Questions
Answers to the bookkeeping and tax questions we hear most from contractors, trades, and service business owners.
Do I need a bookkeeper for my contracting business?
Most contractors do, especially once they're juggling multiple jobs, subcontractors, and equipment purchases. The complexity of construction accounting makes it easy to lose money without realizing it.
Read answerWhat's the difference between a bookkeeper and a CPA?
A bookkeeper handles the day-to-day recording of your transactions, reconciliations, and financial reports. A CPA is a licensed professional who can file tax returns, represent you before the IRS, and provide tax strategy. Both roles feed into each other.
Read answerWhen should a small business hire a bookkeeper?
Most small businesses should hire a bookkeeper as soon as they have regular income and expenses flowing through the business. Waiting until tax time or until things feel out of control usually means paying more to fix problems that proper bookkeeping would have prevented.
Read answerShould I do my own bookkeeping or hire someone?
Most trades business owners start doing their own books, fall behind, and end up with a mess at tax time. If your books are consistently months behind or you're unsure what you're doing, hiring someone will save you money in the long run.
Read answerHow much does a bookkeeper cost for a small business?
Most small businesses pay between $200 and $2,000 per month for bookkeeping, depending on transaction volume, number of accounts, and complexity. Trades and contractor businesses often land in the middle of that range.
Read answerWhat should a bookkeeper do for a contractor?
A bookkeeper for a contractor should handle much more than basic data entry. They need to track job costs, manage subcontractor payments, categorize expenses for maximum deductions, and deliver reports that show profitability by project.
Read answerCan a bookkeeper do my taxes or do I need a CPA?
A bookkeeper can legally prepare tax returns in California if they're registered, but they can't represent you before the IRS or provide strategic tax advice. For trade businesses, working with someone who handles both bookkeeping and taxes produces the best results.
Read answerWhat's a reasonable monthly fee for bookkeeping services?
Most small service businesses pay between $200 and $600 per month for professional bookkeeping. The actual number depends on transaction volume, how many accounts you have, and whether your industry requires specialized tracking.
Read answerHow do I find a good bookkeeper for my trades business?
Look for someone who already works with trades and construction businesses. Industry experience matters more than general bookkeeping skill because trades companies have specific needs around job costing, subcontractor payments, and equipment that generic bookkeepers often get wrong.
Read answerWhat questions should I ask before hiring a bookkeeper?
Ask about industry experience, what's included in the monthly price, how they communicate, and what reports you'll receive. The answers will tell you whether they'll actually help you run your business or just enter transactions.
Read answerIs it worth paying for bookkeeping when I'm just starting out?
In most cases, yes. Starting with clean books from day one costs far less than fixing messy records later. Even basic bookkeeping helps you track real profitability and avoid surprises at tax time.
Read answerWhat does a CPA do that a bookkeeper doesn't?
A CPA is a licensed professional who can file tax returns, represent you before the IRS, and provide strategic tax and financial advice. A bookkeeper handles the daily recording of transactions that makes all of that possible.
Read answerHow much does a CPA charge for a small business tax return?
It depends on your entity type and the complexity of your finances. A simple Schedule C might cost $300 to $800, while an S-corp return can run $1,000 to $2,000 or more. The condition of your books is often the biggest factor.
Read answerDo I need a local bookkeeper or can I use someone remote?
Either can work, but industry expertise matters more than geography. A remote bookkeeper who understands trades and construction will serve you better than a local generalist who doesn't know job costing or contractor deductions.
Read answerWhat's the difference between an accountant and a bookkeeper?
A bookkeeper handles day-to-day financial recording like categorizing transactions and reconciling accounts. An accountant uses those records for tax prep, compliance, and strategic planning. Most trades businesses need both.
Read answerHow do I set up bookkeeping for my plumbing business?
Start with a dedicated business bank account and credit card, set up QuickBooks Online with a plumbing-friendly chart of accounts, and build a weekly habit of categorizing transactions and reconciling your accounts.
Read answerWhat records do I need to keep for my contracting business?
Keep income records, expense receipts, job-related documents, payroll files, subcontractor paperwork, and vehicle logs. Most records should be kept for at least three to seven years depending on the type.
Read answerHow often should I reconcile my business bank account?
At minimum, once a month. But weekly is better if you want to catch errors, spot duplicate charges, and actually trust the numbers in your accounting software.
Read answerWhat's the difference between cash and accrual accounting?
Cash accounting records income when you receive payment and expenses when you pay them. Accrual accounting records both when they're earned or owed, regardless of when money actually changes hands.
Read answerHow do I set up a chart of accounts for a construction company?
The key is separating job costs from overhead expenses so you can see true gross profit on each project. Break your Cost of Goods Sold into materials, subcontractors, direct labor, and equipment, then keep operating expenses in their own section.
Read answerHow do I track expenses for my HVAC business?
Use a dedicated business bank account and credit card, code every expense to a job in your accounting software, and reconcile weekly. The goal is knowing what each service call or install actually costs you.
Read answerWhat bookkeeping software is best for contractors?
