Bookkeeping for General Contractors in the Inland Empire: A Practical Setup That Delivers Job-Level Profit
If you can’t see profit by project, you’re estimating in the dark. DIY QuickBooks Online often hides true costs. Retainage gets lost. Deposits get booked as income. Payroll isn’t tied to jobs. Margins leak.
We set up QuickBooks Online the way contractors actually run work. Progress billing, retainage, deposits, time by job, and reports you can trust every month. If you want job profitability without wrestling the software, this guide shows the “what”, and when it’s smarter to have us do the “how.”
Who this is for
General contractors and small construction firms in the Inland Empire and broader Southern California.
5–50 jobs per year. Mix of fixed-bid and T&M.
Using QuickBooks Online (Plus or Advanced).
Want clean, monthly job profitability and tax-ready books.
What “clean” books mean for a GC
Project gross margin you trust. Materials, subs, labor, and overhead tied to each job.
Cash clarity. Deposits, draws, retainage, AR, and AP all lined up.
Tax-ready. Reconciled accounts, accurate vendors, 1099s, workers’ comp audit pack.
Decisions with confidence. Price work and schedule crews based on facts.
Prefer not to DIY? Book a 30-min fit call. We’ll review your file and give you a fix plan.
Step-by-step setup in QuickBooks Online for job profitability
The clicks below are accurate to QBO today. If you’d rather not spend hours configuring and testing, we do this setup and hand you job-costed reports in weeks, not months.
1) Turn on Projects (one project per job)
Settings ▸ Account and settings ▸ Advanced ▸ Projects ▸ Turn on ▸ Save.
Create jobs from Business overview ▸ Projects ▸ New project and link to the customer.
Use Projects for job P&L. Add Classes for divisions/crews if helpful. Use Locations only if you operate separate branches.
When to call us: If your file already has hundreds of transactions and no Projects, mapping history correctly is the part most contractors get wrong. We can batch-reclass and backfill job costs without breaking your AR. If you want to save hours of your time and headaches, let us take this off your plate.
2) Build Products & Services (Items), not just Categories
Sales ▸ Products and services ▸ New. Create Service and Non-inventory items for materials, labor types, subs, equipment, change orders, and retainage.
Map each item to the proper Income or COGS account. Use Categories to group items.
When to call us: If items aren’t mapped perfectly, reports lie. We’ll rebuild your item list, fix historical mapping, and protect your margins.
3) Handle retainage the right way
Add Retainage Receivable (Other Current Asset). If you hold retainage from subs, add Retainage Payable (Other Current Liability).
Create a Service item “Retainage” mapped to Retainage Receivable.
On progress invoices, show retainage as a negative line.
When retainage is released, invoice using the Retainage item to move it out of Retainage Receivable and collect payment.
When to call us: Retainage is where cash disappears. We’ll implement the workflow and clean up past retainage so AR and cash flow match reality.
4) Treat customer deposits as a liability until earned
Create Customer Deposits as Other Current Liability.
Receive deposits to that liability.
Apply to the first progress invoice to reduce AR.
When to call us: If deposits have been hitting income, your revenue and tax picture are wrong. We’ll correct prior periods without wrecking reconciliations.
5) Time tracking and payroll mapped to Projects
Use QBO timesheets or QuickBooks Time to tag hours to projects.
Map earnings types so labor posts to job cost.
If your payroll app doesn’t push burden (employer taxes, workers’ comp, benefits) by job, book a monthly allocation to Projects.
6) Subcontractors, W-9s, and 1099-NEC
Add each subcontractor as a Vendor. Mark Track for 1099.
Collect W-9s before first payment and map vendor payment types correctly.
Run 1099s at year-end from QBO.
When to call us: We’ll clean the vendor list, fix coding, and prevent 1099 headaches.
7) Connect bank feeds and create strict bank rules
Transactions ▸ Bank transactions ▸ Link account.
Build Rules for fuel, dumps, suppliers.
Always review payee, account, and project before adding.
Reconcile every month.
When to call us: We’ll design smart rules that speed up coding without creating misposts — and we’ll reconcile reliably each month.
8) Month-end close checklist
Reconcile all bank and credit cards.
Review open progress invoices; match payments and bank deposits.
Open Projects: look for unbilled time/expenses and missing costs.
Confirm payroll is mapped to jobs; post burden allocation.
Run Project Profitability and Estimates vs Actuals; fix gaps.
Close the books and lock the period.
When to call us: We run this checklist for you every month. You get job-costed financials on time, every time.
Indirect costs and overhead allocation
Simple method:
Monthly overhead pool ÷ direct labor hours = overhead rate per hour.
Apply this rate to each job. Easy to maintain.
