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7 Accounting tips for Designers, Architects and Contractors to Prepare for Year End

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As we usher in the new year and close out 2024, it’s time to ensure your finances are organized and ready for a fresh start. For design and build professionals like designers, architects, and contractors, managing your books properly can save you from year-end stress, maximize your profitability, and keep you CRA-compliant.


Here are 7 essential accounting tips to help you close the year with confidence—and set your business up for success in the new year.


1. Don’t Recognize Deposits as Revenue Until the Project is Completed


If you’ve received deposits for future work, avoid recognizing them as revenue until the project is completed.


Why? Should anything prevent the work from being finished, you’ll owe that deposit back to the client. By holding these amounts as liabilities until the project is done, you maintain the accuracy of your books and avoid overstating your income.


Want more tips like this? Be sure to check out the From Projects to Profits on-demand webinar, where we cover practical steps to manage your bookkeeping effectively.


2. Identify Invoices That Are Not Collectible


Every business has clients who fail to pay their invoices. Before year-end, review your accounts receivable and identify any invoices that are unlikely to be collected.


These invoices should be categorized as bad debt to ensure they don’t inflate your revenue and misrepresent your business’s financial position. By addressing these now, you can make your financial reports more accurate.


3. Categorize Expenses Properly


Uncategorized expenses can create confusion and missed deductions when tax season rolls around.


Go through your expenses and assign them to the appropriate categories (e.g., marketing, travel, or supplies). If there are any expenses you’re unsure about, consult with your accountant to get them categorized correctly.


Join our From Projects to Profits Facebook Group to connect with like-minded professionals and share tips on organizing your finances.


4. Identify Long-Term Assets


Some expenses aren’t tied to a specific project but add value to your business over time. Think about items like computers, cameras, or equipment—they’re not just costs; they’re assets.


These assets depreciate over time and should be tracked separately from regular expenses. Doing so ensures your financial statements accurately reflect your business’s value and keeps you prepared for CRA reporting requirements.


5. Know How Much Money You’ve Taken from the Business


Your business is a separate entity from you, even if you’re a solopreneur. It’s essential to know how much money you’ve withdrawn for personal use and document these transactions properly.


This keeps your records organized, ensures compliance, and helps you better understand how your business and personal finances interact.


6. Avoid Using Business Accounts for Personal Expenses


Using your business credit cards or bank accounts for personal expenses can create a financial mess. But if you’ve done this, it’s critical to let your accounting professional know.


Why? The CRA requires accurate reporting of business expenses, and misreporting could lead to penalties if you’re audited. Address these transactions before year-end to keep your books clean and compliant.


7. Use Financial Reporting Data to Inform Strategy


The numbers you’ve collected over the year are more than just data—they’re insights into your business’s health. Use your profit and loss statements, expense reports, and other financial data to have meaningful conversations with your accountant.


This will give you a clear picture of how your business is performing and help you set realistic, actionable goals for the future. If you’re unsure where to start, our From Projects to Profits webinar offers step-by-step guidance to use your financial data effectively.


Bonus Tip: Sync Your Operations and Accounting Software


Apps that support your daily operations—like time-tracking tools, project management platforms, or invoicing systems—should sync with your accounting software.


When these systems are connected, you’ll always have up-to-date financial data at your fingertips. This makes it easier to track profitability throughout the year, so you’re not left guessing at year-end.


Start 2025 Off Right


Getting your finances in order now ensures a smooth year-end process and sets you up for success in 2025.


Ready to take control of your bookkeeping? Watch the From Projects to Profits webinar on-demand and learn the steps to organize your finances, maximize your profits, and save on taxes—all tailored for design and build professionals like you.


Want ongoing support?


Join the From Projects to Profits Facebook Group to connect with a community of like-minded professionals and get exclusive tips to manage your finances with ease.


Let’s make this year-end stress-free and set your business up for its best year yet!


Chat soon,


Etel

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