How do I set up QuickBooks for a construction business?
Construction accounting runs on job costing. Every dollar you spend and every dollar you earn needs to connect to a specific project. If you set up QuickBooks without this in mind, you end up with books that are technically accurate but useless for understanding which jobs make money and which ones lose it.
Start with the chart of accounts. The default QuickBooks setup is built for generic small businesses, not contractors. You need expense categories that match how construction money actually flows. Direct costs like materials, labor, subcontractors, and equipment need their own accounts. Overhead expenses like insurance, office costs, and admin salaries belong separate from job costs. Without this structure, you can’t calculate true job profitability.
Enable job costing features and set up your customers as jobs rather than just company names. Each project should be its own sub-customer under the general contractor or property owner. When you buy materials, assign them to that job. When you pay a sub, assign it to that job. When you bill progress, assign it to that job. This lets you track income and expenses at the project level.
Set up items for everything you bill and track. Labor should be an item with an hourly rate. Different material categories should be items. Equipment usage should be an item. This structure lets you create accurate estimates, convert them to invoices, and compare estimated costs to actual costs when the project wraps up. Many construction and trades businesses also need equipment rental tracking and fuel expenses broken out by job.
If you do progress billing or deal with retainage, configure those correctly from the start. Retainage tracking requires specific accounts and careful attention. Getting this wrong means your accounts receivable will show amounts that don’t match what customers actually owe you.
Classes or locations can track job types, divisions, or crews if you need that level of reporting. Start with solid job costing basics before adding complexity. Get the foundation right and add layers once you understand what reports you actually need.
Most contractors who configure QuickBooks themselves miss something that causes problems later. Wrong structure means months of cleanup or working around limitations that shouldn’t exist. If you’re not confident in the setup, Nampa bookkeepers with construction experience can help. Getting it right the first time saves frustration and gives you numbers you can actually use to make decisions.
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More Questions
What is progress billing and how do I track it?
Progress billing lets contractors invoice customers incrementally as work gets completed instead of waiting until project end. Track it by setting up jobs in your accounting software with the total contract value and generating invoices against that estimate as milestones are reached.
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Read answerHow do I handle retainage in my construction bookkeeping?
Set up separate accounts for retainage receivable and retainage payable. Track both at the job level so you know exactly what's held back on each project. Record the full invoice amount as revenue when the work is done, even though part of the payment is withheld.
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