Tag Archive for QuickBooks

Making Your Construction Business More Profitable

10152641_573081996138421_5796564990161265784_n (3)Small companies are always struggling to find more profits with less time and resources.  Construction and architectural companies are faced with these same struggles, but they often have the additional challenges of high equipment costs and the competition of bidding on jobs against a tight pool of opponents. Trying to maintain a tight leash on costs while growing the business and staying competitive can be a daunting task. There are a few small business areas where additional attention now can mean more profitability in the long run.

Understanding of your company’s overhead- Look at all those expenses that you would still have to pay if no one worked for a week, like rent, utilities, equipment loans, salaries, web site, internet and other costs. Once you have a firm grasp on your fixed costs, it will be easier to bid on jobs and more importantly, make a profit from the jobs you win.

Accounting on and off the job site- Trying to juggle your small business accounting on napkins and post-its from the field or an antiquated accounting system can cost your business thousands or even tens of thousands in lost time and missed revenue.  Invest in a productive and efficient small business accounting software program like QuickBooks. Consult with a small business accountant about the best way to set up your accounts and how to generate reports.  You’ll need to access this data time and time again, so an investment in solid advice at the start will enable you to do the job right the first time. After you have a good accounting practice in place, you’ll be far better prepared to process invoices in a timely manner. Better accounts receivable means better cash flow.

Change Orders- Sustaining a tight control on client’s change orders can be the difference between being profitable or not. Change orders are those requests that fall outside the scope of your original contract and can add up to hours of re-estimating work and lost time if you’re not careful.  Failure to keep up with change orders can also mean that your business is losing considerable dollars and opportunities for profitability because you’re doing work that you’re not being paid for. Change orders serve as an excellent source of increased revenue, too.  Because you already have the original contract, you don’t need to compete with other construction firms to win the business – you’ve already got that! Put a tracking system in place to organize, manage and complete change orders in the field and translate those modifications into actual billable time on the accounting side. Which takes us to the next step – accounting.

Job Analysis- Having a good estimating and accounting system will also save you the repetition of freshly estimating every job.  In construction as in many other businesses, there are similarities from job to job.  Having an electronic reference will equip you with a track record from which you can gauge the profitability of your pricing structure including the raw materials and labor required for each job. When you take the opportunity to reflect on previous projects, it will enlighten you to the success of the job, stumbling blocks and enable you to learn from mistakes so you can be more profitable with future contracts.

Training- This portion of your small business management translates into many aspects of your business.  Invest in your staff by providing growth and enrichment opportunities. This benefits both the employees and your company, resulting in employees who are more loyal, resulting in less turn over.  Absence of employee retention can wreak havoc in a small business, especially when those individuals in strategic positions leave the company. The cost to search for and hire replacements can impact your company both financially and emotionally as the strain of double-duty roles on the remaining employees can be exhausting. By providing in-house training on responsibilities, roles, safety and procedures, you will have a more efficiently operating organization. Set aside time to draft procedures and maintain them will streamline repeated questions, curtail errors and in the case of safety, can prevent costly and serious injuries on the job site. Procedures aren’t etched in stone but they should be documented, reviewed by your team and then revisited regularly.  As procedures change, they should be revised with a journal log so you can see who updated the procedure, what changes were made and why.

A business is a business, but each type of industry has different obstacles where the company can become stuck if the right reinforcements aren’t in place. Construction firms have unique needs; speak with an experienced small business advisor in your area to learn how you can become more profitable.

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How to Handle A Returned Check

How to Handle a Returned Check

For most any business, accepting checks is a service to its customers. Unfortunately, banks every so often return checks, and dealing with them can be a frustrating process. If you are the receiver of a bad check, you can take several steps to recover the money you lost on the sale, as well as the fees you incurred from your bank.

Handle the return check on your books:

The first thing you will need to do is record this returned check in your accounting system. You don’t want your accounts receivable and bank account to be misstated.  If you don’t have this item set up already in your QuickBooks you want to create a new item “other charge” for your Item List: Bounced Check.  Leave Amount at zero, tax code as non, and for the Account choose your checking account.  Also create another “other charge” item: Bad Check Charge — no amount, non-tax, and for the account set up an income item named “returned check charge”.  Then create an invoice to your customer using these two items.  Invoice for the amount of the check on item Bounced Check and for the bank charge on the Bad Check charge item. (Include a description of the NSF ck# number, date.)  This will have the effect of backing out the deposit and will match to your bank statement.   When you receive a replacement check from your customer, receive it as you would any other payment.

Now for the handling of the check with your customer:

Do not redeposit the check without first speaking with your customer. This will avoid additional bank fees if the check still isn’t good.  Call your customer. Good people make mistakes too, and giving your customer a call, and letting him know what happened often can solve the problem. Let the customer know the check number and dollar amount, as well as any fees your bank assessed you. The oversight might embarrass many people, and they will want make good on the check and then your problem is resolved.

