Our New eBook is out! More than 15 pages filled with Marketing, Accounting, and Production tips, checklists, and best practices that you can use year-round for your construction business success.
Free Download here.

FEA Randal And Train
Call Us At 1-800-361-1770
Bookkeeping Trial Test Drive
Outsourced Accounting
Contractor Bookkeeping Templates For QuickBooks And Xero
Construction Accounting Academy
  • There are no suggestions because the search field is empty.

Common Bookkeeping Pitfalls And The Value Of Outsourced Accounting

Posted by Sharie DeHart on Fri, Dec 20, 2019

Although most construction company owners recognize the importance of careful financial management, few want to spend their time dealing with numbers. Unfortunately, not keeping a close eye on your income and expenses can be very costly for a business.
 
Here are five of the most common bookkeeping pitfalls, and some simple tips for getting back on track.

1. Mixing business and personal

All too often, contractors adapt a "buy now, sort later" approach to expenses, using the same credit card for personal and professional purchases. At the end of the month, they're left poring over statements, trying to sort things out. Mixing business and personal expenses cost extra hours of bookkeeping each month and muddles your overall financial picture.

Avoid this pitfall by using a separate credit card and bank account for business, and being disciplined about separating expenditures.

 

Worried man sitting at table with bills and laptop while his wife and daughter sitting on sofa-1

 

2. Neglecting to track reimbursable expenses

Receipt-tracking is a necessary part of business ownership. You need to keep track of receipts to understand spending patterns and effectively manage your company's finances. And if you want to claim deductions at tax time, you'll need to submit receipts along with your tax return. 

But far too many business owners take a haphazard approach to collecting and organizing receipts—especially while on-the-go, where a whopping 50% of their expenses are generated. Get the deductions you deserve and simplify tax prep by using an expense-tracking app.

We have a directory of additional resources of apps and software for contractors that can record mileage, billable hours, and other expenditures, as well as generate expense reports. Plus, many of these apps sync seamlessly with your business bank account and accounting software.

3. Not taking advantage of technology

Are you still relying on manual accounting methods? While basic spreadsheet tools can get the job done, they leave the door wide open for human error. Mortgage loan giant, Fannie Mae, once uncovered a $1.1 billion error on their Excel spreadsheet, citing "honest mistake" as the cause.

What's more, manual methods can't match the technological benefits offered by software like QuickBooks or Xero. These systems track invoicing, link with your credit card and business account, organize expenses, and generate insightful financial reports.

4. Not keeping accounts up to date

Let's be frank. Most construction business owners don't look forward to that weekly appointment with "the books." Many entrepreneurs cite bookkeeping as their most dreaded responsibility and will find a host of reasons to avoid it.

5. Doing it all yourself

It is entirely understandable for budget-conscious entrepreneurs to try to cut costs by handling bookkeeping on their own. However, taking advantage of professional help—even on a part-time basis—can generate substantial savings of time and money over the long term.

Time to get savvy about bookkeeping. If you know your numbers well, you can use this calculator to find out how much time and money you can save per week if you outsource it to us. Having the right bookkeeper will allow you to invest your talents and energy where they will be most profitable.

 

 

 

 

 

 

 

 

 

 

"Outsource your weaknesses." So says start-up guru, Sujan Patel, when advising small business owners to get outside help for tasks like payroll and bookkeeping. And when you consider that 70% of businesses fail due to poor in-house financial management, Patel's advice seems spot on.

Unfortunately, many small business owners seek to keep costs low by doing everything themselves— unwittingly sabotaging the financial stability of their own company. If numbers aren't your strength and you would instead focus on building your business, it's time to hire a bookkeeper. 

Here are four ways to ensure that you find the right fit.

  • Choose a bookkeeper with experience in your industry.

The nuances of bookkeeping vary from one corner of the market to another. When assessing candidates, it's important to look not only at total years of experience but also at the relevance of that experience. As an example, your business is in construction and home service repair and maintenance, a bookkeeper who has primarily worked in the retail industry won't have the insights into your industry that can add value to your work together. 

  • Look for membership in a professional association.

In addition to a degree or diploma from a recognized institution, your bookkeeping candidate should belong to a professional bookkeeper association. Most associations test applicants to verify their technical skills and theoretical knowledge to protect and further industry standards. 

