Be A Better Bookkeeper | QuickBooks for Contractors blog

10Jun 2010 by Nancy Smyth

QuickBooks Tip – Job Costing Starts With A Simple Item

Job Costing Tips, QuickBooks Setup & Cleanup

For many contractors job costing is a key part of the success of their business – how else will they know if they are actually making a profit on the jobs they are bidding on. Job costing in QuickBooks starts with the Item List. When you tell this to most contractors they respond with “Items --- I don’t sell ITEMS --- what does Items have to do with construction????? This is a common feeling shared by many who use QuickBooks – not just contractors. What is an “Item”? By way of explanation, QuickBooks is a generic software program which can be used in any industry or business type; therefore, many of the terms in QuickBooks are generic and often confusing when trying to make it work in a specific industry. …

08Jun 2010 by Nancy Smyth

QuickBooks Tip – Determing Cost of Goods Sold

Job Costing Tips, QuickBooks Setup & Cleanup

Question: How do I determine the Cost of Goods Sold for an item? Answer: I tell my clients that Cost of Goods Sold (COGS) is any cost incurred that directly relates to getting the sold goods out the door. I have them ask the question "Would you have this expense if you hadn't made the sale?" Typical examples of COGS are product purchased for resale, subcontractors or vendors you hire specifically for preparing a product for sale, shipping materials like packaging, freight costs of receiving the resale product and shipping the product to your customers, payroll/labor costs of your employees who are directly related to preparing the goods to be sold or shipped out (would you have hired them if you didn't have the product to sell?). Costs that are…

03Jun 2010 by Nancy Smyth

Join our “QuickBooks for Contractors” Group on LinkedIn

Be A Better Bookkeeper, The "Sunburst" Website

Using QuickBooks in the construction industry can be a daunting task. There is not a lot of construction specific help available for QuickBooks users and the accounting professionals who support them. That's one of the reasons that we've decided to start a "QuickBooks for Contractors" Group on LinkedIn - please feel free to join us - https://www.linkedin.com/e/vgh/3105723/ You can also follow Sunburst on: FaceBook at https://www.facebook.com/pages/Sunburst-Software-Solutions-Inc/301555289895 Twitter at https://twitter.com/SunburstSftware

01Jun 2010 by Nancy Smyth

QuickBooks Tip 10 Plus Methods of Accounting for Construction Contracts

Be A Better Bookkeeper, QuickBooks Setup & Cleanup

Every contractor, regardless of their business structure (sole proprietor, partnership, corporation) has to choose an overall method of accounting; before the first federal tax return is filed. Accounting methods include: the cash method the accrual method the accrual method which excludes retentions, and (possibly) a hybrid method(s) Depending on the type, size, and length of the construction contract, there are various methods of accounting for long-term construction projects that are allowed - each method has its own advantages and disadvantages. A contractor will need to select a specific long-term contract accounting methods - possibly with different methods for it's exempt and non-exempt contracts - and also selects sub-treatments for the classification of contracts and the allocation of indirect costs. In a nutshell, accounting for long-term contracts relates to the treatment…

21May 2010 by Nancy Smyth

Construction Accounting – Tracking Construction Costs Primer

Job Costing Tips

Tracking costs throughout a construction project is possibly the most important aspect of completing a project. This may seem like a simple function, but in a construction project, different entities need different financial information, and being able to track finances in real time saves a lot of work (and costs) later on. Let’s look at some of the costs and how accounting software fills the need. Construction accounting software makes it easier to keep track of direct material purchases. Direct materials consist of basic building supplies like drywall, wire, pipes, and wood. Essentially, direct materials are everything purchased for a project. Sometimes these materials are purchased tax-free or with a builder’s discount. These items are generally recorded separate of labor costs to ensure accurate profit and loss statements. The cost…

20May 2010 by Nancy Smyth

QuickBooks Tips – Contractor Needs – Part 3

Be A Better Bookkeeper, QuickBooks Setup & Cleanup

General Contractors using QuickBooks will have by far the most complex job costing needs. Tracking the cost of specialized equipment, subcontracts, multiple prevailing wage rates, and retainage in addition to overhead costs, employees, materials and labor charges. Estimating and Job Costing needs will vary depending on the type of contractor you will be dealing with, so if anyone dares to suggest that one “Chart of Accounts or bookkeeping method” will work for all contractors – well you just shouldn’t listen to them Meet Gerry the General Contractor: "Gerry's" usually have the same basic philosophy as Sam the Subcontractor; however, because they have more employees, subcontractors, and bigger “operations” they realize that they need to consider more things when they go out to bid on a job; but they do not…

19May 2010 by Nancy Smyth

QuickBooks Tips – Contractor Needs Part 2

Be A Better Bookkeeper, QuickBooks Setup & Cleanup, The "Sunburst" Website

Sam Subcontractor already uses QuickBooks, he has more complex job costing needs due to certified payroll reporting requirements, payments of prevailing wage fringe benefits and AIA billing. High overhead costs, specialized equipment, materials, labor charges are other things that must be taken into consideration. QuickBooks Estimating, Job Costing, and payroll needs will vary depending on the type of contractor you will be dealing with, so if anyone dares to suggest that one “Chart of Accounts or bookkeeping method” will work for all contractors – well you just shouldn’t listen to them, and here’s why: Meet Sam Subcontractor: I have worked for a lot of “Sam’s” they are great people too. They usually have the same basic philosophy as Harry the Handyman; however, because they have employees and bigger “operations” they…

