Questions
Answers to common questions about bookkeeping, accounting, and managing the financial side of your small business.
How do I set up job costing for my construction business?
Job costing tracks every cost against the specific project that incurred it so you know which jobs make money. Setup requires defining cost categories, configuring your accounting software for project tracking, and establishing consistent processes for capturing labor and expenses.
Read answerWhat is the best bookkeeping software for contractors?
For most small to mid-size contractors, QuickBooks Online is the standard. It handles job costing, integrates with common tools, and every accountant knows how to work with it. The key is setting it up correctly for contractor needs.
Read answerHow do I track labor costs by project in QuickBooks?
Enable projects in QuickBooks, set up time tracking that assigns hours to each project, and connect it to payroll so hours convert to actual labor costs. The setup is straightforward but requires daily discipline from your crew.
Read answerWhy are my construction job estimates always off?
Your estimates are probably off because you don't have accurate data on what past jobs actually cost. Without tracking actuals against estimates, you keep repeating the same mistakes on every bid.
Read answerHow do I know if a construction project is profitable?
A project is profitable when revenue exceeds all costs including allocated overhead. Most contractors undercount costs by missing their own time, vehicle use, and overhead allocation, making jobs look more profitable than they are.
Read answerWhat expenses should contractors track for each job?
Track labor hours, materials, subcontractor invoices, equipment costs, and permits for every job. Each expense needs a job code before it hits your books. Without this discipline, you won't know which projects actually make money.
Read answerHow do I handle progress billing for construction projects?
Set up billing milestones tied to project phases or completion percentages in your contract. Invoice as each milestone is reached, track retainage separately, and record everything in your accounting system so you know exactly where each project stands financially.
Read answerWhat is the difference between job costing and process costing?
Job costing tracks expenses by individual project or customer. Process costing tracks expenses by department or production phase for companies making identical products in continuous batches. Most small businesses need job costing.
Read answerHow do I track subcontractor costs in QuickBooks?
Set up subcontractors as vendors, use projects or classes to assign every bill to a specific job, and enter bills when you receive invoices rather than when you pay. This gives you accurate job costing and simplifies 1099 prep at year end.
Read answerWhat chart of accounts should a general contractor use?
A contractor's chart of accounts needs separate categories for materials, labor, subcontractors, and equipment costs so you can track job profitability. The default QuickBooks templates don't work for construction.
Read answerHow do I allocate overhead costs to construction jobs?
Calculate your total annual overhead, divide by total direct job costs or labor hours to get a percentage, then apply that rate to each job. This shows true profitability instead of just gross margin.
Read answerWhy does my contractor business show profit but have no cash?
Your profit and loss shows revenue minus expenses, but several things use cash without appearing as expenses. Accounts receivable, retainage, equipment purchases, loan payments, and owner draws all drain your bank account while your books still show profit.
Read answerHow do I track equipment costs across multiple job sites?
Track equipment hours or days on each job site, then allocate depreciation, fuel, and maintenance costs proportionally. Set up your accounting software to assign these allocated costs to specific jobs.
Read answerWhat reports should a construction company run monthly?
Construction companies need job cost reports, work in progress reports, AR aging, and profit and loss by job. These reports show profitability by project instead of just overall revenue.
Read answerHow do I handle retainage in construction bookkeeping?
Track retainage as a separate receivable on your balance sheet, not as regular accounts receivable. Set up dedicated accounts for both retainage you're owed and retainage you're holding from subcontractors.
Read answerDo I need a bookkeeper who understands construction accounting?
If you're running multiple projects, using subcontractors, or billing based on milestones, then yes. A general bookkeeper will produce books that are technically accurate but won't show you which jobs actually make money.
Read answerHow do I track change orders in my bookkeeping system?
Track change orders as sub-jobs under your main project in QuickBooks. Code both the revenue and expenses to the sub-job so you can see profitability for each change order separately from the original contract.
Read answerWhat is WIP reporting for contractors?
