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Bookkeeping for General Contractors
A general contractor’s books carry everyone else’s money. Deposits from owners, retainage withheld by owners, retainage you withhold from subs, draws from a construction lender, and a dozen sub contracts committed before a single invoice arrives. The P&L is the least interesting report on the file.
Retainage runs both ways
Owners hold back five or ten percent of every progress payment until the job is accepted. You hold back the same from your subs. Both are real amounts that do not belong in ordinary receivables and payables: the receivable makes you look more collectible than you are, and the payable, left in the general pile, gets paid early by someone trying to be helpful. Your bookkeeper carries retainage receivable and retainage payable as their own balance sheet lines, by job, so a closeout statement can be produced from the books rather than from memory.
The WIP schedule your surety wants
Bonding agents and banks ask for a work-in-progress schedule because it is the one document that shows whether a contractor is over- or under-billed across every open job at once. Produced monthly, it is a management report. Produced once a year because the surety asked, it is a scramble that usually reveals a job that went wrong months ago.
Your bookkeeper produces it monthly as part of the standard package: contract value with approved change orders, estimated cost, cost to date, percent complete, earned revenue, billed to date, and the over- or under-billing on each job. When the surety requires reviewed or audited statements, those come from a CPA; your bookkeeper prepares books that make that review short.
Subcontractor control
Every sub needs a W-9 before the first check, a signed contract so the committed cost is known, lien waivers matched to payments, and insurance certificates that are current. The books are where three of those four live. Your bookkeeper tracks committed sub costs against each job so a job that is forty percent complete with most of its sub work still to come does not look like it is beating the estimate, and prepares the 1099-NEC forms in January at the current reporting threshold.
Pay-when-paid clauses mean sub payables often sit until the owner’s draw arrives. The ageing report shows which payables are waiting on which receivable, which is the cash-flow picture a GC actually manages by.
Draws, deposits and the lender
A construction loan draw is not revenue and an owner’s deposit is not income. Both are liabilities until the work that earns them is done, and both are among the most common things found booked as sales in a GC’s file. Your bookkeeper reconciles draw requests to the schedule of values and to the lender’s statements, and releases deposits to revenue as the percentage of completion moves.
Change orders and the leak
On a residential build the unbilled change orders can run to five figures: the extra outlets, the upgraded fixtures, the rock under the footing. Your bookkeeper keeps approved change orders against each job so the contract value on the WIP schedule is right, and lists work that has been done without a signed change order so it is either billed or consciously written off.
If a surety or lender has asked for a WIP schedule and you do not have one, that is the request to send. Your bookkeeper can say within a day what it would take to produce one from your books.
General Contractors: common questions
Can your bookkeeper prepare what my bonding agent asks for?
The WIP schedule and the books, yes, monthly. If the surety requires reviewed or audited financials, those come from a CPA, and your bookkeeper prepares the books so that review is as short as possible.
How are subs’ committed costs tracked?
From the signed sub contract, entered against the job when it is executed. Invoices then draw down the commitment, so the job cost report shows committed, actual and remaining.
What about lien waivers?
Your bookkeeper tracks which payments have a matching waiver so the closeout file is complete. The waiver forms themselves depend on your state and your contract.
Residential or commercial?
Both. Commercial work tends to have formal retainage and AIA-style billing; residential tends to have deposits, draws and allowances. The books handle each.
What your bookkeeper handles
- Construction Bookkeeping Services
- Contractor Bookkeeping for Trades and Service Companies
- Construction Payroll Services
- Job Costing and WIP Reports for Contractors
- Construction Bookkeeping Cleanup and Catch-Up
Also written for Plumbers, HVAC Companies, Electrical Contractors, Landscapers, Roofers, Painters, Remodelers, Pool Builders, Handyman Businesses and Concrete & Excavation.
Request a quote for your GC business
Tell us about the company and the state of the books. Your bookkeeper replies within one business day with a plain answer: what it would take, and what it would cost. Requests answered within one business day · Calls Mon–Fri, 9am–5pm Eastern Or call (888) 720-4009 if you would rather talk it through first.