‍by Cloonan CPA Services – Trusted Accountants for Construction & Trades

Introduction: Why Job Costing Matters More Than You Think

If you own a contracting business—whether roofing, plumbing, electrical, or general construction—your profits live or die by how well you track job costs.
Many small contractors think they’re doing fine if there’s cash left in the account after a project. But without proper job-cost accounting, you’re flying blind—especially when tax season arrives.

Accurate job costing helps you:

  • See which projects actually make money.
  • Control labor and material overruns in real time.
  • Estimate future bids more confidently.
  • Avoid tax-time shocks from under-reported expenses or misclassified income.

Let’s look at how to do it right—and how the right bookkeeping process can protect your bottom line.

1. Separate Every Job From Day One

The #1 rule in contractor bookkeeping: every project is its own profit center.
Create a unique job or project code in QuickBooks (or your accounting platform) for each contract. Track all income and expenses—labor, subs, materials, permits, mileage—under that job.

When you review your Profit & Loss by job each month, you’ll instantly see which projects are draining cash and which are worth replicating.

Pro Tip: At Cloonan CPA Services, we help contractors design chart-of-accounts structures that align with your estimating templates—so your bids, books, and taxes all speak the same language.

2. Capture Labor Costs Accurately

Labor is often the biggest unknown in a project’s profitability.
Use job-cost timesheets or software like QuickBooks Time (formerly TSheets) to assign employee hours directly to a job. Don’t forget to include:

  • Payroll taxes and workers’ comp premiums.
  • Owner’s time if it’s billable (use a reasonable rate).

By tying all payroll to specific jobs, you get a true gross profit per project—and avoid under-deducting labor for tax purposes.

3. Track Materials and Subcontractors in Real Time

Contractors frequently lose money by mixing receipts or waiting until month-end to record materials.
Instead:

  • Use digital receipt capture (QuickBooks, Hubdoc, or Dext).
  • Require subs to include your job number on invoices.
  • Reconcile supplier accounts monthly.

Keeping materials and subcontractor expenses job-coded not only tightens your estimating but also gives your CPA a clean audit trail at tax time.

4. Know What’s Deductible (and What’s Not)

Tax surprises happen when expenses are miscategorized or not tracked. Common contractor deductions include:

  • Tools and small equipment.
  • Safety gear and uniforms.
  • Vehicle mileage or actual costs.
  • Business insurance premiums.
  • Depreciation on trucks, trailers, and major equipment.

Proper classification matters: the IRS often disallows deductions that aren’t tied to specific jobs or clearly documented. Having a CPA-prepared bookkeeping system ensures you claim every legitimate deduction while staying compliant.

5. Review Your Job Cost Reports Monthly

Set aside one morning a month to review your Job Profitability Summary and Open Job Report.
Ask yourself:

  • Which jobs ran over budget?
  • Did I price correctly for labor and overhead?
  • What’s my true margin per job category (roofing, siding, etc.)?

Small course-corrections throughout the year prevent the “April panic” when your tax bill reveals you made less than expected.

6. Partner With a CPA Who Understands Construction

Many accountants treat contractors like any other small business—but construction accounting is its own world.
At Cloonan CPA Services, we specialize in job-cost bookkeeping, contractor tax planning, and entity structuring for Pennsylvania trades. We help you:

  • Automate job tracking in QuickBooks Online.
  • Reconcile materials and labor monthly.
  • Project year-end taxes to avoid surprises.

When your books reflect your job sites accurately, your bids get sharper, your profits grow steadier, and your tax time becomes stress-free.

Ready to Get Your Books Job-Cost Ready?

Let’s make sure every hour and dollar you spend builds profit—not paperwork headaches.

Schedule a free 30-minute consult: calendly.com/wcloonan-cloonancpa/30min • Or call us at 724-835-5296.  

We’ll help you turn your project data into business intelligence—and keep tax season predictable.