Contractor bookkeeping and job costing
Monthly totals tell you whether the business survived. Job costing tells you which work makes money. Only one of those helps you decide what to bid on next.
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The number that matters is margin by job
Two contractors with identical annual revenue can have completely different businesses. One makes money on service calls and loses it on large installs; the other is the reverse. Neither can tell from a monthly profit and loss, because the profitable work and the unprofitable work are averaged together.
Job costing separates them. Labour hours, materials, subcontractor invoices, and equipment time are coded to the job as they occur, so each job carries its own cost and its own margin. After a few months you know which work types, which crews, and which clients are worth pursuing.
What has to be coded, and when
Materials at the point of purchase, not reallocated later from a supplier statement. Labour from the hours actually worked on that job. Subcontractor invoices matched to the job they were on. Equipment time where it is material.
The timing matters as much as the categories. Costs reconstructed at month-end from receipts in a truck get attributed roughly, and roughly attributed job costs are worse than none, because they produce confident conclusions that are wrong.
Progress billing and work in progress
Contracting rarely bills once at completion. Progress invoices go out against work performed, which means at any month-end you have work completed but not yet billed, and invoices issued but not yet collected. Both belong in the books.
Add the statutory holdback under Ontario’s Construction Act, a portion of each payment retained for a set period, and there are three separate things between finishing work and having the cash. Books that record only deposits will show you none of it.
Subcontractors, tracked for the return you will have to file
Because payments to subcontractors have to be reported on a T5018 once they pass five hundred dollars cumulatively, subcontractor payments need tracking per subcontractor across the year rather than as one expense line. Done in the books as you go, the T5018 is a report. Done at year-end, it is a reconstruction. Our T5018 guide covers the requirements.
Equipment, vehicles, and the capital side
Trucks, trailers, and equipment are capital assets claimed over time through capital cost allowance rather than expensed on purchase. Financing needs splitting between principal and interest. Vehicle costs need a defensible business-use split, which means the log matters. Our guide on vehicle expenses through a corporation sets out the rules.
Books are reconciled daily and reviewed and signed monthly by a Canadian accountant, and the same team files your HST and prepares your corporate return.
What’s included
- Labour, materials, and subcontractor costs coded per job as they occur
- Margin reported by job, not just by month
- Progress billing, work in progress, and receivables tracked
- Statutory holdbacks recorded as receivables
- Subcontractor payments tracked per subcontractor for T5018 reporting
- Equipment and vehicle capital cost allowance handled correctly
- Month-end close reviewed and signed by a Canadian accountant
Also: General contractors in Ontario · Plumbers in Toronto · Trades & contractors. More for this industry: Contractor accounting · Contractor bookkeeping · Contractor payroll and T5018
All four services: Bookkeeping · Tax · Payroll · Business advisory
Common questions
What is job costing and why does it matter?
It codes labour, materials, subcontractor costs, and equipment time to individual jobs as they occur, so each job carries its own margin. Two contractors with identical revenue can have opposite economics, and a monthly profit and loss averages the profitable and unprofitable work together.
Why does the timing of coding matter?
Costs reconstructed at month-end from receipts get attributed roughly, and roughly attributed job costs are worse than none because they produce confident conclusions that are wrong.
How are progress billing and holdbacks handled?
Work completed but not yet billed, invoices issued but not collected, and statutory holdbacks retained under the Construction Act are all recorded, so the books show what you have earned rather than only what has been deposited.
Do you track subcontractors for T5018 purposes?
Yes. Payments are tracked per subcontractor across the year, because reporting is required once cumulative payments pass five hundred dollars. Tracked as you go, the T5018 is a report rather than a year-end reconstruction.