Bookkeeping for Contractors and Construction Businesses
Most bookkeepers can do a bank reconciliation. Not many can tell you which of your jobs made money, what's sitting in holdbacks, or whether your subs' T5018 slips are right.
That's contractor bookkeeping, and it's what we specialize in. Trades and construction is our specialty: electrical, plumbing, HVAC, framing, excavation, roofing, general contracting. Job costing, holdbacks and progress billing, subcontractor paperwork, crew payroll, GST or HST. Clean books every month, and a report you can read in five minutes.
The Clean Books Year includes payroll and, if you're behind, up to 12 months of catch-up at no extra charge.
The free ebook: 4 Fatal Mistakes Construction Business Owners Make Which Keep Them Guessing Where Their Money Goes.
What's different about construction bookkeeping?
A retail shop sells a thing and the money lands. A contractor quotes a job, buys materials up front, pays a crew every two weeks, bills in stages, waits on a holdback, and pays subs who need their own slips at year-end. The money moves in a different pattern, so the books have to.
Here's what a general bookkeeper usually misses:
- Costs that aren't coded to a job, so every job looks the same and none of them look wrong.
- Holdback money recorded as regular receivables, or not at all.
- Subcontractor payments with no slips at year-end.
- GST or HST collected on a progress bill and spent before the return is due.
- A payroll run that doesn't tie back to the job it was for.
None of that shows up as an error. It shows up as "we're busy, so why is there no money?"
Which jobs actually made money?
Job costing is the whole point. Every job gets its own project in QuickBooks Online, every cost gets coded to it (materials, labour, subs, permits, equipment), and every month you see what you quoted against what it cost.
Most contractors we talk to have a feeling about which jobs are the winners. The numbers usually disagree with the feeling on at least one of them. That one job is where the margin went.
We set this up in QuickBooks Online Plus or Advanced, the Canadian plans that include Projects. Read how job costing works for contractors and whether QuickBooks Online is right for construction.
Holdbacks and progress billing
Profit and cash aren't the same thing, and construction is where that hurts most.
In BC, the Builders Lien Act requires the person paying on a contract to hold back 10% of what's owed, and as the Act reads today that holdback period ends 55 days after a certificate of completion. Every province has its own lien law and its own holdback. Record it wrong and a profitable job reads as a loss for two months, then as a windfall.
We book holdbacks in their own account, so money you've earned but can't touch yet stays visible, and we set up progress billing so each stage is invoiced, tracked and chased. Read why a profitable trades business is always short on cash.
Paying subcontractors: clearance letters and T5018 slips
Two pieces of paper protect you when you pay a sub.
In BC, a WorkSafeBC clearance letter confirms the sub is registered and paying premiums. Get one before and after the work, because if a sub doesn't pay, you can be on the hook for the premiums on the work they did for you. Outside BC, your provincial workers compensation board issues the same kind of letter. Read when contractors need a clearance letter.
Then CRA. If more than half your business income comes from construction, you report what you paid each subcontractor over $500 in the period on T5018 slips, due six months after the end of the period you report on. We prepare them from the books, so nothing gets rebuilt from memory in June. Read who has to file T5018 slips, and when.
Payroll for a crew
Payroll is part of The Clean Books Year and our Growth Partner plan. Direct deposit, source deductions, CRA remittances, T4s and ROEs, and in BC the WorkSafeBC premiums that come with having people on the tools. Your guys get paid on time, and every payroll run lands on the job it belongs to, so your job costs are real.
Behind on your books?
Then you're our kind of client. Most people come to us after messy, behind or rebuilt-wrong books, usually left by a previous bookkeeper or an accountant with too many files.
Catching up means rebuilding every month you missed from bank statements, receipts and invoices, then filing what's late. If you owe on a late GST or HST return, CRA's late-filing penalty is 1% of the amount owing plus 25% of that 1% for each full month it's late, up to 12 months, with interest on top. So the oldest months come first. Read how catch-up bookkeeping works.
One client came to us with a $20,000 CRA assessment letter. Once the books were rebuilt and the filings corrected, the amount owing was zero. Real clients, not typical of every business.
What does contractor bookkeeping cost?
It depends on the business: the volume of transactions, whether you run payroll, how many subs you pay, and how far behind the books are. A small company with current books and nobody on payroll is a different job from a contractor with a crew, subs and a year to catch up.
So we don't quote on this page. Book a free 30-minute call, we look at your books together, and you get a number before any work starts. Our post on what a bookkeeper costs walks through the market range.
We take three new clients a month, so the people doing your books aren't buried.
What you get with The Clean Books Year
- Twelve months of bookkeeping with up to 12 months of catch-up included at no extra charge.
- One dedicated bookkeeper on our own team, the same person all year, so you never re-explain your business.
- Payroll, GST or HST returns, and your subcontractor slips.
- Job costing set up in QuickBooks Online, with a monthly report on revenue, margins, cash flow and job profitability, written for trades owners.
- MBCapture, our receipt app: snap the receipt from the truck and it lands in your books.
- The 30-Day Go Kick Rocks Guarantee: if the first 30 days don't work for you, you get a full refund.
What contractors say
"We’ve been working with MBC Canada, Jeremy and Teri, for our construction bookkeeping for the past 9 months and have been very happy with their service. They’ve done a great job keeping everything organized and accurate. They’re responsive, easy to work with, and understand the needs of a construction business. Overall, we’re very satisfied and would definitely recommend Jeremy, Teri and the MBC Canada team."
"We have been using MBC Canada Inc for over 6 months now and have been SUPER impressed and happy with the bookkeeping services they provide us for our fencing business. It is so much more than just bookkeeping! Both Adam and Jeremy are very responsive, they know their stuff, and they are super helpful. They are also constantly looking to improve and implement new programs and systems that have really helped streamline our bookkeeping processes. Hear it here first: we were hesitant and unsure of how much value they would actually bring us, but we are thoroughly impressed and looking forward to what they can do for us inn the future! We now have a much better idea as to what our profit margins are, what our cashflow looks like and a good overall financial picture of where our business is going. We would highly recommend them!"
Common questions
Yes. We work with trades and construction businesses across Canada. The rules differ by province, from the workers compensation board to the lien act and its holdback, and your books get set up for yours.
No. We work in QuickBooks Online. If you're on something else, we move you over and set up the projects, subs and holdback accounts as part of the catch-up.
The Clean Books Year includes up to 12 months of catch-up. Anything older is scoped and quoted separately, after we've looked at it.
Clients on a monthly plan get a discount on their year-end taxes. Ask on the call.
It depends on your transaction volume, payroll, subs and how far behind the books are. You get the number on a free 30-minute call, before any work starts.
Book a free 30-minute call. We take three new clients a month, and if we're a fit, the catch-up starts first.
Key takeaways
- Contractor bookkeeping is job costing, holdbacks, subcontractor paperwork and crew payroll, not just a bank reconciliation.
- In BC the holdback is 10% under the Builders Lien Act; every province has its own.
- T5018 slips are due six months after the period ends if more than half your income is from construction.
- The Clean Books Year includes payroll and up to 12 months of catch-up; the number comes on a free 30-minute call.