This Podcast Is Episode Number 0201 And It Is
About Contractors Are Confused About
Bookkeeping
Many of you may begin with the thought; I
am just a contractor
I don’t want to be in business; I just
want to do the work
That is what is important. Yes, doing the work is important.
Keeping track of your hard costs, soft costs, general expenses and
overhead is the difference between making a profit or having a
loss.
Ignoring the costs do not make them go away; it just avoids putting
them on the tax return. Any missed expenses make your profit on the
job look higher than it really is and causes you to pay more income
taxes because all net profit is taxable.
All businesses need to keep track of their company expenses,
including the material and much more. Contractors usually go from
one extreme (doing nothing) to the other (trying to count every
bean, every paperclip, all the nails and, the scraps of 2x4’s). The
balance is somewhere in the middle.
Labor is the biggest cost you will face. As an owner / operator
you're entitled to the same wages your construction company would
pay for having another construction worker on the payroll.
Otherwise, why not go to work for someone else?
Favorite Option: No Bookkeeping
System
- One checking account which is a mix of business and personal
expenses.
- Multiple credit cards which are a mix of business and personal
expenses.
- No formal invoices to customers.
- Give verbal amounts to customers to pay; maybe send them an
email.
- Have customer payments made out to you instead of the
company.
- Part of the time deposit the check into the checking
account.
- Most of the time Cash the check; randomly put the money into
the bank
- or Hip National Bank.
- Ignore the government until forced to respond.
- Usually throw away all your receipts, deposit slips, bank and
credit card statements.
- Emergency; Toss everything you can find later into a file box
(all receipts business or personal).
- Take the Magic File box unsorted and may not have all
statements to the tax accountant. Drop and Run – Tax Accountant’s
Problem Now. Messy records mean you will pay a
lot more income tax.
- Next Option: Limited Bookkeeping System
- Contractors are trying to do their own bookkeeping may start
with a pile of receipts and some.
- One checking account which is a mix of business and personal
expenses.
- Multiple credit cards which are a mix of business and personal
expenses.
- Catch yourself from throwing away all your receipts, deposit
slips, bank and credit card statements.
- When you remember, toss everything you can find into a file box
(all receipts business, personal, junk mail)
- Randomly look for the missing bank and credit card statements
and add them to the box.
- Create written proposal, send the customer an email in “story
form” with an amount to pay.
- Give verbal amounts to customers to pay.
- No formal invoices sent to customers.
- Have customer payments made out you or the company (based on
what the customer wants).
- Usually, deposit customer’s check into the bank, maybe put into
the bank or Hip National Bank.
- Ignore the government until forced to respond.
- Take the Magic File box unsorted complete with junk mail which
may not have all statements to the tax accountant.
- Drop and Run – Tax Accountant’s Problem Now. Messy records mean you will pay a
lot more income tax.
This process can go on for years until the Contractor is willing
to make a change even a slight one; nothing changes. No one can
make a Contractor like to do paperwork. It is not a natural
skillset.
The question is how to make paperwork easier, simpler, and at
least tolerable for the Contractor to do before getting back to the
“Fun Stuff” like building something, taking apart something, fixing
something.
To Explain In A Way, Your
Spouse Would Understand
- Contractor’s Clean House (tear out walls and fill a
dumpster)
- Rearrange Furniture (remodel and move walls)
- Buy New Stuff (sheetrock, cabinets, light fixtures, plumbing
fixtures and faucets, carpet)
- Install Stuff (secure to wall, floors, and ceiling so we can’t
move them)
To Explain In A Way, You
Would Understand
- Wives move rearrange furniture as part of the process to
cleaning the floors, baseboards edge to edge.
- Once the furniture has been moved and cleaned behind; it is
easier to leave the furniture in the new location than move it back
to the original location. This process is called Spring, Fall,
Summer, Winter Cleaning.
- The contractor just knows his stack of papers got moved. His
desk, chair, sofa, remote, dresser, clothes moved, and he is
clueless on why. It was all perfect exactly where he left it; now
everything is lost.