18May 2010 by Nancy Smyth

QuickBooks Tips – Contractor Needs – Part 1

Be A Better Bookkeeper, QuickBooks Corner

Estimating and Job Costing needs will vary depending on the type of contractor you will be dealing with, so if anyone dares to suggest that one “Chart of Accounts or bookkeeping method” will work for all contractors – well you just shouldn’t listen to them, and here’s why: Harry Handyman will have simple job costing needs, as he is usually a one-man operation with little to no overhead costs and will be charging his customers for materials and his time. Meet Harry Handyman. Harry is probably nearest and dearest to my heart. We have a “Harry” who comes and does a lot of work around our house for us; as a matter of fact a couple of years ago he was here installing some new windows, putting vinyl siding on…

17May 2010 by Nancy Smyth

QuickBooks Tip – Working With Contractors – Part 4

Be A Better Bookkeeper, Construction News, QuickBooks Corner

Congratulations, you have just picked up your first construction client! As an Certified QuickBooks ProAdvisor, a "contractor" or a Bookkeeper/Office Manager has contacted you for a contractor because they need "help" with their QuickBooks file. The chances are good that you have completed one of the various "New Client Interviews" that are readily available, you arrive at the contractor's office, and start to review their current QuickBooks setup only to find: A Chart of Accounts that is so long it could easily be considered a "book" OR one that is so short you wonder how they manage to keep accurate records. An Item List that is so long that it too could be considered a "book" OR one that consists of only a few items. A Payroll Item List that…

14May 2010 by Nancy Smyth

QuickBooks Tip – Working with Contractors – Part 3

Be A Better Bookkeeper, Construction News, QuickBooks Corner

How contractors view business management covers a wide range of emotions; from a "necessary evil" to those who want and need their information "NOW" (or yesterday) in order to be able to make better day-to-day operating and financial decisions.For the most part, contractors are NOT "business people" - they are highly skilled craftspeople who prefer to work in the field doing what they do best....building things. They hate being stuck in an office in front of a computer faced with a pile of paperwork; and while they may recognize that their current accounting method isn't optimal, if it's working well enough (in their opinion) they simply leave it alone.Although this group of contractors may not be actively looking to solve their financial pain, they can and do strongly identify with…

13May 2010 by Nancy Smyth

QuickBooks Tip – Working With Contractors – Part 2

Be A Better Bookkeeper, QuickBooks Corner

The word "contractor" is a vague and widely misused term which cover everyone from the local handyman who makes repairs/improvements on your house to the contractor who is building or repairing a bridge on your local highway. Who are contractors? Understanding the different types of contractors and the roles that they play in the construction industry will enable you to realize just how different their QuickBooks accounting and compliance needs will be. "Contractors" are "construction-related" businesses including: Your "local handyman" - who is a jack of all trades and does a little of everything. He will work on various "jobs" for private homeowners and usually bills on a Time & Materials or Cost Plus basis. General/Prime Contractors - A general contractor will take full responsibility for the completion of the…

12May 2010 by Nancy Smyth

QuickBooks Tip – Working With Contractors – Part 1

Be A Better Bookkeeper, QuickBooks Setup & Cleanup

An infusion of federal infrastructure funding through the American Recovery and Reinvestment Act (ARRA) have had and will continue to put more contractors and their employees back to work. Federal investment in Public Works projects will create jobs throughout the country and not just construction jobs. While additional public infrastructure projects will allow the construction industry to maintain their current workforce and will even necessitate hiring more workers. You will also see contractors who have previously worked on other types of construction projects (residential and/or commercial) begin bidding on newly created Public Works projects. This will also encourage contractors to purchase equipment, thus preserving and creating manufacturing jobs. As a Certified QuickBooks ProAdvisor or Accounting Professional who is working with construction clients - you are entering into a very challenging…

10May 2010 by Nancy Smyth

Contractors Using QuickBooks Have Special Bookkeeping Needs

Be A Better Bookkeeper, QuickBooks Add-Ons, QuickBooks Setup & Cleanup

As we all know, having an accounting system is a vital piece of any successful business. An accounting system provides an automated and easy way to track how much money is being made vs. how much money is being spent. Creating proper accounts in an accounting system to track business Assets, Liabilities, Equity, Income, Cost of Goods Sold, and Expenses will allow your construction client to see an overall picture of their company's worth or value from a financial standpoint - not only for themselves, but also when they apply for a loan, or have to be bonded. A construction company, like any other company, has numerous responsibilities - to their employees, customers, vendors, subcontractors, investors, and even the government. Contractor Business Needs: The construction industry has some very specific…

22Apr 2010 by Nancy Smyth

What’s So Different About Accounting for Contractors?

Be A Better Bookkeeper, QuickBooks Add-Ons, QuickBooks Setup & Cleanup

As we all know, having an accounting system is a vital piece of any successful business. An accounting system provides an automated and easy way to track how much money you are making vs. how much money you are spending. Creating proper accounts in your accounting system to track your businesses Assets, Liabilities, Equity, Income, Cost of Goods Sold and Expenses will allow you to see an overall picture of your company's worth or value from a financial standpoint - not only for yourself but also when you apply for a loan or have to be bonded.A construction company, like any other company, has numerous responsibilities - to their employees, customers, vendors, subcontractors, investors and even the government.This is where the similarities end!The construction industry has some very specific accounting…

16Apr 2010 by Nancy Smyth

2010 Hire Act – Tax Break for Small Business

Construction News, IRS Information

From the Hire Act of 2010 website President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010. This new $17.5 billion legislation (scaled down from an earlier $150 billion package) is of particular interest to businesses as it includes new tax benefits directly related to hiring employees and writing off investments in equipment. The new tax incentives for businesses to hire unemployed workers: payroll tax exemption of the employers share of Social Security taxes on wages paid to these workers after March 18, 2010. employer tax credit of up to $1,000 per worker The new employees must meet these criteria in order to qualify for the business tax credits. hired between Feb 3, 2010 & Jan 1, 2011 newly-hired employee was unemployed during the 60…

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