Sometimes we have the opportunity to work with people who are just starting a contracting business, and they will ask us: Do I need to use QuickBooks with ContractorTools?
You don’t have to use QuickBooks with ContractorTools right away, but once the money starts coming in and going out, you will want to for the following reasons:
For the two or three hundred bucks that it costs, paying an accounting firm to prepare your taxes is cheap insurance to protect you against problems with the IRS, and money well spent for tax planning advice (to avoid paying more tax than you need to). All accountants know and use QuickBooks, so using QuickBooks is a very efficient and economical way to prepare and provide all of your accounting information to your accountant when it comes time to do taxes. If you don’t use QuickBooks, you’ll still have to keep track of all of the information that would go into it, but doing so otherwise is a pain, and handing your accountant a shoe box full of receipts at the end of the year is going to cost you a lot more (for the time it will take them to deal with that) than $200 or $300 for a QuickBooks subscription.
At some point, you might want to take advantage of a line of credit with your local lending institution. For example, say things slow down during winter and you need something to tide you over, or say you decide you want to build something on “spec”. You’ll need a loan from a bank. And in order to get a loan from a bank, a business needs to provide a Balance Sheet and a Profit and Loss statement. These are the fundamental accounting reports that are provided by QuickBooks.
As business owners and operators, you will soon become aware of the importance of being able to look at your profit and loss statement on a monthly, quarterly, and yearly basis. This is a crucial instrument panel that tells you a number of things you need to know, such as how much you need to bring in on a monthly basis in order to cover your expenses and income needs. This is very important in order to have peace of mind. Without it, you are “flying blind”, and that’s not going to help you get to sleep at night.
Basic accounting: keeping track of the dollars and cents. ContractorTools provides “job accounting”, which covers everything involved with a job for your customers’ needs. But job accounting does not include everything that goes into the operation of your business. You also need to keep track of overhead expenses – costs that are not allocated to specific jobs, but are part of the cost of operating the business. Keeping track of all of that is necessary for tax purposes as well as for your monthly profit and loss reporting.
So, our advice is to get familiar with ContractorTools, maybe do a few jobs with it first, and then sign up with QuickBooks (Online) and let us help you connect ContractorTools to it. ContractorTools will write all of your job related information into QuickBooks, but then you will use QuickBooks to:
- Record your business expenses,
- Pay bills (for both job costs and business expenses),
- Run Payroll (if you have enployees),
- Print checks,
- Reconcile your bank statement (balance your checkbook)
- Generate your financial reports (Profit and Loss, Balance Sheet)