How is bookkeeping for contractors different from regular bookkeeping?

Contractors need cost tracked by job, not just by account, plus subcontractor compliance, retainage, progress billing, and often certified payroll and use tax. A standard profit and loss cannot tell you which jobs made money.

How much does contractor bookkeeping cost?

Our monthly accounting starts at $750 a month and scales with transaction volume, payroll, and number of active jobs. Cleanup of prior periods is quoted separately after we review the file.

What software should a contractor use?

QuickBooks Online Plus or Advanced for the accounting file, paired with a field tool such as Buildertrend, Jobtread, or Jobber when project management and client billing need to live together.

How often should a contractor close the books?

Monthly. A close within fifteen days of month end keeps job decisions, tax reserves, and lender reporting current. Quarterly closes are already too late to fix a slipping job.

What is construction bookkeeping?

Construction bookkeeping tracks income and cost by job as well as by account, so every contract shows its own revenue, labor, materials, subcontractor, and equipment cost. It also covers retainage, progress billing, subcontractor compliance, and sales or use tax on materials — items standard small business bookkeeping never touches.

Can I do contractor bookkeeping myself?

Many owners start there. It works while there are one or two jobs at a time and a single bank account. Once you add crews, subcontractors, progress billing, and multiple concurrent contracts, the time cost and the error cost usually exceed what monthly accounting support runs.

What reports should a contractor look at every month?

Job cost report with budget versus actual, profit and loss with overhead separated from job cost, balance sheet with retainage and over/under billings, accounts receivable aging, and a WIP schedule once contracts run across months.

Construction Accounting Guide · Monthly Books

Bookkeeping for contractors: a practical monthly system

Contractor books fail for predictable reasons: costs are not tied to jobs, subcontractor paperwork is missing, and the close never happens. This guide lays out the monthly system we run for construction clients so the numbers are usable by the 15th.

Who this is for: General contractors, remodelers, home builders, and specialty trades from roughly $300K to $10M in annual revenue.

Worked examples

A construction chart of accounts, simplified

This is the cost structure we build for remodelers and general contractors so gross profit by job stays honest.

Account group	Examples	Where it belongs
Direct labor	Field wages, payroll taxes, workers' comp on field crew	Cost of goods sold
Materials	Lumber, fixtures, supply house purchases	Cost of goods sold
Subcontractors	Electrical, plumbing, HVAC, drywall	Cost of goods sold
Equipment and rentals	Excavator rental, fuel, small tools charged to jobs	Cost of goods sold
Other job costs	Permits, dumpsters, job-site portable toilets	Cost of goods sold
Overhead	Office rent, admin payroll, general liability, software	Operating expenses

The monthly close calendar we run

A close finished by the 15th is the difference between reporting and guessing.

When	Task	Owner
Weekly	Code costs to jobs, chase missing receipts, review unbilled work	Bookkeeper
Weekly	Collect W-9s and insurance certificates before paying a new sub	Office
Day 1–5	Reconcile bank, credit card, and loan accounts	Bookkeeper
Day 6–10	Update estimated cost at completion on every open job	Owner / PM
Day 10–15	Review job cost report, post adjustments, lock the period	Accountant

What a job cost report should tell you

A $180,000 kitchen and addition remodel, three months in.

Line	Budget	Actual to date	Variance
Labor	$46,000	$52,400	($6,400)
Materials	$58,000	$54,100	$3,900
Subcontractors	$41,000	$44,800	($3,800)
Other job costs	$9,000	$7,200	$1,800
Total cost	$154,000	$158,500	($4,500)
Projected gross profit	$26,000	$21,500	($4,500)

Labor overruns show up first. Caught in month two you can re-sequence the crew; caught at closeout you just absorb it.

Step-by-step

1. Separate the money
One operating account, one tax and payroll reserve, one credit card for the business. Mixed personal spending is the single biggest driver of cleanup cost later.
2. Build a construction chart of accounts
Split cost of goods sold into labor, materials, subcontractors, equipment, and other job costs. Keep rent, office, insurance, and admin payroll in overhead so gross profit by job stays honest.
3. Code every cost to a job
Each bill, card charge, and check gets a project and a cost code at entry time. Retroactive job coding is guesswork and it is where most of a cleanup budget goes.
4. Run subcontractor compliance weekly
Collect the W-9, certificate of insurance, and contractor license before the first payment. Track the expiration dates. This protects 1099 filing at year-end and your liability exposure all year.
5. Run payroll through the accounting file
Payroll should post to the file automatically, with field labor landing in job costs and office labor in overhead. Certified payroll on public work needs hour detail by job and classification.
6. Handle sales and excise tax on schedule
Know whether each job is retail sales tax or wholesale with a reseller permit, track use tax on materials pulled from inventory, and file on the state's cadence rather than catching up quarterly.
7. Close the month
Reconcile every bank, card, and loan account, review the job cost report with the owner, update open job estimates, and lock the period. A closed month is a month you can make decisions from.

Pro tips

Photograph receipts at the supply house and attach them to the transaction the same day.
Review unbilled costs weekly — most contractors are sitting on work they forgot to invoice.
Keep a 13-week cash forecast when you carry retainage or slow-paying GCs.
Reconcile retainage receivable separately so it does not distort aging.

Common pitfalls

Treating the bank balance as profit while deposits and overbillings sit unearned.
Skipping the certificate of insurance and discovering an uninsured sub after a claim.
Deferring the close for months, then trying to reconstruct a year in March.
Owner draws coded as expenses, which understates profit and misstates the balance sheet.

Frequently asked questions

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