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Bookkeeping for construction companies and contractors: how LedgerBPO runs it
Bookkeeping for construction companies & contractors means job-costed books, progress billing on AIA-style pay apps, retainage tracked separately and lien waivers matched to every payment. LedgerBPO gives general contractors, subcontractors and specialty trades a named dedicated accountant who works inside QuickBooks Online, Buildertrend or Xero, backed by a second reviewer on every close.
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What we handle
Bookkeeping for construction companies & contractors means job-costed books, progress billing on AIA-style pay apps, retainage tracked separately and lien waivers matched to every payment. LedgerBPO gives general contractors, subcontractors and specialty trades a named dedicated accountant who works inside QuickBooks Online, Buildertrend or Xero, backed by a second reviewer on every close.
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Billing and books together
Every cost coded to a job, phase and cost type
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Reconciled every month
Pay apps, retainage and lien waivers tracked per contract
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What you see
Work-in-progress schedule reviewed before each month closes
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A named accountant, a backup and a team lead
Inside your own software, on a fixed close calendar, with a reply from a person within 1 business day. Call +1-657-777-0006 or start a quote.
Get a custom quote 06 / 06
· Reviewed by Nimra Khalid
Construction accounting challenges
- 01
Retainage locks up working capital
Owners commonly hold back 5% to 10% of every progress billing until substantial completion, so a $400,000 contract can have $40,000 sitting outside your bank for months. When retainage is booked as ordinary receivables, aging reports overstate what you can actually collect this quarter.
- 02
Over and under billing hide in the WIP
A job that is 60% complete on cost but 75% billed carries a 15% overbilling that inflates this month's profit and disappears next month. Without a work-in-progress schedule tied to the ledger, the P&L swings with billing timing instead of real progress.
- 03
Sales tax on materials varies by state and contract type
Most US states treat a contractor as the end consumer of materials, so tax is due at the lumber yard, while a few states tax the contract itself. A crew buying $30,000 of materials a month in the wrong tax status builds up a liability that only surfaces in an audit.
- 04
Pay-when-paid pushes cash down the chain
Subcontractors often wait until the general contractor is paid by the owner, which can add 30 to 60 days on top of the pay-app cycle. Payroll still runs every Friday, so the gap is financed by credit lines and supplier terms.
- 05
Field costs arrive late and uncoded
Fuel receipts, rental tickets and supplier invoices reach the office days after the work, and each needs a job, phase and cost code. One uncoded $8,000 concrete invoice moves a job from profit to loss in the estimate-versus-actual report.
What we handle for construction companies and contractors
Job costing in your ledger
We code every labor hour, material invoice, equipment charge and subcontract to job, phase and cost type in QuickBooks Online projects, Buildertrend or Xero tracking categories. Estimate-versus-actual is available per job at any point in the month.
Progress billing and pay apps
Your accountant prepares the schedule of values, percentage complete and retainage on AIA-style G702 and G703 forms or your owner's format. Each pay app reconciles to the contract, change orders and prior billings.
Retainage tracked separately
Retainage receivable and retainage payable sit in their own accounts, so aging reports show what is collectible now and what is held until closeout.
Lien waivers matched to payments
Conditional and unconditional waivers from subcontractors and suppliers are collected before release, logged per payment and filed with the pay app.
Subcontractor and 1099 tracking
W-9s, insurance certificates and cumulative payments are tracked per subcontractor so year-end 1099-NEC filing is a report, not a scramble. UK clients get CIS deduction statements prepared from the same records.
WIP schedule and monthly close
The work-in-progress schedule is updated with each close through our CloseTrack checklist, and over and under billings are booked so revenue reflects real progress.
Construction software we work in
- QuickBooks Online
- QuickBooks Desktop
- Xero
- Bill.com
- Gusto
- Sage 50
- Buildertrend
- Procore
- All 50 platforms
Construction compliance notes
Sales tax on materials
In most US states a contractor pays sales tax on materials at purchase and does not charge tax on the finished job. A few states, including Arizona and Washington, tax the contract itself, and many states have separate rules for repair work versus new construction. We set up tax codes per state and contract type and track exempt purchases with resale or project certificates on file.
Retainage
Retainage withheld by owners is recorded as retainage receivable, and retainage you withhold from subcontractors is recorded as retainage payable. Several states cap retainage on public work, commonly at 5%, and set release deadlines after completion. We track the release date per contract so closeout billing goes out on time.
Job costing and WIP
Bonding companies and lenders expect a work-in-progress schedule that ties to the general ledger, with contract value, costs to date, estimated cost to complete and billings to date. We maintain the schedule monthly and book over and under billing entries so the P&L reflects percentage of completion.
