How much of my bank account is actually mine?
The number on your bank statement isn’t the whole picture. That balance includes money you owe but haven’t paid yet. To know what’s actually yours, you need to subtract everything you’re committed to paying.
Start with your obligations. Add up unpaid vendor bills sitting in your inbox or accounts payable. Include any credit card balances you’ll need to pay off. Factor in payroll if payday is coming before your next deposit. Don’t forget payroll taxes. Even if you deposit them monthly or quarterly, that money isn’t yours to spend.
Sales tax works the same way. If you collected sales tax from customers, that money sits in your bank account but belongs to the state. It’s not available cash. Neither is any loan payment due before your next revenue hits.
For contractors, the calculation gets more complicated. Customer deposits for projects that haven’t started yet aren’t really your money. You haven’t earned it. If you cancel the job or the customer backs out, you might owe it back. Same with deposits on jobs in progress where the work isn’t finished. That cash represents an obligation to complete work, not profit you’ve made. Proper construction job costing helps you track which deposits are earned versus which are still obligations.
The simple calculation is bank balance minus accounts payable minus accrued payroll minus payroll taxes owed minus sales tax owed minus customer deposits for unfinished work. What’s left is closer to your true available cash.
If that number is smaller than you expected or even negative, you’re not alone. Many business owners discover they’ve been spending money that wasn’t actually theirs to spend. That’s how cash crunches happen. The bank shows $50,000 but you have $60,000 in obligations, and suddenly making payroll or paying a critical vendor becomes a scramble.
Knowing your real number changes how you make decisions. You stop saying yes to equipment purchases or owner draws based on bank balance alone. You start seeing the timing of payables and receivables as something to manage actively.
Working with a bookkeeper in American Fork who understands your business means having reports that show your true cash position, not just your bank balance. Tracking payables, receivables, and tax obligations gives you visibility into where you actually stand. Without that, you’re making financial decisions based on incomplete information.
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More Questions
How do I track inventory for a construction business?
Most construction materials are job costs, not inventory. True inventory tracking is only needed for materials kept in stock before being assigned to specific projects. Focus on job costing for project-specific purchases.
Read answerWhat training do I need for QuickBooks?
It depends on your role and what you'll handle in QuickBooks. Business owners reviewing reports need an hour of learning. Those entering transactions and reconciling accounts need 3-5 hours of focused training on the fundamentals.
Read answerWhy do my financial statements never make sense?
Financial statements that don't make sense usually stem from unreconciled accounts, inconsistent categorization, or mixing personal and business transactions. Sometimes the statements are accurate but require practice to interpret correctly.
Read answerAre there any bookkeepers in the Wasatch Front that specialize in construction?
Yes. The Wasatch Front has bookkeepers who focus specifically on construction companies and contractors. Construction accounting requires specialized knowledge of job costing, progress billing, and work-in-progress that general bookkeepers typically don't have.
Read answerWhen should a small business hire a CFO?
Most small businesses don't need a full-time CFO until they're well past $10 million in revenue. But you might need CFO-level thinking sooner if cash flow is tight despite profitable books, you're facing major decisions, or you need help with financing.
Read answerWhat financial reports matter for demolition contractors?
Job cost reports are the most important because they show profitability by project. Cash flow reports, equipment cost tracking, and accounts receivable aging also matter for demolition work.
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