Bookkeeping for Handyman Businesses: Steps, Tips, Software

What is Bookkeeping for Handyman Businesses?

Bookkeeping for handyman businesses is the process of recording in detail the financial transactions that occur in your everyday operations. 

Essentially, it’s how the business provides a clear and organized record of income and expenses so that you (and your accountant) know exactly how the business is performing.

Bookkeeping is important for your overall handyman business plan because it provides a solid foundation for stability and growth. As you diligently record your financial transactions, you can monitor your cash flow, see where and when to cut costs, or find the perfect time to invest money back into the business.

Most importantly, good bookkeeping means you’re prepared for tax time with a detailed paper trail, leaving no room for doubt if it comes to an audit.

Bookkeeping can sometimes be confused with accounting. However, bookkeeping focuses on the day-to-day recording of financial data, while accounting uses those records to provide insights and analysis. 

Think of bookkeeping as collecting the puzzle pieces, and accounting as putting them all together. 

Understanding bookkeeping is a big first step, but can you handle it yourself? How do you know when you need some help?

Can Handyman Contractors Do Bookkeeping Themselves?

Yes, handyman contractors can absolutely do their own bookkeeping, but it depends on how comfortable you are with financial recording.

If you’re organized and have a basic understanding of finances, DIY bookkeeping is well within your skill set. 

On the plus side, doing your own bookkeeping saves money and gives you more hands-on, direct control over your business’s financial health. However, it can be time-consuming and might take your attention away from your core work if you’re not careful. 

Mistakes can and do happen if you’re not familiar with accounting principles, which could lead to problems down the line.

Despite the name insinuating that these records must be kept on paper, modern bookkeeping is done electronically with tools such as contractor invoicing applications, which simplify and speed up the process. 

If you do choose to handle the bookkeeping yourself, here’s how to get started.

Step-by-step Guide to Bookkeeping for a Handyman Business

Bookkeeping involves several key steps to ensure your records are accurate and compliant, helping you to continue maintaining a clear picture of your business’s financial health.

Follow these steps to manage your handyman bookkeeping effectively:

Step 1: Set up a business account

Open a separate bank account that is just for your business. This is one of the best ways to make sure that your personal finances don’t inadvertently get mixed up with your business dealings.

Step 2: Choose an accounting method

Decide between cash, accrual, or double-entry accounting. Cash accounting records transactions when money changes hands, while accrual accounting records them when they are earned or incurred.

Double-entry accounting provides a more comprehensive view as both credit and debit transactions are recorded. For most handyman businesses, cash or accrual methods tend to work best.

Step 3: Record all financial transactions

Consistently document all income and expenses, including customer payments, business-to-business transactions, material purchases, administration costs, and so on. In other words, you should record every single operational aspect of your business. 

A free invoice generator tool helps you create professional invoices and keep more accurate records.

Step 4: Track time and labor costs

Keeping track of your labor hours is very important for accurate job costing and maintaining profit margins. Understanding whether to charge clients a flat rate or bill them hourly can significantly impact your revenue and client satisfaction.

Step 5: Manage all receipts and invoices

Keep all of your financial documents organized, including receipts and invoices. When it comes to tax time, if you have all your paperwork consolidated, you’ll be more prepared and able to answer any inquiries by the IRS.

Step 6: Reconcile bank statements monthly

Regularly compare your bookkeeping records with your bank statements to catch any discrepancies quickly before they spiral out of control. 

Performing this every month means you’ll also be able to catch any fraud and keep your financial data accurate and up-to-date.

Step 7: Prepare financial statements

Generate basic financial statements such as income and balance sheets. These documents are how you can provide yourself with insights into your business performance and help you make business decisions based on data rather than intuition. 

Step 8: Stay compliant with tax obligations

Understand and comply with local tax laws. Accurate bookkeeping makes it much easier to file your taxes on time and correctly. 

To make these steps easier and more seamless while on the job, consider using field service management software like ServiceTitan. It can automate work orders, job and customer details, booking, and financials—all generated in real time as your techs complete the jobs. 

ServiceTitan saves you time and ensures your records are always up-to-date, accurate, and accessible.

What Are Some Good Bookkeeping Tips for Handyman Businesses?

Understanding the essential steps of bookkeeping is a good start, but implementing them makes your financial management even more effective. With this in mind, we’ve created these seven essential bookkeeping tips specific to your industry.

Let’s take a look at each tip in more detail:

1. Always keep your books up to date

With so many transactions going on in the field and on the job, it’s easy for handyman contractors to fall behind on bookkeeping.

Without accurate and up-to-date accounting, you lose visibility and overall financial performance. After a few months of neglecting the books, it becomes nearly impossible to measure any success.

Keep your books accurate. It helps you to stay on top of your business and change its direction, if and when necessary.

ServiceTitan’s Field Management software simplifies these accounting procedures so you can focus on what you do best instead of the numbers. With ServiceTitan Payments, you can securely capture checks and credit cards in the field or send customers a link to a personalized online payment portal.

Additionally, ServiceTitan’s Contractor Payroll software automates the payroll processes by tracking your team’s time and calculating bonuses and commissions quickly and effortlessly.

2. Separate your personal from your business finances

Mixing your professional and personal lives is a recipe for disaster at the best of times, let alone when it comes to finances.

As a handyman contractor, you should have a dedicated business bank account that’s exclusively for business transactions. This means that all income from clients goes into that account, and business expenses like tools and supplies come out of it.

