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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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When my business partner and I found ourselves in a land investment that was abandoned by the developers, we had no reasonable economic choice but to walk away from our mortgage loan.  While we understood that there would likely be tax consequences, the magnitude of our exposure was not fully anticipated.  Thankfully, Mr. Bode was able to work with us to strategize a defensible tax position and mitigate the tax implications of our investment loan abandonment.  I would recommend that anyone facing an investment loss that has tax implications due to debt forgiveness give Gary a call.  It is always best to fully understand the circumstances and the tax rules and related options before paying a hefty bill.  Thanks Gary!

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Construction CPA offers tips for QuickBooks Classes | construction accounting with QuickBooks Contractor Edition

Construction CPA, contractor CPA

The tricks to making your construction accounting useful in QuickBooks is planning and consistent data entry. Call for a free consult. Our virtual office makes us easy to deal with, wherever your construction firms operates. (910) 399-2705.

Construction CPAs see lots of non-optimal construction accounting. That’s a shame since construction accounting plays a vital role in getting paid, bonding, taxes and even licensure. Sometimes a poorly designed set of books is the issue. In this post I’ll go over some tips for setting up  Classes in QuickBooks Contractor Edition. Classes just aggregate job data into broad categories. For a clean, simple example let’s assume:

  • The company opened on November 1st 2013.
  • Had four completed jobs during November and  December.
  • Did not have any other jobs in progress on December 31st.
  • A truck is the only overhead expense for 2013.

Let’s say you’re a contractor and think of your business, in broad terms, as residential and commercial.

  • You setup three Classes in QuickBooks Contractor Edition; Commercial, Residential and Overhead.
  • We’re using four  jobs, two commercial (C and D) and two residential (R and S).
  • You used the company’s one truck for all four jobs.
  • You installed 2″ caliper oak trees for each job.
  • The job cost reports for C, D, R and S all  reflect the oak trees properly. The bookkeeping entries look like this: Residential : Job R: 2″ Caliper oak tree.
  • You can run another QuickBooks report showing income and expenses for all Residential jobs, in this case R and S. And then all commercial jobs, C and D.
  • Plus you show the aggregated Commercial and Residential data side by side.
  • The impact of the company truck? Please see below.

Excel based workarounds for QuickBooks contractor edition

As a construction CPA I’ve never seen any construction accounting software that does everything you need. There’s always supplemental spreadsheets required. But in this case we’ll export a QuickBooks class report to Excel and sort out the overhead. Here’s the direct costs of the jobs from the above example:

  • C: $1,000
  • D: $3,000
  • R: $5,000
  • S: $1,000.

So the relative percentage of job costs are C 10%, D 30%, R 50% and S 10%. We’re using job expense as the cost driver to allocate the truck overhead to the four jobs. Other potential cost drivers exist.

Applying the Overhead in construction accounting

I think any construction CPA says application of overhead is the largest problem in construction accounting. Let’s say you had truck expenses of $1,000 in 2013 and that’s the only overhead.  We’re exporting a QuickBooks Contractor report to Excel and fine tuning them.

  • On a Class report for Commercial: you’d add $600 of overhead. (50% + 1o%) x $1,000.
  • On a Class report for Residential: you’d add $400 of overhead. (10% + 30%) x $1,000.
  • On a Job expense report for C: you’d add $100 of overhead. 10% x $1,000.
  • On a Job expense report for D: you’d add $300 of overhead. 30% x $1,000.
  • On a Job expense report for R: you’d add $500 of overhead. 50% x $1,000.
  • On a Job expense report for S: you’d add $100 of overhead. 10% x $1,000.

The tricks for relevant construction accounting?

  • Plan ahead.
  • Think what you’ll want to see in the future. Your construction CPA can help visualize that for you.
  • Setup QuickBooks Contractor Edition to carry out those goals.
  • Recognize that supplemental spreadsheets are normal.
  • Recognize QuickBooks reports can be exported to Excel for fine tuning.
  • Enter accounting data in a timely matter.
  • Enter accounting data in a consistent manner.
  • Don’t over analyze and get mired down with trivia.

Don’t have a Construction CPA?

Consider calling us.  My experience includes being a staff accountant, controller and CFO for construction firms. Our virtual office makes it easy to deal with us from anywhere in the US. (910) 399-2705.

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