Accurate bookkeeping for your contracting business helps you make better business decisions. Your books are the financial records that indicate the health and state of your company. However, it’s not only the numbers that matter. You also need to make sure that you have clean financials if you want to be able to make data-driven business decisions.
Now is the time to work on getting your finances in order with accurate bookkeeping. Here’s why contractors need to have clean books and how to achieve and maintain clean books for your contracting business.
Clean Books for Contractors Explained
Clean books mean that your financial records are accurate, up-to-date, and understandable. The books are your contracting business’s list of profit- and loss-making accounts, including bank accounts. Clean books are well-organized and provide comprehensive and accurate information about your business finances.
How to Clean Up Your Accounting Records
Even for bookkeeping professionals, cleaning up the books for a contractor is time-consuming and requires a lot of focus. Experienced contractors save time by using bookkeeping services to make sure records are accurate by managing financial record-keeping. The contracting entrepreneur’s time can then be spent improving the productivity of the business.
Here are the common signs that a contracting business has messy books:
- You don’t know how much you’re spending or making
- Your accounts are not being reconciled
- You’re missing receipts or don’t have them recorded
- You’re afraid to log in to your online business banking account
Here are the common signs that there are accounting record issues:
- Cash discrepancies
- General ledger errors
- No clearly defined process for managing company financials
- Up-to-date financial statements can’t be provided on demand
Gather what you have and contact Apparatus today for a consultation. Our team of experts will help you reconcile your books and get your financials in order.
Why Is Having Clean Books Important?
When contractors have clean books, they are better able to accurately determine the income that is needed to cover expenses at any given time. This is also how you reassess your costs periodically to maintain positive cash flow. Clean books ensure that your business practices good cash flow management.
Tax management is another reason you simply must have a clean set of books. Tax planning isn’t just for Tax Day once a year. If you’re running a business, you need to plan your expenses throughout the year to cover operating costs.
An audit request from the IRS is another reason that clean books are essential. If you are not prepared for an audit at any time, organizing your financials may require the expertise of a CPA and will be significantly more expensive.
In summary, when you have accurate books and clean financials, you’ll be able to:
- Generate financial reports to see the health of your business
- Differentiate personal expenses from business expenses
- Create budgets and forecasts
- Prepare for tax time without being overwhelmed
- Discuss potential tax deductions with your accountant
- Meet record-keeping compliance rules
- Take advantage of additional benefits offered by outsourcing bookkeeping services
Well-organized financial records can even give you the insights you need to make timely decisions to change the structure of your business to suit your tax circumstances better.
Maximize the Value of Your Financials by Keeping Clean Books
Here are some of the ways that clean contracting financials help you make better business decisions:
- Achieve compliance: Audited and GAAP-compliant financial statements
- Track performance against budgets and forecasts
- Define and monitor monthly financial Key Progress Indicators
- Ease of company management transition in a merger or acquisition
Making sure that your contracting business has clean books takes time. It also requires knowledge of best practices and accounting systems. Apparatus can help you get organized and set up the right systems for managing your contractor accounting and bookkeeping.
Have questions on contractor bookkeeping?
Contact Apparatus today, and we’ll help you evaluate your current workflows and make recommendations for your contracting business.