How Sage One can help tradesmen manage their accounts
Having a trade is a valuable skill, whether you are a plumber, builder or carpenter. As word of mouth spreads about the quality of your work, you’ll find yourself continually in demand. You’ll need to be flexible and organised to make the most of the work available to you.
Accounting if you are tradesman (or woman) requires you to take care of creating quotes, chasing invoices and managing daily expenses as well as staying on the right side of the tax-man.
We’ll talk later about accounting software, and how it can help, but let’s first look at the factors that will lead to your success.
1) Communicating with clients. How will you take bookings and manage your time? Being available is really important to you and your clients, so you don’t miss out on work. Everyone should know what is happening on a job. It is wise to invest in a smartphone so you are able to answer emails and check your bank account, as well as answering and making phone calls. Using an email app allows you to send quotes and invoices instead of paying for post and printing.
2) Offering a fair price. How will you know if you are charging the right amount? This requires a little bit of competitor research, but also a clear knowledge of your costs too.
Typical costs include vehicle (petrol, insurance and tax), equipment, clothing and any training or membership to trade associations. This will help you come to an hourly rate that covers these as well as giving you a chunk for your time.
3) Customer service. This starts with good communication but extends to the way you act when you are on a job. Turn up on time and be clear about how long you’ll be there and how many days you will need. If you have any issues, such as problems sourcing supplies, then talking to the client first will stop things escalating.
4) Keeping your skills sharp. Improving your skills will help you keep up with the latest techniques in your trade as well as giving you scope to offer a wider range of services. Training is particularly important if you are an electrician or plumber, so you are able to keep up with the latest safety standards.
Managing your accounts as a tradesman
Sage One accounting software can help you to be efficient and organised, so you don’t spend long hours on your books after a hard day of physical labour. Moving away from a paper or spreadsheet based system frees up your time to gain new clients, learn new skills or just relax and put your feet up!
Managing quotes and estimates with Sage One
How can you make quoting and estimating a quicker process? There may be many elements to the quote you give so you want to skim off as much excess as possible, to reduce time spent putting them together.
Sage One allows you to first create a simple template for all your quotes, with your logo and/or contact details included. After you’ve worked out what you need to charge the customer you simply input each line and then send it to your customer. You can do this by email too.
It is also easy to look back on old quotes, by job or customer, so you can see what to charge for certain jobs or what rate a customer is on. No more guesswork!
You are also able to easily see which quotes are out, allowing you to predict the workload you’ll have in the future and keep an eye on cash flow.
Simplifying your invoicing process
Some jobs may take a number of weeks to complete, so you want to make sure the money is flowing in steadily. Invoices can be created as easily as quotes, and you can include an online payment link to allow clients to pay you immediately. This encourages clients to pay you when they first receive the invoice.
Sage One’s reporting system also allows you to quickly run off a list of overdue payments. When you’re not working you can quickly and easily send reminders or statements to chase up stray payments.
Quick entry for expenses
What are your typical expenses? Usually for tradesman it is things like tools, workwear and PPE and travel costs. These things aren’t usually regular, so you may find you need to record expenses on an ad-hoc basis.
Sage One makes it simple to record expenses, and you can even do it from the mobile app. Every expense you recorded against your income means a smaller tax bill, so don’t let those receipts slip away unrecorded.
Submitting your tax return
Reporting is also vital when it comes to submitting your tax return. If you are self-employed you need to pay income tax, Class S social insurance contributions by the 31st October each year, for the previous tax year.
If you are registered as a company you will need to pay corporation tax based on income at either 12.5% or 25% depending on your trade – find out more about company tax on the Revenue website.
If your income exceeds the current VAT threshold then you need to register for VAT, and charge it to your customers. You may want to register even if you are not yet at the threshold too, this means you can claim back VAT on business purchases. A VAT return needs to be completed every two months on the 23rd of the month using the Revenue ROS system. A return for January/February, for example, would need to be filed by 23 March.
Keeping track of cash flow and forecasting for the future
Life is busy so it can be easy to only take a day-by-day approach to your work, but reviewing your business regularly is really important.
First of all, you need to keep a close eye on your cash flow, so you can plan for expenses and plan work. This can also help you if you need to take on staff for a large job or plan for a holiday.
Forecasting helps you to see the trends in your business; you may naturally be quieter around the Christmas period and busier in the summer months. Seeing this allows you to save up reserves for quieter times and hire staff for the boom times. Sage One allows you to run multiple reports, including income reports, profit and loss and balance sheets. You can even automate them so that they are sent to you on a regular basis.
Sage One allows you to manage every aspect of your finances, freeing up your time for work and play. Take the next step and sign up to Sage One today; you’ll receive 20% off for the first 12 months.