Common Questions
Common questions about bookkeeping, taxes, and accounting for small businesses.
What kind of accounting does a construction company need?
Construction companies need job costing to track profit by project, proper revenue recognition for progress billing, and subcontractor management for 1099 compliance.
Read answerWhat's the best accounting software for contractors?
QuickBooks Desktop or QuickBooks Online are the standard for construction. But the software matters less than how it's set up for job costing and progress billing.
Read answerHow should I record construction accounting?
Construction accounting uses job costing to record every expense by project and percentage-of-completion to recognize revenue as work progresses, not when you get paid.
Read answerWhat markup should contractors use?
Contractors typically mark up labor 1.5x to 2x and materials 20% to 40%, but actual margins depend on your overhead, job type, and local market.
Read answerHow much does accounting cost for contractors?
Monthly bookkeeping for contractors typically runs $300 to $800 depending on transaction volume and complexity. Tax preparation adds $800 to $2,500 annually depending on entity type and number of projects.
Read answerHow should I keep books for my construction company?
Keep books for a construction company by setting up job costing in your accounting software, coding every expense to a project, and reconciling accounts monthly. But most contractors need professional help to do this correctly.
Read answerWhat does a construction bookkeeper do?
A construction bookkeeper handles job costing, tracks costs by project, reconciles accounts, manages subcontractor payments, and prepares financial reports showing profitability by job.
Read answerShould contractors use QuickBooks Desktop or Online?
QuickBooks Desktop is usually better for contractors because it has stronger job costing and reporting. QuickBooks Online works for simpler operations but has limitations on construction-specific features.
Read answerWhat can contractors deduct on taxes?
Contractors can deduct vehicle expenses, tools and equipment, insurance, licensing fees, home office costs, subcontractor payments, and business-related travel and meals.
Read answerHow should contractors track expenses?
Track construction expenses by coding every purchase to a job number in your accounting software, saving receipts digitally, and reconciling accounts weekly instead of monthly.
Read answerWhat is job costing for construction?
Job cost tracking records all expenses and revenue by individual project so you can see which jobs are profitable and compare actual costs to estimates.
Read answerWhy do contractors struggle with cash flow?
Construction cash flow problems happen because you buy materials and pay crews before customers pay you. The timing gap between spending money and collecting it creates constant cash pressure.
Read answerWhat is the $2500 expense rule?
The $2500 expense rule is the IRS de minimis safe harbor election. It lets businesses immediately deduct items costing $2,500 or less per item instead of depreciating them over several years.
Read answerWhat expenses are 100% deductible?
Most ordinary and necessary business expenses are 100% deductible. The confusion usually comes from specific exceptions like meals at 50%, entertainment at 0%, and vehicle or home office expenses based on business use percentage.
Read answerHow do you avoid the 22% tax bracket?
You reduce taxable income through retirement contributions, HSA funding, and maximizing legitimate business deductions. But first, understand that only income above the bracket threshold gets taxed at the higher rate.
Read answerWhat is a good profit margin for a construction business?
Most construction businesses should target 20-35% gross profit margin and 5-10% net profit margin. The actual numbers depend on whether you're a general contractor, specialty trade, or remodeler, and whether you're tracking job costs accurately enough to know your real margins.
Read answerIs owning a construction business profitable?
Construction can be very profitable, but the industry has one of the highest failure rates. The difference comes down to whether you actually know your job costs and margins or just stay busy hoping the numbers work out.
Read answerWhat is the prevailing wage in construction?
Prevailing wage is the minimum hourly rate plus fringe benefits required on certain public construction projects. Federal Davis-Bacon Act requirements apply on federal projects over $2,000, regardless of which state you're working in.
Read answerHow to write a change order for construction?
A change order needs a clear description of the work, itemized cost breakdown, timeline impact, and signatures from both parties. Get it signed before the extra work starts, not after.
Read answerHow much do bookkeeping services charge?
Small business bookkeeping typically costs $300 to $1,500 per month depending on transaction volume, complexity, and what services you need. The range is wide because a simple service business with one bank account looks very different from a contractor tracking job costs across multiple projects.
Read answerWhat is the hourly rate for a QuickBooks bookkeeper?
QuickBooks bookkeepers typically charge $25 to $75 per hour depending on experience, certifications, and complexity of work. Many bookkeepers now use flat monthly pricing instead of hourly rates, which often works out better for predictable budgeting.
Read answerHow much should an accountant cost for a small business?
Small business accounting typically runs $200 to $600 monthly for bookkeeping, with tax preparation adding $500 to $2,000 annually. The actual cost depends on your transaction volume, industry, and which services you need.
Read answerIs it worth getting an accountant for a small business?
For most small businesses, professional accounting help pays for itself through time savings, avoided mistakes, and tax deductions you'd otherwise miss. The real question is timing.
Read answerDo I need an accountant if I'm self-employed?
You don't legally need one, but whether you should hire one depends on your situation's complexity and how much your time is worth. Simple freelance setups can manage with software, while growing businesses benefit from professional help.
Read answerDo you need an accountant for a small LLC?
You're not legally required to hire one. But whether you should depends on your time, your comfort with tax rules, and how complicated your business actually is. Most LLC owners benefit from professional help at some point.
Read answerDo you need an accountant if you use QuickBooks?
QuickBooks handles data entry and reporting, but it relies on you entering everything correctly. The software won't catch categorization mistakes, provide tax strategy, or help when the IRS sends a letter. Most small businesses benefit from at least periodic professional review.
Read answerWhen should I hire an accountant for my business?
Hire an accountant when you're behind on your books, have employees, receive IRS correspondence, or spend too much time on financial tasks outside your expertise. Most business owners wait until they're overwhelmed, which means paying for cleanup on top of ongoing help.
