Issues with inaccurate books

Having inaccurate books can be detrimental to your construction business. How do you know where you stand financially? How do you know if you can pay your bills? Or your employees? Is your business growing?

It all comes down to having accurate books. You need a good set of financials to successfully run your business with peace of mind. Without accurate books, the bank won’t approve that loan you need for new equipment, or you won’t be able to purchase new lots. You won’t have the right information if you are faced with a worker’s compensation audit and you won’t be able to file your taxes either. Once you get behind, the pile just keeps growing and so do the questions about your financial status. Bookkeeping is probably the last thing on your to do list, but it is certainly one of the most important. 

Why it matters

It is so incredibly important to know your financial status, in real time. (And to note, this is not the amount of money that is in your bank account!) You will be able to confidently make decisions for your business and have a clear picture of where you stand, giving you the ability to see patterns for opportunity and growth. Especially when times are ever changing, having current financials will help you pivot and adjust accordingly. Simply put, accurate books = peace of mind.

Not enough time? 

It all sounds great, right?! But it takes so much time. Is your time better spent organizing receipts, determining job related cost vs. overhead costs, reconciling all transactions, comparing QuickBooks to project management software or would having the time to actually run and grow your business be more productive? There are so many things that go into accurate books, this process could take you awhile.

No worries! There’s help!

That’s where 24hr Bookkeeper comes in. We are the experts and want to take on the challenge to get your books current. Because we are specialized in construction bookkeeping and accounting, we know common issues you face and we know how to fix them. No matter the size of your project or how complicated it might be, 24hr Bookkeeper can provide you with current financials that you can trust. You can focus on running your business while we get your financials up to date. Leave your outdated books behind! Head into 2021 without the stress and worry of this year’s books weighing you down.

The post Are 2020 financial books weighing you down? appeared first on 24hr Bookkeeper.

What is your financial foundation?

What do we mean when we say your “financial foundation or base”? This is made up of your chart of accounts, cost codes and list items and needs to be set up in a way that makes sense for your business. When it is set up, you will be able to file your taxes correctly and also produce accurate financial reporting. This includes:

• Classes
• Customer lists
• Vendor Lists
• QuickBooks Online (QBO) functionality settings
• QBO bank connections
• Recurring transactions
• Custom reports

Importance of your foundation

Similar to building a house, you need a strong foundation for the long term stability of the structure. For your financials, you similarly need a base or foundation for all of the numbers to make sense and give a clear and accurate picture that decisions can be based on. This piece is so important and oftentimes is overlooked. If your foundation is not in place, you will likely have some of these issues:

• Unable to get accurate costs
• Don’t know how your money is being spent
• Inaccurate reports
• Difficulties integrating project management and financial software
• Unclear if you are making or losing money

Benefits when it is set right 

When your foundation has been set up properly, managing your business and making decisions will be much easier. You will have confidence in your financials and your reports will be clear, providing you the information on the “financial buckets” that you care about and also giving you the information to spot trends over time. The chart of accounts will provide the right buckets to categorize your transactions so you have a clear understanding and view of your company’s financial health. The cost codes will provide the detailed line items on your estimates, time and other construction costs. Streamlining your financial workflow with additional software integrations and automation will also save you time and headaches. All in all, your financial foundation is the base for your entire workflow and it just won’t work if it is not set up correctly…period!

Where to start?

Now you understand what your financial base consists of and the value of having it set up correctly, how do you make it happen? 24hr Bookkeeper has comprehensive experience with finance and accounting in the construction industry and knows what details you need and care about to operate your construction business. We know how it should work and can help you navigate, organize and put all of the pieces together in a way that makes sense for you — for now and for the future. Although we don’t know what 2021 might hold, we do know that accurate financials are a must for success. Now is the time to act to head into 2021 with a solid financial foundation!

The post Lay Your Financial Foundation appeared first on 24hr Bookkeeper.

Let’s start with the basics.

What is progress invoicing?

Good news! You are likely doing it already! Progress invoicing is simply the function of billing customers in increments of the full estimate throughout a project until its completion. For example, let’s say you are building a $400,000 house. Since it is very unlikely that you would bill the full amount at the beginning of the project, you need processes in place to get portions of the full $400,000 throughout the project. Having the right workflow in place will keep everything working smoothly.

Benefits of progress invoicing

So, how can having the right progress invoicing workflow in place benefit you?

