The default QuickBooks setup is built for generic small businesses. It doesn’t account for job costing, progress billing, subcontractor tracking, or any of the things that make construction accounting different. If you just sign up and start entering transactions, you’ll end up with books that can’t tell you whether a job made money or lost it.

Start with the chart of accounts. The default one QuickBooks gives you needs to be rebuilt for construction. You want income accounts that reflect how you earn revenue, such as contract revenue, change order revenue, and T&M billing. On the expense side, break costs into categories that match how you estimate: materials, labor, subcontractors, equipment, and permits. Separate your direct job costs from overhead like office rent, insurance, and truck payments. This distinction is what lets you calculate gross profit by project instead of just seeing one big number at the bottom.

Turn on Projects in QuickBooks Online. This is what ties expenses, invoices, and labor to specific jobs. Every bill you pay, every invoice you send, and every expense you record should be assigned to a project. Without this, your books are just a pile of transactions with no connection to the work that generated them. You can’t figure out job-level profitability after the fact if nothing was coded to a job when it happened.

Build out your Products and Services list to match how you bid work. If your estimates break down into categories like demolition, rough framing, electrical, and finish work, your items list should mirror that. This makes invoicing faster and your income reporting more useful. It also means your profit and loss by project actually shows where money was spent in a way that makes sense to you.

Set up every subcontractor as a vendor with their tax ID on file. Construction businesses in LA get hit with 1099 requirements every January, and chasing down tax IDs from subs in December is a headache you can avoid by collecting them upfront. QuickBooks can generate 1099s at year end, but only if the vendor records are complete.

If you run different types of work, like residential remodels and commercial tenant improvements, consider using Classes to separate them. This lets you see profitability by division without maintaining separate books. It’s optional for smaller operations but becomes important as you grow.

Getting QuickBooks Online setup and training right from the beginning saves you from a painful cleanup later. Most contractors who come to us with messy books don’t have a data entry problem. They have a setup problem. The software was never configured for how their business actually works, so every transaction went into the wrong bucket or no bucket at all.

If you’re already past the setup stage and your QuickBooks file is a mess, that’s fixable too. But if you’re just getting started, take the time to do it right. A properly configured QuickBooks file is the foundation for everything else, from knowing your job costs to filing accurate tax returns. Our bookkeeping and tax services for contractors are built around making sure trade businesses have books that actually help them run their business, not just check a box at tax time.