Meaning, no one can go after homes, cars, credit, or any personal money saved or earned. It is very important to have a clear separation from personal and business. This Is why Incorporating a business Is the smartest way to go. There will be many services provided that pertains to electrical Issues. The two main services will be service calls and commercial build outs. Service calls will consist of everything from installing ceiling fans to trouble shooting any electrical problems a home owner or business may have.
Commercial build outs, which are currently booming In central Florida, will be everything from schools to shopping centers and churches. When there is a large migration of people which move into one particular area the need for these things are of most importance and creates an abundance of work. Before starting the business, accounting will have to play a very important role In decision- making. Knowing how much to spend on tools. materials, vehicles, trailers, advertising, and payroll are all part of starting an organized successful business.
There needs to be enough capital for these things, as well as, approximately 6 months worth of capital In savings for future expenses that often times cannot be covered at the beginning of a business. This can only be done with a good accounting plan in place. Hiring the write accounting firm will be the tricky part. There are hundreds of accounting firms, but finding one that suits the needs of the business could be challenging to find.
For this particular business, the accounting firm preferably needs to have construction accounting experience especially for electrical ontracting companies.
This would help the managing process much easier. Knowing that the company handling the accounting has previous experience in working with this type of company can facilitate managing the finances. It is also very Important for the person going Into business to know about budgeting, Internal controls, and cash management. Prior proven success should be a qualification especially when the capital is borrowed. Many of the current companies going under and getting bailout money have failed because of either lack of experience or plain reediness.
Not all Is left up to the accounting staff, It would need to start with a good Internal control to safeguard assets and enhance the accuracy and reliablllty of its accounting. To have successfully an internal control, the electrical contracting company will need to follow the six principals which are: 1 . Establishment of Mechanical, 4. Electronic controls, 5. Independent internal verification 6. Other controls. Poor internal control can cost a company money even if no theft occurs.
There have been auditors say that the firms had inadequate internal controls. The stock prices fell because investors and creditors were uncomfortable investing in these companies that didn’t have good internal controls. This is why it is very important to follow the six principles to a “T”. Finally, the most effective way to use financial information to predict outcomes for the company would be to compare previous year reports to current ones. Having data from previous years is a valuable tool to have to make comparisons and predictions for years to come.