Have questions about how to handle accounting for your interior design business? We have answers. In this video, you’ll learn about best accounting practices specifically geared towards the interior design industry from a panel of accountants who specialize in the field: Ashley Mobley of Business by the Book, Bradford Schumann of Bradford Tax and Consulting, Emilie Sheaffer of Logistis for Designers, and Houzz’s own Andie Nelson, Accounting Integration Expert and Certified QuickBooks Pro Advisor. (See full bios at the end.) Below are some important highlights from the webinar.
Utilize Houzz Pro’s QuickBooks Online Integration
First, if your financials are “not recorded properly, you could end up spending thousands of dollars in taxes,” Mobley says. So you want to find an accountant or bookkeeper who knows your business; the ins and outs of the design industry, and the accounting software you use. Choose a software that has all of the features you need to make financial recordkeeping easier.
“One of the great things with Houzz Pro is obviously the ability to integrate with QuickBooks Online,” Nelson says. All of the needed data from your projects in Houzz Pro flows automatically into QuickBooks Online. Houzz offers 30 days of free integration training support to get you or your bookkeeper up to speed quickly.
Quick tip: The Houzz Pro and QuickBooks Online integration is a one-way sync, so make sure all your project related information originates in Houzz Pro.
Accountant or Assistant?
Especially if you’re a new business, you might be considering handling bookkeeping yourself or hiring an assistant to do it. Is it worth the cost savings?
Sheaffer advises keeping these functions separate. “You should have a bookkeeper that solely does your bookkeeping work…[which] includes categorizing transactions, matching items that sync over from Houzz Pro, reconciliation, sales tax filing, financial reporting, and checking that the information coming over from Houzz Pro matches your bank records,” she says.
Then your administrative or office assistant would help “with the day to day,” she says. This could include “handling orders, administrative tasks, purchases, order creation, reporting, payments on purchase orders, and checking that orders are received.”
Quick tip: “You never want to give your admin or office assistant full access to all of your accounts [and] financial data,” Sheaffer says. “There should be a professional—an accountant or bookkeeper—that’s checking what they’re ordering.”
Protect Your Profits
Limiting your out-of-pocket liability starts with proposals. “Always send proposals for payment,” Sheaffer says. “The moment you get payment on a proposal, you should turn it into an invoice. Now it shows up on your financial reporting.” With Houzz Pro’s QuickBooks Online integration, you never have to worry about forgetting to create your invoices.
Schumann stresses the “importance of collecting payment from your client before paying your vendors and paying sales tax.”
He says, “I’ve had clients ask us, ‘Should we collect a 100% deposit or a 50% deposit?’ We always stress to the clients that they should collect 100% upfront for any product purchases. Once you turn around and place the order with the vendor, even if you’re providing the vendor with a 50% deposit, you're essentially providing them with a 100% commitment. Oftentimes the markup is less than that 50% deposit. So we’ve seen a lot of situations where clients have been really kind of saved by collecting 100% percent up front.”
Quick tip: Make sure you charge and collect the correct sales tax. Some states are origin based so tax is based on your business location, other states are destination based which means tax is calculated based on the project location, not your business location.
Watch the webinar to learn a lot more about sales tax, including how to find out when to charge tax, as well as more information about proposals, invoices, retainers and deposits.
Review Reports
Reviewing profit-and-loss statements is key to figuring out your ideal client profile and what types of projects are most worth your time. “In QuickBooks Online, you can actually run a P&L by project,” Shaeffer says. If you’re not yet taking advantage of Houzz Pro’s QuickBooks Online integration, “you’ll have to add everything from your bank activity into a spreadsheet” to run a P&L, Sheaffer says.
You’ll want to stay on top of other reports as well — “knowing what your sales tax liability is, knowing what retainer balances you have out there,” and checking your accounts payable reports Mobely says.
Quick tip: Review these reports regularly, Mobely says, to make sure “that everything is syncing over properly from Houzz Pro to QuickBooks Online. It’s important that that information is reconciled monthly.”
How to Account for Returns?
Again, proposals are your friend here. The nice thing, about a proposal is it’s a working document,” says Schumann. “As you make changes to the proposal, it hasn’t yet been recorded and reported on a sales tax return.” So ideally, you’ll account for returns on a proposal instead of an invoice.
Quick tip: Zero out the item being returned instead of deleting it, so you have “a breadcrumb trail for you to better understand what happened,” Schumann says.
Learn more about returns, as well as what our experts say profitable interior design businesses have in common, by checking out the webinar.
About the Experts
Ashley Mobley is director of operations and client services at Business by the Book, a woman-owned firm that offers bookkeeping and accounting services for creative businesses virtually across the country.
Andie Nelson is Houzz’s Accounting Integration Expert and a Certified QuickBooks Pro Advisor. She brings more than 20 years of experience in the world of finance, including as a bookkeeper.
Bradford Schumann is a Certified Public Accountant and the founder of Bradford Tax and Consulting, which offers accounting services and consultations on tax preparation/strategy as well as business processes for interior designers in Illinois.
Emilie Sheaffer is co-founder and CEO of Logistis for Designers, which provides advisory, accounting, sales tax and payroll services for interior designers and interior design teams who want to elevate their businesses.
Ready to get your accounting in order? Watch the webinar now
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