This Podcast Is Episode Number 0229, And It Will Be About Secret To Highly Profitable Contractor Is The Construction Accountant   Contractors Need Help Understanding Role of Accountants Contractors should have two primary accountants. One is the Tax Accountant the other is your Construction Accountant. Tax Accountant who does the Annual tax return for your business and your personal tax return. These are two of the Five Board Of Advisors Successful Highly Profitable Contractors Use To Operate And Grow Their Contracting Company Cash Flow And Profits. Why You Need A Tax Accountant? It is the role of the Tax Accountant to Roll Your Numbers up into a tax return. The first (2) pages of your annual tax return is a summary of all the pages, worksheets that follow. Everything must roll up to those two pages. That means that you could have multiple numbers from multiple pages that might go on a single line. The Tax Accountant manages those numbers. Remember when you were single and could use the EZ form? Then you got married and maybe were still able to file using the EZ form. Add buying a house, and having children and things got a little more complicated.   Now you are a business owner. You owe more taxes. The bottom line is that every missed personal deduction; every missed business expense costs you money.        The Tax Accountant takes all of the summary numbers from your business return (the 1120s – S-Corp) and put them in the appropriate places on your personal return. If you are a Sole Proprietor or an LLC that is taxed as a Sole Proprietor than a Schedule C is part of your personal tax return. When you are a Sole Proprietor or an LLC that is taxed as a Sole Proprietor, you will have the additional taxes in the form of Self Employment Taxes. Self-Employment Taxes are payroll taxes on your net profit. Self-Employment Tax is a separate tax from your Federal Income Taxes. You could owe “No Federal Tax” after all of your personal deductions are applied but still owe Self Employment Tax. It is a Different Line. The Tax Accountant has one goal – Roll all the numbers up (no matter how many pages it takes) to find the answer to How Much Do You The Contractor Owe In Taxes? Taxes from one year impacts the Estimated Taxes Due The Following Year. The IRS has an expectation you will do equal to or better than the previous year and need to pay Estimated Taxes accordingly. Sharie’s Nickname for Self-Employment Tax is “sneaker tax” Almost every Contractor knows how much their Federal Income Tax Rate is and can project about what the tax owed is. The Self Employment Tax is often a forgotten tax and comes as HUGE Surprise (unlike Christmas morning – it is not a fun surprise when you owe money instead of getting a refund to something fun). Based on the tidiness of your paperwork how easy it is for the Tax Accountant to do their job. The last thing any Tax Accountant knows about let alone wants to show their lack of understanding about what you do is to talk about is your job costing, job profitability reports or anything else related to your numbers. Why You Need A Construction Accountant? Now let’s chat about what should be the Other Accountant in your life.  We are Construction Accountants, and our role with your numbers is exactly the opposite of the Tax Accountant. QuickBooks is designed to serve a dual function. Roll up the numbers for the Tax Accountant.  Be able to drill down on any number or group of numbers to give the Tax Accountant the answers needed to be able to take every deduction allowed. The more important part of a Construction Accountant is making the numbers so you The Contractor can see quickly see the numbers in a way that makes sense to you.  The answers are in QuickBooks. The good (money in), the bad (money out), the ugly (maybe more unpaid bills are left over than cash in the bank) Many contractors run their accounting software like an...

