Construction Profits [Income - COGS - Expenses] = Profit

"If You Know The Answers The Questions Will Not Bother You" - Randalism

Let's Get Some Answers - Contractors and sub-contractors know there is more to profits than what is shown above and most of you rely on your "gut feel" to know when project has made a profit or not.

Most contractors add a 5%-25% profit margin to their estimated costs to arrive at a final bid price which means a minor increase in any of the big four Labor, Material, Other Costs and

Subcontractors can have a huge negative impact on your QuickBooks For Contractors Job Profitability Reports.

For contractors not familiar with income and expenses flow for a typical mid-size construction job, consider the following general example.

Example Job 1001

  • Bid Price = $60,000

  • Three Monthly Payments $20,000 Each

  • Job Costs Are Heaviest In Month One And Get Lighter Month Two And Three

    Fast Easy Accounting 206 361 3950 Construction Company Profit Easy Definition

 

Let's Get Some Answers - Contractors and sub-contractors know there is more to profits than what is shown above and most of you rely on your "gut feel" to know when project has made a profit or not.

Most contractors add a 5%-25% profit margin to their estimated costs to arrive at a final bid price which means a minor increase in any of the big four Labor, Material, Other Costs and Subcontractors can have a huge negative impact on your QuickBooks For Contractors Job Profitability Reports.

For anyone who is not familiar with how income and expenses flow for a mid-size construction job, consider the following general example.

Example Job 1001

  • Bid Price = $60,000

  • Three Monthly Payments $20,000 Each

  • Job Costs Are Heaviest In Month One And Get Lighter Month Two And Three

Month 1: Materials, labor and G&A expenses are paid by the contractor but only part of the contract amount (draws) has been collected to offset the expenses. At the end of month 1, the project shows a loss.

Fast Easy Accounting 206-361-3950 Construction Company Profit Easy Definition Example Job 1001 Month One

 

Month 2: Labor, materials, G&A (overhead) are expensed by the contractor for Month 2, but no payments (draws) are still behind the job costs for Month 2. At the end of Month 2 the project still shows a loss.

Fast Easy Accounting 206-361-3950 Construction Company Profit Easy Definition Example Job 1001 Month Two

 

Month 3: The project is finished and the balance of the project is paid in full. At the end of Month 3, the project starts to show a profit.

Fast Easy Accounting 206-361-3950 Construction Company Profit Easy Definition Example Job 1001 Month three

Net Result: Gross Profit on the job is $5,000 at the end of Month 3

Fast Easy Accounting 206 361 3950 Construction Company Example Job 1001 Profit

 

There Are More details regarding opportunity costs including why two contractors can do the same job and have the same expenses yet one contractor will earn more profit than the other one due to differences in Construction Company Business Process Management Strategy.

The Short Video Below Shows A Sample Of It

With Bonus Material On Cash Flow

 

Without proper tracking and matching of income and expenses, most construction companies never know if they made a profit until the job is over.

Because of the special nature of construction accounting, most accountants have little understanding of how construction accounting works. Construction accountants are trained to provide accurate information for contractors while C.P.A.'s and tax preparers are trained to make certain contractors pay their fair share of income taxes. Learn more...

Contractors Bookkeeping Services Vs. Tax Preparers

The bottom line is working with us you get the best contractor bookkeeping services company on your side which means you will improve your chances of success substantially. We are not Jack-Of-All-Trades, Master-Of-None accountants or bookkeepers who take anyone who contacts us. We are construction accounting specialists, with one purpose and only one purpose; serve construction contractors who are in business and those who are preparing to get into business. Who We Help...

If You Are A Contractor You Deserve To Be Wealthy

Because You Bring Value To Other People's Lives!

This Is One More Example of how Fast Easy Accounting is helping construction company owners just like you put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to people like you and me so stop missing out! Call Sharie 206-361-3950 or sharie@fasteasyaccounting.com and schedule your no charge one-hour consultation.

No Charge One Hour Consultation  

Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time and now you know about it too! 

We Scan Your Receipts And Invoices link the appropriate transactions to QuickBooks or Xero Accounting Online depending on the construction accounting service you are using and provide ongoing Cloud Based Contractors Bookkeeping Services by accountants who understand construction.

Thinking About Outsourcing Your Contractors Bookkeeping Services?

Click On The Button Below To Download A Free Guide

 Contractors Bookkeeping Services Guide >

Need Help Now?

Call Sharie 206-361-3950

sharie@fasteasyaccounting.com

Fast Easy Accounting Strategic Bookkeeping Services For Construction Companies

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We Are Construction Accounting Experts Specializing In Construction Bookkeeping Services For Contractors All Across The USA Including Alaska And Hawaii

About The Author:

Randal DeHart, PMP, QPA The Construction Accountant Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Follow Randal on Google+

Our Co-Founder:

Sharie DeHart, QPA, is the President of  Business Consulting And Accounting (Fast Easy Accounting) in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or sharie@fasteasyaccounting.com.