Job Costing Made Easy
One of our program offerings that has helped our customers plan their operating budgets is job costing. Every business, including service businesses, knows the importance of costing out a job for a customer. First, because a company wants to know how much profit it will make on a particular job. Second, because a company needs to know how to assign expenses to a particular job.
QuickBooks® makes job costing easy. It takes three steps.
1. Whenever you write a check in QuickBooks®, there is a column titled Customer: Job. Just put the customer’s name there and the expense will be assigned to the customer.
2. To the right of Customer: Job there is a column labeled Billable. If there is a checkmark in the column the expense will automatically go to an invoice the next time you bill that customer.
3. If you use the Pay Bills system the columns are the same as in Write Checks so you have the option to enter the Customer: Job and if it’s Billable when you’re entering a bill.
It’s not complicated and it saves guesswork. You can try it yourself. If you use QuickBooks®, open the program and go to Write Checks (not the Check Register) and follow the three steps above. You’ll see how easy you can assign job costs for a project.
Don’t Delay on Employer Taxes
Many companies find themselves in trouble with the State or Federal governments because of Employer Taxes. Employer taxes are the monies a company withholds from its employees coupled with the employer’s share of Social Security and Medicare Taxes. So how does a company get into trouble? Sometimes, an employer correctly withholds the monies but doesn’t send it to the appropriate state or federal agency until either the end of a month or quarter, whichever applies. By that time the amount is so large the company can’t pay it. So, the company puts off making the payment all the while incurring interest and penalties. Fiscal Training Solutions knows of one company (Not our client!) that put off paying employer taxes for so long that they were forced to take a second mortgage on their home to pay the back taxes.
The government frowns on delinquent employer taxes, and they should. The money really belongs to a company’s employees.
There are options to avoid this problem. One option is each payday transfer the employees’ withholding and the employers’ share to another checking account so the money will be there when needed. Another option is to use an outside payroll service. Such a service will deduct the tax amounts from you weekly so you never run up a large dollar amount. Fiscal Training Solutions offers a payroll service that not only helps with cash management for tax purposes but also directly imports the payroll information into QuickBooks®. This convenient service saves time and the potential embarrassment of a call from the IRS or your state’s DOR.
Tried and True Rules
In this post, we offer a tried and true bookkeeping rule: Only pay the original invoice. Why? Because if you only pay original invoices, it is impossible to pay a bill twice.
Think about it. There should only be one original invoice. This was a no brainer when all invoices came through “snail mail.” Today it can be difficult to determine the original when an invoice is sent via fax or e-mail. Similarly, an emailed invoice can be printed multiple times. We advise clients to initiate a system where by an invoice received via email can be printed just once. Perhaps, once an invoice is printed, it is deleted.
A similar rule applies when a client sends the invoice. We train clients to process only one invoice per job. If your customer doesn’t pay the entire invoice, do not create another invoice for the smaller amount. That will overstate your income. Instead, we advise clients to use Statement, which is located in QuickBooks® on the Home Page in the Customer section.
Finally, from an Accounts Receivable point of view, a business should process statements monthly. Believe it or not, people tend to pay the bills that are literally on their desk and in their face. Using statements is the professional way to stay in your customer’s face. So be advised. Send an invoice when the job is done and then send your customer a statement every month thereafter until the balance is zero.
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