WIP (Work in Progress) reporting shows the true financial status of jobs that haven't finished yet. It calculates how much revenue you've actually earned on each project based on percentage complete, revealing whether you're ahead or behind on billing.
Read answerHow do I manage cash flow for a remodeling business?
Structure customer payments so money comes in before you need to pay it out. Require deposits that cover materials, set up progress payments tied to milestones, and negotiate supplier terms that give you breathing room between expenses and income.
Read answerHow do HVAC contractors track service calls and installations?
Service calls get tracked by category and department metrics, while installations need project-level job costing. The two types of work have different financial characteristics and require different tracking approaches to understand profitability.
Read answerWhat bookkeeping mistakes do contractors commonly make?
The biggest mistake is not tracking costs by job, which makes it impossible to know which projects actually make money. Other common errors include mixing personal and business expenses, mishandling subcontractor 1099s, and waiting too long to reconcile accounts.
Read answerHow do I track material costs by job in QuickBooks?
Enable project tracking in QuickBooks and assign every material purchase to the correct job when you enter it. The setup takes minutes. The discipline of coding every purchase consistently is what actually makes it work.
Read answerShould I use QuickBooks Desktop or Online for construction?
For most construction businesses today, QuickBooks Online with the Plus or Advanced plan handles job costing and progress invoicing well enough. Desktop still has more robust job costing features, but its days are numbered as Intuit pushes everyone toward Online.
Read answerHow do I prepare my contractor books for tax season?
Start by reconciling all accounts through December 31 and ensuring every expense is coded to the correct job. Then gather 1099 information for subcontractors, compile equipment records, and review outstanding receivables and payables.
Read answerWhat is the best way to track crew labor hours by project?
Track labor daily using time tracking apps or paper timesheets with one person responsible for each crew. Capture hours by job and task type, and review entries weekly before closing them out.
Read answerHow do I set up bookkeeping for rental properties?
Start with a dedicated bank account and set up per-property tracking in your accounting software. Your chart of accounts should mirror Schedule E categories, and security deposits must be recorded as liabilities, not income.
Read answerShould I have a separate bank account for each rental property?
Not necessarily. If all your properties are in one LLC or your personal name, a single operating account with proper bookkeeping can track each property separately. But if properties are in different LLCs, you need to keep the accounts separate to maintain legal protection.
Read answerHow do I track rental income and expenses by property?
Use classes or locations in QuickBooks to assign every transaction to a specific property. This gives you profit and loss statements by property so you can see which rentals actually make money and have clean records for Schedule E at tax time.
Read answerWhat is the difference between repairs and capital improvements?
Repairs maintain property in its current condition and are fully deductible in the year paid. Capital improvements add value, extend useful life, or adapt property to a new use. Improvements must be capitalized and depreciated over multiple years.
Read answerHow do I track depreciation on rental properties?
Track rental property depreciation by setting up a depreciation schedule when you acquire each property, recording annual entries in your accounting software, and keeping detailed records of your cost basis and improvements.
Read answerWhat bookkeeping software is best for real estate investors?
QuickBooks Online works well for most real estate investors because it handles multiple properties, tracks income and expenses at the property level, and produces the reports your accountant needs at tax time. Purpose-built options like Stessa or REI Hub are simpler if your portfolio is strictly rentals.
Read answerHow do I categorize rental property expenses for taxes?
Rental property expenses fall into specific categories on Schedule E. The main ones are mortgage interest, property taxes, insurance, repairs, and professional services. Getting the repair versus improvement distinction right matters most.
Read answerDo I need a bookkeeper for my rental properties?
It depends on how many properties you have and whether your current approach is costing you money. A few simple rentals might be manageable yourself, but complexity adds up faster than most landlords expect.
Read answerHow do I handle security deposits in my bookkeeping?
Security deposits are liabilities, not income. Record them in a liability account when received, then move them to income only when you're legally entitled to keep them. Track each deposit by tenant so you know exactly what's owed.
Read answerWhat reports should landlords review each month?
Landlords should review the rent roll, profit and loss by property, and accounts receivable aging each month. These reports show who's paying on time, whether each property is actually profitable, and which tenants need collection attention.
