Construction Bookkeeping Services
Construction bookkeeping is ordinary bookkeeping with one extra dimension: every dollar in and out is tied to a job as well as to an account. Get that right and you know which jobs make money. Get it wrong and you know only whether the bank balance went up this month, which is a different question with a different answer.
What the work actually involves
Each month your bookkeeper reconciles every bank, credit card and loan account, codes every transaction to an account and to a job, and produces the statements. That much any bookkeeper will tell you. The construction part is what happens around it.
Deposits received before work starts are booked as a customer liability, not as revenue, until the work that earns them is done. Progress invoices are matched to the schedule of values on the contract. Retainage withheld by the customer is carried as retainage receivable, separately from ordinary receivables, and retainage you withhold from subs is carried as a payable the same way. Materials bought for a specific job are coded to that job the day they are bought, not when the job is invoiced. Payroll hours are posted to the jobs they were worked on, at the burdened rate rather than the wage.
Then, from all of that, the reports a contractor actually needs: a job cost report for every open job against its estimate, a profit and loss by job and by period, and a work-in-progress schedule. The WIP schedule is the document a bank or bonding agent means when they ask for one, and your bookkeeper produces it monthly rather than reconstructing it once a year.
Who this is for
General contractors, builders and subcontractors running project work: anything bid as a job, billed in stages and closed out at the end. Typically two to forty people on payroll or paid as subs, a handful to a few dozen jobs open at once, and an owner who is still the estimator. Residential and commercial both; the mechanics are the same, the terms differ.
If your work is mostly service calls and same-day tickets rather than bid jobs, the trades and service contractor page describes a setup that fits better. Many companies are both, and the books can carry both: job costing for the construction side, departmental reporting for service.
Cost codes: the part everyone sets up wrong
A job cost report is only as useful as its categories. Most contractor books arrive with either no cost codes at all, so every job shows one line called "expenses", or with three hundred codes copied from a commercial estimating system that nobody on a small crew will ever use consistently.
Your bookkeeper sets up a short list that matches how you bid. For most small contractors that is labour, materials, subcontractors, equipment and other direct costs, broken down by the phases you actually estimate: site, foundation, framing, rough mechanicals, finishes, or whatever your trade’s equivalent is. If you estimate in fifteen lines, the books should cost in fifteen lines, so that the report puts estimate and actual side by side with no translation.
Committed costs
A sub’s signed contract is a cost you owe before any invoice arrives. The books can carry it as committed, so that a job which is forty percent done and has sixty percent of its sub costs still to come does not look like it is beating the estimate.
Revenue: when the work is earned, not when the check lands
This is the piece that makes a construction P&L true. Under the percentage-of-completion approach, revenue for a period is the share of the contract earned in that period, usually measured as costs incurred to date over total estimated costs. Bill more than you have earned and the difference is a liability, billings in excess of costs. Bill less and it is an asset, costs in excess of billings, and it is the single most common reason a busy contractor has no cash.
Whether your tax return uses the same method is a question for your tax preparer: smaller contractors have other options under the IRS small-contractor rules, and the choice has consequences. The books do not need to wait for that decision. They can carry the information needed for any method, and your bookkeeper prepares the year-end package so the preparer can apply whichever one you are on.
The monthly package
- Bank, credit card and loan accounts reconciled, with the reconciliation reports kept
- Profit and loss, balance sheet and cash flow statement, with prior-period comparison
- Profit and loss by job and by department
- Job cost report for every open job: estimate, committed, actual, variance
- Work-in-progress schedule with over- and under-billings
- Accounts receivable and payable ageing, with retainage shown separately in each
- Payroll processed and filed in every state where crews worked, if payroll is included
- A short written note on anything that looks wrong, before it becomes a problem in January
Reports arrive in the first half of the following month, once the bank statements close. If you need a WIP schedule mid-month for a lender, that is a request the firm can turn around.
