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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?

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More Questions

Can I do my own bookkeeping?

Yes, you can do your own bookkeeping. Many small business owners handle it themselves. The real question is whether you have the time and discipline to stay consistent with it.

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How much can I pay someone without issuing a 1099?

The threshold is $600 per vendor, per year for services. Pay someone less than that and no 1099 is required. Reach $600 or more and you must send a 1099-NEC by January 31.

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How to pay sales tax as a business in Missouri?

Register with the Missouri Department of Revenue, collect the correct state and local rates, then file and pay through the MyTax Missouri portal by your assigned due date.

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What is the best software for salon bookkeeping?

QuickBooks Online works best for most salons because it integrates with scheduling software and handles tips, booth rentals, and product sales. The software matters less than how it's configured for your specific salon setup.

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How long is it reasonable to wait for an invoice to be paid?

Net 30 is standard for most businesses, but what's reasonable depends on the terms you set. Following up within a week of the due date and escalating from there helps catch slow payers before they become bad debt.

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What is the penalty for late payment of payroll taxes?

The IRS charges 2% to 15% of unpaid payroll taxes depending on how late the deposit is. Interest accrues on top, and business owners can be held personally liable for withheld employee taxes through the Trust Fund Recovery Penalty.

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