5 Tips to Maintain Financial Records for Your Contracting Business

The best way to ensure that you get paid on time for your contracting business, and pay all of your bills, is to keep good records. But if you don’t have a lot of experience with it, and you can’t hire someone to do it for you, you’ll need to get up to speed. The good news is that there are plenty of right ways to do it, as long as they work for you. Here are a few tips to help you stay organized.

Create an Organizational System
The first thing you can do to keep your finances in order and out of chaos is to create an organizational system. There are lots of options out there, many of which may be easy to use on your smartphone. Start by making a list of the types of financial records that you will need to track. For example, someone who regularly files paperwork for public works projects may have different record-keeping needs than a business owner working exclusively in the private sector. And once you add payroll for yourself and employees, you may increase your organizing obligations dramatically.

Separate Income from Payments
Eventually, you’ll probably hire an accountant to handle at least a portion of your business finances. For now, you may want to start by using the most rudimentary accounting techniques to keep files under control. You’ve probably heard references to Accounts Payable and Accounts Receivable. These are accounting industry terms that describe the expenses you need to pay and the income you bring in. Keeping them separate helps you to find exactly what you need in a hurry. It also makes it easier for you to add up your income and balance it with your expenses.

Keep All Receipts
If you’re working with a lot of paper records like receipts and invoices, it’s important that you don’t lose track of them. It’s just as vital to organize them in a way that you will remember where they go and which projects belong to them. You may prefer to scan your printed receipts and keep them in a digital file for easy reference. But if you worry that you’ll forget to do it, even a box or drawer is better than nothing. A paper filing system is usually best in this case. The last thing you want is to get to the end of a project and realize that you lack some crucial data in order to bill for it.

Set Reminders to Log Records
Anyone who runs a business knows there is a big difference between having a task to do and ensuring that it gets done in a timely manner. When you’re operating by yourself, you have to do many people’s jobs at once. This means that you might forget to get the receipt from your vehicle after leaving the jobsite, or fail to send an invoice at the correct interval. Set reminders to help keep you on-task, and don’t let it fall to the wayside. This is how you ensure that you pay all your bills and get paid for the work you do, which is crucial to keep your business going.

Note Important Dates on the Calendar
Besides needing to remember to log your records at the end of the day or a couple of times a week, you must ensure that you do not forget important payment or income dates. Like most business owners, you will have a variety of payments that you need to make throughout the month. Create a system that outlines when these are due, with reminders to give you at least a few days’ notice. Do the same for income, especially if you are invoicing clients at specific intervals during the project. Staying on schedule can help you avoid late fees or temporary loss of service.

Keeping your financial records in the best order for you is a big part of your contracting business success. To find out how to get ideal preparation for the contractor licensing exam, contact CSLS today!