If you don’t get anywhere after speaking with the customer, send a certified letter. Bad check laws vary from state to state but many State guidelines typically require you to send a certified letter to the check writer asking for payment of funds. Ask for payment to be made by a certified check or money order; request the check writer to pay bank fees you incurred because of the returned check. State law requires the check writer to respond within a certain number of days to your letter. Check with your state before sending the letter.

Place a follow-up call to the check maker. You are within your legal rights to go directly to small claims court if payment is not received. However, if you contact the check writer again and they pay restitution in full, then a court appearance can be avoided. Explain to the check writer that you will file a police report or take them to small claims court if they do not pay what is owed to you.

If none of the above actions are getting you anywhere, notify the police. If the check writer lives in your area, file a complaint with your local police department. You will need to fill out a police report and include copies of the bounced check, your certified letter, related receipts and document your attempts to recover the funds. Ask the police to pursue the check writer and bring forth charges.

Hopefully it will not come to the final step and you are able to recover the payment in full. But if not, it’s good to know there are steps you can take. The events might make you, the company; more cautious of whom you accept check payments from in the future.

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A Better Way to Book Purchase Discounts

b7783-aipbIf your company routinely takes all purchase discounts, you can simplify your record-keeping by recording all purchases at the net rather than gross amount.  Record missed discounts in a Purchase Discounts Lost account using the net-price method, as follows:

Your company receives an invoice for $10,000 with credit terms of 2/10, n/30.  Under the net price method, the following entry is recorded:

To record receipt of invoice:

Purchases   9,800
Accounts payable    9,800

To record payment:

Accounts payable   9,800
Cash 9,800

If, for any reason, the bill is not paid on time, the entry is:

Accounts payable 9,800
Purchase Discounts Lost 200
Cash    10,000

The Purchase Discounts Lost account does more than simplify bookkeeping—it brings attention to money-saving discounts that your firm may be missing.

For more information or to hire a professional bookkeeper please contact us – info@laebusiness.com

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How to Record Non Check Payments in QuickBooks®

With online banking and debits cards we are using our checking accounts for so many different types of transactions… So how do you record a check in QuickBooks® when it’s not a physical check, but rather a debit card or an electronic transfer? It’s easier than you think… You begin with the same “write check” window to record non check transactions as you would to write a physical check. Do not use the field called Check# to insert the reference number or approval code for debit card receipts, this is not the best use the software and will only add to the confusion when you reconcile your bank account. Consider instead using the following abbreviations to identify when a transaction is a debit card purchase or some other type of transaction other than that of a physical check. If you want to record the reference number or approval code, insert it in the memo field. Make sure to uncheck the “print later” box, then you will be able to insert the abbreviation applicable to your transaction.

Below is a list of abbreviations you can use for the “write check” screen, you can create your own list of abbreviations too. Remember to be consistent with the abbreviations you use; if not it will make reconciling a very tedious task.

Check# is always used when issuing physical checks.

DC = Debit card purchase
DD = Direct deposit transactions (an example is direct deposit paychecks to your employees)
EFT = Electronic funds transfer (items that come out of your bank account electronically)
BP = Bill payments made with online banking
TX = Transfer between bank accounts if the receiving bank account is not a bank account that is tracked in your QuickBooks® Company File (for example a transfer can be funds used for personal reason from business to personal accounts)

If you have any questions please email us: info@laebusiness.com

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Bookkeeping Tip #6: Memorized Reports in QuickBooks

So you’ve finally found the report in QuickBooks that fits your needs perfectly and you want to be able to access it quickly, easily and often…memorize it!

Select any report, modify it by “customizing” and “filtering” it with the information you want to see and then memorize it.  Whenever you change the settings for a report, you can memorize the report with the new settings and save it in the QuickBooks Memorized Report List. Then, when you want to create a similar report, just go to the Memorized Report List to find it. Please note: QuickBooks memorizes the report settings, not the data in the report; so if data changes in your company file the data in the report changes. 

How do you memorize a QuickBooks Report? Glad you asked…Here are a few easy steps:

1. Customize a report with all the information you need, click Memorize at the top of the report.


2. If you have changed an existing memorized report, indicate whether you want QuickBooks to replace the earlier report, using the same name or create a new memorized report with a new name.



3. In the Memorize Report window, enter a title for the report.

4. If you want to assign the report to a memorized report group, choose “Save” in “Memorized Report Group”, and choose the group from the drop-down list.



5.  If you run several businesses or have a multi-user QuickBooks installation, choose the sharing option for your custom reports so other employees will be able to access the report templates quickly and easily.


Happy memorizing… Need more information?

Email us at info@laebusiness.com

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Chargebacks!! How To Handle Them Efficiently

Chargeback – A word no business owner like to hear!

