It's the Mad Dash To The End Of The Year as a contractor recently described their Year End Madness to prepare his documents for the Tax Accountant.
Are you in this cycle? I have great news for you - it is preventable.
1. Review your accounts:
Make sure all your accounts are reconciled and up-to-date. This includes bank accounts, credit cards, and any other accounts.
In Construction Accounting, not everything is an expense. Not every item, tool, material, or customer enters the Chart of Accounts. In some cases, Class Tracking is helpful, but most of the time, it is used to make up for a poor Chart of Accounts or as a "workaround" for an accounting product not designed to have Job Costing Reports or Cost Of Goods Sold.
Giving your bookkeeper only your bank statements and saying "Fix It" – I Want Job Costing Reports, I Want To Know Details is not enough. Doing it the way you have always done it – expecting a different result isn't how it works.
2. Review your files:
Go through your year's costs and ensure they are all properly categorized. This will help you with your tax reporting and better understand where your money is going.
One of the most overwhelming parts of the end of the financial year is finding all the invoices, receipts, and reports you need to file your taxes correctly. Pay attention to how easy it was—or wasn't—to find what you needed this past year.
Did you have to search 15 different places for all your receipts? Did you have a combination of online and physical invoices? Did you have clearly labeled folders for everything? Did you leave everything for the last minute?
If you search high and low for every piece of paper you need, you might want to consider revising your paperwork so it's easier and less time-consuming to manage.
Can you keep track of everything through software and apps? Is there technology or equipment that can help you? Is it worth investing in a filing cabinet?
The effort you put now into sorting your paperwork will pay off hugely every year when you can quickly and easily find all the information you need. Let's face it; you'll come up against the end of the financial year every year, so you may as well be systematic about it.
3. Collect your receipts:
Ensure you have all your receipts from the year. This includes receipts for business expenses, charitable donations, and any other tax-deductible expenses. Every missed receipt that is a business expense is a missed deduction. Bookkeeping is all about tracking the money. Money In, Money Out is just following the checkbooks.
Accounting is entering into an Accounting System that creates a Profit and Loss and Balance Sheet for the Tax Accountant to do the Annual Taxes. (Every successful contractor should have a Tax Accountant do their annual tax return)
4. Reflect on your year:
The end of the financial year is a perfect time to reflect on how the past year went. Celebrate the big successes, but remember to focus on other victories. Even if you didn't meet your financial targets, did you survive a particularly tough year? Did you manage to pivot your construction business and try a new model? Did you take some risks and learn from them? Did you grow your business or expand your offerings?
It's great to have goals for each year and celebrate when you achieve them, but it's also essential to look at where things didn't go according to plan and how you grew from those situations. You may need to refine your business plan if you're not meeting your financial targets or rethink how you arrive at your goals in the first place.
Do this before you start planning the year so you can revise your strategies in the future.
5. Plan for the new year:
Take some time to plan for the new year. This includes setting goals, creating a budget, and thinking about any changes you may need to make to your bookkeeping processes.
Now that you've reflected on what went well and what went sideways, you can better plan for next year. Research upcoming events and schedule your marketing calendar. Plan to address slow times or busy periods. If you didn't meet your financial targets last year, either change how you set your goals or your strategies for achieving them.
At Fast Easy Accounting, we have an entire department, The Project Management Department, that questions every bit of our Contractors Bookkeeping System every day and continually finds new and better ways to improve it and make it more valuable to Contractors like you no matter where you are in the USA Including Alaska and Hawaii.
For clients, we added a document management system that links with many banks and credit card companies across the country (adding more all the time). We still use our original Document Management System behind the scenes. The two companies have figured out how to work together to benefit us and our clients. Change is not always easy, but we are so glad we did.
The same applies to you, the construction business owner. As you figure out ways to be more efficient, better pricing, and prove a better product and service, your cash flow and profits will increase massively, which means more money in the bank to operate and grow your Construction Company and more freedom to do the things you want to do with your life!
Final thoughts
By following these tips, you can ensure that your end-of-the-year bookkeeping is completed accurately and efficiently, giving you a head start for the new year.
We are also here to help. We are not here to beat up on you for "How You Have Done It." You know it's messy and missing stuff. We know it, too, and we want to help figure out the gaps.
PS