This Podcast Is Episode Number 0228 And It Will Be About Our Proven Paperless Contractor Bookkeeping Replaces Bookkeeper Contractors Want Paperless Bookkeeping Services To Avoid Hiring A Bookkeeper The horror stories about bad bookkeepers (in-house or as 1099 contractors) are never ending. For this reason, Contractors are reluctant to interview or hire an outside bookkeeper. Many Contractors are frustrated that the person they hired costs too much appears to know less about bookkeeping than the contractor themselves. Contractors I have talked to mention they know very little about accounting and do not want to know more. You Want Someone To: Take over the bookkeeping Leave you alone Not ask a lot of questions Have everything ready for the Annual Tax Return Provide Financial Statements when you need them   YOU WANT TO KNOW IF YOU ARE MAKING MONEY NOT THE MIND-NUMBING PROCESS OF ACCOUNTING EVERYTHING SHOULD AUTOMATED AND PAPERLESS  YOU SHOULD NOT HAVE TO DO ANYTHING! THE SYSTEM IS THE SOLUTION!     When Contractors Try To Do The Bookkeeping: In doing the bookkeeping themselves; contractors will hook up every app they can find and set it on automatic and “Hope For The Best. ”Using the concept of setting it up once and never having to touch it again. The Contractor is hoping that Magically all the transactions will automatically download to the proper income or expense accounts. The reality is not quite that simple. Everyone is looking to automate their processes. Every minute The Contractor is the time that is taken away from doing something more productive or something more fun. Paperless Bookkeeping is achievable when setup properly. The answer is electronic documents being automatically being sent to someone who knows what to do when the documents are received. Willingness to follow directions and accept new ideas. It is the difference between using a framing hammer or a nail gun. Both will get the job done. One is a lot harder. Who is the expert in the field?  For Construction Contractors the saying “garbage in, garbage out” applies to their bookkeeping needs. Each level of detail adds more time for the contractor to explain in writing details about the job to someone else.  Ten minutes wasted trying to learn and use QuickBooks is ten minutes wasted. That extra 10 minutes is time you do not have. I could tell you – It’s just 10 minutes. You would roll your eyes up at me, in the same way, I will roll my eyes up at you if you were to tell me that Construction Bookkeeping can be completed in just 10 minutes per day.  We embrace technology and use multiple cloud based and desktop software to provide Paperless Bookkeeping Services to our clients. Our QuickBooks Files using a fully working QuickBooks Desktop Version In The Cloud and accessible to you from any web enabled device wherever you have internet access. Cloud Based Remote Access To QuickBooks Desktop Version! Paperless System For You To Store, Print, E-mail Documents Microsoft Excel Is On The Server For You To Use  Your QuickBooks Desktop Version In The Cloud 24/7 Access!ust A Few Mouse Clicks On PC Or Mac And Get: The Key Reports You Need: Cash Report anytime YOU want it! Receivables report anytime YOU want it! Payables report anytime YOU want it! Profit & Loss statement anytime YOU want it! Balance Sheet report anytime YOU want it! Job Costing report anytime YOU want it! Estimates Vs. Actuals report anytime YOU want it!   The Screenshots Below Were Taken In Our Lynnwood Washington Office  QuickBooks Is 1,000+ Miles Away Running On High-Speed Servers     Tucked Securely In A Building With Armed Guards With Highly Skilled Technicians Maintaining It And We Do Part Or All of Your Bookkeeping     All QuickBooks Files Are Backed Up Every Night On A Secured Server...