QuickBooks Online is the best option for most contractors. It handles job costing, invoicing, 1099 tracking, and integrates with nearly every construction and field service app. It's also what most bookkeepers and CPAs already use.
Read answerHow do I separate personal and business expenses?
Open a dedicated business bank account and credit card, then run every business transaction through those accounts. Stop using personal accounts for business purchases and use owner's draws when you need to pay yourself.
Read answerDo I need a separate bank account for my side business?
You're not legally required to as a sole proprietor, but you absolutely should. Mixing personal and business transactions makes bookkeeping harder, costs you deductions at tax time, and creates problems if you ever get audited.
Read answerHow long should I keep business receipts and records?
The IRS generally requires three years from your filing date, but the safe rule is seven years. Some records like asset purchases and entity documents should be kept permanently.
Read answerWhat financial reports should a contractor review monthly?
At minimum, review your profit and loss statement, balance sheet, accounts receivable aging, and job costing reports every month. These tell you whether you're actually making money, who owes you, and which jobs are profitable.
Read answerHow do I read a profit and loss statement?
A profit and loss statement reads top to bottom. Revenue at the top, then cost of services, then operating expenses, with net profit at the bottom. Each section tells you something different about how your business is performing.
Read answerWhat is a balance sheet and do I need one?
A balance sheet shows what your business owns, what it owes, and what's left over as equity. If you're a trades or construction business, you absolutely need one for taxes, bonding, loans, and understanding your financial position.
Read answerHow do I track income from multiple jobs at the same time?
Assign every invoice and expense to a specific job in your accounting software. QuickBooks Online's Projects feature or classes let you track income and costs per job so you can see profitability on each one.
Read answerWhat does a bookkeeper need from me each month?
Less than you'd think. With bank feeds connected and a basic routine, most trade and service business owners spend 15 to 30 minutes a month supporting the bookkeeping process.
Read answerHow do I set up QuickBooks for my construction business?
Start with a construction-specific chart of accounts, enable Projects for job costing, and build out your items list to match how you estimate and invoice. Generic setup won't give you the reporting contractors actually need.
Read answerIs QuickBooks Online or Desktop better for contractors?
QuickBooks Online is the better choice for most contractors today. Cloud access from job sites, easier collaboration with your bookkeeper, and continued development from Intuit all favor Online over Desktop.
Read answerHow do I do job costing in QuickBooks?
Use the Projects feature in QuickBooks Online Plus or Advanced to create a project for each job, then code every expense, invoice, and time entry to the correct project. Run the Project Profitability report to see margins by job.
Read answerCan I use QuickBooks to track subcontractor payments?
Yes. QuickBooks Online handles subcontractor tracking well if you set up each sub as a 1099-eligible vendor, code payments to the right jobs, and collect W-9s before you pay anyone.
Read answerWhat's the best QuickBooks plan for a small service business?
QuickBooks Online Plus is the right fit for most small service businesses. It includes project tracking for job costing, handles multiple users, and supports the reporting that trades and service companies actually need.
Read answerHow do I categorize expenses in QuickBooks for a trades business?
Separate job-related costs like materials and subcontractors from overhead like insurance and office expenses. The key is using a chart of accounts built for how trades businesses actually spend money, not QuickBooks defaults.
Read answerCan QuickBooks handle progress billing for contractors?
Yes. QuickBooks Online has a built-in Progress Invoicing feature that lets you bill against an estimate in stages. It works well for most small to mid-size contractors, though it has some limitations compared to construction-specific software.
Read answerHow do I set up classes in QuickBooks for different job sites?
Turn on class tracking in QuickBooks Online settings, then create a class for each job site. Assign the correct class to every transaction so you can pull profit and loss reports by job and see which sites are actually making money.
Read answerDo I need QuickBooks training or can I figure it out myself?
You can learn the basic clicks from YouTube, but clicking buttons isn't the hard part. Setting up QuickBooks correctly for your specific business and understanding the accounting behind it is where most people go wrong.
Read answerHow do I connect my business bank account to QuickBooks?
In QuickBooks Online, go to Transactions, click Connect Account, search for your bank, and enter your online banking credentials. The process takes a few minutes, but you need online banking enabled with your bank first.
Read answerWhat tax deductions can contractors claim?
Contractors can deduct vehicle costs, tools, equipment, materials, subcontractor payments, insurance, licensing fees, and more. The key is actually tracking and documenting these expenses throughout the year so nothing gets missed at tax time.
Read answerWhat are the biggest tax write-offs for electricians?
Vehicles, tools, materials, insurance, and licensing fees are the biggest deductions for electricians. Most leave money on the table not because the deductions don't exist but because they aren't tracking expenses consistently throughout the year.
Read answerWhat can plumbers deduct on their taxes?
Almost every ordinary expense you incur running your plumbing business is deductible. Tools, your service van, parts, insurance, licensing, marketing, and more. The key is tracking everything properly so nothing falls through the cracks.
Read answerWhat tax deductions are available for HVAC contractors?
HVAC contractors can deduct vehicle costs, tools and equipment, refrigerant and parts inventory, EPA certifications, insurance, and more. The key is tracking everything throughout the year so nothing gets missed at tax time.
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