What is the Best Accounting Structure to Use for your Street Sweeping Company?

Outside of the actual bookkeeping that keep your revenues and expenses straight, you can also employ law and structure to save your street sweeping business money in taxes and expenses. Here are some of the ways to identify the best accounting structure for a street sweeping company.

Understanding the Costing Method
In order to give your company the proper basis for an audit, you must choose the cost basis for your metric that is most advantageous to you. Here are some of the cost metrics that are compliant with the IRS and may help to reduce your tax liabilities and internal expenses.
Activity-based costing – This job costing method gives you the ability to tie your cost metrics to customer service and time-driven costs, both very important for a street sweeping business. You cover your back for jobs that take longer than originally planned, emergency jobs and municipal jobs where every line item is scrutinized. Activity-based costing is especially good for a company that has yet to fine tune its process, because activity is the easiest base to use as a metric in this case.
Job order costing – If you are taking on multiple jobs at once, job order costing will allow you to account for your income and expenses based upon your raw materials units and recorded labor hours. This is a relatively simple metric that any street sweeping company can utilize, because it can take on the usually difficult task of accounting for jobs that are running concurrently.
Absorption costing – If you think that you can save money by considering all of the fixed manufacturing costs such as factory overhead, raw materials and labor costs along with the variable costs of individual jobs, the absorption cost metric is one of the best ways to account for your expenses.
You may be able to incorporate elements of each of the above types of accounting methods into each other based upon the needs of your individual company. This process can be quite complicated, however, and you should look into outsourcing this process to a professional accounting team in order to take full advantage of your opportunity.

The Right Tracking
No matter what accounting method you use, you must be sure that your company is keeping track of certain important data that will always be used in your accounting process. Take a look at the following line items so that you can make sure that your accounting partner is keeping up with the appropriate metrics.
Your transactions – The different transactions that you should keep up with include repayments, loans and sales. These individual transactions must be placed into the appropriate ledger – usually accounts receivable or accounts payable.
Liabilities and assets – Every business must have its assets and liabilities accounted for at the end of every accounting period.
Cash on hand – The cash that your company has in the bank for emergency activity, expansion or self-driven bridge loans will give you leverage for credit as well as protect your business.
Inventory – Although you may not sell a retail product as a street sweeping service, you will definitely need to keep up with your inventory on the supply side, especially if you plan on taking major depreciation tax benefits on your hardware and equipment.

Analyzing Your Business through Your Accounting Structure
The right partnership with the best accounting company will do more than save you money on taxes every year. You will also be able to analyze your business efficiency to create the changes that will move your company forward. Here are some of the most prevalent types of analyses that you should be sure that your accounting partner is running on your behalf.
Cost analysis – This is a basic analysis that gives you the inside scoop on what you are actually spending over a particular time period. You will also be able to understand more closely how input price changes add to and subtract from your profits.
Constraint analysis – One of the most important aspects of good accounting is the ability to find the bottlenecks that are in your process. If you can identify these through your paperwork as well as through your day to day process, you will be able to speed up your production and take more jobs.
Profitability analysis – You will be able to determine how much you are actually making on each job with a margin analysis, also known as a profitability analysis. You can also upgrade this to a constraint analysis if you need to overlap your margin analysis with a process analysis.
Budget refinement analysis – if you are trying to refine your budget for the next accounting period, you may have to employ many of the above tactics at once.
Save money, using the right accounting method and add to your ability to expand your company. Keep to the tips above and choose the best methodology for your business, save money, and keep the tax man off of your back!

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