• More Cash
  You will have positive cash flow. Project costs and overhead can be covered as the project progresses because you have the system in place to know how much money you have and can budget accordingly.
• Less Confusion and More Accountability
  Overall, there is less confusion. Less confusion for you and your customer on payment details, which can make for an better customer relationship. Not only does it allow you to hold your customer more accountable so they know when the payment request will happen, having it already planned out can help hold your company accountable to follow the schedule that you have set for your project.
• Budget Tracking
  You will be able to easily track invoices and also know when you will get paid. You will also see exactly how the project is tracking against the estimate and be able to adjust accordingly, if necessary.
• Tools
  There are tools in most software that make all of this happen, again with the right process in place! Find a software that offers the functionality to track progress invoicing, like QuickBooks Online.
• Happy Customers
  Your customers will not be shocked when they receive a bill since it has all been laid out for them already. It can also give them peace of mind that the job will be completed to satisfaction.
• Happy Vendors and Subcontractors
  Your vendors and subcontractors will be happy when they are being paid on time. Since they will know the expectations of the project, and you will have set terms up front, this will make working together smoother – at least from the accounting side.

Win, win, win!

Setting up progress invoicing

As we’ve already hit on, one of the most important things to do so that progress invoicing works for you is to establish and agree upon the billing details ahead of time, ideally when you are setting up the contract. That way everyone is clear what is expected and can plan accordingly. Be sure to include:

• Total amount of the contract
• When you will be invoicing
• How much you will be invoicing

When?

To determine when you will be invoicing may depend on your relationship with your client. Examples of choosing a time to invoice would be completion of certain phases of the job, monthly on a chosen day of the month, or a chosen time frame agreed upon by both parties. But remember, be confident in you setting your billing terms and do what works for your business, whether it’s Net 30, on the 5th of the month or when a discipline is completed.

How Much?

There are several options to consider when deciding how much of the total estimate to bill. This could be a percentage of the total estimate or a percentage of cost code lines from your estimate. You can even do a custom dollar amount of the total estimate. Another way to determine an amount to bill is to go to your project budget, add up all of the costs and work performed for the month, calculate your fee and charge that amount.

Again, the biggest key to making this work is to make sure you and your customer agree upon the details before the project begins and having the right workflow in place ahead of time.

It’s time to bill! Now what?

When it comes time to billing, QuickBooks has the functions to set up progress invoicing and works with your project management software, such as Co-Construct or BuilderTrend. It provides reporting and dashboards so you can easily track the status of the project. 24hr Bookkeeper has created a step-by-step video on how to do the function of progress invoicing in QuickBooks and has the expertise to take the functions and design a workflow that works for your situation. Find that video on our YouTube page.

At 24hr Bookkeeper, we are passionate about working with businesses like yours taking them to the next level. Getting workflows and processes in place that work for your company and utilizing your software will save you time, money and headaches. Our team knows the challenges you face as a construction business owner and can help solve your accounting and bookkeeping problems.

Find out more how our services can help take your business to the next level!

Contact us today for a no-cost consultation!

The post What Can a Progress Invoicing Workflow Do For You? appeared first on 24hr Bookkeeper.

However, you don’t have to go it alone. In fact, by creating a helpful subcontractor management plan that you can use for each and every project, you can make managing your workers much, much easier.

If you’re familiar with what a subcontractor management plan is, then keep reading for a nice refresher. If you’re totally new to the subject or are looking to get better acquainted with it, then we’ve got you covered too!

Here is a breakdown of what a subcontractor management plan is and the content that should be in it.

Subcontractor Management Plan Defined

A subcontractor management plan is a guideline on how the relationship between you and your subcontractors will work for the duration of a project.

Why Are They Necessary? 

SMPs are necessary because they SMPs are necessary because they help ensure that expectations and deadlines are clear for your contractors. It clearly outlines the goals and parameters of the contract so all parties are on the same page.

Essentially, it’s the methods by which you, the construction business owner, will ensure that everything is done correctly and on-time.

Content Suggestions For Your SMP

Your subcontractor management plan may include the following: 

Prequalification

In order to make sure that you’re bringing aboard the most professional and best crew for the job, prequalification is necessary. While some contractors may try and avoid this step altogether simply to save time, this is not recommended. 

By prequalifying your subcontractors, you can make sure that they have the experience in completing similar projects, have the certifications and licenses that they must have for their role, and that they don’t have any violations against them that renders them unable to work. 

Don’t play fast and loose with who you hire, as it may come back to bite you in the end. 

Insurance Considerations and Creation of Contract

Any subcontractor you are bringing on to a project should be able to provide you with proof of the insurance that is needed when working on that specific job site. Make sure that prior to the subcontractor beginning any work, you first get all insurance information squared away. 

After insurance considerations, a contract should be created, which should include information such as: 

The names of the parties involved in the contract:

• The legal names of the parties involved in the contract
• The scope of the work, including: 
  • Each subcontractor’s clearly defined responsibilities and authorities
  • Each subcontractor’s deliverables identified, and required content clearly specified
  • Each subcontractor’s clearly identified and described services that it is responsible for providing
  • Schedule and budget constraints
  • Warranty details
  • Each subcontractor’s clearly defined requirements for quality, including the requirement to allow independent quality inspections of materials and processes

Safety Plan and Training 

A safety plan and subsequent training are necessary and should be outlined in the SMP. It is especially important to have this safety plan in place with the current OSHA regulations, PPE requirements and worksite changes.

