🕔 The 5-Minute Builder Accounting Check

“Is my accounting lying to me?”

What this is: A quick diagnostic to see if your numbers are decision-safe or dangerous.

✅ Step 1 (1 minute)

Check Your Chart of Accounts Structure

Open:

Reports > Profit & Loss → Last 12 Months

✔️ if yes

Do you see Cost of Goods Sold (COGS) clearly separated from expenses?

Is Direct Labor in COGS (not in Expenses)?

Are Direct Expenses (Materials, Subcontractors, Equipment) grouped under COGS?

Are Overhead items (office rent, admin payroll, insurance) separate from job costs?

⚠️ Red Flag:

If your P&L is basically just a long list of expenses → your job profitability is unreliable.

✅ Step 2 (1 minute)

Check Gross Profit Reality

Open:

Reports > Profit & Loss as % of total income > Look at Total Revenue; Total COGS; Gross Profit %

✔️ if yes

Is your gross profit positive for most months?

Is your gross profit margin in the range of 20–25% for custom/residential work?

Does the margin make sense based on how you price jobs?

⚠️ Red Flag:

If gross profit looks “fine” but cash is always tight → something is misclassified or missing.

✅ Step 3 (1 minute)

Check Job Costing Integrity

Open:

Any recently completed job

✔️ if yes

Does the job show labor + materials + subs?

Does it show overhead applied or allocated (even roughly)?

Does the final job profit roughly match your gut feel?

⚠️ Red Flag:

If jobs “look profitable” but the company isn’t → overhead is eating your margin.

✅ Step 4 (1 minute)

Check Cash Flow vs Profit (The Trap)

Open:

Reports > Profit & Loss by month and Reports > Balance Sheet for the last 12 months

✔️ if yes

Is Balance Sheet cash going up when Profit & Loss profit is positive?

Are Customer Deposits listed as a liability on the Balance Sheet?

Do you know how much profit is tied up in Balance Sheet Work-in-Process?

⚠️ Red Flag:

If profit is up but cash is down → you may be paying tax on money you haven’t earned.

✅ Step 5 (1 minute)

Check Decision Readiness

No reports needed

✔️ if yes

Would you confidently price a new project using these numbers?

Would you make a hiring decision based on this P&L?

Would you be comfortable showing your financial reports to a lender or investor?

⚠️ Red Flag:

If the answer is “not really” → your accounting numbers are not helping you make important decisions.

🟢 Your Scorecard (Instant Diagnosis)

🎯 The Big Takeaway (This Matters)

This diagnosis does not consider:

How hard you work;

The quality of your craftsmanship; or

How busy your company is.

It measures one thing only:

Can you trust your numbers when making decisions?