Read answerHow do I track mortgage payments including escrow?
Split each mortgage payment into its components: principal reduces your loan balance, interest goes to expense, and escrow gets tracked as an asset until taxes and insurance are paid on your behalf.
Read answerWhat expenses can I deduct on rental properties?
Rental property owners can deduct mortgage interest, property taxes, repairs, depreciation, insurance, management fees, and travel to their properties. The key is tracking everything and understanding what counts as a repair versus an improvement.
Read answerHow do I separate personal and rental property finances?
Open a dedicated bank account for your rental properties and run all income and expenses through it. Track each property separately in your accounting system and record personal contributions and draws as equity transactions.
Read answerShould I use QuickBooks or property management software?
Property management software handles operations like tenant tracking and rent collection. QuickBooks handles actual accounting and financial reporting. Many property managers use both, with PM software syncing to QuickBooks for clean books.
Read answerHow do I track multiple rental properties in one system?
Use classes or locations in QuickBooks to tag every transaction to a specific property. This lets you run profit and loss reports by property and see which units actually make money.
Read answerWhat is the best way to organize receipts for rental expenses?
Go digital and organize by property first, then by expense category. Capture receipts immediately with your phone and store them in a cloud folder structure that mirrors your tax reporting needs.
Read answerHow do I prepare my rental property books for my CPA?
Your CPA needs income and expense totals by property, categorized correctly for Schedule E. Separate each property in your records, distinguish repairs from improvements, and have mortgage statements and receipts ready.
Read answerWhat bookkeeping mistakes do landlords commonly make?
Landlords often commingle personal and rental funds, fail to track income and expenses by property, and misclassify repairs versus capital improvements. Security deposit handling and depreciation tracking also trip up many property owners.
Read answerHow do I track tenant payments and late fees?
Treat each property or unit as a separate customer in your accounting software and invoice for rent monthly. When payments come in, apply them against open invoices so you always see who owes what.
Read answerDo I need to track mileage for rental property visits?
Yes, if you want to claim the deduction. Rental property mileage is deductible for trips like collecting rent, maintenance visits, and tenant showings. The IRS requires a log of each trip with date, purpose, and miles.
Read answerHow do I do bookkeeping for my Airbnb rental?
Track income based on what Airbnb actually deposits, categorize expenses specific to vacation rentals, and reconcile monthly. The tricky part is handling the difference between what guests pay and what you receive after platform fees.
Read answerHow do I reconcile Airbnb payouts in QuickBooks?
Airbnb deposits net amounts after deducting service fees, so your bank deposits won't match individual reservations. Download Airbnb's payout reports and decide whether to track gross revenue with fees or just net payouts.
Read answerWhat expenses can Airbnb hosts deduct?
Airbnb hosts can deduct operating costs, platform fees, supplies, and a portion of property expenses like mortgage interest and taxes. How much you deduct depends on whether the property is a dedicated rental or your primary residence.
Read answerHow do I track cleaning fees and platform fees for vacation rentals?
Track platform fees and cleaning expenses as separate line items. Record gross booking revenue as income, then record platform fees as a deductible expense. Cleaning fees collected from guests are income, and payments to cleaners are expenses.
Read answerDo I need separate bookkeeping for each short-term rental?
It depends on your legal structure. If each property is in a separate LLC, yes. If they're all under one entity, you can use one set of books with class tracking to see each property's performance individually.
Read answerHow do I handle occupancy taxes for vacation rentals?
New Mexico vacation rentals face state lodgers' tax at 5% plus local taxes that vary by city. You need to register with state and local authorities, track taxes collected as a liability in your books, and verify what platforms like Airbnb actually remit on your behalf.
Read answerWhat is the best accounting software for Airbnb hosts?
QuickBooks Online is the most practical choice for Airbnb hosts with real accounting needs. But the software matters less than proper setup for per-property tracking and income reconciliation.
Read answerHow do I track income from multiple booking platforms?