This Podcast Is Episode Number 0227 And It Will Be About Contractors Need These Key Reports To Operate And Grow Your Company As A Contractor You Want Reports To Effectively And Efficiently Run Your Business You are not trying to make decisions by looking in the rear view mirror. You want to get a sense that there is “light at the end of the tunnel and know it is not an oncoming train” (author unknown) The question is How Much Detail is too much detail? If you are trying to track a job down to the number of 2x4’s, boxes of nails, joist hangers then I would politely suggest that is too much detail. Think in terms of a more broader scope. Common cost codes (commonly known as item codes, schedule of value, NAHB codes, CSI codes). These are all very important is a larger job or if the job is tying back to a Pay Application for the bank. This type of accounting will provide very detailed reports. The question is will you actually use these detailed reports. When you start an estimate are you thinking in that much detail? If yes, then I suggest that counting of 2x4’s is a function of the estimating program. In the estimate, the phase is where you are starting to develop the scope of work for the job.  QuickBooks Premier Desktop has lots of reports for a $400.00 accounting program. QuickBooks is good at tracking Labor, Material, Other, Subcontractors. It is more work to track each of these as it relates to the individual Cost Codes (Plumbing, Heating, Electrical, Framing, Underground, Rough-in, Top Out). Many contractors will give a Flat Rate number for services. The initial meeting of your prospective client is usually looking at a project with a more broader scope.  Most customers think of their project as it relates to the areas of their home.  Example:  Kitchen, Bath, Master Bedroom, Family Room, Sun Room, Addition, Deck, Patio. Based on this doesn’t your mind immediately go to previous jobs and you begin thinking the same way? This project is like:  Sam’s Family Room plus a little more of [fill in the blank] Pete’s Kitchen take a little of that [fill in the blank] Sarah’s Master Bath and [fill in the blank] Move this to there and move that upstairs Move something else downstairs. The laundry area in any house is almost never in the perfect place for the new owner and probably only tolerated by the previous owner. Plumbing, Heating, and Electrical are always the items that are subject to change. Plumbers are always willing to upgrade; Electricians hate to see a working fixture replaced. Hello To All Contractors, speaking for wives the world over; if we despise the light (for whatever the reason), the faucet is hard to turn on, 2 handles instead of a single handle; time will not make it be better. Please Say Yes I Can Fix That: You really don’t want our help with a 3# sledge hammer or bolt cutters.  Always Give Your Clients What They Want, Not What You Want Everybody picks one or the other to a degree because nobody can do both for very long. Pick one on purpose or the other by default. The more important it is to be right the less you will be rich, and the reverse is true. I Have Asked Thousands of homeowners, commercial property owners, landlords, commercial space tenants and even a few car buyers, computer buyers, ship buyers and consumers about their overall buying experiences and one common thread appears over and over; they got what they wanted and were happy repeat customers and clients who refer their friends and family, or they didn’t get what they wanted and made the contractors life hell. My Script Book - Has a list of questions that are continually honed, polished, updated and replaced from which I pick and choose the ones to use depending on the situation. Develop Your Own Script Book - And record the questions and answers that you find encourage people to open up and get to the fourth level of truth because when you do the service,...

This Podcast Is Episode Number 0226 And It Will Be About Unique tax considerations running Contracting Company from home   Today's Guest Article Is From Ryan Tollefsen Planning to Run your business from a home office? Here's what to know about your taxes If you are planning on using your home office or any part of your home for business purposes or if you already do, it is time to address the tax issue. You have probably heard all sorts of different things about claiming a home office deduction and other deductions. As understanding of tax laws varies from person to person, some inaccuracies can occur. Let's take a look at the truth about the tax issues involved with running a business from your home. Deducting Home Office Expenses The Taxpayer Relief Act of 1997 softened the requirements to determine if the costs tied to a home office can be deducted. However, you can't deduct every single item used in your home office. The costs required to maintain your home office can only be deducted if nuanced IRS guidelines are adhered to. The home office must be exclusively used for running your business. Many homeowners are aware of primary residence rules as they relate to capital gains taxes, but exclusive use is something a little more complex. This means if you use the office for personal activities, family activities or anything else unrelated to your business, you can't use it to reduce your taxes. The bottom line is that the home office will only qualify as a “principal place of business” if the following is true: The office is used to conduct management or administrative activities of the business. There is no other location of the business where you perform substantial management or administrative activities relating to the business. If the above statements are not applicable to your business, home office deductions will not apply. A Word about Exclusive Use If your home office is in a distinct room, a group of rooms or a portion of a room in  which division is clear due to the presence of a partition, it is possible to show that your personal activities do not occur in this space. This is often the most challenging portion of qualifying for home office tax deductions. Aside from meeting the definition of “exclusive,” the space must be regularly used for the business. As an example, if your home office is sometimes used by your kids to do their homework, you will have violated the strict exclusive-use requirement, and the space won't qualify for home office tax deductions. However, if you make the occasional phone call from your home office, you will still qualify, as your space meets the spirit of the exclusive-use test. The bottom line is that if personal activities breach the home office space more than they would at the typical office building, the exclusive-use test will not be passed. The Regular Use Requirement Though there is no exact definition as to what qualifies as “regular use,” simply using an otherwise empty room of your home on occasion for business purposes does not meet the regular use test requirements. Yet using the home office for at least a few hours per day will likely suffice to meet the regular use requirements. A Look at the Principal Place of Business Requirement Aside from passing the regular-use test and exclusive-use test, the home office must serve as the principal location of the business or a place where one regularly meets with clients. This means even an employee that has a part-time business based in his home can pass this test although he spends the majority of his time at his employer's office. The key question is what constitutes a business. One's efforts must generate money, yet the specific circumstances of how money is made are of the utmost importance. If these money-making activities are substantial in regards to time and effort, there is a greater chance the principal place of the business requirement will be met. A great deal of nuance goes into...