- Unlike the Contractors who have laborers to help with the heavy
work. Most wives have helpers who stand under 4’ tall,
want a cookie and a cartoon break (often). By the time they are
over 5’ tall, they are out with friends anytime there is a hint the
vacuum cleaner might be calling their name.
- On a serious note: Many kids are great helpers learning about
the business, are out on the job site, working in the office and
helping at home. For Contactors – the number of jobs on the “To Do
List” are endless.
Third Option: Contractors
Bookkeeping Is Easy, Anybody Can Do
It!
- Contractor tries to do it all
- Contractor works on making his best sale (spouse or
girlfriend)
- Contractor works on his best drop down sale (mother) as a
favor
- Contractor works on having a friend (friends spouse or
girlfriend) do bookkeeping as a favor.
- Contractor has exhausted everyone on the list above and hired a
friend of a friend as a 1099 contractor
- Contractor hires friend who took an accounting class once as
1099 contractor
- Contractor hires someone who has office experience and is a
willing to try to do the bookkeeping
- Contractor hires someone who did bookkeeping using other
software in another field.
- Contractor hires someone who used QuickBooks and therefore
should be able to do their bookkeeping.
- Contractor hires a bookkeeper who is willing to make all the
decisions, pay all the bills and treat it as if it is their
business; implying they are the owner to Customers, Vendors,
Suppliers, Other Employees.
The Last
Option Sounds Like A “Dream Come True” Until It Shifts To The
“Nightmare of the Bad Bookkeeper”
- They train the contractor like an organ grinder trains a
monkey, click here to learn more
- They refuse to invest time and money in continuing education
because they know everything
- They are passive aggressive and will study you and your staff
to learn how to manipulate everyone
- They are masters at gaining power over you, your staff, and new
employees and outside suppliers
- They hate change and will fight tooth and nail to stop it or
they will destroy your company
- They know you're responsible for taxes, fines,
penalties and interest; so this is where they get even
- They know how to increase your quarterly tax return costs,
click here to learn more
- They understand that bookkeeping is 90% repetitive transactions
and 10% complex transactions
- They don't know what to do with complex transactions, so they
put them wherever they feel like
- They have side jobs working for other companies
or an entire bookkeeping business on the side
- They decide how much integrity if any, your
company has and they tell everyone who will listen.
- They create a miserable work environment
causing turnover in your staff which costs you
money
- They make your customers and clients feel unwelcome and
unappreciated which costs you money
- They act as if they are serving time in jail and do the
minimum required to keep their job
- They say things to suggest businesses are bad and
construction company owners are the worst
- They are jealous of your success and even more so if they ever
had a failed construction business
- They don't learn anything new, why should
they, nobody is reviewing the QuickBooks
- They never learn anything new unless the company pays
for the training and it is on the clock
- They quit when the tax return is being
prepared because QuickBooks is a mess and
they're caught
- They come in a little bit late every morning and leave a
little bit early to make up for it
- they bait you with drama, nasty comments and minor actions
to find your tolerance limit
- They get even with you for every perceived injustice
against themselves and society as a whole
- They keep you busy with lots of mindless crap to divert
attention from why the books are a mess
- They let you think you are in control of the
bookkeeping and the bookkeeper until it is too late
- They make you think they are looking out the best interest
of the company, LOL!
- They let the work expand to fill whatever time you are
willing to pay them to get it done
- When they quit or get fired expect to hear: “Chaos, panic and
disorder...my work here is done”
- They become indispensable in order to take time off whenever
they please and hold you, hostage
- They negotiate for additional perks, benefits, changes, and
elimination of personal accountability
- They network for a better job with your clients, suppliers,
vendors and your competitors
- They represent themselves to outsiders as the owner or manager
with decision-making authority
- They text, message, e-mail, surf the web, chat on the
phone and socialize on company time
- They train you to leave them alone by getting upset
or angry whenever you want anything
- They work hard at causing just enough chaos,
so owner does not earn more than
the bookkeeper
- When your business fails they tell everyone, you are
incompetent, and they saw it coming
- They live in a chaotic, neurotic, psychotic, selfish,
disorganized, blame game environment
- They work through lunch to leave earlier in the day (At the
office for 7 hours and get paid for 8)
What happens when the person in control
of QuickBooks is unhappy?