What is a chargeback? A chargeback occurs when a customer’s credit card is approved at the point of sale, but then is reversed when the customer files a dispute with their card issuer. This is the most common reason for a chargeback, but there are a few others, such as computer glitches or miscommunications. However, any chargeback could mean lost revenue for your company as well as incurring fees.

The chargeback process

The typical chargeback process may consist of the following steps:

  1. Your buyer contacts the credit card issuing bank to dispute a specific charge.
  2. The credit card issuer contacts the appropriate credit card association, who then notifies merchant of the chargeback.  
  3. Your merchant services alerts you of the chargeback via fax, mail or email and requests supporting documentation to contest it on your behalf. To dispute a chargeback, you must reply to the correspondence by the indicated reply-by date. 
  4. Your merchant service provider will review the details of the chargeback and the documentation provided by you.
  5. When deemed necessary your merchant service provider submits the evidence to the credit card issuer in an attempt to reverse the chargeback.
  6. If the chargeback is successfully disputed on your behalf, no further action is required. If the credit card issuer does not resolve the chargeback in your favor, you may be liable for the chargeback.

Chargeback liability

Keep in mind that your merchant service provider can only forward your chargeback response to the credit card issuers for review. The credit card issuer is ultimately responsible for determining the resolution of chargebacks.

If you’re found liable for a chargeback: You’ll receive a notification via mail, fax or email from your merchant service provider with details about the chargeback. You’ll be charged for the full amount of the chargeback. 

Things to remember

  • Different orders from the same buyer count as separate chargebacks. Please be sure to respond to each information request you receive individually so that all of the chargebacks can be properly contested, if possible. 
  • The Fair Credit Billing Act protects customers’ rights to dispute charges for a number of accepted reasons. Generally, a policy that allows no refunds will not be upheld by the credit card associations. 
  • Because credit card issuers require that any documentation be received within a certain number of days, prompt replies to our information requests are necessary if you intend to contest the chargeback. Once this time frame has expired and the credit card issuer has resolved a chargeback in the buyer’s favor, they will not review any additional documentation. 
  • The final status of a chargeback may not be determined for several weeks or occasionally several months after it is initiated.
  • Not answering chargebacks in a timely manner can be detrimental to your merchant services account. If you agree that the customer should be refunded, go ahead and refund them, but you must still answer the chargeback notice. Each chargeback that goes unanswered counts as a strike against you, too many and your service provider will revoke your account.
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PayPal, How To Use The Account In QuickBooks

Paypal is a great way to send and receive payments, but many aren’t quite sure how it should be set up in their QuickBooks file.  For all intents and purposes, it’s a bank account and it should be treated as such.     

 To set up your new PayPal account you go to your chart of accounts and click the Account button on the bottom of the window and click on New.  Name your account PayPal.


 How exactly does QuickBooks and PayPal work together you ask?  You can manually enter all your PayPal transactions or you can export them from PayPal as an .iif file and import them into QuickBooks



You will also want to set PayPal up as a payment method both on the customer and vendor side.

When you’re recording a payment from your customer you must also record the fees that PayPal charges. PayPal posts the money to your account net, meaning they deposit the funds after they take their fees. There are a couple ways you can post the payment; one way is to post the full amount of the payment and the record the fees as a negative amount when you are making the deposit. The other way is to record the net amount of the payment and “discount” the fee in order for the invoice to be recorded as paid in full. 


If you use your PayPal account to pay your vendors you would process the payment in QuickBooks as if you were paying bills from your checking account. You can assign it a number as if it were a check, I like to put PP for PayPal in place of a number.


You will also need to link your checking account with your PayPal account in order to transfer funds from the PayPal account into your checking. PayPal also has a Debit MasterCard you can request that is linked to the funds that are in your PayPal account; makes purchasing easier and no more waiting for funds to be transferred into your checking account.

Don’t forget to reconcile your PayPal account monthly just like you do your other checking and credit card accounts.

If you need additional information please contact us at info@laebusiness.com



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Bookkeeping Tip #125 Hire Professional Help

Hire professional help

 Unsure of where to start, consider engaging a bookkeeper or an accountant to set up your bookkeeping system. If paying a seasoned professional doesn’t fit your budget, you could hire a college student who’s majoring in accounting to assist you.


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Bookkeeping Tip #185 Segregation of Duties

Segregation of Duties: the “rule of two”

Meaning that any task involving the finances of your small  business should require  at a minimum two people to complete.
Here’s a few examples
1. Bookkeeper records all receipts, Accountant reconciles all accounts to make sure what’s recorded in the books  matches what happened in reality (as shown on the bank statements)
2. The secretary photocopies checks from clients, gives the photocopies to the bookkeeper to record, then the secretary completes the bank   deposit with the actual check
3. The bookkeeper prints checks to pay vendors, and the owner signs and mails them
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