This Podcast Is Episode Number 0225 And It Will Be About Successful Contractors Employees Produce Results We are excited that you are busy and hiring employees. How do I know this is true? The number of emails I receive about continuing education that reference employees are increasing. The topics you are sharing include wages, access to company funds, providing employee warm and fuzzies and you want to know what is the true cost including payroll taxes of having a Construction Worker on your payroll. More of your emails make references on How To Protect Your Construction Company from your employees. Employees with too much access to credit card accounts Employees with too much access to bank accounts Employees with too little accountability Paper time cards filled out randomly Protection comes from knowing the rules, putting systems in place, and dealing with the money. What type of compensation is required? What type of benefits are required? How to deal with Travel Pay? What should be reimbursed? How do handle fuel? Cell Phone Usage? Cell Phone Bill? Each state has no shortage of rules in place about the rate of pay, schedules and number of hours worked, time off and how it is classified. When travel time starts and ends if the employee travels to the job directly from home. When travel time starts when an employee is in service and goes directly to the job from home and is using the company vehicle. What about side trips to the store, gym, park, personal errands using a company vehicle on the way home from their last job. Every Contractor worth his or her salt wants to be fair to their employees and still be fair to the company. This is where a Payroll Service with the HR Department has enormous value. In construction there is no shortage of “What About” and [fill in the blank]. I should be paid for [fill in the blank] because and [fill in the blank]. Consider buying Clothes with your Construction Company Logo to identify them on the job. Time tracking using mobile devices is a must. See Below: Web Based Online Time Card For Construction Contractors Links To QuickBooks Job Costing Fast Easy Accounting Your Certified TSheets Consultant Other concerns are the “Rogue Employee” in either the office or the field who takes advantage of the “Good Nature” of the owners. Owners trust their employees and most of the time employees trust their owners. Review the concept of leveling. It will help your Contracting firm grow and attract the right office and field staff. How Leveling Up Can Make You Wealthy! Your Thinking Patterns - and what you think about the most is why you are where you are now. It is worth noting there is no profit in chaos and the sooner you understand that, the better off you will be including your mental and physical health. It May Be Too Late - To recoup past losses from chaos, but it is not too late to stop it from happening again. To begin with getting a clear understanding of What Ten Minutes Costs Your Contracting Company and begin implementing a Business Strategy to eliminate chaos. When You Have - A Business Strategy everything changes in your life and your construction company because you will see everything in different light You May Find - Yourself with a different caliber of friends because of the leveling up process. Birds And People - Flock together with others like themselves because it is comfortable. It only makes sense to soar with eagles rather than keeping your head down pecking on the ground with the chickens. Your Income - Is typically within 20% of the average of the six people you spend the most time with.  Leveling Down - If you spend most of your time at the “Contractors Business Round Table”, this is a little round table in a tavern with a pitcher of beer and several contractors all earning $40,000 a year or less telling each other how to run their businesses then your income will hover between $32,000 and $48,000 (20% plus or minus $40,000). ...

