That principle seems pretty straightforward and most thinking owners would never leave out actual costs that are that significant. Accrual accounting gives a broader overview of where your company’s at; it yields a complete picture of your financial health—enabling you to make better business decisions. The downside is that cash-based accounting offers a very narrow (and sometimes misleading) view of how a business is doing.

• Your cash flow statement is a statement that records the cash your business has coming in and out of your accounts.
• Connect with other acclux accounting users and share your experience, view online manuals, and know more acclux accounting.
• Record your expenses and categorize them in a convenient way, you will always know how much you’ve spent this month or in any selected period.
• We provide tax preparation, payroll, and bookkeeping solutions to the accounting challenges encountered by lawn and landscape companies!
• With cash basis accounting, revenue and expenses are recorded when they hit the bank (e.g., when you receive payment for a service or pay off a bill).

Looking at a single snapshot in time leaves out important pieces of the story—large upcoming expenses or periods with unusually high revenue, for example. In some cases, this can enable businesses to be more strategic with their plans because they have a complete understanding of incoming and outgoing cash flow. In other cases, it can be risky and lead decision-makers to prepare for wider margins than currently available.

Arborgold Software

I once had a client whose business experienced the very phenomenon we are talking about above. His last twelve-month P/L statement showed a net profit of $109,000, which they had to pay taxes on. However, when we subtracted out the principle portion of his loan payments and the difference in depreciation and equipment replacement costs, his “real” net profit was really a loss of $81,000.

E into account all the things that go into providing a quote, and creates the cost for you with a few clicks. Professional help managing your books lets you focus on delivering better services and results to your clients. Make sure you have an account that is exclusively for your landscaping business. Only deposit income from the landscaping company into this account and make sure that it covers all the landscaping expenses. They are used to convey a concise picture of the profitability and financial position of your company. The two most important financial statements that allow you to get an accurate snap shot of the results of your business are the Profit & Loss Statement (P/L) and the Balance Sheet.

Use Financial Statements

This can be as simple as reviewing the transactions in your accounting software at the end of each month to make sure they line up with your bank statements. Create a system for categorizing your transactions with a software tailored for your needs so that you have financial statements you can confidently use to make business decisions. Purchase orders are necessary when tracking materials needed for a job, or to keep things tracked when working with subcontractors.

A qualified accountant or skilled in-house staff can ease the transition from cash-based accounting to accrual when the time is right. Evaluating financial processes can be a hassle at best, especially if you’re unsure where to start. This leads many landscape business owners to avoid making changes at all. However, breaking out of bookkeeping for landscaping business that mindset is crucial if you want your business to achieve its full potential. Solid bookkeeping practices are vital to the health of any landscaping business. Bookkeeping—or managing your financial accounts—may look different depending on the scale of your operation, but it’s an aspect of the company that you shouldn’t neglect.

The cash basis method gives small business owners in-the-moment cash flow insights

With landscaping on your mind, you are likely not thinking about bookkeeping and accounting daily. Instead, you are thinking of proper lawn care to keep your customers happy. If your landscape company keeps on hand materials, such as mulch, dirt, sod, irrigation piping and parts, rock, etc, it is important to track how much is on hand and how much is available to jobs. Not having a good line of sight on your inventory can cause a loss of profit that you may not even be aware of. If rent isn’t in your hourly rate, the rate charged will not cover your rent. If your salary isn’t in the cost of doing business, it won’t be in your hourly rate, either, and you won’t get paid.