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HBFOXJr
02-03-2002, 06:17 PM
Attached is my chart of accounts so you can see how I group my expenses. Grouping this way allows me to quickly and accurately get the management numbers I need. These are also the same numbers that many struggle for. Don't worry about the accountant. He'll still have everything he needs. The advantage is this grouping provides numbers that labor intensive contractors need. They also make over head recovery easy to determine.

Just divide your payroll hours into equipment or overhead costs to determine YOUR cost per hour. Subtract gross payroll from your TOTAL labor costs, then divide the answer by your gross payroll to determine your labor burden.

It's easy, accurate and the best part is the numbers are yours.

If business is growing and your adding manpower and equipment the add on % for labor burden and hourly costs for equipment keep you financially secure and the profit machine cranking. Got to add some one in the office. No problem, your always adding dollars per hour for overhead recovery. The more hours you bill the more equipment dollars and overehad dollars you bring in so evcerything pretty much keeps pace with everything else.

Although this is a simplistic rundown on how to do it the plan is valid.

LawnLad
02-03-2002, 06:26 PM
Looks like you have a pretty good chart of accounts. Couple of quesitons:

1) Is your GL insurance/Umbrella Policy a function of payroll? They may audit you in terms of payroll, but is the cost actually driven by paroll? Such as Workers' Comp or Unemployment.

2) Do you track your fuel/fluids differently for your equipment from your trucks? Could this be combined for simplification.

If you're interested in other Chart of Accounts that are out there... look into the one that Frank Ross did for ALCA. They came up with a 'standard' chart of accounts that the entire industry could apply to their businesses. They cover a lot of material with their chart. You can find it in his "Pricing for the Green Industry" book.

What's nice about it is that if you then get their operating cost study for the industry, you can compare/bench mark your operation more easily to the industry as a whole - on a % basis.

HBFOXJr
02-03-2002, 06:47 PM
I can track separately pretty easy because I ususally buy truck fuel on the road and equipment fuel is delivered to the yard.

HBFOXJr
02-03-2002, 06:49 PM
GL is payroll driven and umbrella follows on the coat tails somehow.

LawnLad
02-03-2002, 06:50 PM
Gotcha.... Sure wish we had a place to have fuel delivered to us. Sounds nice.

HBFOXJr
02-03-2002, 06:51 PM
Since I put GL under labor since it payroll driven if you put more people to work and the payroll gets bigger, you don't have an ugly suprise come audit time. Technically you recovered the cost. Whether you saved the money to pay the bill is another matter.

Mike Paulsen
02-03-2002, 07:18 PM
When they deliver gas to the yard , do they have all the highway taxes off????

Lanelle
02-03-2002, 10:07 PM
We have fuel delivered to our yard. There is on-road diesel and off-road diesel due to taxes. Gasoline is regular since so little is used for off-road use. Taxes are based on usage not place of delivery.