This Podcast Is Episode Number 0224 And It Will Be About Unique High-Profit Contractors Need Value From Their Accounting Software Price Vs. Value A Cheap Price does not always give you the “biggest bang for the buck” as the saying goes (author unknown). One of the reasons that we all like unit pricing in the grocery store is that it helps us determine which is the best value when deciding between sizes and between the store brands. Take for example ice cream. There are several main types: Labeled as Non-Fat, Low Fat, Reduced Fat, Sugar-Free, Creamy, Deluxe, Premium. A quick search on the web shows over 100 flavors is available.  We all have our favorite brands. I am a Creamy, Deluxe, Premium double chocolate fudge or dark chocolate usually costing a zillion dollars per ounce and an equal number of calories. Randal and I have brands and flavors we both like, and some flavors only one of us like. Thankfully our Ice Cream budget increased over the years. A low price was important back when we were “starving students” going to college.          Unit pricing does not take into consideration of the quality of the product.   I can explain why I believe QuickBooks Desktop In The Cloud is the best value with the most features and why every Construction Contractor from Handyman to Trade Contractors to Home Builders should buy it. If you are in the “starving student” phase or your Contracting Company, then everything is too expensive. QuickBooks Desktop comes in (3) sizes. Pro, Premier, and Enterprise.  Each size grows is a little more robust. Think Trucks, S10 Pickup, ½ Ton Pickup, ¾ Ton Pickup, 1 Ton Pickup, 2 Ton Truck, Motor Home or Semi. The size of Boat your S10 Pickup can tow is quite different than what your 2 Ton Truck can tow.   Contractors would be very offended if I said: “What is the big deal?” A truck is a truck, is a truck when in reality I know they are not the same. Each size of Truck has a useful application.  Same thing applies to Accounting Software. There are 1,000’s of Construction Accounting Software Solutions in the market. Price points start out at free and grow to much higher prices for specialty software. Which do you need?  QuickBooks Desktop is a good economically priced software that is proven and easy to use for both the Contractor and their tax accountant to do the annual taxes. Easily available at every office supply store, Costco, Amazon.com and other local merchants. Recommend buying a copy “In The Box” with a CD. Occasionally I have someone who says that the QuickBooks Desktop is “Too Much.” I understand their thinking. Price is King! Unfortunately, If you are more concerned about price than the value of good reports, Annual Insurance Audit, State Sales Tax Reports and State and Federal Tax Returns then you will experience the pain of false savings. What you save on buying QuickBooks Desktop you are likely to spend at least 100X more in fines, penalties and overpaying your taxes. Looking at anything from a cost standpoint instead of the Total Cost Of Ownership (TCO) puts a lot of good Contractors on the road to ruin. The Desktop Version of QuickBooks is updated for a period of (3) years. You own the software, and if you do not use payroll, merchant services or email from the program, you may get additional life out of the program. The data is never lost unless the program has become corrupted, crashed or your computer that it is resting on has died.   Online versions are “Software As A Services” on the cloud is a great feature. The issue is that when you stop paying - your data if it is not backed up by an external source, will expire. In other words, you are RENTING the software. No different than renting a tool from your local rental shop. When you turn the tool back in you no longer have access to the tool. Some companies for a period of time will allow you to access the file, but...

