Manage episode 178988826 series 1082451
You need to be able to show the bank that you have enough sales to pay back the loan. For most contractors, an excessive amount of profit is NOT an issue.
There are always more than enough expenses that happen naturally in your Construction Company. And there are always tools that need to be purchased, repaired or replaced. As 2017 tax season is finishing, I have heard from owners and employees who say. This Income or That Income doesn’t count. The fact is it all Counts. The underground economy may be there but don’t count on the information being a secret. Between Memberships, rewards cards and using a credit card purchases are being tracked everywhere by somebody. (Some contractors think buying a truck for cash is not traceable).
Play it straight, report all of your construction company income and if your QuickBooks setup is done right and the bookkeeping entries are clean more often than not you may get a big fat tax refund!
Merchant Service providers are required to issue 1099’s
This means every time you use a debit or credit card the amount, date, place of purchase is recorded and the grand total for the year is reported to the IRS.
Web-based services (E-Bay) are required to issue 1099’s is earning are over a certain amount. Casino’s issue 1099’s is winnings are over a certain amount. Construction Company Owner’s issue 1099’s and finally there is a Nanny Tax on household help.
Tax Reporting Is Everywhere You Win When You “Play Within The Rules” This Means Don't Cheat Your Own Future, Count All Of Your Income
Keep track of all your expenses. Have a good bookkeeping system to calculate the difference between Profit And Loss. Invest is good tools and equipment. Depreciate the high-value items like cars, trucks, vans, tools, equipment and expensive software.
We have found that a Professional Version of Construction Accounting software like QuickBooks and Professional cloud-based services have additional value to be worth more than the “Cheap Price” of something less. This does not mean that all expensive software and apps are the Perfect choices based on a High Price – if it is useful, then it may be the “Better Value.” A tiny pickup truck based on price is cheap. But if you need an 8’ bed and are hauling lots of “Heavy Things” than it is cheap but not the best value as a ¾ Ton or 1-Ton Truck would be. Contractors at all stages of their Construction Company have to be price and value conscience. It may be a shock to some, but cash flow issues happen to everyone at some stage in their Construction Company. All it takes is for a few customers with “large invoices” outstanding to delay payments for a long time, and you are experiencing a “Cash Crunch.” Unsigned or forgotten Change Orders can also be a problem. Forget the customer who promises “If you give them a good price on this project – they have several more jobs waiting for you.” (so that you can lose even more money).Click Here to download our FREE Change Order Form on PDF.
The challenge for all contractors is How Much to charge for their product and services to make a profit.
Picking a Price Point that is fair to both parties. The goal is to always Provide Good Quality Work. Frustration comes when the person they are working for wants to “Nik Them A Little,” then “A Little More” and still expect that The Contractor to be a willing rush to their project, eager to put in another day and do even more “Extras For Free” - Answer is Usually Not!
Give Good Value
Many new contractors provide “Handyman Services” a low cost to get the additional experience and to show they have clients. Helping The Grandmother down the street and all her friends. This is different from working for a Builder / Developer and discovering they built the house for practically “free.” If you are required to Collect Sales Tax – be sure to have it spelled out in the contract as Plus Sales Tax after the subtotal. Almost everywhere in Washington State sales tax is 10%. Just missing a little thing like charging the Sales Tax (repeatedly) could be the difference between a profitable year or having a loss. Think about the benefits of Flat Rate, Bid Jobs and Time and Material Billing. I know of contractors who refuse to Mark Up Material and do not charge labor to go get the material. If The Contractor’s Labor Rate is high enough this might not be a problem. Many times, when the customer does not want to pay a markup – they also are also looking for ways to complain about the price of material and try to deduct some hours from the invoice. After all – how cool is FREE? A couple of years ago, I had a Homeowner come to my office
The Homeowner was very up front that she was trying to figure out a way to not pay the contractor the final invoice. The Homeowner was certain that there must be a way to find a massive discount and avoid paying the final bill. Because we do Construction Accounting, the Homeowner wanted my help to review all the invoices to find anything that would allow deductions. She was very unhappy the work passed inspections, and the Permits were all written off.
Contractors need to write clear estimates, contracts, be sure to send Notice To Owners to protect their Lien Rights.
- They know when document are due for projects
- They research documents and sends notices on time
- They receive, manage, and sends your lien waivers
- They produce legally compliant forms every time
Keep your invoices simple, collect the money. Take Credit Cards from the mainstream processor. Discount for cash if it makes sense. Get Paid - Move On. Count All The Money as Income. A customer’s tip is $20.00 – Even that is Other income on an invoice. It’s the habit. And Good Habit’s will be better for you in the long run. Our parents and grandparents had many “Old Fashioned Saying.” When you think about it – Their sayings usually made sense without being offensive or overbearing while saying them. My Father’s favorite saying was “Tend To Your Knitting” meaning “Keep Focused – Don’t Get Distracted.” My Brother’s is “Don’t Stop” he lives in the country, and they tend to move “Big Things” down a narrow road. For a Contractor in the city, it would mean “If it’s working – keep doing it” (Think Marketing) It annoyed our children when Randal and I would speak in shorthand referencing a movie or a book. Now that they are older – they “Get The Humor” and “The Lesson.” For most of us, our parents and grandparents got smarter the older we got. They let us spread our wings and tried new things. Being a Contractor is like that. Having an idea, a dream and willing to “Go For It” (with the support of others) There is no book with the perfect answers to all the “What If” and “What About Questions” What makes a good client for one contractor is not necessarily a good client for another. The same is for employees. Not all people are a “Good Fit.” for your construction contracting company. Every Contractor will need and want a new(er) truck at some point. Bankers like to see Good, Clean Financial Statements. You may know all of your numbers in your head. It is hard to tell a Banker you make a lot of money and can support the loan if all your statement shows are $10,000 in sales for the year. Written on a piece of notebook paper it is not as believable as coming from QuickBooks, and your sales are much higher, and your net income is $10,000.00. The banker can look at “Why” and see if the numbers can be moved around to make sense. The Banker may need to Explain Your Numbers To A Loan Committee who does not know you. Many Bankers really do want to “Say Yes” and give you the loan. We Can Help “A Little” or “A Lot” Depending on your needs. We work with QuickBooks Desktop Version for Setup, QuickBooks Cleanup, and Provide Ongoing Contractor Bookkeeping Services, and Contractor Consulting Services.
Looking forward to chatting about your specific needs. PS:
After we setup QuickBooks for your specific construction company you have a range of options:
- Do-It-Yourself Bookkeeping
- Utilize our Outsourced Accounting Services.
- Keep your QuickBooks file on the Server and do your own bookkeeping (our QuickBooks setup is not required)
- Buy QuickBooks Chart of Accounts and/or QuickBooks Setup Templates for the “Do-It-Yourself” Contractor at the FastEasyAccountingStore.com
Wishing you the Best Enjoy your day. Sharie
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. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or firstname.lastname@example.org
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 email@example.comContractor Bookkeeping Done For You!
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
This guide will help you learn what to look for in outsourced construction accounting.
Need Help Now?
Call Sharie 206-361-3950
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.
Randal DeHart | The Contractors AccountantOur Workflow Removes Your Paperwork Frustrations For Contractors Who Prefer To Do Your Bookkeeping Fast Easy Accounting Do-It-Yourself Construction Accounting Store Is Open
#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 SeminarAnd QuickBooks Does Not Work The Way They Want It Too! The Answer: #1 Click Here To Buy An Entire QuickBooks Setup For Your Specific Contracting Company #2 Click Here To Buy Just The Chart Of Accounts For Your Specific Contracting Company
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