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Should you work with a bookkeeping firm, hire an accountant, or DIY your books?

As an independent contractor—whether you’re a plumber, electrician, roofer, or any other trade professional—managing your finances can often feel like a second job. From juggling client invoices to tracking expenses and ensuring tax compliance, the financial side of your business can become overwhelming. At NetProfit Advisers, Inc., it’s our mission to make accounting simple, freeing up your time to do the things you do best.

In this guide, we’ll explore the different options you have when it comes to managing your books:

1. Working with an accounting and bookkeeping Firm

2. Hiring a full-time accountant

3. Doing It Yourself

Understanding the pros and cons of each option can help you decide which one is best for you and your business.

Hiring a Bookkeeping and Accounting Firm

Aside from eliminating the stress of accounting, hiring a bookkeeping and accounting firm offers numerous advantages that can transform the way you manage your business — many of which our clients are pleasantly surprised by.
 
Here are some of the benefits of partnering with a bookkeeping and accounting firm for your financial management needs:

Saves You Time

Firstly, knowing that you have a trusted partner to help you maintain accurate and up-to-date financial records and to council you through important business decisions can relieve a significant burden that all business owners face.
Having a Bookkeeping and Accounting Firm on your team not only frees up your time and reduces stress, but it also allows you to focus your time serving your clients and growing your business. Instead of spending hours on bookkeeping, you can dedicate more time to your core business activities. Whether it's fixing plumbing issues or installing electrical systems, your time is better spent doing what you do best.

Informs Business Decisions

Improving your financial health is another key benefit. Depending on our clients’ needs, our bookkeeping team provides detailed monthly or weekly financial reports. Keeping recent records gives you a clear picture of your business’s current financial health, which means you can pivot before profits dip.

This helps you make informed decisions and avoid unpleasant surprises.

For example, the drastic inflation increase over the past few years has put many contracting companies in a precarious position. Costs of parts and labor drastically increased, yet service charges didn’t move. Our clients, who receive regular financial updates, were able to see within a 30-day-window of accuracy just how much of a hit their profit margins were taking. Using this information, they pivoted their services and pricing to correct the difference and remain profitable. Without this data, these companies would have either guessed at a new pricing model or took a drastic hit on their profits, not knowing the outcome until tax season.

Attracts Investors

Accurate and organized financial records also make you more appealing to lenders, improving your chances of securing loans for expansion or emergency needs. It’s also something that potential partners, individual investors, banks, and investment firms look at when considering an investment into your business. Finally, if you are looking to sell, any buyer will want to see consistent, accurate, and up-to-date business records before making a purchase decision.

It Saves You Money

One of the most overlooked and arguably the most valuable perks of working with bookkeeping professionals is that they can actually save you money.
 
A good Bookkeeping and Accounting Firm will pay for itself plus some by helping you catch costly mistakes, cut costs, grow revenue, and make smarter financial decisions. It will also drastically reduce how much you’ll need to pay your CPA since you will be handing over organized, up-to-date books and won’t need to pay your tax preparer to sort through a year’s worth of receipts, invoices, payroll, and other business finances. 
 
Moreover, professional firms will represent you in case of an audit, ensuring compliance and accuracy, and will review your taxes and point out any discrepancies that might be costing you money.

Expert Guidance

Running a business alone can be hard, especially when it comes to managing parts of your business that you’re not an expert in. At NetProfit Advisers, Inc., we merge our expertise in finance and business to serve as your trusted business adviser. In our consultation calls, we’ll help you make sense of your books and financial trends and serve as your sounding board for important business decisions.

Peace of Mind

Finally, knowing that you have a trusted partner who is doing your books, keeping you compliant and up to date, completing your payroll, and reviewing your taxes can relieve a big burden of stress and responsibility from your shoulders. Instead, you can move forward growing your business and using your data to make well-informed decisions. 

Hiring Vs. Outsourcing Your Bookkeeping Services

While many businesses choose to partner with a bookkeeping firm that can offer robust benefits, some decide to bring their accounting services in-house by hiring a full-time employee.

Typically, companies will hire an employee when they are looking for dedicated, full-time support and prefer to have someone in-house who is deeply familiar with their specific operations and culture.
 
However, there are several important factors to consider before committing to a full-time employee vs working with a firm, such as cost, flexibility, and diversity in experience and expertise.
 
Here are some elements to consider when making a choice for your business:

Expertise and Experience

• Hiring an Employee: When you hire an employee, their expertise and experience will vary based on their background. You may need to invest in ongoing training to keep them updated on the latest financial regulations and accounting software. You’ll also need some level of accounting knowledge to know you are investing in someone who will be a good fit.