This Podcast Is Episode Number 0223 And It Will Be About  Contractors Are In The Business Of Being In Business   As A Contractor You Are Either Getting Paid, Paying Someone Or Both Contracting Is All About The Money And Taxes Which is better for you, Employees or 1099 Contractors? In the world of the State and Federal Agencies. Someone who works for you is either an Employee (on W-2) or a Subcontractor. You need to be issued 1099 at the end of the year, and you need be able to prove they are legitimate Subcontractors! What we sometimes forget is the personal side of our life and do not realize we have employees. Nanny tax is for any household employees that you have for yourself, the obvious is the Nanny who provides childcare. It also includes a Housekeeper (unless using a licensed maid service). Reminder from Tax Accountants is the Elder Care market. If you have an individual who is caring for an elderly parent (they are subject to Nanny tax unless you are using a licensed service.) Do you have support people? Are they making your life easier or are they a risk to you and your Contracting Company? Support People: Are your support people working for you just to make a little money on the side? Who is the Person who cleans the office? Who is the Person who keeps up the landscaping? Who is the Person who works as an Admin Assistant and runs errands? Next step is what may seem like a nosy question. Does this person have multiple clients? If anyone is working for Just You; then the State Agency is going to say they are your employee.Once the State Agency determines you have employees – Payroll taxes are due. Just a friendly reminder – State Agencies talk to the IRS.  States across the country are explaining to Construction Contractor that the person they hired as a 1099 Contractor is actually an employee.  If neither of you wants to have them be an employee – then they must have a business license, business cards, website, using an outside bookkeeping service and anything else that shows they are in business.  Each state is different regarding Contractors Bond, License, and Liability Insurance. Some states want Contractors to start out with a Handyman license (which restricts work based on dollar amount of the invoice) and then moves up to a full contractor’s license. In Washington State – Contractors are either a Home Builder, General Contractor or a Specialty Contractor (Trade Contractor which is limited to individual trades). Some occupations do not require a contractor’s license. Another difference is whether a Contractor must take a test to be licensed. Since Washington State is a sales tax driven state (no income tax), Who is required to collect sales tax? Plumbing, Electrical require individual licenses which depending on the state maybe receptacle with other states.  Temporary Labor. If you only need someone for a few days, it might be better to use a Temp Agency.  The rule is that Casual Labor is $600 or less per YEAR. Sometimes contractors think it is $600 per quarter.  If someone is paid more than $600.00, they need to be a W-2 employee on payroll or a subcontractor.  More states are adding more and more company paid benefits to employees. The name of the benefit, definitions and each state’s requirements vary. Smaller companies may be exempt from providing some benefits. It is necessary to “Understand” which Paid Off benefits are mandatory; the exact benefit name. Paid Time Off may include one or more of these:  Family Leave Personal Time Off Sick Leave Vacation Time Electronic Time Cards Are Important No Matter What Size Your Construction Contracting Company Electronic time cards mean the office can stop chasing employees for timecards. Owners time should also be on an electronic timecard; especially when tracking jobs with T&M billings. Nothing is more frustrating than having an employee guess where they were last...

This Podcast Is Episode Number 0222 And It Will Be About Uniquely Highly Profitable Contractors Target High-Profit Enjoyable Clients Every Construction Contractor Has Clients Who Want To Help Part of the reason is that they want to be sure the project is moving and things are being done. Other times the goal is to hopefully save money.   In many cases, the most helpful thing a client can do on a project is keeping the area clean, pets under control and children out of the way. Anything other than that and you, the contractor could be at risk of losing everything you own or ever will if your client or customer is injured while working on your construction project even though it was their home or business. There is a reason why most automotive repair shops have a sign like the one shown below and as a construction contractor, you would be wise to have signs professionally made and use them on every construction site. Each type of construction has its own challenges but the overarching answer is to always give your clients what they want, not what you want. Wake Up To An Overflowing River Of cash flow and profits beyond anything you have seen in the past or continue sleeping on the hard mattress of regret under the cold blanket of lost opportunity by refusing to change old tired worn-out wealth limiting habits that are keeping you from your best. Right Or Rich Everybody picks one or the other to a degree because nobody can do both for very long. Pick one on purpose or the other by default. The more important it is to be right the less you will be rich and the reverse is true. I Have Asked Thousands of homeowners, commercial property owners, landlords, commercial space tenants and even a few car buyers, computer buyers, ship buyers and consumers about their overall buying experiences and one common thread appears over and over; they got what they wanted and were happy repeat customers and clients who refer their friends and family or they didn’t get what they