The safety plan should include: 

• Management Commitment 
• Responsibilities for Different Parties 
• Safety Rules and Regulations 
• Disciplinary Policies 
• Accident and Reporting Procedures 
• Safety Training Requirements 
• Emergency Response Plan 
• PPE Requirements

You should also require your subcontractors to make sure that all their employees are properly trained. When it comes to what they need training for, make sure to thoroughly outline them in the “safety training requirements” portion of the SMP.

Inspections and Review

The last portion of your subcontractor management plan should include the conducting of inspection both during work in progress, as well as post-project. 

This will allow you to make sure that everything is going according to what was agreed to. 

But, you should also plan for what should happen if things aren’t going as well as you’d like during your inspection (i.e. certain aspects of the project weren’t done yet, they are way behind schedule, etc.). Included in your SMP should be an outline of what will happen if during these inspections if the work is unsatisfactory. 

Finances

Another important part of a subcontractor management plan is the financial aspect. This section will outline financial elements that will be monitored and ultimately can help you manage your accounting and cash flows. Some details in this section could include:

• Payment Terms agreement
• Retainage agreement

Focus More on Completing Projects and Less on Your Accounting With 24hr Bookkeeper! 

Managing subcontractors is a tall order and it’s just one of the many on your plate. And as a construction business owner, it’s important that you implement the proper systems to ensure that you’re spending the majority of your time ensuring that great work gets done for your clients.

One area of your business that can be very time-consuming and take you away from delivering results for your customers is accounting. Wouldn’t it be great if you could have someone specialized take care of your bookkeeping while you focus on the job at hand?

By tapping into the accounting expertise of 24hr Bookkeeper, you can do just that!

24hr Bookkeeper offers construction software integration, workflow advisory and monthly bookkeeping services so you can focus on getting the job done instead of worrying about your finances.

Contact us for the solution to managing your construction financials. We can help take your construction business to the next level!

The post Subcontractor Management Plan: A Key to Success appeared first on 24hr Bookkeeper.

QuickBooks is a multi-faceted tool that can help propel any construction business forward. With this being said, it’s important to ensure that you’re utilizing this tool correctly and can integrate it other construction management softwares that help you increase efficiency.

Reach Out to QuickBooks For Assistance

First and foremost, if you need to figure out whether or not your construction software can integrate with QuickBooks, a quick Google search will yield your answer. If you find out that yes, your software does integrate with QuickBooks, reaching out to QuickBooks or visiting their website and looking for information is a good place to start.

QuickBooks has tons of great Help Articles, and there is a decent chance that someone else out there has the same question you do. Contacting QuickBooks directly is also a good idea. They have a Learn and Support page where you can reach out to them, and they’ll be sure to help you find the answer to your integration questions.

Visit the Software Program’s Website

Because QuickBooks is such a popular tool, there is a solid chance that the construction software you use may have some resources on integrations on their website.

If you check their site and can’t find any content or information on QuickBooks integrations, try emailing or calling them directly. There is a good chance they will be able to help you out in some capacity, or at least point in the right direction for how to integrate your software.

Find Construction Industry Specific Groups To Ask Your Questions

Misery loves company. Just kidding! Finding a group of peers in the construction industry to bounce your ideas off of and ask for their experiences with different software. This can be a good place to start for valuable feedback. Don’t wait to struggle on your own when the internet has a wealth of connections available for you to find your answer. There are few different places across the web to find a strong construction community. Community groups on LinkedIn, Facebook, and even Reddit have a lot of people you can bounce ideas off of.

If you’re looking for a group to get connected with, but you’re not sure where to start, check out our Facebook Group Construction Cash Flow Round Table! It’s free to join and is full of people just like you looking for the answers to their construction accounting and business cash flow questions.

Understand Construction Industry & Software Terminology

There’s nothing more frustrating than trying to find the answer to a problem, but not knowing where to start. When you’re working with a construction software, it’s important to understand the different terms associated with the software itself as well as the key terms that many construction accountants use to describe different processes. Understanding the pieces that go into to calculating your labor burden and using purchase orders can lead to more specific software searches as you research the different problems you hope to solve within your business while utilizing construction softwares.

Utilize Video Tutorials & Reviews on Construction Software

Sometimes reading about your problem isn’t enough to solve the specific issue you are encountering. Watching tutorial videos developed by the company itself or created by experienced users can be a good place to gather information about whether or not a software integration will be a good fit with the current QuickBooks accounting system you are utilizing. There are many independent reviewers that can help you get a good understanding of what software is out there and what pros and cons come with each them.

Within these videos and reviews, you can commonly find the answer to some of the issues or potential problems you may experience with a specific software. It is not uncommon for other construction business owners to note their frustration with a specific feature or design flaw that you also may be seeing or tell you the biggest pain points that the software was able to alleviate within their company. It is also a good way to find answers to how those individuals worked around their difficulties or were able to get connected with a professional who resolved their problem.

