Contracting businesses often have projects at various locations with scattered production. So, it can be a little more challenging than other sectors to ensure accounts are continually in full order. However, you can make sure that your contracting business is entirely on top of its accounts by embracing the following five helpful tips.
1. Ensure You Track Invoices
In any business, it is vital to track invoices. But in contracting industries, it is even more essential. For example, in the construction industry, companies typically have multiple projects going on at once, where invoices are periodical, making it trickier to track every invoice. Make sure all invoices are tracked every time they are sent, received, and paid so that you can have an accurate picture of your business’s financials every step of the way.
2. Embrace Accounting Software
There is no excuse for still doing accounts manually with pen and paper in this digital day and age. By using accounting software like QuickBooks, all of your financial records and transactions are in one central location. Accounting software enables you to keep track of things like project expenses, cost-plus hours, and invoices. Indeed, accounting software can help you stay organized and up-to-date with all of your financial information. As your business grows, it is a good idea to go one step further and use accounting software specifically for your industry. For example, if your company works in the pest control industry, you can use software solutions like ServiceTitan. You can then easily integrate your software with Quickbooks to ensure everything is accurately recorded in the books.
3. Hire a Tax Accountant
Taxes are a crucial element of your business accounts. You need to ensure all of your tax information is accurate and complete throughout the year, not only at the end of the tax year. Thankfully, accounting software can help you to keep on top of your taxes. However, as your business grows, it could be worth hiring a tax accountant. Not only will he or she have the professional skills to organize your accounts efficiently. An accountant can also give you advice and find ways of saving your business money. It may be an additional cost to employ an accountant, but the benefits can save you money in the long run. Having an accountant on board also means you have more free time to focus on your contracting business’s other crucial areas.
4. Allocate Time to Review Your Books Regularly
Even if you hire a professional accountant, you still need to check your books regularly. After all, this is your business, so you need to ensure you are continually knowledgeable and in charge of your financials. It is advisable to check your books on a weekly basis, so you can manage your cash flow, know what your weekly expenses are, and stay updated about current invoices.
5. Separate Receivable Payments and Borrowed Loans
When contracting businesses poorly manage their finances, they are setting themselves up for failure. A common error is to mix deposited funds and money the business has borrowed. If you do that, it can not only lead to confusion. It can also turn into a financial crisis. So, make sure you keep separate records for things like borrowed funds and income.