Set up a separate income account for each booking platform in your accounting software and record gross revenue before fees are deducted. This lets you see exactly how much income came from each source and what you're paying in platform fees.
Read answerShould I hire a bookkeeper for my vacation rental business?
If you manage multiple properties or find yourself spending hours each month sorting through platform payouts, a bookkeeper is worth considering. The complexity of tracking revenue by property, reconciling different platforms, and handling New Mexico's Gross Receipts Tax usually exceeds what most owners want to manage themselves.
Read answerHow do I calculate profitability for my short-term rental?
Profitability comes down to net revenue minus operating expenses. Track booking revenue after platform fees, then subtract cleaning costs, supplies, utilities, insurance, and all the other expenses that come with running the property.
Read answerWhat records do I need to keep for Airbnb taxes?
Keep income records from all booking platforms, receipts for every expense by category, property documents for depreciation, and a calendar tracking rental vs personal use days. In New Mexico, you'll also need GRT and lodgers' tax documentation.
Read answerHow do I track supplies and amenities for vacation rentals?
Track vacation rental supplies by creating specific expense categories in your accounting software and coding every purchase to the correct property. The goal is understanding your true cost per guest stay, not just having receipts for tax time.
Read answerHow do I handle fluctuating income from seasonal rentals?
Build cash reserves during peak season to cover slow months, budget based on annual income rather than monthly, and track patterns year-over-year so you can predict and plan instead of react.
Read answerWhat bookkeeping mistakes do vacation rental owners make?
The biggest mistakes involve platform payouts, personal use tracking, and misclassifying repairs vs improvements. Most owners also miss New Mexico's Gross Receipts Tax requirements for short-term rentals.
Read answerHow do I separate personal use from rental use in my books?
Track every day the property is used and by whom. Allocate shared expenses like insurance, utilities, and repairs based on the ratio of rental days to total use days. Keep direct rental expenses separate from direct personal costs.
Read answerHow do I set up bookkeeping for my trucking company?
Start with separate business accounts and QuickBooks configured for transportation. Your chart of accounts needs trucking-specific categories, and you'll need to track expenses by truck for per-mile cost analysis. IFTA reporting requirements mean fuel tracking needs to be built into your system from day one.
Read answerWhat expenses should owner-operators track?
Owner-operators should track fuel, maintenance, insurance, truck payments, permits, tolls, meals, equipment, and professional services. Missing expense categories means overpaying on taxes and not knowing your true cost per mile.
Read answerHow do I prepare for IFTA reporting?
IFTA preparation is mostly about what you track throughout the quarter, not what you do at filing time. Keep mileage logs by jurisdiction, organize fuel receipts by state, and file your quarterly return by the end of the month following each quarter.
Read answerWhat is the best bookkeeping software for truckers?
The best software depends on your operation size and tracking needs. QuickBooks works well for core bookkeeping, though you may need trucking-specific apps for IFTA tracking and load profitability. What matters most is picking something you'll actually use consistently.
Read answerHow do I track fuel costs and mileage for my trucking business?
Fuel cards capture purchase data automatically, while ELD or GPS systems track mileage by truck and by state. Organize everything by unit number so you can calculate cost per mile and have clean records for IFTA reporting.
Read answerShould owner-operators hire a bookkeeper?
Most owner-operators benefit from professional bookkeeping. The time spent doing your own books is time you're not earning money, and trucking-specific complexities like IFTA and per diem make DIY bookkeeping harder than it looks.
Read answerHow do I calculate cost per mile for my trucking business?
Add up every expense tied to running your truck and divide by total miles driven. The challenge is capturing all costs, not just the obvious ones like fuel and maintenance.
Read answerWhat chart of accounts should a trucking company use?
A trucking company chart of accounts should separate fixed costs from variable costs and track expenses in ways that let you calculate cost per mile. Generic setups don't give you useful information about where money actually goes.
Read answerHow do I track maintenance and repair costs by truck?
Use classes, tags, or locations in your accounting software to assign each maintenance expense to a specific truck. Capture the truck number, mileage, and repair type for every expense so you can run reports showing total costs per vehicle.