The same thing that happens when the cook is
unhappy!
All Of This Seems Like A “No Brainer” To Contractors Who Have
Been In Business For A Long Time
- Please remember How It Was; when you were in your First Year in
business.
- Did your find some neighborhoods easier, nicer to get jobs?
- Remember That First Job? Was it profitable?
- What was the learning curve about bidding?
- Contractors Need A Working Knowledge Of Business To Become
Successful
What is
Income?
If “Money In” not clearly defined in an Accounting System; then
the government agencies will consider all money you received in the
bank as “Income.” No big deal; right? “Money Out” is just a few
taxes between the City, State, and Federal based on either “Gross
Sales or Net Income.”
Deposits are from the
following sources:
- Down payment on the job
- Reimbursement for material
- Progress payment
- Refund on material
- Premium overpayment
- Overpayment of taxes
- Loan from bank or friend
- Personal Loan from You
Tracking
Receipts:
All material and overhead receipts need to go into an Accounting
Software
Please Note, One Giant Single Entry for multiple receipts is not
proper accounting. It is quick, and it does match the payment
from the bank to the credit card company. A true example of
“Garbage In = Garbage Out” As the Contractor; it is understandable
to take short cuts and get the job done. Hiring an In-house
bookkeeper or accountant; not really any good excuse.
Same goes for expecting someone who knows nothing about bookkeeping
to get it right. You are overpaying for the task at hand; because
in the future, you are paying to someone to “Do It Over.”
Tax Accountants are too busy to chase after you and nag for missing
deductions.
In your zeal to have good job costing reports “Do Not Overdo
It.”
There is a balance between making paper airplanes and flying your
receipts near the Magic Box and trying to get so detailed in your
bookkeeping system that it becomes this overwhelming task.
It is unreasonable to expect your Office Manager / Bookkeeper to
enter in each material receipt into the Accounting Software line by
line. (Coded to perfection without any direction from you)
What should a Contractor use in QuickBooks?
Looking at the Home Page in QuickBooks some contractors feel they
must use every part of QuickBooks to be sure they get their Money’s
Worth. Think Picture Puzzle – and the small child starts out with a
25 piece puzzle and moves up to larger puzzles with more
pieces. They do not start out with a 2000 piece puzzle.
What you need in QuickBooks
depends on What You Do and How You Do It
- The object is to pick the basic parts of the Software and make
it work well for your company.
- QuickBooks is designed for the most basic user with limited
accounting skills. (Use as a checkbook)
- QuickBooks is set up with an Easy Step Interview designed to
help contractors get a feel of the Software.
- If you are only going to use it as an Electronic Checkbook then
maybe a very basic setup is all you need.
- For proper job costing you will need a little bit more than the
basics
QuickBooks is designed for Customized Setups to be able to function
well from someone doing Professional Services, Handyman, Trade
Contractors, General Contractors, Commercial TI Contractors, Custom
Home and Spec Home Builders and Developers.
At Fast Easy Accounting We
Welcome:
- Brand New Contractors
- Established Contractors
- Home Builders
- Commercial Tenant Improvement Contractors
- Remodel Contractors
- Trade Contractors
- Weekend Warrior Contractors
- Handyman Contractors
- Restarting Contractors
- Contractors that tried the No Bookkeeping Option
- Contractors that tried the Basic Bookkeeping Option
- Contractors that tried the Bookkeeping Is Easy Option, and
Anybody Can Do it.
Sometimes what looks “Good
On Paper” doesn’t always work in the “Real
World.”
- Do You Just Need “A Little or A Lot of Help?”
- There are No Right or Wrong Solutions, only what works best for
you and your situation.
Do-It-Yourself Contractors But Not By
Yourself
- Digital Products on FastEasyAccountingStore.com are
available worldwide
- More Digital Products and Professional Services are regularly
added
- Do you want something you don’t see? Send in a request for it
to be added
What Can Fast Easy
Accounting Do For Contractors?