• Contracting with a Firm: Bookkeeping and accounting firms typically employ a team of professionals with diverse and extensive experience. They are well-versed in the latest industry standards and regulations, providing you with a higher level of expertise without the need for additional training.

Cost

• Hiring an Employee: The cost of hiring a full-time employee includes not only their salary but also benefits, taxes, and other overhead costs such as office space and equipment. These expenses can add up quickly and become a significant financial burden for your business.

• Contracting with a Firm: Contracting with a firm can be more cost-effective, as you pay only for the services you need. There are no additional costs for benefits, taxes, or office space. This can result in significant savings, especially for small businesses and independent contractors.

Flexibility

• Hiring an Employee: An in-house employee is dedicated to your business and can be available whenever you need them. However, their workload and availability may be limited to a standard workweek, making it challenging to handle peak periods or special projects without additional help.

• Contracting with a Firm: Firms offer greater flexibility, allowing you to scale services up or down based on your needs. This means you can easily adjust the level of support during busy times without the commitment of a full-time employee.

Risk Management

• Hiring an Employee: With an in-house employee, there is a risk of theft or fraud. You need to establish and maintain strong internal controls and conduct regular audits to mitigate these risks. Additionally, dealing with employee turnover can disrupt your business operations and incur additional costs for recruiting and training replacements.

• Contracting with a Firm: Professional firms have robust security measures and protocols in place to minimize the risk of theft and fraud. They also handle staffing internally, so you don’t have to worry about turnover or the associated costs of replacing employees.

Access to Technology

• Hiring an Employee: Your employee will likely need access to accounting software and other tools, which can be an additional expense. They may also require training to effectively use these tools.

• Contracting with a Firm: Firms invest in the latest technology and tools, ensuring that your bookkeeping and accounting processes are efficient and accurate. You benefit from their investment in technology without having to bear the cost yourself.

Focus and Specialization

• Hiring an Employee: An in-house employee may have a broad range of responsibilities, which can sometimes dilute their focus on core accounting tasks. They might also lack specialization in certain areas, which can be a disadvantage if your business has specific accounting needs.

• Contracting with a Firm: Firms often have specialists in various areas of accounting and bookkeeping, allowing them to provide targeted expertise for whatever your business needs. This can be particularly beneficial if your business requires specialized knowledge, such as tax planning or compliance with specific industry regulations.

Long-Term Commitment

• Hiring an Employee: Employing someone full-time is a long-term commitment, which can be beneficial for continuity but also limits flexibility. If your business needs change, it can be challenging to adjust quickly.

• Contracting with a Firm: Contracting offers more flexibility, allowing you to modify the scope of work or switch providers if your needs evolve. This adaptability can be advantageous as your business grows and changes.

DIY vs. Professional Services

As a professional contractor, you’re probably well aware that the do-it-yourself (DIY) route can have many drawbacks. Afterall, you can’t expect to gain 30+ years of financial experience through a few online courses or resources! However, we do understand that not every business is ready for the financial commitment of working with accounting professionals.
 
To help you make the most of your DIY bookkeeping efforts, we recommend the following tips:

1. Invest in Training: Take advantage of QuickBooks training to understand how to input data correctly and use the software efficiently. This won’t make you an accountant, but it will help you manage day-to-day bookkeeping tasks.
2. Stay Organized: Keep all receipts and financial documents well-organized. This will save you time and headaches when it’s time to reconcile your books or prepare for taxes.
3. Regular Updates: Make it a habit to update your books regularly. We recommend daily, or at least weekly, to keep the process manageable. Falling behind can make it harder to catch up and increases the risk of errors.
4. Seek Professional Help When Needed: Even if you’re managing your books yourself, consider consulting with a professional periodically. They can provide valuable insights and catch errors you might have missed.

Of course, it is recommended to make the switch to a professional as soon as possible. Having the support of financial professionals can help you quickly grow your business, speeding up your path to profitability.
 

Are You Ready for Professional Bookkeeping Services?

So, how do you know if you’re ready to work with a bookkeeping and accounting firm? There are several indicators.

If your business is growing and you’re finding it hard to keep up with the financials, it’s time to consider professional help. As your operations expand, so do your financial transactions. Managing this complexity without expert assistance can lead to errors and missed opportunities. If you’re spending more time on bookkeeping than on your trade, outsourcing could be the solution.

When considering professional services, it’s important to ask the right questions. Understand the fees involved and make sure you know what you’re getting for that cost. Services typically include monthly financial reporting, tax compliance, payroll management, and strategic financial advice.

