QuickBooks and Bookkeeping for General Contractors
By BRIX Editorial Team · Updated
Bookkeeping for general contractors centers on job costing: every dollar of revenue and cost tied to a specific project, including change orders, progress billings, retainage and sub payments. QuickBooks can do this with projects, items and classes set up correctly. Without that setup, a GC knows whether the year was profitable but not which jobs made the money.
Key takeaways
- Track every project as its own job in QuickBooks, with costs split into labor, materials, subs and other.
- Bill progress draws on schedule and invoice change orders separately so none get lost in the final.
- Retainage is money you've earned but can't collect yet. Track it as its own receivable.
- Collect W-9s and certificates of insurance from subs. The 1099-NEC threshold is $2,000 for payments made after Dec. 31, 2025.
- BRIX keeps invoices, payments and categorized expenses synced with QuickBooks. It doesn't file taxes or give tax advice.
What makes GC bookkeeping different?
GC bookkeeping is different because one project can run for months, get billed in stages, change scope halfway through and hold back a percentage until closeout. A service business can look at monthly profit and loss. A general contractor needs to know, job by job, whether the money collected so far matches the work done so far.
Setting up QuickBooks for a general contractor
- Turn on projects (QuickBooks Online) or use customer:job (Desktop) so each remodel or build is its own job. See classes vs. projects.
- Build cost codes as items or accounts: demo, framing, plumbing, electrical, HVAC, drywall, finish carpentry, flooring, paint, permits. Match how you estimate so you can compare estimate to actual.
- Separate sub costs from your own labor and materials. It makes 1099s, workers' comp audits and job costing cleaner.
- Add accounts for retainage receivable and customer deposits so those balances never hide inside regular receivables or income.
- Use a contractor chart of accounts. See chart of accounts and how to do job costing in QuickBooks.
Progress billing and draws
Progress billing means invoicing in stages as work is completed instead of waiting for the end. Residential remodels usually bill by milestone (deposit, rough-in, drywall, cabinets, final). Commercial work often bills by percentage complete against a schedule of values, sometimes on AIA G702/G703 forms.
See progress billing, AIA billing and percentage of completion for the details.
Change orders and retainage
Change orders should hit the books as their own line or invoice, tied to the job, the day they're approved. If they only show up in the final bill, homeowners forget agreeing to them and you end up negotiating your own margin. See change order.
Retainage is a percentage of each payment held back until the job is complete, common on commercial and some larger residential contracts. It's earned income you can't collect yet, so track it as a separate receivable and follow up the day closeout is signed. See retainage.
WIP reports: are your jobs over- or under-billed?
A work-in-progress report compares what you've billed on each job with what you've earned based on costs to date. Over-billing means you've collected ahead of the work (a cash cushion that's really a liability). Under-billing means you've done work you haven't invoiced. Banks and bonding companies often ask for WIP reports. See WIP report and surety bond.
Subcontractors: W-9s, 1099s, COIs and lien waivers
Collect a W-9 before the first payment. For payments made after Dec. 31, 2025, the IRS requires a Form 1099-NEC for non-employees you pay $2,000 or more in a year ($600 for 2025 payments). If a sub won't provide a taxpayer ID, the IRS backup withholding rate is 24%. Keep certificates of insurance current, and collect a lien waiver with each payment. See 1099 for subcontractors, certificate of insurance and lien waiver.
Taxes general contractors should plan for
- Quarterly estimated taxes if you're a sole proprietor, partner or S corp owner. See quarterly estimated taxes for contractors and the quarterly estimated tax calculator.
- Sales and use tax on materials, which differs by state and by whether the job is a capital improvement. See sales tax on labor vs. materials and use tax for contractors.
- Entity choice as you grow. See S corp vs. LLC for contractors.
- Equipment and vehicle deductions. See Section 179 and contractor tax deductions.