- Contractors Bookkeeping And Construction Accounting
Services
- New Company or Fresh Start - We setup your new QuickBooks
File
- Existing Company - We set up, clean up your QuickBooks
File
- Return file to you for your In-house Bookkeeping solution
- Discuss the possibility of Outsourced Accounting
- One Hour Free Consultation
Short Answer – Yes, We Can Help
Keep In Touch
Sharie
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 Remove Contractor's Unique Paperwork
Frustrations
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.
You Deserve To Be Wealthy Because You Bring Value
To Other People's Lives!
I trust this will be of value to you
and your feedback is always welcome at www.FastEasyAccounting.com/podcast
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
Contractor Bookkeeping Done For
You!
Thinking
About Outsourcing Your Contractors Bookkeeping
Services?
Click On
The Link Below:
www.FastEasyAccounting.com/hs
This guide will help you learn what to
look for in outsourced construction accounting.
Need Help
Now?
Call Sharie
206-361-3950
sharie@fasteasyaccounting.com
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
For Contractors Who
Prefer
To Do Your
Bookkeeping
Most Contractors Setup
QuickBooks Desktop Version In One Of Three
Ways:
#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
And QuickBooks Does Not Work The Way They Want It
Too!
The
Answer:
In Conclusion:
Helping Contractors around the world
is one of the reasons we added the FastEasyAccountingStore.com
Follow our blogs, listen to Contractor Success M.A.P. Podcast. We Appreciate Our
Visitors, Listeners, and Subscribers. – Thank You!!
Please feel free to download all the Free Forms and
Resources that you find useful for your business.
We are here to Help “A Little or A Lot” depending on your
needs.
About The
Author:
https://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping
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. http://www.fasteasyaccounting.com/sharie-dehart/
206-361-3950 or 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 Remove Contractor's Unique Paperwork
Frustrations
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 the 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.
You Deserve To Be Wealthy Because You Bring Value
To Other People's Lives!
I trust this will be of value to you and your feedback is always
welcome at www.FastEasyAccounting.com/podcast
This Is 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
Contractor Bookkeeping Done For
You!
Thinking
About Outsourcing Your Contractors Bookkeeping
Services?
Click On
The Link Below:
www.FastEasyAccounting.com/hs
This guide will help you learn what to look for in outsourced
construction accounting.
Need Help
Now?
Call Sharie
206-361-3950
sharie@fasteasyaccounting.com
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.
Enjoy your day.
Sharie
About The
Author:
https://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping
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. http://www.fasteasyaccounting.com/sharie-dehart/
206-361-3950 or sharie@fasteasyaccounting.com
For Contractors Who
Prefer
To Do Your
Bookkeeping
Most Contractors Setup
QuickBooks Desktop Version In One Of Three
Ways:
#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
And QuickBooks Does Not Work The Way They Want It
Too!
The
Answer:
Short List
Of Construction Contractors We Serve
Additional QuickBooks Templates,
Resources, And Services
QuickBooks Set Up
TemplatesSolopreneurQuickBooks Chart Of
AccountsFree StuffQuickBooks Item Lists
TemplatesConsulting
We Serve Over 100 Types Of Contractors So If Your Type Of
Company Is Not Listed
Please Do Not Be Concerned Because If You Are A
Contractor
There Is A Good Chance We Can Help
You!
Additional QuickBooks Templates,
Resources, And Services
QuickBooks Set Up
Templates Solopreneur
QuickBooks Chart Of Accounts
Free
Stuff
QuickBooks Item Lists Templates
Consulting
We Serve Over 100 Types Of Contractors So If
Your Type Of Company Is Not Listed
Please Do Not Be Concerned Because If You Are A
Contractor
There Is A Good Chance We Can Help
You!
If you are a blogger,
who writes about construction we would like to hear from
you.
Contractors_Success_MAP,
Contractors_Success_Marketing_Accounting_Production,
Contractor_Bookkeeping_Services, QuickBooks_For_Contractors,
QuickBooks_For_Contractors,Contractors_Success_Map_Contractors_Are_Confused_About_Bookkeeping