Year-End Close for Contractors: Check Yo...

You pay the Christmas bonuses. Then January hits, more job costs come in, and the profit you paid them on starts to shrink.

In part nine of the construction accounting series, Kathe Barrington, CPA, of KB CPA walks through a contractor's year-end close. She covers how to test your numbers before you spend, distribute or pay bonuses on them.

Takeaways:

• Year-end prep starts in January. A hard close tells you which SOPs need work

• Check December's closed jobs against January's job costs. Costs still landing means you closed too early

• Take job losses as soon as you know them. Be conservative on pending change orders

• Internal financials that don't match your reviewed statement cost you credibility with your bank and surety

• Get Q3 right, pick the jobs you'll close by December 31, and get the numbers to your tax person in October

Kathe also tells the story of a job that took 11 years to close out.

The full Construction Accounting Series with Kathe Barrington:

Playlist: https://www.youtube.com/playlist?list=PLNqgaQ0mEF1w

• Ep. 357 WIP Reports Made Simple: https://www.constructiongenius.com/wip-reports-made-simple-the-key-to-stopping-hidden-job-losses-ep.-357

• Ep. 359 Use Your WIP to Protect Cash: https://www.constructiongenius.com/how-to-use-your-wip-to-protect-cash-and-grow-profitability-ep.-359

• Ep. 364 Physical Progress vs. Financial Reporting: https://www.constructiongenius.com/physical-progress-vs.-financial-reporting-in-construction-projects-ep.-364

• Ep. 368 Underbillings Bad. Overbillings Better: https://www.constructiongenius.com/underbillings-bad-overbillings-better-the-cash-flow-truth-construction-owners-cant-ignore-ep.-368

• Ep. 377 Why Your Jobs Look More Profitable Than They Are: https://www.constructiongenius.com/why-your-jobs-look-more-profitable-than-they-are-indirect-allocations-and-overhead-in-construction-ep.-377

• Ep. 388 Read Your Backlog Like a Banker: https://www.constructiongenius.com/how-to-read-your-backlog-like-a-banker

• Ep. 396 Grow Bonding Capacity: https://constructiongenius.com/grow-bonding-capacity-banking-tax-moves-contractors/

• Ep. 400 Projections: https://www.constructiongenius.com/construction-projections-cash-flow-margin-kathe-barrington

Connect with Kathe Barrington:

LinkedIn: https://www.linkedin.com/in/kathe-barrington-a6346337

Facebook: https://www.facebook.com/p/Kathe-Barrington-CPA-100072271041746

KB CPA: https://kbcpa.biz