Read answerWhat is the most overlooked tax break?
Retirement plan contributions. Most self-employed people either don't have a plan set up or contribute far less than allowed. The tax savings can be substantial and the money stays with you.
Read answerWhat are the biggest tax mistakes business owners make?
The costliest tax mistakes include mixing personal and business finances, missing deductions due to poor tracking, misclassifying workers, and waiting until April to think about taxes. Most of these are preventable with basic systems.
Read answerHow much does it cost to get your taxes done for a small business?
Small business tax preparation typically costs $300 to $1,500 depending on your business structure. S-Corps and partnerships cost more than sole proprietors. The condition of your books and industry complexity also affect the final price.
Read answerIs a bookkeeper cheaper than an accountant?
Yes, bookkeepers typically charge less than accountants for similar work. But they do different things, so the real question is which one you need for the tasks at hand.
Read answerWhat is the difference between a bookkeeper and an accountant?
Bookkeepers handle day-to-day transaction recording, categorization, and reconciliation. Accountants analyze financial data, prepare tax returns, and provide strategic advice. Most small businesses need both, though many firms handle both functions.
Read answerCan I do my own bookkeeping?
Yes, you can handle your own bookkeeping. But it requires time, consistency, and accounting knowledge that most business owners underestimate. The real question is whether it's the best use of your hours.
Read answerDo contractors charge tax in Arizona?
Prime contractors in Arizona pay Transaction Privilege Tax on their gross receipts from construction contracts. This is typically built into the contract price rather than shown as a separate line item to customers.
Read answerWhat taxes do you have to pay as a contractor?
Self-employment tax and income tax are the main ones. You'll pay 15.3% in self-employment tax plus federal and Arizona income tax on your net profit. Quarterly estimated payments are required to avoid penalties.
Read answerHow much tax do independent contractors pay in Arizona?
Independent contractors in Arizona typically pay 25% to 35% of net income in total taxes. This includes 15.3% self-employment tax, federal income tax based on your bracket, and Arizona's flat 2.5% state tax.
Read answerWhat is one of the most common bookkeeping mistakes that business owners make?
Mixing personal and business finances is one of the most common and damaging bookkeeping mistakes. It makes tax preparation harder, obscures your true profitability, and creates serious problems if you're ever audited.
Read answerAt what point should I hire a bookkeeper?
Most business owners wait until bookkeeping becomes a crisis before getting help. The real threshold is when DIY bookkeeping costs you more than professional help would, whether in time, mistakes, or decisions made with bad information.
Read answerWhy would anyone use a bookkeeper for their small business vs QuickBooks?
QuickBooks is software. A bookkeeper is someone who uses that software and knows what to do with the information. Most bookkeepers use QuickBooks, so the real question is whether you manage your books yourself or have a professional handle them.
Read answerWhat are common tax mistakes small businesses make?
The most costly mistakes include mixing personal and business expenses, missing quarterly estimated payments, and misclassifying workers. Most are avoidable with proper tracking and year-round planning.
Read answerWhy do 80% of small businesses fail?
The 80% figure is overstated, but the failure rate is still high. Most businesses don't fail from one big mistake. They fail because cash runs out before the owner realizes how bad things have gotten.
Read answerDo small businesses need to worry about accounting?
Small businesses can't ignore accounting because tax filing requires accurate records and good financial data drives better decisions. The goal isn't to worry about it constantly but to have systems that keep your books accurate without constant stress.
Read answerShould I hire a bookkeeper or accountant?
Most small businesses need both functions covered. Bookkeepers handle day-to-day records while accountants handle taxes and strategy. The real question is how to get both done in a way that fits your budget.
Read answerWhat are the disadvantages of hiring an accountant?
The main disadvantages are cost, potential communication delays, and the challenge of finding someone who understands your specific business. Large firms often treat small clients like a number, which leads to generic advice and slow response times.
Read answerWhat expenses can I write off for my small business?
Almost everything you spend to operate your business is deductible. The real challenge isn't knowing what counts. It's tracking expenses properly and keeping documentation that holds up if the IRS asks questions.
Read answerWhat can I deduct on my Arizona taxes?
Arizona starts with your federal adjusted gross income, so federal deductions carry through automatically. Arizona also offers unique tax credits for school donations and qualifying charitable organizations that can reduce your state tax bill dollar-for-dollar.
Read answerHow can a small business manage its cash flow?
Cash flow management starts with visibility into what's coming in and going out. Invoice quickly, follow up on receivables, negotiate vendor terms, and forecast weekly so you see problems before they become emergencies.
Read answerWhy do small businesses struggle with cash flow?
Cash flow problems usually come from the timing gap between when expenses are due and when revenue arrives. Most businesses pay for labor, materials, and overhead on fixed schedules while customers pay on their own timeline.
Read answerWhy is my cash not balancing?
The most common cause is missing transactions. Checks, deposits, or bank fees that happened at the bank but never got entered in your books. Timing differences and duplicate entries are the other usual culprits.
Read answerWhat are the most common payroll errors for small businesses?
The biggest payroll errors include misclassifying workers, depositing taxes late, calculating overtime wrong, and missing state tax registrations. These mistakes compound quietly until an audit or tax filing reveals months of accumulated problems.
Read answerWhat is catch up bookkeeping?
Catch up bookkeeping is the process of bringing your financial records current after falling behind. It involves entering transactions, reconciling accounts, and producing accurate financial statements for the months or years you missed.
Read answerHow to clean up inaccurate bookkeeping?
Start with bank reconciliation to find duplicates, missing transactions, and amounts that don't match. Then work through credit cards, fix categorization errors, and clear out uncategorized transactions. If the mess is significant, professional cleanup is usually faster and more reliable than DIY.
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