How to do bookkeeping for a contractor?
Contractor bookkeeping differs from regular small business bookkeeping in one critical way: job costing. Every expense, labor hour, and piece of revenue needs to connect to a specific project. Without that connection, you know your overall profit but have no idea which jobs made money and which ones lost.
Start with separate accounts. One business bank account and one business credit card, used only for business expenses. Mixing personal and business transactions makes job costing nearly impossible and creates headaches at tax time.
Set up your chart of accounts for construction work. Standard templates won’t cut it. You need categories for materials, labor, subcontractors, equipment rental, and job-specific costs. QuickBooks Online handles this well when configured correctly from the start, but generic setup produces reports that don’t tell you what you actually need to know.
Code every expense to a job when it happens. Buy lumber at the supply house for the Smith project? Tag it to that job immediately. Wait two weeks and you’ll either forget which job it was for or code it wrong. The lag between spending money and recording it is where most contractor books fall apart.
Save receipts digitally. Apps that connect to your accounting software let you snap a photo and attach it to the transaction. Paper receipts fade, get lost in your truck, or end up in a shoebox that nobody wants to sort through in April.
Track subcontractor payments carefully. You’ll need to issue 1099s at year end for anyone you paid $600 or more, and the IRS takes those filings seriously. Keep W-9s on file before the first payment, not after you’re scrambling to collect them in January.
Reconcile accounts weekly instead of monthly. Contractors have too many transactions flowing through to wait 30 days. Weekly reconciliation catches duplicate charges, coding errors, and missing receipts while you still remember what happened. A Mid-Missouri bookkeeper can handle this rhythm if you don’t have time to stay on top of it yourself.
Run job profitability reports after each project closes. Compare estimated costs to actual costs. If you bid $8,000 in labor and spent $11,000, you need to know that before you bid the next similar job. This is where construction bookkeeping actually pays for itself through better bidding decisions.
The system doesn’t need to be complicated. It needs to be consistent. Same coding approach every time, receipts captured as you go, reconciliation on a regular schedule. Do that and your books will actually answer the question every contractor asks: which projects are worth taking?
Full-Charge Bookkeeping for Mid-Mo's Businesses
The Next Step:
Get Your Quote
Tell us what you're dealing with. We'll listen, ask a few questions, and give you a straightforward price that meets your expectations.
More Questions
How do I register to collect MO sales tax?
Register through the MyTax Missouri portal on the Department of Revenue website. You'll need your EIN, business details, and information about your sales activities to complete the application.
Read answerWhat proof do I need for business expenses?
Keep receipts showing the amount, date, vendor, and what you bought. For meals and travel, also document the business purpose. Bank statements alone won't satisfy the IRS if you're audited.
Read answerDo you need an accountant if you use QuickBooks?
QuickBooks organizes your financial data, but it doesn't file taxes or catch errors on its own. You still need an accountant for tax preparation and likely a bookkeeper to keep the data accurate throughout the year.
Read answerHow much should I pay someone to do payroll?
Payroll processing typically costs $40 to $200 per month for small businesses. The price depends on whether you use DIY software, a payroll company, or have a bookkeeper handle it as part of your monthly service.
Read answerWhat is the rule of thumb for construction costs?
Labor typically runs 25 to 35 percent of project cost, materials 40 to 50 percent, and net profit should land between 5 and 10 percent. These benchmarks only work if you track actual costs by job and compare them to your estimates.
Read answerWhat is the difference between bookkeeping and accounting?
Bookkeeping is the daily work of recording and organizing transactions. Accounting is interpreting that data for taxes, strategy, and business decisions. Most small businesses need both, but they serve different purposes.
Read answer