Read answerWhat records do truck drivers need to keep for taxes?
Owner-operators need to track fuel purchases with state-by-state details, mileage logs, maintenance receipts, meals and lodging, tolls, equipment purchases, and all licensing costs. Company drivers have far less to track since most employee deductions disappeared in 2017.
Read answerHow do I handle per diem expenses for trucking?
The IRS allows transportation workers to deduct a daily amount for meals when traveling overnight, currently $69 per day. Truckers get to deduct 80% of this amount instead of the 50% that applies to most businesses.
Read answerWhat bookkeeping mistakes do trucking companies make?
Trucking companies most commonly fail to track IFTA data properly, don't know their cost per mile, and mix personal and business expenses. These mistakes lead to compliance problems, lost money, and tax headaches.
Read answerHow do I track loads and income by customer?
Set up each broker, shipper, or freight company as a customer in your accounting software and create invoices for each load. Run income by customer reports monthly to see which customers generate the most revenue and which rates are worth your time.
Read answerShould I use cash or accrual accounting for trucking?
Most small trucking companies use cash basis accounting. It's simpler and shows your actual cash position. Accrual makes more sense when you have significant receivables outstanding or need accurate period-by-period profitability.
Read answerHow do I prepare my trucking books for tax season?
Start by reconciling all accounts through year-end, organizing fuel receipts by state for IFTA verification, and gathering mileage logs. Make sure Form 2290 is current and equipment depreciation schedules are updated.
Read answerHow do I handle consignment accounting for my art gallery?
Consigned artwork isn't your inventory. When a piece sells, record only your commission as revenue. The artist's portion goes into a liability account until you pay them out.
Read answerWhat bookkeeping software is best for art galleries?
QuickBooks Online works well for most art galleries when configured correctly. The software matters less than how it's set up to handle consignment sales, artist payouts, and tracking unique inventory pieces.
Read answerHow do I track artist commissions and payouts?
For galleries, set up each artist as a vendor and use a liability account to track what you owe them. Record your commission as revenue when a piece sells, then reduce the liability when you pay the artist.
Read answerWhat expenses can artists deduct on their taxes?
Artists can deduct materials, studio space, equipment, marketing costs, show fees, travel, and professional development. The key is running your art practice as a business and tracking expenses as they happen.
Read answerHow do I track inventory for an art gallery?
Track each piece individually with artist, title, medium, acquisition cost or consignment terms, and asking price. Keep consigned work separate from owned inventory since the accounting treatment differs significantly.
Read answerDo galleries need to report large cash sales to the IRS?
Yes. Any cash payment over $10,000 for artwork requires filing Form 8300 with the IRS within 15 days. This includes related payments that add up to more than $10,000 over time.
Read answerHow do I separate gallery sales from secondary market purchases?
Set up separate income and cost of goods sold accounts for each revenue stream. Consignment sales and secondary market purchases have different accounting treatment because of how you acquire the work and what you owe when it sells.
Read answerWhat chart of accounts should an art gallery use?
Art galleries need a chart of accounts that handles consignment properly. The key is separating gallery-owned sales from consignment commissions and tracking what you owe artists as a liability.
Read answerHow do I track studio expenses as a working artist?
Use a dedicated business bank account and credit card for all studio purchases. Capture receipts digitally as you buy supplies, and categorize expenses weekly while you remember what each purchase was for.
Read answerShould artists hire a bookkeeper?
Artists with gallery sales, consignment inventory, and irregular income often reach a point where professional bookkeeping pays for itself in time saved and taxes handled correctly.
Read answerHow do I file New Mexico gross receipts tax?
File through the Taxpayer Access Point (TAP) portal after registering for a CRS number. You'll report gross receipts by location code and pay by the 25th of the following month.
Read answerWhat is the GRT rate in Santa Fe?
The combined GRT rate in Santa Fe city is approximately 8.4375%, combining state, county, and city portions. Your exact rate depends on your business location and can be verified through the New Mexico Taxation and Revenue Department.
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