Know The Best Size and Fit of The Construction Software

This is an area that many construction business owners commonly skip while researching a software. Knowing the cost benefit analysis of a software and its practical application to your business needs is actually one of the most valuable things you can do before committing to a software. Really good construction software is designed to help construction companies meet specific industry needs. It’s always good to ask a salesperson what their typical customers look like for that specific software. Ask them the approximate employee size, industry focus, and average number of projects running to see what type of companies have found their software the most valuable. Sometimes a one-size-fits-all construction software will not be flexible enough to meet the volume of project you have running, but could be a really good fit for a very diversified construction business. No software is perfect, but evaluating which ones have worked successfully for businesses similar to yours can help you make a good investment decision.

Have A Construction Software Implementation Plan Before Purchasing

Just because you purchase a software or start paying a monthly fee doesn’t mean it will solve your process problems. The same way a tool in your tool box cannot help you if you never take it out to the box. Software must be tuned to use in your specific business and your team must be trained to use it properly. In many construction companies we have encountered, a large investment in software was made to solve a problem, but no person in the business ever utilized the software to complete all of the tasks it was supposed to be used for. This is a very common problem that we would hate to see you get stuck with.

Sometimes a software can solve all of your problems, but it isn’t within your business’ budget to implement. Researching similar products to that software to see if there is a lower cost option to complete the biggest time savings issues within your company can be a good place to start. Before making a software commitment, it’s important to make sure you are committed to rolling it out within your business. If you don’t have time to implement the software and make all the connections to QuickBooks yourself, you could find the next section valuable!

Work With an Experienced Integration Team Like 24hr Bookkeeper

Here at 24hr Bookkeeper, we support all 3rd party construction software that integrates with QuickBooks. Examples include BuilderTrend, CoConstruct, RedTeam Software, simPRO, and Knowify.

We understand the importance of integrating QuickBooks, which is why we made it one of our services. And, if you’re nervous about how integrations may interfere with your day-to-day, don’t worry, we’ve got you covered! We’ll create a reasonable timeline for implementing new software and processes throughout the entire company, all while avoiding interference with daily operations and allows for a smooth transition.

In addition to our integration services, we can also help your construction business in the following ways:

Monthly Bookkeeping

We manage your financials in both QuickBooks and your construction software. We’ll handle accounts payable and receivable, payroll, reconciliations, and review for real-time financials and job costing.

Construction Software Integration with QuickBooks

We integrate QuickBooks and construction software together for a streamlined workflow, from estimating to project management to bookkeeping.

Catch Up Bookkeeping

We bring your financials up-to-date, reflecting accurate, and verified financial data. You’ll be able to produce all financial reports confidently.

Workflow Advisory Services

We produce customized step-by-step financial manuals that identify financial management and workflows, including staff responsibilities and utilization of QuickBooks and construction management software.

Quickbooks Training

Learn to use, understand, and confidently navigate QuickBooks Online with one-on-one or group training.

To get started, reach out to us today!

The post QuickBooks Integration: How to Research Your Specific Construction Software appeared first on 24hr Bookkeeper.

If you do not see the profitability you want out of your projects, you may start to question whether or not your business is going to make it in the long-term. It’s essential to throw those thoughts out the window because by taking the right actions and prioritizing the important areas of your process, you can increase your profits significantly.

To ensure that you’re cutting costs while increasing profits, here are 5 key ways to improving your construction company’s profitability.

1. Increase Productivity

Now, obviously improving your company’s productivity is more complicated than telling your team they need to be more efficient. You actually have to look for areas in your process where bottlenecks may occur.

For example, choose an upcoming project to monitor extra closely. Track every step in the process to see how long it takes to be fulfilled. See which steps are taking longer than they should be, and look for ways to make that step more efficient.

Let’s say that you notice your materials are taking longer than you’d like to arrive at the job site. You might look to change where you’re sourcing your supplies from, and if you can find someone that can do it faster. Less time waiting equals more productivity, which, in turn, creates more profit.

Offering your crew an opportunity to make suggestions on your process improvement can be a good way to hear different perspectives and ideas that you may not have even considered. Making it a competition through prizes or even a game of some sort can help your team feel valued in offering cost savings that benefit your business.

2. Be Precise With Your Bids

One of the biggest mistakes you can make involving a project is making your bids based on guesswork, not concrete evidence, and data. Sure, a quick bid might give you a slight advantage in some cases, but many clients will appreciate you taking the time to give them an accurate bid as opposed to a quick one.

Another mistake with job estimations is simply trying to be the lowest bid every time. This is a good way to not only lose profits, but to frustrate your team when they are working hard on a project that may end up costing the company more than it actually makes. Know how you are structuring all of your bids. Two common approaches that construction companies take in creating their bids are on cost-plus pricing and value based pricing. It’s good to know what is the best fit for the way you do business.

