The Seven Most Common Bookkeeping Mistakes Made by Small Firm Architects

By Kimberly Burgraff, Director of Studio Services Bookkeeping (A Division of Charrette Venture Group)

I’ve sorted through a lot of messy books in the 17 years that I’ve been in the accounting industry. It’s completely understandable that non-bookkeepers struggle with accounting best practices. How would an architect know that supplies purchased for a project shouldn’t fall under regular office expenses? Or taxes paid on behalf of the owner should be filed under “owner’s draw / member’s draw,” not “taxes paid”? Most importantly, how would an architect understand the business impact that an amazingly organized set of books can have, compared to a set of books that work “just fine”?

You wouldn’t. And you probably wouldn’t know that a bookkeeper who specializes in small architecture firms can also help with invoicing, setting up time tracking software to align with fee proposals, project budget summaries that show hours spent vs. available fee, cash flow summaries – and, of course, the basic financial statements, payables, and receivables.

Regardless of how robust you need your financial reporting to be, you do need to cover bookkeeping basics correctly. For those of you who are tackling bookkeeping yourselves, here are the most common mistakes I see when I take over this role from small architecture firm leaders:

1. Too many “hands in the Quickbooks jar.” You may be tempted to share bookkeeping responsibilities with several partners or staff members, but this usually results in several ways different ways of doing things. If you haven’t guessed, “several ways of doing things” is a very bad phrase for bookkeepers. It is better to have one person in charge and one system in place to keep your books in order and financial reports accurate.

2. No system at all. Receipts in a shoebox? Seen it. Makeshift Excel spreadsheets? Seen them. Panic at quarter’s end? Been there. Professional accounting software is worth the investment. There are lots of affordable solutions available: I recommend Quickbooks Online as an excellent option for small architecture firms. It is synced to the cloud, accessible from anywhere, and is robust software that has all the features you will need for your architecture business.

3. Relying too heavily on Quickbooks. I know this sounds like a contrast to the recommendation above, but hear me out. The software is automated (yay), but it also can do things incorrectly (boo). If you don’t understand Quickbooks, or accounting in general, and think the program can answer your questions, your books can easily go off the rails. It is important to set up the software correctly at the beginning and track entries to keep things in the right places. Point being, software is only as good as the people using it. It isn’t a magic bullet that will do bookkeeping for you.

4. Systems don’t talk to each other. You’re likely using third-party software solutions for payroll, time tracking, and project management. Do they integrate with Quickbooks? If they don’t, you’re probably creating extra steps that you don’t need to. It is important to find software solutions that work with each other so the right data is captured in the right places and shared across platforms.

5. A totally random Chart of Accounts. There’s a rhyme and reason to why Charts of Accounts for architects are set up the way they are. If you simply guessed where things go when you created yours, or if it doesn’t align with your products or services, it may be time for an overhaul. Understanding where revenue goes, what is considered a cost of goods sold, and what should be in overhead expenses is vital when preparing and analyzing reports. And it is much better to get this right in the beginning rather than try to make changes after years of incorrect accounts.

6. Not fully understanding your P&L and Balance Sheet. Each of these statements is designed to tell a particular story about the health of your business. Many architects are uncertain of what to look for, or can’t recognize anomalies until they pass them to their accountants at tax time. With the right guidance, financial statements are effective tools that can give you an important perspective on your cash position, profitability, and overall solvency.

7. Little or no communication about budget and fees between principals and staff. With the right systems in place, such as the Project Summary Spreadsheets I create for my clients, design staff can understand how much time they have to complete certain tasks, and how to schedule work to keep projects profitable. Empowering staff with this information helps them understand the business of architecture, while it also creates an additional safeguard so that monitoring the budget doesn’t fall through the cracks when you are busy.

Do any of these common mistakes sound familiar? Would you rather be doing [insert pretty much anything] than straightening out your Chart of Accounts? I highly recommend outsourcing your bookkeeping to a Quickbooks-certified professional so you can focus on what you do best, designing and serving your clients. I can help you understand the best questions to ask when screening bookkeepers, or I can provide a quote for our remote bookkeeping services.

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Kimberly Burgraff is Director of Studio Services Bookkeeping, a division of Charrette Venture Group. A Quickbooks Certified ProAdvisor and experienced bookkeeper who has worked in the accounting industry for 17 years, Kimberly holds a Bachelor of Science degree from California State University San Marcos in Business Administration with an emphasis in Accounting. Her interest in bookkeeping began at a very young age, working with her CPA father during his busy tax seasons. She joined Studio Services Bookkeeping as an Account Specialist in January 2020. Kimberly is based in Rancho Cucamonga, California.