Bookkeeping for Subcontractors and Specialty Contractors (Flooring, Tile, Drywall and More)

When you're the subcontractor, your bookkeeping problems look different from the general contractor's. You don't control the project schedule or when the owner pays. You bill on someone else's pay application cycle, wait on someone else's payment terms, and carry retainage you won't see until the whole project closes. Specialty trades like flooring and tile add another layer: materials can be a large share of every job, and they're often bought well before the install.

General small-business bookkeeping will get the bank accounts reconciled. It usually won't tell you which GCs pay slowly, how much retainage you're owed across all open jobs, or whether the flooring job you finished last month made money once leftover material and the GC's back charge are counted.

1. Billing and collections by general contractor

Most subcontractors bill through the GC's process: a monthly pay application against a schedule of values, often with a cutoff date and lien waivers attached. Miss the cutoff and the payment slides a month. Good subcontractor books record each invoice against the job and the GC, so your receivables report shows who owes what, on which project, and how long it's been outstanding. That's the report you need when you're deciding which GC to call this week.

2. Retainage receivable

GCs commonly hold back a percentage of each payment until the project or your scope is complete. That money is earned and owed to you, but it isn't cash. If retainage isn't tracked separately, two things go wrong: your receivables look smaller than they are, or your cash looks bigger than it is. Retainage should sit in its own receivable account by job, so you can see the total being held, chase it when your scope is done, and make sure it actually gets paid at closeout.

3. Slow pay and pay-when-paid terms

Many subcontracts tie your payment to when the GC gets paid by the owner. Even without that clause, 30 to 60 days or more between doing the work and getting paid is normal. Meanwhile you've paid your crew every week and paid your supplier on their terms. Current books with receivables aged by GC let you see the gap coming, plan around it and spot the customers who are consistently the slowest.

4. Change orders and back charges

Extra work requested on site needs to be written up and billed, or the labor and material are simply lost. The reverse matters too: GCs sometimes issue back charges for cleanup, damage, delays or rework, deducted from your payment. If a back charge is buried as a short payment, the job looks more profitable than it was and the dispute is hard to reconstruct later. Both change orders and back charges should be recorded against the job they belong to.

5. Materials-heavy jobs (flooring, tile, cabinets, finishes)

For specialty trades that supply the material, materials can be the biggest cost on the job, and the timing is awkward. You may buy flooring weeks before install, take a customer or GC deposit up front, order overage for waste and end up with leftover boxes. Bookkeeping that works for this:

• Material purchases coded to the job that uses them, not to a general supplies account
• Deposits received before work starts recorded as a liability until the work is done, not as income
• Leftover or returned material handled consistently, so one job doesn't carry another job's cost
• Supplier credits and returns matched back to the original job
• Material and labor shown separately on job reports, so you can see margin on each

Sales tax on materials depends on your state and how your contracts are written. Your CPA should make that call; the bookkeeping job is to record materials and labor clearly enough that they can.

6. Labor cost per job

Install labor is usually the other big cost. If payroll lands in one lump, job reports only show materials and every job looks better than it is. Allocating labor to jobs using hours or crew data from your payroll provider or job software gives you a real job margin. Remember that labor cost includes employer payroll taxes and workers' comp, not just the hourly wage. On payroll itself, we set it up turnkey (we usually recommend Gusto) and assist as needed.

7. Your own subs and the paperwork

Many specialty contractors use their own subcontracted installers. Keep a current W-9 and certificate of insurance on file for each one, code their bills to the job, and keep year-end 1099 reporting simple by recording them consistently all year. GCs will also ask you for paperwork: certificates of insurance, lien waivers with each payment and sometimes a W-9 before they'll pay. Keeping these organized avoids payments held up over missing documents.

8. Profit by job and by GC

The most useful report for a subcontractor is often profit by customer, not just by job. Some GCs pay on time, rarely back charge and keep change orders clean. Others don't. When each job is tied to the GC and costs and payments are recorded against it, you can see which relationships make money and which ones just keep the crew busy. That's the information you want before the next bid.

What stays with your CPA

Your bookkeeper keeps the records accurate and reconciled all year: jobs, receivables, retainage, materials and labor. Tax preparation and planning, including sales tax decisions and how your income is reported, stay with your CPA or EA. Good subcontractor books give them clean numbers to work from.

How Bookkeepers Lane works with subcontractors

We set up QuickBooks Online so each job is tied to the GC or customer, track retainage receivable and customer deposits, code materials, labor and your own subs to the job, and record change orders and back charges where they belong. Every month we close the books and review job cost coding, so receivables by GC and job profit stay trustworthy. Pricing is a flat monthly fee based on agreed scope, set after a free Books Review.