Accounting and Tax Services for Framing Contractors
A framing crew can achieve all their deadlines, and at the end of the day, the owner can't say, with any degree of confidence, whether that job was a money spinner. The price of lumber will be quoted for one week and then billed the following week at a different rate. The subs are paid prior to the general contractor's release of progress billing.
A change order is created on a Tuesday and not placed on an invoice. When the numbers reach a spreadsheet, the task is over, and the lesson has passed. This is where Online Accountant fills in a void: the place between operating a full-time framing business and realizing what it truly earned.
Being Busy Isn't the Same as
Being Profitable
There are certain challenges that framing contractors face that are not well represented by a generic bookkeeping system. Engineered Wood and Lumber prices fluctuate through the project. Crew wages, WCB premiums and subcontractor payments are paid on a different schedule than the invoices to cover them are issued. Progress billing implies that payments of cash are received in stages, typically at a rate slower than the materials and labour payments.
Include under-quoted jobs, change order creep, and the boom and bust of the activity season, and revenue might increase without any real margin even being realized. A strong topline number for the year, and the same framing company can have negative cash flow in a few weeks, as the accounting system never differentiated job costs from overhead.
The Business Has Outgrown the Shoebox
Framing has evolved at a much quicker pace than many trades. Estimating, job tracking and all the other processes that involve invoices are becoming digital, and the builders are looking for quicker and cleaner reporting from the trades they are hiring. Meanwhile, the compliance side, GST/HST, payroll remittances, and T5018 subcontractor reporting, is becoming more accepting of mistakes.
A contractor with two or three crews requires financial information that is current to the business rather than a shoebox of receipts that are assembled at the last minute every year.
From Estimate to Payment
The accountant who is familiar with the job follows the same trajectory as the job: estimate, quote, materials, labour, subcontractors, completion, invoice, payment, GST/HST, what's left over. Online Accountant constructs bookkeeping mechanisms along that path: job cost, overhead, labour, materials, subcontractor pay, equipment, vehicle expenses and more to help a contractor understand, job-by-job, where the funds were spent.
That's important because a paper Profit Story can be quite good while you have a cash flow crisis, holdbacks sitting in the bank, payroll bills waiting to be paid, and work bills not getting paid on time. While clean books do not solve the cash-flow timing issue, they help you see it, which is the first step to managing it.
That operational data, whether it is in Buildertrend or Jobber, or the books are in QuickBooks Online or Xero, should be firmly linked to the financial picture, not a different dimension altogether.
What Online Accountant Does
Bookkeeping
Based on job costing: labour, materials, payment of subcontractors, and receivables are recorded by job, instead of in one general ledger.
Payroll
Crew wages, remittances, T4s etc. are maintained so payroll costs remain visible and are not a surprise at year-end.
Tax preparation
Starts well before the filing deadline using already reconciled numbers rather than reconstructing those in a rush.
Tax planning
A year-round subject versus a seasonal one, making sure you look for what's deductible for equipment and tools, planning GST/HST and the input tax credit, owner compensation and instalments, and advice a contractor can provide before the tax bill is paid, not after.
Construction-specific reporting
Filing of T5018 (subcontractor payment) where a contractor's construction income satisfies the requirements, GST/HST returns and year-end financial statements.
It is important to note that all requirements are not necessarily one size fits all, depending on the type of business and how it is run.
Online Accountant integrates with cloud-based platforms such as Xero and QuickBooks, making financial information available online almost instantly, as opposed to having to wait a year to reconstruct it.
Who This Is Built For
Perfect for owner-operated framing companies that are getting their systems in place for the first time, contractors that just started working with their first crew, and established operations that are already working multiple crews for builders and general contractors at the same time. Most framing contractors will find themselves at some point between one crew and twenty-five employees, when DIY bookkeeping becomes unfeasible, which is when this type of assistance begins to pay for itself.
The Numbers Worth Watching
A few key numbers tell more to a contractor than a full year-end statement:
Gross margin per job
Profit a project made after labour and materials costs have been deducted.
Labour cost as a percentage of revenue
The quickest-moving number on most framing jobs.
Job cost
Is it what you quoted?
Accounts Receivable Days
The time that cash remains in the “inbox” of the Progress Billing System before it gets paid.
Overhead as a percentage of revenue
Whether growth is adding profit or just adding activity
These all follow each other and make bookkeeping a decision-making process.
Let Your Books Keep Up with Your Crews
Crews, materials and the relationship with the builders are all a full-time occupation, and the books shouldn't be one of them. Online Accountant helps Canadian framing contractors develop bookkeeping, payroll and tax planning that reflect the reality of framing operations and thereby increases profitability even before it's too late to do something about it. Contact us to discuss what that would entail for your business.
Contact Online Accountant