Software
QuickBooks Online is the most common starting point, and Plus or Advanced is needed for job costing because the Projects feature and class tracking live there. QuickBooks Desktop still runs in a lot of contractor offices and your bookkeeper works in it; note that Intuit no longer sells new Desktop subscriptions to US customers other than Enterprise, so a company on an old Desktop file will at some point face a move, and that move is better planned than forced.
Field and project tools such as Buildertrend, Procore, CoConstruct, Knowify and Jobber produce estimates, change orders and invoices that the books need to agree with. Your bookkeeper reconciles those systems to the accounting file rather than re-keying them, and will tell you where the two disagree, which is usually the most informative report of the month.
Switching from another bookkeeper
Common, and usually less painful than people expect. Your bookkeeper reviews the existing file, lists what it would change and why, and takes over at a month-end so there is a clean line. Your previous bookkeeper does not need to cooperate for this to work, though it helps. If the old file is beyond repair, your bookkeeper says so and quotes a rebuild rather than quietly carrying the errors forward.
What it costs
Engagements start at $250 a month. For a construction company that figure moves with transaction volume, the number of open jobs and whether payroll is included, and most land between $400 and $1,500. Books that are behind are quoted as a cleanup first: a deposit, then a monthly retainer until current, then the ordinary monthly figure. Your bookkeeper looks at the books before quoting, so the number you get is the number.
For a sense of where your company might fall, the cost guide walks through the variables with examples.
If the books are behind and there is a date in view, say so in the request. That changes the order your bookkeeper works in, and it is better known on day one.
| Event | Ordinary books record | Construction books record |
|---|---|---|
| Customer pays a deposit | Income | Customer deposit liability, released as earned |
| Materials bought for Job 14 | Expense: materials | Job 14, materials cost code, this period |
| Crew works 40 hours on Job 14 | Expense: wages | Job 14, labour, at burdened rate |
| Progress invoice sent | Income | Billings against Job 14; compared with earned revenue |
| Customer withholds 10% retainage | Receivable | Retainage receivable, shown separately |
| Sub signs a $40,000 contract | Nothing until invoiced | Committed cost on Job 14 |
| Month end | Profit and loss | Profit and loss plus job cost report and WIP schedule |
Common questions
What size of contractor is this for?
Mostly companies with two to forty people on payroll or paid as subs, and a handful to a few dozen jobs open at once. Smaller than that and the service contractor setup is often enough; much larger and you probably have a controller.
Can they produce a WIP schedule for my bank or bonding agent?
Yes, monthly as part of the standard package, and on request between months. If the bank or surety requires reviewed or audited statements, those must come from a CPA; your bookkeeper prepares the books so that review costs as little as possible.
Do I need QuickBooks Plus or Advanced?
For job costing in QuickBooks Online, yes: Projects and class tracking are not in the lower tiers. If you are on Simple Start or Essentials your bookkeeper will say so and the upgrade is part of the setup.
How do they get my receipts and invoices?
A secure document portal, a shared email address that captures vendor bills, and bank feeds for everything that clears the bank. Photographing a receipt on the tailgate is fine; the point is that it gets coded to the job the same week.
What about sales tax on materials?
It varies by state and by how your contracts are written, and it is a question your bookkeeper will raise early because it affects how material costs are coded. The rules themselves are for your tax preparer or state department of revenue to confirm; the books will carry whatever treatment applies.
Can they take over mid-year?
Yes. The handover happens at a month-end so there is a clean line, and your bookkeeper reviews the earlier months in the year rather than assuming they are right.
What happens at year-end?
Your bookkeeper prepares a year-end package for your tax preparer, including the WIP schedule needed for contract accounting, and works with whoever you use.
How is this different from the trades and service page?
This page is about project work: bid, billed in stages, closed out. The service page is about tickets: dispatched, done, invoiced the same day. The books are structured differently for each, and a company that does both gets both.
Related services
- Contractor Bookkeeping for Trades and Service Companies
- Construction Payroll Services
- Job Costing and WIP Reports for Contractors
- Construction Bookkeeping Cleanup and Catch-Up
Who we work with
Request a quote for construction bookkeeping
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