What bookkeeping do general contractors need to do?
Job costing is the foundation of contractor bookkeeping. Every expense, material purchase, labor hour, and subcontractor payment needs to be tracked to a specific project. Without job-level tracking, you might know your overall profit but have no idea which jobs made money and which ones lost it. That information changes how you bid future work.
Track expenses by job as they happen. Materials from the lumber yard, equipment rentals, permit fees, and fuel for the work truck all need to be coded to the project they belong to. Waiting until month-end to sort through receipts means guessing, and guessing leads to inaccurate job costs that make your profitability reports useless.
Bank and credit card reconciliation should happen weekly for contractors and construction companies. High transaction volumes mean errors and duplicate charges slip through if you wait a month. Weekly reconciliation also keeps your books current so you can pull a job profitability report whenever you need one.
Accounts payable management matters when you’re paying subcontractors and suppliers across multiple jobs. Track what’s owed to whom, which jobs those costs belong to, and when payments are due. Late payments to subs damage relationships you depend on for future projects.
Invoicing and accounts receivable need consistent attention. Send invoices on schedule, track what’s outstanding, and follow up on late payments. If you’re working with retainage, track the held amounts separately so you know what’s coming and when you can expect it.
If you have employees, payroll records and tax deposits must be accurate and on time. California has strict requirements and the penalties for mistakes add up quickly. Crew time should be tracked by job so labor costs show up in your project reports alongside materials and sub costs.
Collect W-9s from subcontractors before you pay them and track payments throughout the year. This is a year-round job, not a January scramble. Chasing paperwork for 1099s at tax time wastes hours you don’t have.
Keep digital copies of every receipt, contract, and invoice. Paper gets lost, fades, or sits in the cab of your truck for months. A simple system for scanning and organizing documents saves headaches during tax prep or if you’re ever audited.
The bookkeeping that actually matters for contractors goes beyond categorizing transactions. You need to see profit margins by project, understand which types of work are most profitable, and have reliable numbers when bidding future jobs. Small business bookkeeping in Los Angeles that doesn’t track by job gives you half the picture and leaves money on the table because you’re flying blind on which work is worth pursuing.
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More Questions
What are the penalties for late payroll tax deposits?
IRS penalties start at 2% for deposits 1-5 days late and increase to 15% for amounts unpaid after receiving a notice. California EDD adds its own penalties on top. The trust fund recovery penalty can make owners personally liable.
Read answerWhat financial documents do buyers want to see when purchasing a business?
Buyers typically request three years of profit and loss statements, tax returns, balance sheets, bank statements, and aging reports. They're verifying the seller's claims and looking for consistency, trends, and red flags.
Read answerHow do I analyze the financials of a business I want to buy?
Request three years of tax returns, profit and loss statements, and bank statements. Compare them against each other to verify accuracy, then dig into adjusted earnings claims and look for trends that reveal the true health of the business.
Read answerShould I hire a bookkeeper to review financials before buying a business?
Yes. Sellers present financials in the most favorable light possible, and a professional can verify reported figures, identify red flags, and help you understand what you're actually buying.
Read answerWhat is the difference between a bookkeeper and an accountant?
Bookkeepers handle day-to-day financial record-keeping like categorizing transactions and reconciling accounts. Accountants focus on tax preparation, compliance, and financial strategy. Most small businesses need both.
Read answerWhat should I look for when hiring a bookkeeper?
Look for industry experience, clear communication, and genuine interest in understanding your business. Technical skills matter, but so does whether they ask the right questions and explain things in ways you understand.
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