Finally, assess your budget to determine if you can afford the service. Businesses with substantial gross income are generally a good fit for professional bookkeeping services. However, even if you’re just starting out, the right financial partner can help you grow efficiently and quickly. If hiring a firm is beyond your current budget, there are still valuable tips for managing your books effectively on your own.

Start Your Financial Journey

Deciding to work with a bookkeeping and accounting firm is a significant step towards streamlining your business operations and ensuring financial health. If you’re a growing contractor feeling overwhelmed by your financial tasks, investing in a professional firm like NetProfit Advisers, Inc. could save you time, reduce stress, and ultimately help your business thrive.
 
Ready to take the next step? Contact NetProfit Advisers, Inc. today to discuss how we can help you manage your finances and grow your business efficiently.

Staying compliant with regulatory standards and reporting requirements is crucial for ensuring the smooth operation of your company. From financial transparency to contractual obligations, construction and contracting companies must navigate a maze of mandates to maintain credibility, success, and good legal and financial standing.

More importantly, gaining a deeper understanding of your financial story will help you better understand your business and leverage that data to increase your bottom line and grow your business.

In this guide, we'll delve into the key compliance and reporting requirements specific to construction and contractor firms.

Financial Reporting Requirements

Bookkeeping for construction companies can get complicated, fast. When you’re balancing multiple jobs or multi-million-dollar projects with a lot of moving parts, people, and materials it’s crucial that you stay on top of your finances. How and what you track will depend on the nature of your business, but here are the most important areas construction companies need to look at in order to remain tax-compliant. 

Work in Progress (WIP) Reporting

Work in Progress (WIP) reporting is essential for construction companies to accurately track the financial status of ongoing projects. WIP reports provide insights into project profitability, completion timelines, and potential risks. Timely and precise WIP reporting ensures that project managers can make informed decisions to mitigate issues and optimize resource allocation.

Sales Tax Management

Sales tax management in the construction industry is multifaceted and varies based on factors such as project type (commercial or residential) and client profile. Construction companies must navigate sales tax regulations applicable to materials, labor, and services provided. Understanding sales tax nuances is crucial for avoiding penalties and maintaining financial compliance.

Book Reporting

Effective bookkeeping goes beyond tax compliance—it encompasses contractual obligations, bonding requirements, and overall business management. Maintaining accurate and transparent books enables construction companies to pivot swiftly in response to market changes and capitalize on opportunities. Moreover, robust book reporting enhances credibility and facilitates investor relations, funding acquisition, and business growth.

Inventory Management

While not every construction company requires inventory management, those that do must adhere to tax compliance standards. Proper inventory management ensures accurate financial reporting and facilitates informed decision-making. As revenue grows, construction firms may need to implement gap-compliant bookkeeping practices and adhere to reasonable tax obligations.

GAAP Compliance

Adhering to Generally Accepted Accounting Principles (GAAP) is paramount for construction companies seeking financial credibility and operational efficiency. GAAP-compliant financial statements provide stakeholders with a clear understanding of the company's financial health and performance. Compliance with GAAP standards enhances transparency, facilitates audits, and fosters investor confidence. 

Best Practices for Financial Compliance

Like most business owners in the construction industry, diving into the books each day sounds tedious and time-consuming. This is especially true when you are constantly in the field or onsite managing the project itself. However, with the right tools, discipline, and mindset, you can develop a low-stress way to keep your books up to date. 

Here are some recommended practices to keep you compliant:

1. Invest in Accounting Systems: Robust accounting software streamlines financial processes and enhances reporting accuracy.
2. Training and Education: Continuous education for finance staff fosters compliance awareness and competency. (When you invest in NetProfit Advisers, we serve as your financial partner, offering customized one-on-one consultations and training.)
3. Engage Professional Advisers: Consulting experts ensure compliance with evolving regulations and mitigate risks effectively.
4. Regular Audits and Reviews: Internal audits identify weaknesses and facilitate process improvements.

Growing Your Business with Bookkeeping

Keeping track of your finances is essential to ensuring you remain tax-compliant, but it can also help you exponentially grow your business and improve your bottom line. At NetProfit Advisers, we give you the tools, knowledge, and resources you need to take control of your books and start making data-driven, strategic decisions for the growth of your business.

We can help you achieve a 30% increase in net profits, just by staying consistent in your bookkeeping. Contact our team today to learn more about how we can help you stay compliant while also growing your business.

In an industry where every nail driven and each brick laid carries financial implications, understanding and managing your project costs can mean the difference between profitability and financial strain. Construction and contractor services companies that utilize job costing see a significant difference in not just their profitability, but also in the efficiency and quality of their work.

Our clients at NetProfit Advisers increase their net profits by up to 30% when they take the time to understand their finances better.

