If you’re running a small painting operation, it can be difficult to keep everything in order. The right accounting approach works wonders! Here’s what you need to know.
Key takeaways:
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Proper accounting tips for painters start with organizing your bank accounts.
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You need to master billing and learn how to properly estimate a contract.
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Managing payroll is key to keeping your employees paid on time and in the right amounts.
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Accounting software can help you keep everything on track, including preparing for taxes and managing your payroll schedule.
Operating a small business requires a little knowledge in areas like finance, management, human resources, and marketing on top of industry trends. Seeing the big picture can help you keep moving your company forward, but that doesn’t mean it’s always easy.
A solid accounting strategy helps you understand your business, keeps everything organized for taxes, and ensures you’re always compliant with local tax laws. Here are six accounting tips to help your painting business run smoothly.
1. Organize your bank accounts
It may be tempting to use personal accounts and cards to cover business costs and store your painting income, but it’s always wise to keep business and personal money separate. Doing so helps you report your expenses when tax time rolls around and keeps you organized as you earn money, pay yourself, and potentially pay other workers.
For example, you need to track your cost of goods sold so you know your gross profit and can adjust your pricing and business goals accordingly. It’s much more challenging to track and understand your expenses when your work expenses are mixed with personal grocery runs and coffee stops.
2. Master billing
Invoicing is always going to be a part of running your painting company. It’s how you bill your customers for the work you do, after all. The more efficient your process for generating and sending invoices, the faster you’ll get paid to cover your expenses. Consider making this process electronic for speedier transactions, and be sure your payment terms (whether funds are due within 30 days, for example) support your goals to help you maintain a healthy cash flow.
3. Learn how to estimate a contract
Creating the right financial goals takes some fact checking and predicting. Estimating your contracts can help you keep things in line. For accurate estimates, you need to know how long projects are likely to take, the cost of supplies and labor for each, and other costs like liability insurance.
This may take time to master if you’re just starting out, but tracking everything early helps you build that knowledge quicker. Pay attention to what your competitors are doing in the meantime, and stay reasonable but aggressive. Estimating will likely take trial and error before you have a steady process in place.
4. Get on top of payroll
Your payroll responsibilities can get tricky fast. You have to be sure you’re taking all the right steps to be able to pay other people, and that means following labor laws, managing records, registering your business properly, and paying applicable employment taxes. Here are a few payroll musts:
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You’ll have to get an Employer Identification Number (EIN) from the federal government before you can pay anyone. Note that some states require a separate state EIN as well.
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There are many labor laws you need to follow, including against discrimination. A professional can help you understand what you can and can’t do as an employer, but start by reviewing the Fair Labor Standards Act (FLSA), child labor laws, and the Family and Medical Leave Act (FMLA).
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Decide how and when you will pay your employees.
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Decide how employees will track and report their hours.
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Store employee records according to state and federal laws that aim to protect personal information.
Growing your painting business to include employees can bring lots of benefits, like scaling to be able to complete multiple projects simultaneously. Just be sure you’re prepared with a complete, compliant accounting system in place before you do.
5. Prepare for taxes
Tax preparation is a key component among accounting tips for painters. You’ll need to report all your income and business expenses each year, so having detailed lists and documents is a must. Staying on top of things throughout the year means you’ll have less to do each spring.
Another important point is that most small business owners have to pay quarterly estimated tax if they expect to owe at least $1,000 in taxes for the year. This means you could have to pay estimates by the four deadlines annually, or pay a penalty for underpayment of estimated taxes. Sole proprietors, partners, S corporation shareholders, and corporations may have to make these payments.
6. Use a software
Fortunately, there are lots of digital tools out there that make behind-the-scenes processes much easier for painters. You can use invoicing software that will automatically generate and send documents for you, for example. Then, all you have to do is find a template, enter your information once, and invoices will be automatically generated for each subsequent project with the appropriate client’s data and fee structure.
Accounting software like QuickBooks stores and tracks your financial information, which is extremely helpful when you’re doing your taxes. You can also generate reports, search completed transactions, manage payroll, and send billing reminders. Software can help you stay organized and get all the information you need much quicker than recording by hand or on a spreadsheet.
Get help with accounting setup
You have a lot on your plate running your painting business. Why not get a little help in creating the right accounting system for you?
At Franco Blueprint, we specialize in helping small business owners set up their businesses and automate their accounting processes. The right approach means you’ll be better able to grow your business, manage your cash flow, and reduce your financial risk.
When you need better accounting solutions customized to your painting business, we’re here to help. Contact Franco Blueprint today to set up a free consultation.