What BRIX automates in a GC's books
| Task | BRIX | Still yours (or your accountant's) |
|---|---|---|
| Deposit, draw and change order invoices | Creates invoices and chases unpaid ones | Deciding the draw schedule |
| Getting invoices and payments into QuickBooks | Syncs customers, invoices and payments | Reviewing the job cost reports |
| Expense categorization | Keeps expenses categorized | Approving cost codes |
| 1099 subs | Tracks payments to 1099 subcontractors | Filing the 1099s (or your preparer) |
| Quarterly estimated taxes | Reminds you of the dates | Calculating and paying |
| WIP and AIA pay apps | Keeps invoice data clean | Producing the WIP report and AIA forms |
The jobs that feed these books start with the AI receptionist and bid follow-up. Overview: general contractor software.
Frequently asked questions
Is QuickBooks good for general contractors?
QuickBooks works well for most small and mid-size GCs if it's set up with projects, cost codes and separate accounts for retainage and deposits. Larger contractors with heavy AIA billing and WIP needs sometimes move to construction-specific accounting software.
Should general contractors use cash or accrual accounting?
It depends on your size, contracts and what your bank or bonding company needs. Accrual gives a truer picture of job profitability; cash is simpler. IRS rules on which methods you can use depend on factors like average gross receipts, so decide with your CPA.
How do I track change orders in QuickBooks?
Add each approved change order as its own line or invoice tied to the project, using the same cost codes as the original estimate. That keeps estimate-vs-actual reports honest and prevents changes from disappearing into the final bill.
What is a good profit margin for a general contractor?
We don't cite a single industry figure because margins vary by project type, region and how much work you sub out. Track gross margin per job and net margin for the business, and price new work with your real overhead using the overhead rate and markup calculators.
Do I need to send 1099s to my subs?
Generally yes for unincorporated subs you pay for services above the IRS threshold: $2,000 for payments made after Dec. 31, 2025 ($600 for 2025 payments). Most payments to corporations are exempt. Collect a W-9 before paying and confirm specifics with your tax preparer.
Can BRIX produce AIA pay applications or WIP reports?
No. BRIX creates and chases progress invoices and keeps invoice and payment data clean in QuickBooks, which makes WIP and pay apps easier for you or your accountant to produce.
Related
- General Contractor Software That Runs the Office While You Run the JobGeneral contractor software that answers remodel inquiries, follows up bids, invoices draws and change orders, tracks 1099 subs and syncs QuickBooks.
- AI Answering Service for General Contractors and RemodelersAn AI answering service for general contractors: qualifies remodel inquiries by scope, budget and timeline, books walkthroughs and handles calls 24/7.
- General Contractor Sales: Following Up and Winning More BidsHow general contractors win more remodel bids: qualify early, follow up for weeks, sell the process not the price, and get referrals. What BRIX automates.
- What Is Progress Billing?Progress billing explained: milestone, percent-complete and schedule-of-values methods, worked examples, QuickBooks progress invoicing steps and pitfalls.
- What Is Retainage in Construction?Retainage explained for contractors and subs: how it's calculated, worked billing examples, retainage receivable and payable accounting, rules and release.
- What Is a WIP Report (Work-in-Progress Schedule)?What a construction WIP report is, every column explained, a four-job worked example with over and under billings, how to read it, and mistakes to avoid.
- How to Do Job Costing in QuickBooks OnlineJob costing in QuickBooks Online: turn on Projects, set hourly cost rates, code bills and time to jobs, read project profit and avoid mistakes.
- QuickBooks for contractors: the right version, real job costing and a sync that keeps the books matched to the jobsQuickBooks for contractors: Online vs Desktop, job costing with projects and classes, sync pitfalls, and how BRIX keeps QuickBooks matched to your jobs.
- Bookkeeping for contractors that keeps your books tax-ready all yearContractor bookkeeping that stays current: categorized expenses, 1099 subcontractor tracking, sales tax and quarterly tax reminders, synced to QuickBooks.
- AI Receptionist & CRM for General Contractors in Rochester, NYRochester remodelers work pre-1950 houses full of surprises. Capture every lead, follow up on bids, track change orders and keep project books clean.
Sources
- IRS — Form 1099-NEC and independent contractors FAQ ($600; $2,000 for payments made after Dec. 31, 2025) (checked October 12, 2026)
- IRS — Instructions for the Requester of Form W-9 (backup withholding rate 24%) (checked October 12, 2026)