Out of the box, QuickBooks thinks you run a coffee shop.
It’ll track your sales and your expenses just fine. But it doesn’t know about jobs, subs, holdbacks or the receipt you grabbed at the supply store at 6 am. You have to teach it.
Set it up for construction, though, and it does the job well. Here’s how.
Is QuickBooks Online good for construction?
For most small and mid-sized BC trades businesses, yes.
It’s what a lot of bookkeepers and accountants already work in. It connects to your bank. And with the right plan, it can tell you the profit on every job.
The catch is the setup. A QuickBooks file that wasn’t built for construction will happily give you a profit number for the whole business and nothing for each job.
Which QuickBooks Online plan do contractors need?
The one with Projects.
In Canada, QuickBooks Online Plus and Advanced include project profitability, which is how QuickBooks does job costing. It tracks income and costs by job, so you can see which ones made money.
Not sure which plan you’re on? Check your subscription in QuickBooks before you set up projects.
If you only care about the whole business, a smaller plan will do. But honestly, if you run jobs, you want to see each one. That’s the whole point of job costing.
How do you set up QuickBooks for a construction company?
Here’s the setup that works for most trades businesses:
- Customers and projects. Each customer gets a record. Each job for that customer gets its own project.
- Cost categories that match your work. Materials, subcontractors, equipment rental, fuel, permits and dump fees. Keep it simple enough that every cost has an obvious home.
- Subcontractors as vendors. With their legal name, address and business number or SIN.
- Holdbacks in their own account. More on that below.
- Bank and credit card feeds connected, so transactions come in on their own.
- Payroll set up with time tracked by job, if you have a crew.
- GST set up for BC, so what you collect and what you can claim back are tracked as you go.
Get those seven right, and month-end is a review, not a rescue.
How do you handle subcontractors in QuickBooks?
Treat every sub like a vendor you’ll need to report on, because you probably will.
If more than half your business income is from construction, CRA wants T5018 slips for subcontractors you paid more than $500 for construction services. So:
- Collect their business number or SIN, name and address when you hire them, not at year-end
- Code every sub bill to that vendor and to the job
- Keep their WorkSafeBC clearance letters with their file
Do that, and the T5018 is one report. Skip it, and it’s a weekend.
How do you track holdbacks in QuickBooks?
Holdbacks trip up a lot of construction books.
Under BC’s Builders Lien Act, the person paying on a contract holds back 10% of what’s owed until the holdback period ends. You’ve earned that money. You just can’t have it yet.
If your invoices only go to regular receivables, that 10% sits there looking like a customer who won’t pay. Months later, nobody remembers which job it was for.
The fix: record the holdback part of each progress invoice in its own holdbacks receivable account, tied to the job. Then you can see, at a glance, how much is being held and when it should come back. If you hold back on your own subs, do the same on the other side with holdbacks payable.
How do you get receipts into QuickBooks?
The day you buy, or it doesn’t happen.
A receipt that sits in the truck for three weeks is a receipt that never gets coded to a job. And it’s GST you paid and never claimed back.
QuickBooks can take photos of receipts. Our clients use MBCapture, our own receipt app: snap the photo, and it lands in the books.
Either way, the rule is the same. Capture it right away.
Does QuickBooks payroll feed job costing?
It can. Intuit says that with QuickBooks Payroll and Time, labour costs and expenses update automatically in job costing.
That only works if your crew’s hours are tracked by job. If everyone’s time goes to “general,” every job looks cheaper than it was.
Do you need construction software instead of QuickBooks?
Maybe. But probably not yet.
There’s software built just for construction, with estimating, scheduling and job management baked in. If you’re running dozens of crews and big commercial jobs, it can be worth it.
For most small and mid-sized BC trades businesses, though? QuickBooks Online set up properly does the books well. It’s common to pair a separate estimating or scheduling app with QuickBooks for the accounting.
Here’s the question to ask yourself. Is the problem the software, or is it that nobody’s keeping the books current? New software won’t fix books that never get updated.
Get the setup right and the books current first. Then decide if you’ve outgrown it.
What are the most common QuickBooks mistakes contractors make?
- No projects. One big pile of income and costs, no job profit.
- Sub bills coded to “contract labour” with no vendor or job. Bad job costs, painful T5018s.
- Holdbacks buried in receivables. Money you’re owed, forgotten.
- Receipts left in the truck. Missing costs, missing GST credits.
- Bank feeds accepted without checking. QuickBooks guesses the category. Sometimes it guesses wrong.
- Personal and business spending mixed together. One card for the business, one for you. Sorting a mixed card at year-end is nobody’s idea of fun.
- Nobody reconciling. If the books don’t match the bank, nothing else in them can be trusted.
Want QuickBooks set up and run for you?
We handle QuickBooks for BC trades and construction businesses: set up for jobs, reconciled every month, with your receipts coming in through MBCapture. Trades and construction is our specialty.
Behind already? Start with catching up.
Our bookkeeping starts at $800 a month, and here’s what decides your number. Or book a free 30-minute call and we’ll look at your file together.
QuickBooks is the tool. What we do with it for trades is on our bookkeeping for contractors page.