Accounting for a Plumbing Company
There is no fun in running a business, because a proper accounting for the company’s activities should be done so that it is possible to determine the financial performance and find out whether the plumbing company has managed to meet the tax reporting requirements. There are many truncation involved in the plumbing business such as asset-intensive thus this calls for a proper accounting to avoid the business from collapsing.
Accounting for sales
The continuity of a plumbing company depends on the company’s overall sales, the revenue that comes from customers. For a plumbing business that offers plumbing services upfront and collects the bills later, it is advisable for such a business to ensure the records are kept accurately followed by a follow-up with those clients who have not paid. Although most businesses run credit checks on their loyal customers, the same cannot be extended to home repairs, therefore plumbers should be bit diligent when it comes to the collection end. In case a client has not paid a past balance, a plumber is at liberty to refuse servicing such a client until that time when the bill shall have been settled.
To account for an expense in a plumbing Company requires one to divide such expenses into two categories, parts and labor. When one purchases the plumbing parts for a client, it is prudent for a plumber to note the cost of such parts and where the part was bought from. This helps in charging the client appropriately for the part and it is a way of providing evidence of an experience incurred by the business during tax time. Likewise, plumbers use this method to gain extra bonuses since they are able to trace the prices of parts that are used most often from a variety of vendors thus managing the cost of parts throughout the year.
When it comes to labor, it is easy for a plumbing company to track the labor expenses of a single plumber, however, in instances where there are several plumbers in a plumbing company it is important to record accurately the time by use of time cards and assigning the costs to the jobs and projects the employees are working for. This helps business owners in examining employees whose productivity is high thus remuneration is awarded accordingly.
The balance sheet of a plumbing company
The balance sheets for a plumbing business should be fairly simple. The asset side keeps the records of accounts received thus aiding collection; it also has details of tools and the company assets thus allowing easy calculation of depreciation. On the other hand, the liability side normally contains payables and loans from the banks.