Year-End Close for Contractors: Check Your Numbers Before You Pay Bonuses

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