CIS in the UK
Under the Construction Industry Scheme, UK contractors deduct 20% from registered subcontractors and 30% from unregistered ones, and file a monthly CIS return with HMRC. We verify subcontractors, prepare the deduction statements and CIS return workings, and reconcile deductions suffered against your PAYE liability. Your accountant or the business submits the return.
KPIs we report
| KPI | Why it matters |
|---|---|
| Pay apps submitted within 2 business days of the cut-off | Late pay apps miss the owner's draw cycle and push cash out by a full month. |
| Zero uncoded job costs older than 7 days | Estimate-versus-actual is only useful when every invoice carries a job and cost code. |
| WIP schedule updated by the close date each month | Bonding capacity and lender reporting depend on a current work-in-progress schedule. |
| Lien waivers on file for 100% of subcontractor payments | A missing waiver leaves the project exposed to a double payment claim. |
| Retainage receivable aged and confirmed quarterly | Retainage that is never invoiced at closeout is money left with the owner. |
Case study
2 years of books caught up
Case studyTwo years of catch-up bookkeeping for a contractor before a bank loan
A general contractor in the Mountain West had run for two years on bank balances and a box of receipts. The business was busy, but when the owner applied for an equipment and working-capital loan, the bank asked for two years of financial statements, and the QuickBooks Online file had not been touched since the previous bookkeeper left. The owner engaged LedgerBPO for catch-up bookkeeping, bank reconciliation and financial reporting. A named accountant, a backup and a team lead rebuilt 24 months of books inside the contractor's existing QuickBooks Online file, reconciled every account and prepared the statements the lender asked for. The contractor's CPA reviewed the results and handled the tax returns. LedgerBPO handled the books.
- Months of books outstanding240
Services for construction companies and contractors
- Outsourced bookkeeping for construction companies & contractors
- Invoicing & billing for construction companies & contractors
- Accounts receivable management for construction companies & contractors
- Accounts payable processing for construction companies & contractors
- Bank & credit-card reconciliation for construction companies & contractors
- Month-end close for construction companies & contractors
- Monthly financial reporting for construction companies & contractors
- Catch-up bookkeeping for construction companies & contractors
- Payroll processing support for construction companies & contractors
- Cash application & remittance posting for construction companies & contractors
- Payment processor & marketplace reconciliation for construction companies & contractors
- KPI dashboards for construction companies & contractors
- Remote controller review for construction companies & contractors
- Accounting software setup & migration for construction companies & contractors
Frequently asked questions
What does bookkeeping for construction companies & contractors include?
Bookkeeping for construction companies & contractors includes job-costed transaction coding, progress billing, retainage tracking, lien waiver logging, subcontractor payments, payroll journals with job allocation and a monthly work-in-progress schedule. A named dedicated accountant handles the daily posting inside your QuickBooks Online, Buildertrend or Xero file, and a second reviewer checks every close before reports reach you. The outsourced bookkeeping page covers the general service.
Can you prepare AIA-style pay applications?
Yes, your accountant prepares G702 and G703 style pay applications from the contract schedule of values, approved change orders, percentage complete and retainage. We follow your owner's or general contractor's format when it differs. Each pay app is reconciled to prior billings so cumulative totals never drift, and supporting lien waivers are attached before submission. The invoicing and billing page explains the workflow.
How do you handle retainage in the books?
Retainage withheld from your billings is posted to retainage receivable rather than ordinary accounts receivable, and retainage you hold from subcontractors goes to retainage payable. This keeps aging reports honest about what is collectible now. We track the contractual release date per job and raise the closeout invoice when the conditions are met.
Do you work with Buildertrend or Procore?
Yes, we work inside the job-management system you already use and connect it to your accounting file. In Buildertrend we map cost codes, sync purchase orders and bills and reconcile the sync log each week. Procore's ERP integration and Sage 50 or QuickBooks connections are handled the same way. The accounting software setup page lists supported connections.
Can you handle CIS for a UK contractor?
We prepare CIS deduction statements, verify subcontractors and build the monthly CIS return workings from the same subcontractor records used for payments. Deductions suffered are reconciled against your PAYE liability so the offset is claimed correctly. The business or its accountant submits the return to HMRC. The UK CIS payroll service page covers this in more detail.
How is the work-in-progress schedule produced?
Each month the accountant updates contract value, approved change orders, costs to date, estimated cost to complete and billings to date for every open job. The resulting over and under billings are booked to the ledger so revenue reflects percentage of completion. The schedule is reviewed through our Two-Tier Review before it goes to your bonding agent or lender.
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