Accounting 101

Discussion in 'Business Operations' started by C Cutters, Apr 19, 2007.

  1. C Cutters

    C Cutters LawnSite Member
    Posts: 33

    I could probably sit here for hours with questions, but this is one I need an answer too. Just figuring out for myself how to keep track of revenue and expenses for my company, as well as whether or not to buy a truck. Here's what I'm trying to figure out:

    What different items do you generally have under variable and fixed costs? Since I am not legit yet, I do not have insurance, truck payments, or tax costs (will soon though), therefore I do not carry any fixed costs...that I am aware of. My variable costs, the obvious, are fuel and profit (affixing profit as a cost for now, until I learn better)..any other variables I am leaving out?
    Secondly, since profit margin was covered in a previous thread, what percentage of revenue is typically allocated for fuel? I have figured 15%, but what is typical for you all? (Fuel meaning for vehicle and all equipment) Any help is appreciated, I'm learning for myself how the numbers game can play to my advantage (so as to not play to my disadvantage)
     
  2. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I understand what you're saying but either it's an expense or it isn't, for the purpose of paperwork, if you want to categorize your expenses then maybe do so in a way that fits your taxes, at least that way you get some benefit out of it all.

    Truck payments are not a fixed cost, they are an unnecessary expense and maybe good as a status symbol, but I buy most of my stuff cash, and on all my vehicles I carry minimum liability insurance... Because one thing about running a business is you have to operate on a shoe string budget, that means absolutely no expenses that are not 100% necessary, because even then money's always real tight lol.
     
  3. ECS

    ECS LawnSite Bronze Member
    Posts: 1,733

    Cutters, do you have Excell on your computer? If so, I can send you the Excel sheets I use.
     
  4. C Cutters

    C Cutters LawnSite Member
    Posts: 33

    ECS,
    I do have Excel, and that would be awesome, you could PM it to me (can you attach files on here?) or email it to me at bairdd@email.uc.edu. Thanks alot man!
     
  5. ECS

    ECS LawnSite Bronze Member
    Posts: 1,733

    C Cutters, they are on the way to your email. There are instruction as to how I use them on the bottom of each work book. You will see them when you open them up. I sent a compressed folder with all of them in it.
     
  6. perrys landscape service

    perrys landscape service LawnSite Member
    Posts: 6

    I use Quickbooks. It has a tutorial to walk you through everything. Some stuff is a little foriegn to me but it is really good for tracking income and expense. I have it linked up with my business account at the bank so my check register is always up to date.
     
  7. razor1

    razor1 LawnSite Bronze Member
    Posts: 1,985

    Just curious, have you talked to a CPA? :)
     
  8. C Cutters

    C Cutters LawnSite Member
    Posts: 33


    I have not. I am a finance major at UC (big deal I know...), and I do have various professors I can refer to for questions that may arise (retired & active CPA's), without having to pay a CPA. The only reason I am interested in the fixed cost & variable cost is because I am trying to decide if it is in my best interest to purchase a truck (1994-1997 Dodge Ram, see other thread) and if I do it would be a fixed cost (insurance, financing), whereas my fuel expenses and profit margin are a variable cost, as they fluctuate with business volume.

    Therefore, do I buy a truck and eat into my personal pay, or do I wait until business volume can easily absorb such costs?
     
  9. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    Even if you don't have truck payments, insurance etc. or even shop rent/payments. You would be wise to calculate those items into your equation so that you have a realistic target of what you should be charging to make it and grow as a legit business. Its no fun trying to get 50-70% rate increases out of clients when you realize you are not charging enough.
     
  10. razor1

    razor1 LawnSite Bronze Member
    Posts: 1,985

    "Its no fun trying to get 50-70% rate increases out of clients when you realize you are not charging enough". Az Gardener

    A lot of truth in that statement. As they say "Been there done that." :cry:
     

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