1. Reconcile every bank and credit-card account
Start with the accounts where cash actually moves. Each business checking account, savings account, credit card, and line of credit should be represented once in QuickBooks and reconciled to the statement on a consistent schedule. A profit and loss report can look reasonable even when the underlying cash and credit-card balances are wrong, so reconciliation is the first control—not the last cleanup step.
2. Keep materials and subcontractors separate
Avoid using one broad expense category for everything bought on a job. Materials, subcontractor payments, rentals, permits, fuel, and other common job costs should be categorized consistently enough that the owner can understand where money is going. The goal is not to build a complicated chart of accounts; it is to prevent meaningful costs from disappearing into generic categories.
3. Review customer deposits and payments
Contractors often receive deposits before work begins and progress payments while a job is underway. Keep the source of each receipt clear and avoid recording the same customer payment twice through both the bank feed and an invoice or sales receipt workflow. If the business uses invoicing in QuickBooks, review open customer balances and unapplied payments regularly.
4. Track equipment, vehicles, and financing separately
A truck, trailer, excavator, compressor, or other significant equipment purchase can create several bookkeeping entries: the purchase itself, a down payment, a loan, recurring principal and interest, and sometimes a trade-in. Keep the asset purchase and financing balance distinguishable from routine repairs, fuel, and operating costs. Your tax professional should determine depreciation and tax treatment.
5. Keep owner activity out of operating expenses
Owner draws, personal purchases, reimbursements, and money contributed to the business should not be buried in normal operating categories. Consistent owner-equity treatment makes the profit and loss statement more useful and reduces year-end cleanup questions.
6. Review payroll and subcontractor activity
If the business has employees, compare the bookkeeping records to payroll reports and payroll-tax liabilities. If it pays subcontractors, maintain vendor information and make sure payments are being recorded to the correct payee. Plutus provides bookkeeping services only; payroll compliance and worker-classification questions should be handled with the appropriate payroll, legal, or tax professional.
7. Review the balance sheet—not just profit
Contractors naturally focus on sales and expenses, but old credit cards, stale customer balances, incorrect loan balances, negative bank accounts, or unexplained liabilities can make the file unreliable. Review the balance sheet each close and investigate items that do not make business sense.
8. Create a simple monthly close routine
Set one recurring date each month to finish bank and credit-card reconciliations, review uncategorized activity, resolve owner questions, confirm major loan balances, and review the financial statements. A consistent two-hour close is usually more valuable than a large cleanup once a year.
Frequently asked questions
How often should a contractor update QuickBooks?
For an active contractor with regular purchases, credit cards, customer payments, or subcontractors, monthly bookkeeping usually provides the clearest control. Smaller businesses with lighter activity may be able to use a quarterly process if accounts are still reconciled and records stay organized.
Do contractors need complicated job-cost accounting?
Not always. Many owner-operated contractors mainly need dependable account reconciliations, consistent categories, and a practical way to review customer or project activity. More complex WIP, percentage-of-completion, retainage, bonding, or certified-payroll requirements may require specialized construction accounting.
What is the most important item on the checklist?
Reconciliation. If the bank and credit-card accounts do not agree to source statements, the rest of the reporting is harder to trust.
Practical checklist
- All bank and credit-card accounts reconciled
- Materials and subcontractor costs categorized consistently
- Customer deposits and payments reviewed
- Equipment purchases and loans tracked separately
- Owner activity separated from operating expenses
- Payroll and subcontractor records reviewed
- Balance-sheet accounts reviewed
- Monthly close date established
This guide provides general bookkeeping information. Plutus Bookkeeping LLC provides bookkeeping services only and does not provide tax-return preparation, tax advice, legal advice, payroll compliance advice, or specialized construction accounting.