Many associations require members to earn a credential, prove a high standard of proficiency, and continue to improve their skills through ongoing professional development. 

  • Put a high premium on communication skills.

Construction business owners must have open, effective communication with their bookkeeper. You will need to sit together each month to review key financial reports, such as the profit and loss statement, balance sheet, and cash flow statement. A competent bookkeeper should be adept at explaining and breaking down complex accounting concepts in accessible ways, so you always have a clear understanding of your financial position.

During the initial process, ask them to explain a few key concepts, like gross and net profit, job costing, or deferral transactions. Strong communicators can make the abstract easily digestible –precisely what you need in a prospective bookkeeper.

  • Evaluate honesty and reliability

When you hire someone to look after your books, you place a considerable amount of trust in their integrity and trustworthiness. But how does one evaluate these character traits during a consultation?

The best approach is to ask open-ended questions that get them talking about the ethical challenges they've faced in the workplace, such as:

  • Tell me about a time when you committed an error. How did you handle the situation, and what did you learn from it?
  • How would you respond to uncovering an unethical or fraudulent accounting practice in the workplace?

Final thoughts

The bottom line is that outsourcing a bookkeeper is about much more than finding an able number-cruncher. The person (or company) you choose will be an integral part of your business success. Having the right bookkeeper for your Construction Company is the key to saving time, money, and energy that is better spent on more valuable opportunities. Look holistically at their technical skills and character to find your ideal match, and you'll gain a valuable professional ally for years to come. 

About The Author:

Sharie_DeHart_President_Fast_Easy_Accounting_Serving_Contractors_All_Across_The_USA_Including_Alaska_And_Hawaii-1Sharie 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. Call 1-800-361-1770 or sharie@fasteasyaccounting.com

 

OUTSOURCED ACCOUNTING FOR 
THE BUSY CONTRACTOR
IN A MOBILE ENVIRONMENT

Bookkeeping Trial Test Drive Contractor Bookkeeping Templates For QuickBooks And Xero
Outsourced Accounting 1-800-361-1770


Download the Contractors APP today
 from the 
App Store or Android Store

Access Code: FEAHEROS

Click here to download the App on Android:

Click here to download the App on iOS:

Simply scan the QR code or search for ‘MyAccountants’ in the App Store and enter the Access code: FEAHEROS to utilize the powerful App features and capabilities, and benefit from having our Construction Accounting App at your fingertips, 24/7."

PS: Even if you are not a Construction Contractor you will find a plenty of benefits in the app so we invite you to download it too! It's Free so why not?

 

Topics: Outsourced bookkeeping, outsourced construction accounting and bookkeeping, Accounting, Contractor, Contractor Tips, Contractor Operating Tips, Construction Systems And Processes

QuickBooks Setup And Chart of Accounts For DIY Contractors
Download Our Free App For Construction Contractors

click to download the Contractors APP now from the App Storeclick to download the Contractors APP now from the Android store

Access Code: FEAHEROS

accounting articles

Subscribe by Email

How Can We Help?

 
Contractors Bookkeeping And Accounting Services

Who We Help

How We Help

Next Step

FAQ's

Contractors Bookkeeping And Accounting Services

Outsourced Construction Accounting Services For Contractors All Across The U.S.A. By Fast Easy Accounting 206-361-3950

Serving Construction Contractors
Across The U.S.A
Including Alaska
And Hawaii

Podcast On iTunes
 
Click Here To Listen In iTunes
Contractor  Success M.A.P.
Contractors Bookkeeping And Accounting Services

Remote Access Your QuickBooks  Using Secure Servers

Outsourced Bookkeeping Services For Contractors At Fast Easy Accounting

Highly Recommended by Locals On Alignable

Most Popular Posts

Read the Latest:

Browse by Tag

badge

Blog Suggestion Box

We Remove Contractor's Unique Paperwork Frustrations

Quickbooks certified proadvisor

Xero-Accounting-Services-Fast-Easy-Accounting

Financial-Intelligence-And-Performance-Reporting-Tool-Fast-Easy-Accounting Hubdoc-Document-Collection-and-Management-System MBA Member Fast Easy Accounting 206-361-3950
 
contractor-success-map-podcast-listen
 
Don't forget, you can hire our services at FastEasyAccounting.com
 
 
How To Use Our Services