Bookkeeper for Junk Removal Companies

How do I record deposits and advance payments?

A deposit is not income yet because the job hasn't been done, so it does not belong in your books as revenue on the day the cash lands. It sits in a separate account as money you still owe the customer in the form of work.

It is routine for a caller to put a deposit down to hold a date, and some customers pay the whole job up front. The money is real and the job has not run. If you record it as income that day, your books show revenue for work you haven't done, and the month the job actually runs looks thin for no reason anyone can explain.

The clean fix is a separate liability account, usually called Customer Deposits or Unearned Revenue. The deposit goes there when it arrives. When the truck rolls and the haul is done, we move that money from the deposit account into revenue and match it to the job it came from. If a customer pays for three planned loads in a single check, the money waits in the deposit account and transfers load by load as each one finishes. If the job is canceled, the refund comes out of the same account instead of hitting your income.

What counts as the actual cost of a job?

The costs that belong to a job are the dump fees, the fuel for the run, and the wages of the crew on that truck. Everything that keeps the business open whether or not you take a job, the shop, the insurance, the licenses, the marketing, is overhead and is handled separately from the jobs.

Dump and disposal fees are the most distinctive line in the trade. Industry sources put them around 8 to 11 percent of the gross price of a job, which usually comes out to about $20 to $55 per trip depending on the city and whether the yard charges by the load or by weight. When that receipt gets folded into a catch-all expense category, every job quietly absorbs a bit of it, and the small ones that should be profitable start showing less margin than they actually earn.

The wages you pay the crew of route as direct job costs too. The owner's own draw is not a per-job cost; it comes out of what is left after the jobs pay for themselves. Keeping wages inside the job costs is what makes the per-job profit number a real number you can make decisions on.

Is the truck an expense or an asset?

The truck is your biggest capital asset, it is not an expense you feel all at once, and it does not belong as a lump in the month you pay for it. You will be using the vehicle for years, and the books should be spread out over those years rather than spilled into the one month.

The used vehicle market in this work runs $3,000 to $8,000 for a pickup and $15,000 to $25,000 for a used dump truck, according to the setup guides we read. Put that whole purchase in the month it happens, and one month will look disastrously unprofitable while every other month pretends you are doing better than until now been actually doing.

So the truck is recorded as an equipment asset on the balance sheet, and every month we take depreciation, which spreads the purchase price over its useful life as the cost of owning it. That is a much better picture of what the truck costs you month to month. Fuel is a line of your own, separate from the truck asset, and so is regular repair and maintenance. Another pattern worth knowing: some industry sources allocate around three percent of gross revenue to the truck expense each month as a reserve for future repairs, but it is a guideline, not a rule.

How do I track profit by job size?

You get a real answer only when the book account is split by the load sizes you sell, meaning a separate income line for quarter loads, half loads and full loads. As long as your work falls into one total revenue and one total COGS, pricing decisions are being made on nothing The actual cost per job type does not exist.

In the chart of accounts, we set up a service line for each size of load. Every job that leaves the office gets classified as a quarter, a half or a full load. To start the, the report will show you how many of each size that you took, the average revenue per job, and the average profit after the dump fee, the fuel and the crew wages. Then you see the full truck load at extra money or the quarter loads that barely ever clear the road. That is, a pricing question, not a guessing one.

One national index from an actual company transaction data puts the average job around $241. Your job mix and your area stay different from the index, but the mismatch is exactly the point: market averages will not tell you how much you need in your own books.

What do junk removal owners usually get wrong?

The most common failures in this trade ignore the books until tax season, lose the dump receipts, and tuck the crew's wages so far into the overhead you can never see what a job is worth. Those are the specific failures.

• Waiting for tax time to touch the books. A month of job receipts can be logged in a day when you run behind, but rebuilding a full year afterward is near-impossible to get right. The data is not in any one pile; it is spread across banks, a field app, a notebook on the truck.
• Not listing dump fees at all. The expectation of $20 to $55 per run, or 8 to 11 percent of the quote, has to be a line item. If it vanishes into the columns, every half-loaded job ends up secretly costing more than you think.
• Believing a service business has no cost of goods. Labor, fuel and disposal are direct costs of a job. If they are not tracked as such, your gross profit is overstated and you can't do per-job analysis.
• Only one big revenue account for all sizes. Then a question like 'should we stop quoting full loads?' is not answerable from the books.

What should my monthly reports show me?

The month end report's job? When everything is well kept, it answers the owner's questions: which size of job made the profit, who still owes money, and what deposits you still have to earn. The first thing we give the owner is a gross profit report broken down exactly that way.

Order that you get a single summary number, the decisions remain plausible. And gross profit on each size tier tells you how to charge and when to stop quoting. The Deposits-balance shows the work you have already invoiced by the customer, and which a job still has to be completed to count it as revenue. The payables aging report shows the clients who go on for more than 30 days while you are putting gas and depending on them.

If you use one software in the field for the route and another for the money, the two have to be reconciled at the end of every month. Otherwise you are short on a sales slip, the and you don't know which job the slips belongs to.

This all sounds like a lot, but the simple amount tells the question of the growth. If we can see the gross profit per job and what deposit remains, everything else becomes simpler business.