0201: Contractors Are Confused About Bookkeeping

Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services

0201: Contractors Are Confused About Bookkeeping

Released: Jan 27, 2017

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 Click here to visit our Contractors Assisted Do-It-Yourself QuickBooks Setup Store 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

Our Workflow Removes Your Paperwork Frustrations For Contractors Who Prefer To Do Your Bookkeeping Fast Easy Accounting Do-It-Yourself
Construction Accounting Store Is Open

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: #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

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

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

Our Workflow Removes Your Paperwork Frustrations For Contractors Who Prefer To Do Your Bookkeeping Fast Easy Accounting Do-It-Yourself
Construction Accounting Store Is Open

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

Short List Of Construction Contractors We Serve Asphalt Contractor Asphalt Contractor Brand New Contractor Brand New Contractor Brick And Stone Contractor Brick And Stone Contractor Cabinet Installation Contractor Cabinet Installation Contractor Carpentry Contractor Carpentry Contractor Carpet And Tile Contractor Carpet And Tile Contractor Commercial Tenant Improvement Contractor Commercial Tenant Improvement Contractor Concrete Contractor Concrete Contractor Construction Employees Construction Employees Construction Manager Construction Manager Construction Support Specialist Construction Support Specialist Custom Deck Contractor Custom Deck Contractor Custom Home Builder Custom Home Builder Demolition Contractor Demolition Contractor Drywall Contractor Drywall Contractor Electrical Contractor Electrical Contractor Emerging Contractor Emerging Contractor Excavation Contractor Excavation Contractor Finish Millwork Contractor Finish Millwork Contractor Flipper House Contractor Flipper House Contractor Flooring Contractor Flooring Contractor Foundation Contractor Foundation Contractor Framing Contractor Framing Contractor General Contractor General Contractor Glass Installation Contractor Glass Installation Contractor Gutter Contractor Gutter Contractor Handyman Contractor Handyman Contractor Hot Tub Contractor Hot Tub Contractor HVAC Contractor HVAC Contractor Insulation Contractor Insulation Contractor Interior Designer Contractor Interior Designer Contractor Land Development Contractor Land Development Contractor Landscape Contractor Landscape Contractor Lawn And Yard Maintenance Contractor Lawn And Yard Maintenance Contractor Masonry Contractor Masonry Contractor Mold Remediation Contractor Mold Remediation Contractor Moss Removal Contractor Moss Removal Contractor Painting Contractor Painting Contractor Plaster Contractor Plaster Contractor Plaster And Stucco Contractor Plaster And Stucco Contractor Plumbing Contractor Plumbing Contractor Pressure Washing Contractor Pressure Washing Contractor Remodel Contractor Remodel Contractor Renovation Contractor Renovation Contractor Restoration Contractor Restoration Contractor Roofing Contractor Roofing Contractor Siding Contractor Siding Contractor Spec Home Builder Spec Home Builder Specialty Contractor Specialty Contractor Stone Mason Contractor Stone Mason Contractor Stucco Contractor Stucco Contractor Subcontractor Subcontractor Swimming Pool Contractor Swimming Pool Contractor Swimming Pool And Hot Tub Contractor Swimming Pool And Hot Tub Contractor Tile And Carpet Contractor Tile And Carpet Contractor Trade Contractor Trade Contractor Tree Contractor Tree Contractor Underground Contractor Underground Contractor Utility Contractor Utility Contractor Waterproofing Contractor Waterproofing Contractor Window Contractor Window Contractor 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! Call Now: 206-361-3950

Additional QuickBooks Templates, Resources, And Services

QuickBooks Set Up Templates Solopreneur

QuickBooks Chart Of Accounts Free Stuff

QuickBooks Item Lists Templates Consulting

If you are a blogger, who writes about construction we would like to hear from you. https://www.fasteasyaccounting.com/guestblogger

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