The best way to estimate job costs is by taking your time, doing your due diligence, and being honest with the client. You may not win every bid, but the ones you do win will be highly profitable and help your construction business maintain long term financial security. If you don’t have an estimating template that you use to bid your jobs, check out our free construction estimate templates!

3. Set Goals for Profits

Speaking of estimating, never underestimate the power of goals. Whatever you want your profitability to be, set that number in stone by documenting it somewhere. Then, keep tabs on your progress to see whether or not you’re on your way to hitting your goal. Setting your profitability goals, and tracking to see if they are on track ever week can actually help you identify areas that are a bleed to your bottom line. If you find that certain phases of your project commonly go over budget, it’s good to evaluate how that step can be restructured within the bidding process, what other resources can create less problems for this step, or how more accountability & efficiency can be placed into that phase. Catching profitability issues can also show you where mistakes are happening in other areas of your business such as accounting documentation, change orders, etc.

Because profitability is a company-wide goal, make sure that the rest of your team—regardless of where they are on the organizational chart—is aware of the goal. If you have some flexibility with your revenue, consider rewarding your team for their hard work by offering bonuses or buying them all meals at a nice restaurant. Teams become more aware to watch for issues when it is communicated how those issues impact the company and themselves. Always try to present your new goals as something that will benefit your team. Find the ways that it makes their life easier, and their response will be more welcoming to the change.

4. Invest in Your Employees

Employee turnover can be detrimental to any business. Not only do you have to spend tons of time looking for replacements, but you have to also invest time and energy into training new employees.

By taking good care of your current employees and investing some resources into ensuring they have everything they need to have success while employed at your company, you can limit turnover drastically.

When you put effort into making sure your employees are taken care of, they are more likely to stick around. Promoting from within—where those who take on leadership roles already know the ropes and are family with the business—will help boost your profits even more. Check out resources offered by your state’s Department of  Employment & Economic Development. Many times, there are even grant funding options that can be utilized to invest in your employees. Another great place to utilize is the Small Business Administration there are many options they have to support your team and connect you with local resources that could be of value to your construction business.

5. Prioritize Project Management

Project management is a huge part of productivity. Whether it’s integrating a new project management software that your team can utilize to stay on the same page, or bringing in an experienced project manager to facilitate the process efficiently, figuring out how to improve the lifecycle of a project is key to profitability. Following your projects through their regular life cycle can sometimes be done far better in project management software, and can help you find ways to save time.

Integrations within your project management can also allow for faster document collection, quick access to timeline information, and easy connection to your bookkeeping. Streamlining these types of processes can save hours of manual entry or searching for paper documents.

Contact 24hr Bookkeeper to Manage Your Construction Company’s Accounting

Another way to cut costs and improve profitability is by outsourcing certain areas of your business. This includes your bookkeeping. Hiring an internal bookkeeper can be expensive, but doing it on your own can be incredibly time-consuming. By choosing to outsource your accounting to 24hr Bookkeeper, you can focus on creating beautiful projects for your clients. Having the support of a bookkeeping company takes the stress out of managing your books, and gives you peace of mind knowing that your accounts are in order. Contact us today to find out what options would be the best fit for your construction business!

The post Construction Accounting and Financial Management: Maintaining and Increasing Profit appeared first on 24hr Bookkeeper.

This week, we’re covering information regarding the extension of the PPP loan program. Here’s the video transcript of Karine’s info broken down by category.

Transcript:

Gather Your Documents Associated With the PPP Forgiveness Application

Don’t Freak Out There Are Some Exemptions for Payroll Changes

Should I Wait to File My PPP or File Right Away?

Who Can Help Me File My PPP Forgiveness Application?

The post What You Need to Know For Your 24th Week of PPP appeared first on 24hr Bookkeeper.

Audit Your Cash Flow & Accounts Receivable

Going through your books right now to understand where your money is coming and where it’s going is incredibly important to controlling costs. Knowing what needs to still be paid, and who currently needs to be billed can help you make a game plan for how and when to get your accounts in line. Just because you have money in your bank account doesn’t mean that it isn’t spoken for somewhere else. Knowing what your inflow and outflow look like helps you know what amount of cash you need to retain in order to make your payroll, keep accounts current, and maintain operations. For more tips on keeping cash flow rolling, check out this article we wrote.

Think Lean & Know the Cost of Subcontractors

While many construction businesses applied for the PPP and EIDL funding, it’s important to remember that some of the loan may not all be forgivable if you have a change in staff numbers. You must keep the same number of staff from when you applied throughout the loan time frame. If the number of staff changes throughout the forgiveness period, identify the exemptions that you may qualify for towards forgiveness.

Hiring new employees at this point also might not also be in your interest if the new contracts slow, but it does depend on the position you’re looking to fill. If subcontractors are a better fit for your business, don’t forget that you must file your 1099’s correctly.

