Mastering Construction Bookkeeping A Contractor's Essential Guide
- Akash Dey
- Jul 2
- 2 min read
Updated: Jul 3
Introduction
Effective bookkeeping is essential to the smooth operation of any business, but it’s especially critical in construction. With complex financial reporting, project timelines, and tight margins, accurate bookkeeping helps contractors stay profitable and compliant. This guide breaks down the essentials every contractor needs to manage construction finances successfully.
Why Construction Bookkeeping Matters
Cash Flow: Track every dollar in and out to avoid cash shortages.
Payroll: Accurately handle wages, taxes, and subcontractor payments.
Work in Progress (WIP): Monitor long-term projects in real time.
Overruns: Catch budget issues early and adjust before it’s too late.
Key Components of Construction Bookkeeping
Job Costing Ledger
Each project is treated as its own “job,” with records for:
Labor
Materials
Equipment
Subcontractors
Overhead
Cost Accounting Essentials
Material & Labor Cost Control
Overhead Allocation
Project-Based Job Costing
Accurate Financial Reporting
Recommended Bookkeeping Software for Contractors
QuickBooks Desktop Contractor Edition – For small/mid-sized contractors
Sage 100 Contractor – Powerful for larger construction firms
Xero – Ideal for cloud-based bookkeeping
Buildertrend – Project management + financial integration
Must-Have Bookkeeping Services
Job Costing
Payroll Management
A/P & A/R
Bank Reconciliation
Financial Reporting
Construction Accounting Best Practices
Use WIP Reports to align expenses with project progress
Record construction-in-progress (CIP) as an asset
Apply job costing formulas: Job Cost = Labor + Materials + Overhead
Store records in cloud systems (Dropbox, Drive, or integrated software)
Setting Up Your Company in QuickBooks
Create company profile
Enable job costing features
Build a chart of accounts specific to construction
Add vendors, contractors, and employees
Choosing the Right Accounting Method
Percentage of Completion (POC): Recognize revenue as work progresses
Completed Contract: Recognize only after completion
Accrual Method: Record when earned/incurred, not when paid
Costs and Rates for Construction Bookkeeping
Service Type | Average Rate |
Bookkeeper (Hourly) | $40 – $100/hr |
QuickBooks Pro Advisor | $50 – $150/hr |
Software License | $300 – $500/year |
Who Should Handle Your Construction Bookkeeping?
You need professionals who understand construction-specific challenges like job costing, retention tracking, and billing schedules. A trusted option is Book Tech’s Construction Bookkeeping Services — tailored for contractors, designed to keep your financials in shape and your projects on budget.
Frequently Asked Questions (FAQ)
1. What is GAAP Construction Bookkeeping?
It’s bookkeeping based on standardized accounting rules (GAAP) tailored to construction, ensuring consistent and compliant financial records.
2. What’s the difference between POC and Completed Contract?
POC: Recognizes income/expenses as work progresses.
Completed Contract: Recognizes everything after project completion.
3. Is QuickBooks Online or Desktop better for contractors?
QuickBooks Desktop is better for contractors due to stronger job costing and reporting. Online is easier to access but less feature-rich without add-ons.