Why Should Contractors Use QuickBooks for Accounting?
QuickBooks is with out a doubt the most friendly accounting program on the market currently. Intuit, the makers of QuickBooks boast of having a 91% market share of all small to medium sized businesses in America and maybe across the entire world.
Contractors that use QuickBooks for accounting enjoy the program because it’s easy to learn and because of all the features that help contractors make more money.
Features like entering the Estimate for any job and then tracking the Actual Job Costs and comparing them to each other in order to see any variance between the two. QuickBooks also allows the contractor to bill off each line item of the Estimate for more accurate progress billing.
Change orders are easy to add to any Estimate and can also be billed in stages like any normal progress billing.
The Profit and Loss Statement or Income Statement can be divided to show individual departments or segments of the business, each with their own income and expenses. The Profit and Loss Statement also allows for contractors to see what percentage of each sales dollar is going towards actual construction (Direct Job Costs) vs. overhead for the company.
This can be extremely helpful to contractors to see their actual overhead percentage since so many contractors take shortcuts by bidding with magic numbers. If contractors don’t want to utilize this kind of detail they can just keep it simple and record everything on the Cash Basis of accounting, which means just recording cash spent during the year vs cash deposited for the year.
The majority of contractors in America keep their books on the Cash Basis because it is the same way they file their income taxes at the end of the year. So it makes it easy to give the information to their small business’s tax preparer. Using QuickBooks on the Cash Basis of accounting also reduces contractors’ bookkeeping costs because it requires less time to enter all the information. It’s easy enough for the contractor or their significant other to learn and save even more money. This is always important for a new business just starting out or those that just want to keep their business small and manageable.
Either way, QuickBooks is ideally suited for accounting purposes for any contractor. Intuit has even produced a Contractors Version of QuickBooks that uses a lot of familiar languages commonly used by contractors to make learning easy. So it does not matter if you want to be very detail-oriented or if you just want to keep the accounting work simple, QuickBooks is a great accounting tool for contractors everywhere.
Most contractors start out by using the Cash Basis of Accounting method because it’s easier to use and it is the logical starting place for learning accounting and QuickBooks. Then as their businesses and construction firms grow it’s much easier to learn the more complicated accrual method if they desire.