Find the time to calculate what a new employee will cost you versus what it could look like to hire a subcontractor to do the job. If you don’t know how to calculate the cost of an employee, you can check out our video about calculating your labor burden. We also have created a subcontractor management plan that you can utilize if you choose to work with some of them for your construction business.

Streamline Your Construction Business Processes

There is so much time lost within many construction businesses because they are using processes that are outdated, technology that isn’t automated, or their communication process has gaps. The phrase, “that’s the way we’ve always done it” costs businesses thousands of dollars every year. If you’re stuck at home or forced to self-quarantine, use the time to create better processes or research different types of technology that can save your team time or money. One product that we really like, and work to help our contractors integrate with their accounting system is Buildertrend. If you have questions about different software options and are looking for recommendations, we’d be more than happy to point you in the right direction!

Evaluate Your Construction Business’ Price Point

Consider ensuring your bidding estimate calculations are accurate for any changes that have happened including OSHA regulations, PPE requirements, or worksite changes that make your project sites slower impact your operating costs. You need to be factoring these into your next bids. Make sure your estimators have accurate costs factored into their bids as they work on new business. As jobs get more complicated, and safety plans cause additional delays, you must factor this into the cost of doing business. Doing this now will save you many hours processing change orders.

Have A Strong Relationship With Your Construction Material Suppliers

Many suppliers have a required down payment policy on supply orders, while others have the option for you to open a line of credit. Consider what type of support you will need from them to get through this time, but also know that any accounts that have been unpaid prior to COVID-19 are being called and your request may not be taken seriously if you are not current on your previous orders.

Open and honest communication with your suppliers is important to ensuring you can come through for your customers. This relationship is incredibly important if you’re finding that your accounts receivables are not coming through well. Suppliers can support you in contacting your customers and ensuring you get paid. The actual supplies that they provided for the job can give them the ability to place liens much easier than you can on your own for the work you have completed.

Commit to Quality Customer Service

The care and respect in which you have shown your customers impacts their emotional response to opening their checkbooks. Communication and timeliness are crucial, especially in times of crisis. Take one from the Hurricane Harvey play book. Construction companies that communicated efficiently and showed concern while having the correct policies in place during their response to Hurricane Harvey strengthened their brand and brought their business long term loyalty from quality customers. Make sure that you keep your commitments and communicate if you are not going to be able to do them.

Ramp Up Your Construction Sales Team

Especially within the commercial industry, new construction projects have started to dry up more than ever before. With governments looking at deficits, and businesses wondering if they will endure, you have to have a strong sales strategy with a solid team to back it. Know what kind of contracts you plan to go after and help your sales team prepare to connect in a way that is helpful and supportive to the customer’s needs. Uploading their contract documents into QuickBooks can allow you to easily reference them. You may also create your proposal and progress bill. If that is not the best option for you, you can also create your invoices ahead of time, dated for the appropriate billing period, as they are accepted in your client contract. You can easily do this within QuickBooks Online, using the Projects function. This is not available for QuickBooks Desktop.

Dig for Tax Deductions & Save Receipts

Now is the time to keep all of your documents organized. Keeping your accounting records up to date with any purchase receipts and unexpected costs due to COVID-19 should be documented. This could help you qualify for a disaster relief credit of some sort if the legislature passes one for small businesses before the end of the tax year. If you took the PPP or EIDL loan, you will also need to count the forgivable portion of this loan as income and from what we’ve seen so far, you will need to pay tax on it.

Talking with your CPA is a good way to know if there are more areas that you may not have counted before as tax write-offs such as training hours, mileage, etc. Being diligent this year in your documentation because it could help you save so much money when tax time comes!

Button Up Your PPP Loan Forgiveness Application

If you have applied for the PPP funding, the forgiveness application is now open. The longer you wait to get your application in, the longer it will take to get processed. Being ahead of this now could give you some advantages in freeing up your time later and potentially cash flow by being able to plan what you will have to repay and what percentage you are forgiven. If you haven’t accessed this form yet, you can find it here. If you are still in your 8 week period, and need to track your expenses, we’ve created a spreadsheet that you can duplicate and use right here.

Consider Have a Construction Diversification Strategy

There are tons of different ways to diversify your construction business, but historically, many contractors have gotten through recessions by having great customer service while patching up what’s broken. Having a repair and maintenance division gives your sales team a foot in the door to develop a great relationship while waiting for their customer’s confidence to be restored in signing a contract for making a new build or complete renovation. What’s also great about this side of the construction business is that it can help you lock in residual income to fix anything under a certain dollar value while waiting for bigger business.

Exploring other options such as new product offerings, becoming certified under a certain manufacturer’s warranty, or expanding into different parts of construction can also help you stay afloat. Always research and run your profitability numbers first before signing on a new product!

