Bookkeeping for an Electrician

by Rosemary McMahon

I kept the books for a furnace cleaning company that I owned for 8 years but I am no longer in that now. I am helping my son-in-law to set up books for his new company as an electrician. He is only selling his services as an electrician, not selling electrical equipment in a shop. Do I need a heads up on anything to do with entries for an electrician - I will be using Simply Accounting as this is the only program I have ever used.

An area I am confused about is that he will purchase lots of wires, socket plates, switch plates etc. On some jobs he invoices for everything under one amount but on others he will list the labour and, for example, the plates used and wiring used separately. Do I need to enter those differently or not?

Also, how do I pay him - do I put him under Directors Fees and then he pays tax at the end of the tax year? He had heard that it's different now and you have to pay tax each month?

I'm info gathering before I launch into this and it has been 4 years since I did this!!!

image of fancy scroll lines

Hi Rosemary,

Let's start with the end.

How Do I Pay Him?

If the business is incorporated, one method to remove money from the corporation is to be paid as an employee and remit payroll taxes according to the remitter type CRA assigns.

There are also other ways to be receive corporate funds. It would be wise to consult a CA or CGA for advice.

If the business is a sole proprietorship, then your son-in-law will take draws.

Purchase of Supplies

If I understand you correctly, the business will not be keeping any inventory of parts on hand ... but will purchase the parts for each job as it arises.

I don't use Simply Accounting (SA), but can speak to QuickBooks.
In QuickBooks you would setup non-inventory parts from the item list. You would check the box that sets purchase accounts (like Job Materials) and a sales account. If you don't click on this box, the purchase and sale go into one account.

Under this method, your job material purchases will be expensed immediately. It is important you do not use this method if you intend to have inventory on hand.

The beauty of tracking your job materials this way ... if it is setup correctly ... is that it allows you to calculate your gross margin on each job.

I will assume that SA has a similar function as the one I've just described.

Other Things to Consider

When you select your version of SA, I would make sure you select the one that let's you manage estimates.

You may also want to consider hiring a SA consultant to do your initial software setup. It could save you money down the line and ensure you get off on the right foot.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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