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As you’re probably aware, bookkeeping for contractors is difficult. Construction firms typically have unpredictable workforces, fluctuating wage rates based on location, and several long-term projects of varying budgets and deadlines.
A good, well-organized bookkeeping system lays the groundwork for achievement. It is essential that you develop a robust bookkeeping system for your firm, regardless of where you are in your organization. You’ll save time, prevent wasteful spending, and have better long-term performance if you maintain your company’s financial records up to date and available.
Here are five bookkeeping suggestions to help you stay organized and set your company up for success in the new year.
One of the issues with poor bookkeeping abilities is recalling where the money is kept. Many firms are unaware that the cash missing from their bank account is actually in their accounts receivable.
Determine clients who haven’t paid on the account and keep a close eye on your bills. Allow no more than 30 days to pass before closing the account. You will not be able to pay your bills if you have old unpaid invoices.
You may need to be firm and follow through on your outstanding receivables on occasion. You’ll forget to ask for payment if you don’t have a decent record-keeping system. This will save you a lot of effort and time.
Financial affairs should be maintained separately from business spending from the start, which is easiest done at the time of acquisition. If you don’t, you’ll have a chaotic mess of costs to sort through and classify at the end of the year from several account statements, costing you time. You also don’t want to end up with an excessively high shareholder account, requiring you to claim all of the ‘extra’ revenue at once.
Opening numerous bank accounts for company purposes is one of the simplest ways to keep track of spending and revenue. One account should be set aside for accepting payments from customers. You can then move funds to other accounts as needed. Another account should be used solely for payroll, and a third should be used to build a cash reserve. It’s also a good idea to keep a separate account for paying taxes.
Separate accounts allow you to better track the amount of money coming into your construction company each month, saving you time. You’ll be able to keep a better eye on how much money you’re spending and where it’s coming from. Furthermore, separating accounts ensures that no one writes checks for nonpayroll items against.
For effective data management, consistency and timeliness are essential. Having a well-organized organization and strong bookkeeping skills from the outset will make it easier to:
● prepare year-end paperwork,
● maximize your tax deductions
● be aware of your company’s financial situation
● explore for strategies to boost your company’s profit margins
● Accounting Chart of Accounts
Your chart of accounts is the starting point for growth planning. You must appropriately label and categories your data to ensure that your financial reports are informative and that your bookkeeping is expedited. Begin with the fundamentals, then adjust and expand your accounts as your company expands.
● Reconciling Transactions
Accounting software makes it easier to find whatever you need when you need it, which is among the most critical tasks of any accounting system. Using online (cloud) accounting software like QuickBooks Online to automate your payables and receivables improves the data accessibility and eliminates the need to keep and handle paper files. These types of software also provide your bookkeeper, accountant, and CPA access to your records, allowing you to handle your finances as a team.
Receipts, invoices, and other papers should be organized and filed so that they are easy to discover later. It’s critical to keep backups in case the original documents are lost or destroyed.
There is a plethora of software and apps available today to assist you in keeping your business organized. Some are free, while others are not. With all of the useful online tools at your fingertips, there’s no excuse for not having a well-organized business. These digital solutions not only make bookkeeping tasks easier, but they also eliminate the need for human data entry, resulting in few transcription errors.
Manually putting information into the database and comparing numbers is so last century. Make use of cloud-based bookkeeping software and online banking for your organization. You may synchronize your accounting software with your business bank account in this way, ensuring that you always have correct, up-to-date records. Your vital financial data is also stored up on the cloud.
● Tools for Time Management
There are a plethora of time/task management apps available to help you plan projects and set reminders for when they’re due. Use these to make absolutely sure you’re reviewing your books on a regular basis, paying your bills on time, and managing your time properly
Some contractors wait until a project is finished or nearly finished before beginning to record costs or incoming payments. However, your books should always have “wet ink” — that is, statistics and facts that have been revised recently to keep you up to date on what’s truly going on.
After all, unanticipated expenditures can arise at any time, necessitating rapid adjustments to a company’s budget. A properly recorded and handled change request, on the other hand, may result in you receiving more money from a project than you anticipated.
Finally, if you don’t understand where your money goes through your books, you won’t realize how much money you have in your bank account. You can make better company judgments by employing a competent bookkeeping system, and it doesn’t have to take hours.