wanted and made the contractors life hell. My Sales Script Book Has hundreds of questions that are continually honed, polished, updated and replaced from which I pick and choose the ones to use depending on the situation. Develop Your Own Script Book And Record the questions and answers that you find encourage people to open up and get to the fourth level of truth because when you do the service you will render will be far in excess of the money you earn. The Two Most Powerful Questions: What are your most important criteria in making a purchase decision? What is the one thing you remembered about your purchase? Question #1 Most Common Answer "Price" because for most people it is a conditioned response they learned early in life. It is similar to ringing a bell; it gets people's attention; Stimulus & Response. If you ever get mugged, and I hope you never do; yell "FIRE" because everybody wants to see a fire but very few people will respond to a cry for "HELP". Question #2 Most Common Answer "I could or could not get what I wanted!" There is a lot of money making power in this answer and it does not come fast or easy. In fact, in most cases, it takes a while to get to it...because: Truth Is Four Levels Deep: What people want to hear What people want to believe Everything else out in the world The Truth of what they really believe If Your Construction Company has annual sales volume of less than $1,000,000 and you want to double, triple and quadruple your cash flow and net profit pay attention to these tips: Listen With Empathy And Understanding because this one of the most valuable gifts one person can give to another person is to listen and let someone speak until they are finished. Poor communicators make deep noises from the chest sound like important messages from the brain have a captive audience and it is 180 degrees opposite of truly listening. Ask Good Questions When your construction customer or client makes a point about something...

This Podcast Is Episode Number 0221 And It Will Be About Contractors of all sizes must be adaptable to change Every time the phone rings you need to be willing to question what do they need are how far are you willing to drive to bid the job and do the work. Some types of work accepted or rejected may be based on the location of the job or by the state license. When starting out one of the first decisions to be made is “What Type Of Contractor Am I?” This decided during the process of the contractor talking to the Bonding Company, Insurance Company and The State Licensing Board who approves the company’s Contractors License. The Primary Questions to be answered are: What level of exposure, risk and your skills? How do you want to do these projects? Are you most comfortable being a Handyman? Are you most comfortable being a Trade or Specialty Contractor? Are you most comfortable being a General Contractor? Are you most comfortable being a Remodel Contractor? Are you most comfortable being a Home Builder? The Four Types Of Contractors... Dog And Pick-Up Truck This Wonderful Soul - Has a heart as big as the outdoors and likes working alone. They are easy to get to know. They usually have either a pick-up truck or a van with a dog sitting in the passenger seat hanging his head out the window watching and occasionally barking hello to folks and other dogs while feeling the breeze as the contractor zooms down the road. They Do Not Think About - Retirement and when asked about it the reply I get most often is something like “Retire, nope, I don’t need new tires yet”. These Contractors - Enjoy being their own boss, doing what they want when they want, how they want and works hard. They typically do not feel the need or desire to grow the business or hire employees since they would only get in the way. Most Of Them - Run their business as a sole proprietor They Generally Earn - $20K to $40K a year after all expenses   Salt of The Earth This Wonderful Soul - Also has a big heart; just not quite as big as all outdoors. They like having employees because they do not want to work alone.  As their business grows they like to take time off and enjoy travel and vacations. These Contractors - Have one, two or three employees because when the employees get out of line the contractor can hold two of them by the throat; one in each hand and eyeball the third one!  This is called “Construction Management” This Group Will Usually Invest - Some money to build a retirement nest egg. Most Of Them - Operate their business as a C-Corporation, LLC or Sub-S They Generally Earn - $40K to $60K a year after all expenses   The Professional This Wonderful Soul - Also has a big heart; they just tend to keep it under cover. This group tends to have more employees and have a structured approach to their construction company treating it more like a firm. These Contractors - Tend to have 1-20 employees with formal organizational charts, processes, and systems in their contracting businesses including a formal documented business plan which is updated and reviewed regularly with a board of advisors as outlined in my article on the subject. They Invest Heavily In Marketing - Their businesses. They understand their target market, they use The 80/20 Rule to understand the demographics and psychographics of their prime customer, the ones who generate 80% of the cash and income. And they seek to acquire more of them and will do whatever is economically feasible to turn those customers into lifetime repeat business. This Group Usually - Engages the services of a competent financial planner, banker, and accountant to work together in helping plan and develop a financial estate that can take care of them in their senior years and be passed on to future generations. Most Of Them - Operate as a C-Corporation, LLC or Sub-S or Partnership. They Generally Earn - $100,000+ a year after all...

