaccurate or incomplete data when they check their reports.
Not checking user access and permission levels
Many business owners give key team members full access to their business' Xero system and don't review the user permissions at all.
However, the best practice is to provide access on an "as needed" basis and review who has access to the system and what permission level they have quarterly.
Also, when your staff members leave, you should revoke their Xero access immediately.
Not setting financial SOPs (Standard Operating Procedures)
Create a proper financial SOP that describes who is responsible for what and by when and the step-by-step process of getting things done.
For instance, you can assign your operations manager to run the aged receivables report in the system, so you'll know who owes your construction business money. Then, map out a clear action plan of what happens in specific scenarios, such as a payment that's two weeks late. You can also have standard replies that the team can send as needed.
Mishandling transactions when you've paid with your personal money
Many construction business owners don't know how to handle transactions using their personal accounts when paying for a business expense. There are actually ways to capture such costs paid on the wrong card in Xero so you can still claim the tax deduction.
You may need to get in touch with your advisors to make the adjustments accordingly.
Xero Accounting Online saves us time in data entry, which means we can offer contractors bookkeeping services at substantial savings over QuickBooks bookkeeping services and provide more in-depth financial reporting, with some of the reports being updated within seconds of when the transactions are received.
Avoid Xero Mistakes By Working With A Specialist Advisor
The best way to ensure that you're taking full advantage of all the features in Xero and avoiding costly financial mistakes is to work with an experienced advisor who knows the ins and outs of this cloud accounting system.
We're Xero Certified and would be happy to look at your file to give you some suggestions. The time, effort, and money you've put into running your construction business is a testament to your commitment to this industry. So, let me end this post by telling you to do what you do best and outsource the rest. The "rest," as you know, is where your cash flow and profit depend – construction bookkeeping and accounting.
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 firstname.lastname@example.org