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QuickBooks Tip – Working With Contractors – Part 4

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Congratulations, you have just picked up your first construction client!

Every contractor should have a computer as part of his "toolbelt"As an Certified QuickBooks ProAdvisor, a “contractor” or a Bookkeeper/Office Manager has contacted you for a contractor because they need “help” with their QuickBooks file.  The chances are good that you have completed one of the various “New Client Interviews” that are readily available, you arrive at the contractor’s office, and start to review their current QuickBooks setup only to find:

  • A Chart of Accounts that is so long it could easily be considered a “book” OR one that is so short you wonder how they manage to keep accurate records.
  • An Item List that is so long that it too could be considered a “book” OR one that consists of only a few items.
  • A Payroll Item List that is so long that it too could be considered a “book” OR one that consists of only a few items

In the case of the Chart of Accounts, Item, and Payroll Item Lists feeling like “books” most ProAdvisors first thought is “oh what a mess, we need to clean this up!”


This initial reaction may not be the best approach to dealing with a construction client, so let’s address some areas that most of the New Client Interviews I’ve ever seen – never take into consideration.  Also, remember that your construction clients in-house management reporting needs do not, and probably will not, perfectly line up with financial-statement or tax return reporting requirements.  However, you will find it worthwhile to help them retrieve the information that they desperately need – even if it means a bit more work from you or their Accountant on a periodic or year-end basis.

So, let’s talk about some of those questions that are not in the New Client Interviews, it is impossible to cover all of them, but you can certainly add these to your “list”:

  • Do you subcontract portions of your construction projects to other contractors?
  • How are you currently tracking these subcontracts?
  • Do you have a method of tracking your Subcontractor’s Worker’s Comp and/or General Liability Insurance Expiration Dates?
  • Do any of your construction contracts require that Retainage be held on current invoices and paid to you at a later date?
  • Will you be withholding Retainage on payments to your Subcontractors?
  • Will a standard QuickBooks Invoice or Progress Invoice be sufficient for billing purposes?  If not what type of billings do you need to submit?  Is this for all jobs or just some jobs?
  • Do you have any special job-costing needs, such as tracking equipment or trucks?
  • How are you doing your Estimates?  Using QuickBooks, Excel, a 3rd party Estimating program with Cost Books?
  • Are any of your construction projects funded with Federal, State or ARRA monies and require certified payroll reporting?  If so, how are you currently producing these reports?
  • How are you paying the fringe benefits associated with these Federal, State, or ARRA Funded Projects?  Are they paid to a Union or a bona-fide plan?
  • Are you required to submit Union Benefit and Union Dues Reports?  If so, how often?
  • Are you required to submit EEOC/Work Utilization Reports for these Federal, State, or ARRA funded projects?
  • Are all of your projects funded with Federal, State, or ARRA monies?  Or do you perform work on private jobs also?
  • Are your crews working locally with a foreman, supervisor or project manager submitting timesheets to the office?
  • Do your employees perform work under multiple work classifications and or pay rates throughout the week?
  • Are you required to pay overtime using weighted-average overtime calculations?
  • Do your projects frequently have Change Orders?  If so, how are you tracking these?
  • What tasks are you still doing manually or with an Excel spreadsheet?
  • What tasks are currently taking the most time?

As you can see these questions will help you to zero in on their needs and you can then help them set up a QuickBooks file that will be a “workhorse” instead of one that “underperforms” and causes frustration.

QuickBooks will not automatically provide some of the solutions to the needs of contractors, for example:  tracking Retainage, equipment costs, union or bona-fide plan fringe benefits – but properly setup QuickBooks “can be made” to do so; and of course, there are always third-party applications that will help with the “tough stuff”.

Now that you have some more information about the client’s needs – your first step should be to help them (and yourself) get organized by making a list of their needs!  However, before you begin implementing new procedures – you should review their current QuickBooks file to make sure it will provide them with the desired results.

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About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert

I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.

QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

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