The same applies to business and personal credit cards. Only use business cards for your business and personal cards for yourself.

Many business owners choose different banks to minimize any chances of accidental mix-ups that can blur the lines between business and personal expenditures and make tax time extremely complicated.

3. Regularly monitor your cash flow

Regular cash flow monitoring means handyman businesses can make smarter decisions, plan ahead for busy or slow periods, and avoid unexpected cash shortages.

Software is the most effective way to monitor your cash flow. ServiceTitan’s Service Field software for QuickBooks lets you see all your business transactions in real time.

As a handyman, most of your transactions occur in the field. This integration level means that customer purchases are captured instantly and exported immediately to QuickBooks without manually entering them. 

This saves you a lot of time and means your finances are 100 percent accurate and up-to-date.

4. Regularly monitor your equipment and assets

Regularly monitoring your business assets helps you understand the condition and location of your tools and materials, which helps prevent job delays and unnecessary costs.

To simplify this process, ServiceTitan’s Contractor Inventory software can provide a more centralized workflow to track purchases, vendor returns, transfers, and adjustments—all in one place.

With features like on-the-spot inventory management and barcode scanning, you can manage inventory in multiple locations and automatically trigger a stock replenishment based on stock levels alone. 

5. Take advantage of tax deductions

Whether you’re a handyman contractor or a plumber, everyone loves tax deductions.

Some key tax deductions specifically for handyman businesses and contracts are:

• Tools and equipment: The purchasing and maintenance of tools are all tax deductible if they’re necessary for your work.

• Vehicle expenses: Claim the mileage or actual expenses for the use of your vehicle when it’s used for work purposes, including travel to work sites.

• Licenses and permits: Licenses and certifications that are required for you to stay compliant are all tax deductible.

• Business insurance: Write off any premiums for liability insurance or insurance policies related to your operations.

• Marketing and advertising: Business cards, mailers, flyers, websites, and any marketing efforts can qualify as tax deductions.

Keep accurate books to ensure you don’t miss out on any deductions to which you’re entitled. 

6. Regularly check your financial statements

Even if you’re not a huge fan of number crunching, it’s still important to regularly review your financial statements. Balance sheets, income statements, and cash flow statements offer a clear picture of the financial health of your business.

For example, your profit and loss statement shows the trajectory of business profit (or loss) over time. Reviewing it means comparing previous months to find trends and patterns of on and off seasons.

The cash flow statement provides insight into cash movement in and out of the business. Even when your profit and loss statement is in the black, there can still be issues with cash flow, so it’s essential to review both statements together.

Finally, the balance sheet summarizes your assets, liabilities, and equity at any time. When you monitor balance sheets in combination with cash flow and profit and loss statements, you can spot financial issues early and address them before they become significant problems.

7. Consider hiring a professional bookkeeper

Managing every single aspect of a handyman business can be challenging. If handling the financial side of the business becomes overwhelming, hiring a professional bookkeeper is one way to lessen the workload.

A bookkeeping pro can handle the complexities of the financial records, make sure that everything is above board, and allow you to rest easy knowing you’re compliant with tax laws.

This frees you up to focus on the work that brought you here in the first place—serving customers and repairing their homes and belongings. Yes, it will cost extra, but often, the benefits outweigh the expenses, especially as the business grows.

Is There Handyman Bookkeeping and Accounting Software?

Absolutely, there is bookkeeping and accounting software designed specifically for handyman contractors.

These tools are developed to help automate financial tasks such as invoicing, expense tracking, and financial reporting; best of all, they’re designed with the needs of field service professionals in mind. 

Using specialized software not only streamlines your accounting processes but also reduces the risk of errors and saves you valuable time—time you can spend serving your clients and growing your business rather than filling out endless paperwork.

1. ServiceTitan 

ServiceTitan’s Field Service Accounting software automates day-to-day accounting tasks and provides valuable and accurate financial insights personalized for your business. 

With features like automatic exporting to QuickBooks Online or Intacct, you can simplify your accounting processes and ensure that financial data is always up-to-date.

ServiceTitan also allows the business to produce and download detailed or summarized journal entries using its internal general ledger. This flexibility reduces integration friction by enabling handyman businesses to work seamlessly with their accounting system of choice.

2. QuickBooks

A popular choice, not just for home service industries, but for businesses of all types is QuickBooks. It offers user-friendly accounting solutions that are ideal for small businesses and provides invoicing and financial reporting while keeping your finances organized and accessible.

3. Xero

Another popular bookkeeping and accounting platform is Xero. A cloud-based system that offers real-time financial data, invoicing, and bank reconciliations, all within an easy-to-use interface that caters to trades and service industries as well as others. 

Xero is known for its flexibility, making it an excellent option for handling finances for businesses constantly moving.

Over to You

While not the most exciting part of your business operations, DIY bookkeeping, appropriately done, is the backbone of a successful handyman business. 

By implementing these steps and using the tips we’ve covered, you can keep your finances organized and then relax come tax time, all while focusing on delivering expert services to your customers.

ServiceTitan is a comprehensive software solution that’s designed to simplify not only bookkeeping and accounting but all aspects of running a services-based business. With features like real-time financial reporting, integrated payment processing, and integration with all major accounting software, ServiceTitan empowers you to manage your business more efficiently. 

Ready to streamline your business bookkeeping and save time by not filling out endless paperwork? Give these strategies and ServiceTitan a try, and see the difference they can make to your handyman business today.