This Podcast Is Episode Number 0220 And It Will Be About Contractors Are Skilled In Construction But Not Usually In Construction Accounting Almost every Contractor understands how to do basic repairs and remodels on a house.   As the project grows it gets a little more complicated. Is it a kitchen remodel, a bath remodel, upgrading the laundry area? Building a Deck? Adding a second story addition? Adding a garage? Your Construction Accounting System started small and easy. Perhaps you tracked everything with bank statements and Excel sheets and it worked fine for a while. Later as your Construction Company grew and you began to wonder where you are making and losing money (Job Costing) and you realized you need to better understand Construction Job Cash Flow you purchased QuickBooks thinking it was "Quick" and that is when the trouble started... Each type of project takes planning and skill. Doing a teardown and then building a new house? Oh, maybe the zoning does not allow for a new house so technically it is a major remodel keeping a certain amount of square footage of the original house.   A brand-new contractor without a background in larger projects typically is not going to immediately jump into a large remodel.  Someone who has done lots of remodels may not be comfortable building a new house from the ground up. Decisions in any project are what level of quality of the work, how much detail, the size and the material needed to complete the job Decides How Much It Costs.  Is a Cottage or a Mansion?          The area of the country makes a difference. For Example, a $500,000 house in one part of the country could be a two story, 4 bedrooms, 2.5 baths and a wraparound porch. In another part of the country, it may be a 3-bedroom rambler and a carport.      The cost of material may not be a lot cheaper in one area over another. The price of sheetrock and lumber increased in Seattle after Hurricane Sandy and Hurricane Katrina. Local labor may be different.   The skillset needs to complete the Handyman Repair, Installation of Plumbing, Heating, Electrical, Roofs, building the Additions on a House, creating a whole house remodel or building a new house are not the same as being able to track all of the expenses and do all of the bookkeeping properly. Construction Accounting and Regular Accounting require entirely different skill sets. With an Excel Spreadsheet, quite a lot can be done to know your costs and track the bills that need to be paid. Many contractors have done this for years. Turning in the spreadsheet and a pile of paperwork to the Tax Accountant to file the annual taxes.   If the Tax Accountant has worked with you for years; they understand your method and figure out a workaround.  Some will setup QuickBooks Desktop or some other software to create monthly, quarterly numbers leading them to the annual Profit & Loss and Balance Sheet needed to file your annual taxes   Your Banker is not quite so willing to do “try to figure out” your financials. They have a limited amount of time to make a presentation to a Loan Committee.  Financial Statements from QuickBooks make it easy for your Banker and the Loan Committee to compare financial statements between applicants. Some contractors have the benefit of being in a small town, where their banker has known them for years. The decision process is more informal.  As Bank Regulators have gotten involved with the decision process – what was a simple “Yes” decision may suddenly be “No”. A lot of Home Builders got caught up in that loop and lost property because could neither sell or refinance. Are you counting on “The Kindness of Others” (to quote slightly from a classic movie) for solutions to your lack of good bookkeeping? Sometimes it is harder to avoid doing something than it would be to find a qualified “Construction Bookkeeper” to do...