This Podcast Is Episode Number 0327, And It Will Be About Proven Reasons Why Contractors Lose More Money Doing Their Books As a construction or trade contractor, you are highly skilled, intelligent, and adaptable. That is a given because you operate in a multi-faceted changing environment doing the impossible with limited time, money, and resources on every project. Moreover, soon as one is finished, another one is waiting for you. Many contractors like you feel that hiring a Professional Contractor Bookkeeping Service is a waste of money when you should be able to do it yourself. You press a few keys on your keyboard thinking you are going to get the results you want, accurate bank balances, a report showing who owes you money and who you owe money to, a Profit and Loss Report and Balance Sheet Report you can understand and if all goes well perhaps even some Job Costing Reports. Instead, what you get is a hot steaming pile of fertilizer that cannot even be used in the garden.
The DIY (Do-It-Yourself) approach is one of the traps every contractor who is financially struggling falls into because as contractors, we don't believe in asking for help until we are in deep trouble. We find it hard to trust experts because they cost too much, and most do not understand how construction works.
In the end, hiring a QuickBooks Expert in Construction Accounting can prove to be not only beneficial but a safer option. After all, what makes a homeowner or businessperson call an expert contractor like you instead of working on their own construction project? You have the skills, expertise, and experience about how construction projects are done. You know how to bid jobs, collect money, coordinate labor, material, subcontractors and other things needed to get work done, and in the end, you will have saved your customers and clients time, money and frustration.
Here are five reasons why contractors like you lose more money doing your bookkeeping:
1. Figuring out the right bookkeeping/accounting software for your business
The only way to do it right is to make sure you start it right. Using a particular software depends on the kind of contracting business you have, what you need out of it, and how much time you are willing to devote to learn and use it. Keep in mind that using more popular and in-demand software and applications have a significant advantage in case you are having some issues. Technical support should be readily available, and if not, a quick Google search can lead to video tutorials and community forums.
Buying an accounting software or being locked-in for a year's subscription of a cloud service that doesn't particularly align with your company's goals is not cheap. Not to mention the hours you've dedicated to learning and on-boarding your office team will prove to be costly once you realize all the effort you put in won't make any sense because you have the wrong tool from the start.
2. Proper Invoicing
When a construction project grows beyond two invoices, and you add job deposits and change orders, the process gets tricky. For instance, there is no "magic button" in QuickBooks that will generate a complex invoice that makes sense to your customer. You need a proper money trail from beginning to end in a way that everyone can understand and appreciate, which means you get paid faster, with less hassle, and your clients will love you for it. Doing it wrong could mean you get little or no down payment when starting a construction project. Keeping change orders paid early and often is crucial to your company's cash flow.
3. Financial Reporting
Generating financial reports is easily accessed through your accounting software. The real question here is, how reliable are your reports? A generic chart of accounts that comes with your QuickBooks software, for example, is not customized to your construction business needs; thus, transactions are often assigned to improper categories resulting in inaccurate reports. These reports, in combination with Five Key Performance Indicators, are what helps you understand which projects to pursue and which ones to ignore. Having inaccurate statements could result in bad decisions on what to bid and not bid on until you eventually run out of time and money.
4. Payroll Processing
Payroll calculations are tedious, time-consuming and thanks to a variety of local, state and federal regulations, they are rather complex to compute. You have to consider everything from time cards, workers compensation, unemployment, federal withholding, social security, employee loans, child support, wage garnishments, certified payroll reports, sick pay, vacation pay, holiday pay – not to mention, filing the entire group of local and state and federal payroll tax returns. In this area alone, a Professional Contractor Bookkeeping Service is worth having because you will save time, aggravation and hopefully avoid fines, late fees, interest, and penalties.
5. Tax Filing
Filing tax returns takes time and can be a misadventure for those who aren't aware of the local, state, and federal regulations. If you find yourself in an audit situation, it is in your best interest to have an accountant doing the math rather than playing the rookie apprentice.
Again, you may incur financially crippling fines, penalties, and interest if you miscalculate your tax returns. Bookkeeping errors such as filing receipts as expenses could also result in your company overpaying taxes.
In conclusion
You work vigorously for your hard-earned money, don't let yourself (or your bookkeeper) waste it because of trying to do everything. Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time, and now you know about it, too.
For construction companies who has valuable construction bookkeeper in their staff, our Do-It-Yourself bookkeeping templates are available in our online store. We also offer Bookkeeping Review and Bookkeeping Trial.
About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, and QuickBooks For Contractors Expert. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and Construction Accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes.
