Bookkeeping for Plumbers: QuickBooks, Parts Markup and Getting Paid

Bookkeeping for plumbers means tying every supply-house bill, labor hour and invoice to a job so you know what each drain call, water heater and repipe earned. In QuickBooks that comes down to clean income and cost accounts, parts marked up on every invoice, sales tax handled the way your state requires, and receivables collected on time.

Why do plumbing books get messy so fast?

Plumbing books get messy because materials move faster than paperwork. A plumber grabs a PRV, two ball valves and a box of fittings at the supply house at 7 a.m., uses half on one job and half on another, and restocks the truck on Friday. All of it shows up as one line on a monthly account statement. Unless someone splits it out, nobody knows what any job really cost.

Add a mix of pricing methods (flat-rate service calls, T&M repipes, bid remodels), customers who pay at the door and property managers who pay in 45 days, and sales tax rules that change depending on whether you fixed something or installed something new, and it's easy to see why plumbers dread tax season.

How should plumbers set up QuickBooks?

Plumbers should set up QuickBooks with income split by type of work and costs split by what drives them, then tag costs to jobs wherever possible. That way the profit and loss tells you whether service, installs or new construction makes your money, and job reports show which jobs did.

The truck stock line is the honest compromise. You won't tag every wax ring to a job, but keeping restocks separate from job-specific parts at least tells you how much the trucks eat each month. For more on this, see truck stock and inventory turnover.

How much should plumbers mark up parts?

Plumbers should mark up parts enough to cover the time spent buying, stocking and standing behind them, at a level that fits their market and pricing method. Rather than copying someone else's percentage, start from the gross margin you need on materials and work back to the markup.

Markup % = Margin % ÷ (1 − Margin %)

Flat-rate shops build the markup into the task price; T&M shops add it line by line. Either way the failure is the same: the $38 ball valve that got used and never billed. If your flat rates haven't been updated since supply prices last jumped, rerun them with the flat-rate pricing calculator. The difference between markup and margin trips up a lot of owners, and markup vs. margin clears it up.

Do plumbers charge sales tax on parts?

Whether plumbers charge sales tax on parts depends on the state and the kind of job. In some states the plumber pays tax when buying materials and doesn't charge the customer; in others the parts are taxable on the invoice; and many states treat repairs differently from capital improvements. Labor can be taxable in a few states too.

Get the rule for your state from its revenue department before you set up invoice templates, and ask your CPA about use tax on materials you pulled from truck stock for a job in another state. Start with sales tax on labor vs. materials, use tax for contractors and your state's page under taxes.

How do plumbers get property managers to pay on time?

Plumbers get property managers to pay on time by sending the invoice the same day to the right person with the unit, tenant and work order number on it, and then following up on a fixed schedule. Most late commercial payments aren't refusals; the invoice got lost or is missing something AP needs.

That exchange is a sample, not a real customer. Notice the reply that needed a person got handed to the office. BRIX keeps chasing on schedule until the invoice is paid, and you can see what's outstanding by customer. If you want a number for how long you wait to get paid, the DSO calculator gives you one.

What tax basics should a plumbing business owner know?

• Quarterly estimated tax. Per the IRS, sole proprietors, partners and S corporation shareholders generally must pay estimated tax if they expect to owe $1,000 or more when filing, across four payment periods. See quarterly estimated taxes for contractors and how much to set aside for taxes.
• Self-employment tax. The IRS says you usually owe it with $400 or more of net self-employment earnings. The rate is 12.4% for Social Security plus 2.9% for Medicare. See self-employment tax.
• Subs and 1099s. Excavators, concrete cutters and other subs may need a Form 1099-NEC. Collect a W-9 before the first payment. See W-9 for subcontractors.
• Tools and vans. Jetters, cameras and vans are often depreciated or expensed under Section 179. See depreciation and Section 179.
• Keep the paper. The IRS says to keep records 3 years in the general case and employment tax records at least 4 years.

Where BRIX fits in a plumber's books

BRIX handles the daily grind that keeps the books clean: finished jobs become invoices with the parts on them, unpaid invoices get followed up automatically, customers, invoices and payments sync to QuickBooks, expenses are categorized, 1099 subs and sales tax are tracked, and you get reminders before estimated tax dates. Your CPA still files and advises.

Already invoicing from Jobber or Housecall Pro? We'll agree during setup which system sends invoices to QuickBooks so nothing doubles. For calls and dispatch, see the plumbing software hub; for closing more estimates, see plumbing leads and sales.