Incentivize Cost Savings Within Your Construction Business

We know you’re committed to keeping all of your construction employees, but the need to cut costs is never more apparent than in a recession. You can track what your expenses are within your business, but your employees can offer you a hand in cutting costs. Some construction companies have incentivized saving money for their business, and many employees take it on as a challenge to find ways to increase efficiency. Holding contests, offering rewards, etc. can make this a team effort and keep it fun. You would be surprised how much your team can save your business if you show them the value of putting their minds to work. Utilizing classes in QuickBooks can help you track some of these employee efforts.

Know What Your Time Is Worth As A Business Owner

Working a lot within your construction business can help pay the bills, but working on your business is going to keep it going long term. Find time to delegate work that someone else on your team can do before taking everything on yourself. Now is not the time to be a micromanager. Help your team take on the things that need to be done to succeed and/or find a way to outsource tasks that can be done by someone who specializes in that field. If you find that bookkeeping makes sense to outsource in order to free up your time, you can connect with us to see what options would be right for you.

The post Mapping The COVID Comeback in Construction appeared first on 24hr Bookkeeper.

The post 5 Common PPP Forgiveness Questions Answered appeared first on 24hr Bookkeeper.

While many of our contractors are navigating the PPP loan program, we wanted to make sure we had some information available on the Forgiveness Application. For those who like to skim and find the most relevant information to their needs, we also wanted to put out our video transcript. If you have additional questions that we didn’t answer yet, get in contact with us! We’re here to support the construction industry with any financial questions.

Transcript:

Hey there! It’s Karine Woodman with 24hr Bookkeeper. Today I’m going to talk about the PPP loan forgiveness application. I am going to do a basic overview of completing the three worksheets that are part of the application, one of them being the application. Keep in mind that there are changes coming in the pipeline, such as instead of an 8-week PPP period that is proposed, to change from 16 to 24 weeks. Also the 75/25 payroll versus non-payroll costs are proposed to switch to a 60/40 split. For the sake of this video, I’m going to do it as it sits today, and keep in mind that that application could change. I’m guessing that the majority of the information is going to remain the same. It’s just again the extension of the time will be different, in addition to the split. But you’ll still have those costs.

Step 1: Download the PPP Forgiveness Application

To get ready for this, the first thing you should do is download the application. You can just Google it. Just type in PPP loan forgiveness application. It’s an 11 page PDF that has the three sections. The application has three pieces that you should know about. There is the application itself, and I know you can see my screen. I’ve got them kind of all over.

There’s the Schedule A, and then the Schedule A worksheet. My recommendation is, the first thing you should do is you should work off the Schedule A Worksheet. Then do the Schedule A Form, and therefore complete the application.

Step 2: Gather Employee Information of Those You Paid During the 8-Week Period

There’s a few things that you’re gonna have to gather prior even being able to plug in the information. The main thing related to payroll would be all of your employees that worked during your PPP period. The last four digits of their social, their gross wages, and their average hours during that period. You will also need to have the employee’s average pay during… (There are three stated periods you can choose from to identify what their average pay.)

They’re going to ask that because they want to know if during the PPP period, basically the salary was reduced from what it was prior to the PPP timeframe. Any mortgage interests or loans basically related to mortgage or personal property, vehicles equipment, anything like that, those need to be in effect prior to February 15th on this application. Also lease payments, rent payments, and utilities. So utility is not just water, gas, and sewer. It also includes transportation. Which I interpret to be mileage, in addition to telephone and internet bills.

Step 3: Start With the Schedule A Worksheet

So, let’s start with the Schedule A Worksheet. The first thing it wants to do, and this is just giving you, if you have more employees and what would fit on this and this is for your calculation purposes. just open up a spreadsheet and create the same thing. Then add all of your employees on there, which will probably help calculate those totals. Basically Table 1 and Table 2 just allow you to enter your employee information, who they are what they got paid, if they’re full-time or not full-time equivalent, and basically if they have any reduction in hours. The first thing you need to know is for all employees that reside in the United States. You cannot include any owners on either of this calculation.

Step 4: Separate Your Employees into Those Who Make Less Than/More Than $100,000 and Full Time/Part Time

Table 1 is for anyone that has been paid less than $100,000 in 2019 or any employees that have not been paid in 2019. So anyone that’s new. In Table 2, it wants you to add the employees that were paid more than $100,000 in the 2019 period. Basically it separates in that hundred thousand dollar line between the two employee types. What you want to do is an employee name go ahead and put that in put the last four digits of their identify employee social security number.

Cash compensation includes gross wages, sick pay family, sick leave, any severance packages, and again the instructions, which is part of the original 11 pages, has this detail but again I’m just giving you a basic overview. The average full-time equivalent: iff you have an employee that works 40 hours a week that is considered an equivalent of 1. If that employee works 45 hours, you cannot go over 1 so 1 is the max. If you have any employee that works less than that, you can use a basic calculation that allows you to put a .5. So two .5’s equal 1.