In this blog, we’ll dive into everything you need to know about job costing and how doing it can drastically improve your business.

What is Job Costing for Construction Projects?

Job costing is the act of regularly monitoring your actual costs throughout a long-term project so that you can compare it to cost estimates, recognize gaps, improve project profitability and efficiency, and make informed, strategic decisions that keep your project costs on track. It can also be used to inform future bids and help you perfect your pricing and offerings to achieve maximum profitability.

Ideally, you will want to spend time each day updating project costs to keep an accurate, up-to-date account. A daily practice will also save you time down the road as you’ll be able to quickly correct mistakes or fill in missing information while it’s fresh in your head rather than scrambling to track down old receipts and job reports from months or years prior.

Is Job Costing Right for Your Construction Business?

Any construction or contracting company that works on long-term projects can benefit from job costing. This includes trades such as plumbing, electrical, concrete, masonry, general contracting, framing, or any other trade that manages multi-month or multi-year projects.

Companies with short project timelines, such as roofers or landscapers, don’t usually need to spend the time tracking project costs because they can easily calculate at the end of the day or week whether or not their job was profitable.

Benefits of Job Costing

In addition to understanding how much money you are actually spending on each area of a job, job costing provides numerous benefits to your business. It is also essential for any company looking to take on larger contracts and improve their net profits.

Here are just a few of the ways we’ve seen job costing help our clients.

Better Financial Insight
Many construction businesses don’t know if a project was profitable or not until it is over. Regular monitoring and tracking of your costs throughout the project lets you know if your actuals are outweighing estimates before the job ends, enabling you to make strategic pivots throughout the project to keep it profitable.

Flags Problems with The Job
The same way high costs can indicate a need to shift financially, seeing costs that are much lower than expected could be a red flag that something is off on your project. Did your project manager forget to place a material order? Is one of your teams behind schedule? Did a third-party vendor not show up for the job? Comparing current costs to estimated costs can quickly show you where the gap is.

Helps You Win Larger Projects
Large projects or any jobs that involve public works or the government often have bonding requirements. A surety bond is insurance for the project owner, or client, that you will complete a project and fulfill all obligations, including payment to subcontractor and suppliers, according to the terms of the contract. If not, the bonding company will compensate the client for any financial losses incurred.

To secure a surety bond, the bonding company will want to look at your books, including profitability and completion of previous projects. Current financial books enable you to bid on larger projects and improve your chances of securing the contract quickly and easily.

Attracts Investors
Just as bonding companies want to see your financial data before insuring your work, banks, buyers, potential partners, and other investors will also want to see detailed reports on your project financials and profitability. Keeping your numbers up to date will ensure that you aren’t missing crucial data that could cost you a critical loan or lucrative investment opportunity.

It Informs Business Decisions
Job costing lets you quickly see which areas of your project did well and which areas fell flat. Did you underestimate a certain area of the project? Are there opportunities to cut costs somewhere? Did a particular service provide unexpected profits? This information not only helps you assess the health of your current project, but it also enables you to develop more accurate quotes for future projects and maximize your profitability.

Fuels Business Growth
Financial transparency is the first step to growing your construction or contracting business. When you understand the reality of your finances, you can develop data-informed strategies that improve how you operate your business. For example, comparison reports are a powerful tool that lets you see how your business performs year-to-year or project-to-project. From there, you can work with your financial adviser to uncover opportunities to grow and improve.

Investing in an Accounting and Bookkeeping Firm
If you’re ready to shift from a small business mindset and drastically increase your businesses net profits, it could be time to invest in a bookkeeping and accounting firm that knows your business.

At NetProfit Advisers, our team of seasoned financial experts specialize in bookkeeping and accounting services for businesses in the construction and contractor services industry. We can help you unravel your financial information, get your books back in order, and provide you with the tools, education, and advice you need to grow your business and increase your net profits year over year.

Schedule a chat with our team today and make the first step to growing your business!

Managing your business’s financial books is not for the faint of heart. It requires a ton of time, knowledge, organization, and coordination. While some businesses choose to take on bookkeeping themselves, many prefer to rely on the expertise of a professional bookkeeping consulting firm to support their needs. Here are just a few of the reasons why choosing to hire a bookkeeper will be beneficial to your business.

When it comes to finances, many business owners focus on revenue, expenses, and profit – and rightfully so. But those measures don’t paint the full picture of the business. There are many metrics to track and targets to hit when it comes to your financial books that not only inform you on performance but can help increase the amount of money you make. When you expand the financial knowledge in your business, both with your own education and in hiring the right experts, your opportunities for growth and success increase.