Every business has its own unique challenges. Home service contracting businesses – such as plumbers, electricians, and HVAC technicians – have to manage jobs across different sites in addition to all the back office responsibilities.
In the blog post, we’ll provide tips on how home service contractors can take on these challenges and ultimately run a successful business.
Stay connected while in the field
As a home service contracting business owner, you likely have employees working at different job sites. Fortunately your staff can use mobile devices and cloud technology to stay in touch with each other and your company’s headquarters while in the field. You can provide each employee with a data-connected tablet so they can provide updates on their jobs.
Manage your Cost of Goods Sold (COGS)
Plumbers, electricians, HVAC technicians, and other home service contractors have various expenses that need to be tracked and managed. Cost of Good Sold (COGS) are expenses directly attributable to creating a product or service. For home service contractors, COGs can include the cost of parts and materials, labor, and even merchant fees from accepting credit card payments.
Properly tracking your COGS is critical because it can be deducted from Gross Revenue in order to calculate your Gross Profit. By understanding your Gross Profit, you can set the right prices and accurately project sales goals. You can learn more about Cost of Goods Sold (COGS) in this blog post.
Maximize your tax deductions
There are many tax deductions home service contractors should take advantage of, such as the mileage deduction, the home office deduction, and client gift costs.
The key to maximizing tax deductions is to understand the IRS requirements and have the necessary information and documents to support your filing. You and your employees can use mobile apps to track miles driven and take photos of receipts for company-related expenses. And you can use cloud storage for the documents you collect throughout the year.
Use a budget to reach your financial goals
Your business has a much better chance of succeeding if you create a budget at the beginning of the year and follow it as closely as you can. In order to create a budget, start by estimating your revenue. Take your previous year’s sales and incorporate any changes you expect for the coming year. Next estimate your expenses by pulling your annual costs from your Profit and Loss (P&L) Statement and again incorporate any expected changes.
Finally, subtract your estimated costs from your estimated revenue and you’ll arrive at your project profits. You can learn more about creating a budget in this blog post.
Stay on top of your invoices
Any experienced owner of a home service contracting business can tell you how difficult it can be to get invoices paid. However, receiving payment on time is a crucial part of maintaining a healthy cashflow.
You can use quality invoice software to send and manage your invoices in the cloud. Most solutions give you the ability to email an invoice and know when the client has opened and viewed it. You can also see when invoices are nearly overdue so you can follow up at just the right time.
BookKeeping Express (BKE) is the leader in bookkeeping and other financial services for home service contracting business. Visit our industries page to learn more.