The reason they’re asking for the full-time equivalent is they want to make sure that you started with the same amount of employee full-time equivalents that you ended with in the PPP period. Now there are going to be some cases where an employee was fired. They might have quit. You do have the option to have an exemption for that, but in this case they want you to go ahead, and and just put in that they are full time. If they work 35 hours a week you can take that 35/40, whatever that amount gives you round it to the nearest tenth, and you can also put that there. Or you can use a .5 if it’s under 40. The salary hourly wage reduction: I’m going to just explain this on, hopefully what sounds like a basic scale.

You cannot have reduced anyone’s wages more than 25% of their average wage at your reporting. If the average wage was a thousand dollars, and now they received seven hundred dollars per week, that’s actually more than 25 percent. Because 25 percent would have allowed them to make $750. Because there is a $50 difference from the 25 percent to what they actually got paid, that’s what you would put in this box right here, times the 8 weeks. It would be four hundred dollars. Again, if you are within 25 percent of a reduction in in wage, you do not have to put it here. This is anything over 25 percent. So, you’re going to fill all this out. You’re going to put your totals in here. Then we’re going to use that in the Schedule A Form. Down here, it’s asking for the numbers I had mentioned to gather. Your full-time equivalents, you can put your your numbers based on filling out these, step one through step five.

Step 5: Plug Your Number Totals into Schedule A

Once you’ve completed this, then you can basically plug in those numbers, the totals, into the Schedule A. If you look here, this goes box one, box two, box three, box four, box five. Line one through line five is all coming from the schedule A Worksheet. Now everything I’m telling, you remember it’s it’s a little bit more depth, but I’m just giving you a basic overview on completing the application.

Step 6: Enter In Any Health Coverage Information, Retirement, & Local Taxes

For line six, it’s asking for you to state your employee health insurance coverage or benefits paid by the employer. Do not include any employee paid contributions. You would go ahead and total that over the period. I should have mentioned this at the beginning, but there’s actually two periods that are accounted for in here. There’s the covered period, which is the first day of funding, basically the day you receive the money and it’s 56 days from there, or there is the alternative payroll covered period. If you ran a payroll that was after the day you got funded, you are allowed to use the first day of the pay period after you were funded as the first day of your 56 days. As long as everything falls on the right rotation, you would be able to include
that into your application for forgiveness. It does state that it wants you to in the application notify which period it is, and actually give you the dates for both. When you’re accounting for cost, they understand that it falls into the right period based on what it is. The alternative payroll would only be for, likely, payroll related costs.

A Note On Owner Income: Okay, so, I should have mentioned that at first, but it is here now. Right here, you have contributions to employee retirement plans. Again, this is employer portion, not employee portion. Then any state and local taxes, so unemployment would be that. If there’s any city or local tax related to employee wages, you could include that here because that would be paid strictly by the employer. In line nine, it does want you to include any amounts paid to partners or self-employed or general owners. The owner, still follows the same rule of the hundred thousand. Whether you’re an owner or you’re an employee you cannot make more than the $15,385. I believe it is which is at a hundred thousand dollar salary.

So if you were an owner, and you paid yourself fifty thousand in the eight-week period because for whatever reason you did, you would only be able to claim the 15,385 per owner because of the hundred thousand dollar rule. They came up with the hundred thousand dollar calculation for owners to say you take a hundred thousand divide that by 52 weeks times eight weeks equals that $15,385.

Line ten, you know just follow the calculation. Equivalency reduction calculation, if you have not made any reductions then you are not going to have to worry about any of this information.

Step 7: Gather Your Original PPP Loan Application Information

Okay, the last piece is the application itself. You need to have your PPP loan number, your disbursement date, your loan amount, how many employees you had at time of application, and so on. That’s pretty self-explanatory. Keep in mind that the frequency when I talked about the covered period or the alternative payroll covered period, you have to be on a biweekly or a weekly schedule to be able to use that period. Even if you’re twice a month, which I think that those people are not going to get that potentially good side of the stick, they do not unfortunately have the option to use the alternative payroll period.

The rest here as you can see, you’re going to go ahead and just enter your payroll costs, but you’re going to get it from your Schedule A.  On your non-payroll costs: any interest on, again, personal or real estate property, any rent, or lease payments, and any utility, which also includes transportation, telephone, and internet. All of this has to be in place prior to February 15th, and you’re going to have to show documents that all of that was the case in your forgiveness application.

Then you’re going to, again, take the information that you got from Schedule A, enter that related to FTE’s, and it’s asking for a calculation to make sure that the payroll costs are in the seventy five percent split. Which again, this might change. That’s a basic overview of the application. There will be more to come. So we will go ahead, and get an updated video when that time
comes. Thanks for watching!

If you need assistance reviewing your current financials, contact us today! We’re here to help, and we offer a free financial analysis that you can use to your advantage!

The post How to Fill Out The PPP Forgiveness Application appeared first on 24hr Bookkeeper.