Rate-based method:
Overhead as a percentage of direct costs (materials + subs + labor).
Useful if labor hours fluctuate.
Equipment costs:
Owned: capitalize, depreciate, and apply an internal hourly rate to jobs.
Rented: code to COGS and assign to the project.
We’ll choose one method, document it in your SOP, and keep it consistent so estimates match results.
Fixing a DIY QBO file (the fast path)
Diagnostics:
Is banking history complete? Any duplicates?
Vendor list clean? Subs marked Track for 1099?
Any uncategorized income/expense? Misused Transfers?
Transactions missing from Projects? Estimates not linked to invoices?
Reconstruction order:
Reconcile bank and credit cards.
Vendor cleanup and 1099 mapping.
Rebuild Items and account mapping.
Map historical transactions to Projects; fix sales forms for progress billing.
Reclass payroll to jobs; post burden allocations.
When to start a parallel file:
Multi-year unreconciled accounts, item mapping beyond repair, or wrong revenue model. Start fresh, bring in clean opening balances, and keep momentum.
What we’ll request:
Bank and card statements (PDF + CSV), W-9s, vendor list, open jobs with budgets, payroll by employee/job, signed contracts/COs, current retainage status.
We run this as a defined cleanup sprint with a fixed scope and weekly check-ins. Most small GCs are cleanup-to-monthly service in 2–6 weeks.
Reporting package contractors actually use
Monthly:
Project Profitability
Job cost detail
AR with retainage
AP aging by vendor/sub
Cash flow
WIP summary
Quarterly:
Overhead review and labor burden rate check
Estimate-vs-actual variance
Year-end:
1099s
Workers’ comp audit pack
Tax-ready GL with supporting schedules
You get these reports every month: no chasing, no surprises.
Inland Empire realities to plan for
Commutes and fuel move the needle. Build rules for fuel vendors and tag to jobs.
Heat and seasonality affect productivity. Watch labor hours vs estimates in summer.
Permits and inspections vary by city. Track them as COGS per job.
Common project types: ADUs, residential remodels, small commercial TI.
California specifics to flag (not legal advice):
Retainage norms, prevailing wage on public jobs, CSLB compliance, and CA use-tax on out-of-state material purchases.
Tooling stack that works
QBO + Projects for job P&L.
QuickBooks Time (or similar) to tag hours to jobs.
Document hub for contracts/COs, expense capture for receipts, job photo storage, estimate/CO tools that mirror your item list.
Need job-costed books without the headache? See our Monthly Bookkeeping.
FAQ
1) What’s the best QuickBooks setup for general contractor bookkeeping in Redlands?
Use QuickBooks Online Plus or Advanced with Projects for each job, a construction-ready Chart of Accounts, itemized products/services, progress invoicing, and retainage tracking. We implement this for Redlands-area GCs so job profitability is clear every month.
2) Can you handle construction bookkeeping cleanup if my file is DIY?
Yes. We run a defined cleanup sprint: reconcile banks/credit cards, rebuild the item list, map history to Projects, fix progress billing, and set up retainage. Most Redlands and San Bernardino GCs are cleanup-to-monthly in 2–6 weeks.
3) How do you do payroll job costing for construction in QuickBooks?
We map hours to Projects, align payroll items, and allocate labor burden (employer taxes, workers’ comp, benefits) to each job. Your labor cost per project becomes accurate and repeatable.
4) How should deposits and retainage be recorded for contractors?
Deposits go to Customer Deposits (liability) and are applied to progress invoices when earned. Retainage is tracked in Retainage Receivable and invoiced when released—no more missing cash.
5) Do you prepare 1099s for subcontractors?
Yes. We clean the vendor list, collect W-9s, mark Track for 1099, map the right expense accounts, and e-file 1099-NEC. We also make sure credit-card-paid vendors are excluded properly.
6) What construction reports will I get monthly?
Project Profitability, Job Cost detail, AR with retainage, AP by vendor/sub, cash flow, and a simple WIP summary. We review the highlights with you so you can price and schedule with confidence.
7) Do you offer ongoing construction accounting in the Inland Empire?
Yes. We provide monthly bookkeeping and controller-lite advisory for GCs in Redlands, Yucaipa, Loma Linda, Calimesa, San Bernardino, and Grand Terrace.
8) Is QuickBooks Simple Start enough for general contractor job costing?
No. You need Plus or Advanced for Projects and Classes/Locations. We’ll confirm your subscription and configure the features so reports match how you build and bill.
Want someone else to handle this?
Book a 30-min fit call. We’ll look at your current file, list the must-fix items, and recommend the fastest path to clean, job-costed books. If we’re a fit, we start with a cleanup sprint and roll you into monthly service.
