What should a bookkeeper do for a contractor?
At a minimum, a bookkeeper should reconcile your bank and credit card accounts every month, categorize every transaction, and give you financial reports you can actually use. That’s the baseline. But for a construction or contracting business, the baseline isn’t enough. There are several things a bookkeeper needs to handle that are specific to how contractors operate.
Job costing is the big one. Every expense, whether it’s materials from a supplier, a subcontractor invoice, or labor hours from your crew, should be coded to a specific job. Without this, you have no idea which projects made money and which ones didn’t. A bookkeeper who lumps everything into general categories is giving you numbers that look fine on the surface but tell you nothing useful about your business.
Subcontractor tracking is another area where a good bookkeeper earns their fee. You need accurate records of what you’ve paid each sub throughout the year so 1099s go out correctly in January. Miss a 1099 and the IRS comes asking questions. Pay a sub who doesn’t have a W-9 on file and you’ve created a problem for yourself at tax time. Your bookkeeper should stay on top of this year-round, not scramble in December.
Expense categorization matters more than most contractors realize. A truck payment hits your account and it needs to be split correctly between principal and interest. A Home Depot run could be job materials, shop supplies, or tools. Each category flows differently on your tax return and affects your deductions. Sloppy categorization means you either miss deductions or claim things incorrectly. Both cost you money.
Accounts receivable tracking is important if you do progress billing or deal with retention. Your bookkeeper should track what’s been invoiced, what’s been paid, and what’s still outstanding so you always know your cash position. Contractors who don’t watch receivables closely end up chasing payments months late or forgetting about retention that’s owed to them.
Monthly reports should include a profit and loss statement and a balance sheet at minimum. But for contractors, a job profitability report is just as important. You want to see revenue versus costs on each active job so you can spot problems before they eat your margin. If your bookkeeper only hands you a standard P&L, they’re not giving you what you need to run a contracting business.
Your bookkeeper should also keep your books in a state where tax preparation is straightforward. That means clean records, proper documentation, and nothing your CPA has to untangle before filing. If your bookkeeping for trades businesses is done right throughout the year, tax time becomes a smooth handoff instead of a stressful reconstruction project.
The difference between a bookkeeper who “does books” and one who understands contracting is the difference between having numbers and having numbers that actually help you make decisions. A good bookkeeper for a contractor gives you clarity on job profitability, keeps you compliant with 1099 and payroll requirements, and makes sure you’re not leaving deductions on the table.
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