Bookkeeping for home service businesses
Bookkeeping for home service businesses means recording every dollar the shop takes in and spends, then sorting it so your reports answer three questions: which jobs made money, why there's less cash than profit, and what you'll owe in April. For HVAC, plumbing, electrical, cleaning, landscaping and pest control companies, that takes a setup most general bookkeepers don't use. Your techs' pay goes in cost of goods sold, every truck gets tracked, and deposits from your field software get matched to the invoices behind them.
Accounting for home service businesses is built on the same books. Tax returns, payroll filings, sales tax and any advice on pricing or labor all start from them, so when the bookkeeping is wrong, everything downstream is too. Good bookkeeping for contractors in the trades comes down to two things, a weekly rhythm and where the techs' pay goes, and both are below.
What makes trades bookkeeping different?
A service shop moves money in ways a store or an office doesn't:
- Labor is the biggest cost of doing the work. Your techs' wages, plus the payroll taxes and workers' comp on them, belong in cost of goods sold (COGS) next to materials. Generic setups often put every paycheck in one overhead line.
- Trucks are cost centers. Fuel, repairs and the truck note hit every month. Tag them to each truck and you can see what each one costs to run.
- Deposits don't match invoices. Card payments through ServiceTitan, Housecall Pro or Jobber can land in one batch with the card fees already taken out, so someone has to tie each deposit back to the jobs in it.
- Some of the money in the bank isn't yours. Customer deposits for work you haven't done, sales tax you collected and payroll taxes you withheld all sit on the balance sheet as money you owe.
- Seasons swing cash. The busy months have to carry the slow ones, so the books have to show cash month by month as well as profit for the year.
Each trade adds its own wrinkle: maintenance agreements in HVAC, truck stock in plumbing, service calls mixed with bigger jobs in electrical, seasonal crews in landscaping, recurring routes in pest control. Our pages on HVAC bookkeeping services, plumbing bookkeeping, electrical bookkeeping, landscaping bookkeeping, pest control bookkeeping and handyman bookkeeping cover each one, and two trades get a full walkthrough: bookkeeping for HVAC and bookkeeping for painting contractors.
The weekly and monthly rhythm
Good books run on a schedule, not a scramble before the tax deadline. Here's what gets done, and when, in a shop with a few trucks:
| Task | How often | Why it matters in a trades shop |
|---|---|---|
| Capture each receipt and tag it to a job or truck | As the charge happens | A $214 supply house run is easy to explain today and a mystery in three weeks |
| Match deposits to invoices | Weekly | Batched card payouts hide which jobs got paid |
| Reconcile bank and card accounts | Weekly or monthly | Catches missing, duplicate and personal charges |
| Review unpaid invoices | Weekly | Receivables are payroll you've earned and can't spend yet |
| Book each payroll | Every payroll | Techs' pay to COGS, office pay to overhead |
| Close the month | Within about a week of month-end | A P&L you see on the 7th can still change this month |
| File sales tax | Monthly or quarterly, per your state | Collected tax was never yours |
| File payroll tax returns | Quarterly, on Form 941 and your state's forms | Late deposits and returns carry IRS penalties |
| Send W-2s and 1099s, hand the books to your tax preparer | January | Clean books make the return faster and April quieter |
Two of those rows have their own guides: how to organize contractor receipts, and which financial reports contractors need once the month is closed.
Where do techs' wages go?
In cost of goods sold, with their payroll taxes and workers' comp. Office and admin pay, including yours, stays in overhead. That one split decides whether your gross margin, what's left of each dollar after the work is paid for, tells you the truth. Brandon Vaughn, who coaches home service owners, wants it fixed the same day:
If you aren't currently breaking apart your payroll and your QuickBooks for your admin pay, including yourself as an owner, and your technician pay under its own separate line item up in COGS, I want you to immediately send an email to your bookkeeper and say, hey, I need to take all of my technicians pay and I need to move them up into our COGS line item.
He said it while setting up a bonus plan for a production manager, because a bonus paid on gross margin means nothing until that line is split. The chart of accounts for contractors shows the full setup, and how to calculate labor burden shows a tech's full cost once taxes and comp are added.
Know your overhead before you mark up
Clean books give you a number you can't get anywhere else: overhead as a share of revenue. Without it, a markup that feels fair can lose money on every job.
One owner and his wife were subbing out pressure washing and keeping a 20% margin on it. Brandon walked them through the overhead below the COGS line and gave them the verdict:
The bottom line is, is that, I mean, making a 20% margin on your subcontractor work, you're losing money, right? The business is losing money.
Here's the math with example numbers:
| Line | Amount |
|---|---|
| Customer pays | $1,000 |
| The sub's bill | $800 |
| Gross profit (20%) | $200 |
| Overhead at 30% of revenue (example) | $300 |
| Profit on the job | −$100 |
A subbed job has to carry its share of the office, the phones, the insurance and your pay, the same as a job your own crew does. If your books put overhead at 30% of revenue, any work priced under a 30% margin loses money however busy it keeps you. Tracking job profitability shows how to check it job by job.
When to stop doing your own books
Doing your own books makes sense with one truck and a short list of transactions. Past that, the hours come out of estimating and selling, and the books fall behind.
Why are you doing the bookkeeping? You're a CEO, man.
That was Brandon's answer to an owner who was still entering and categorizing his own P&L numbers. When you hand it off, look for someone who already knows the trades setup above, closes the month on a set date and explains the numbers in plain English. Here's what a bookkeeper should do for a contractor and what a bookkeeper costs.
YetiBooks was built by trades owners for exactly this, and we work only with home service companies. Yeti, our text assistant, asks about a charge while it's fresh, you reply with a photo of the receipt, and a person checks everything Yeti files. You get the same profit specialist every time, books cleaned up in about two weeks and a first report with action items inside 30 days. How it works walks through it, and the plans are on the pricing page. If you'd like a second opinion first, bring last month's P&L to a free profit call and we'll tell you whether your techs are in the right place.
Questions owners ask
Is bookkeeping for contractors the same as construction bookkeeping? Not quite. Construction bookkeeping is built around long projects: progress billing, retainage and work in progress. A service shop bills when the job's done, so it needs fewer accounts and a clean labor split. If you do both, like an electrician who wires new builds and runs service calls, set the books up for both.
What's the difference between bookkeeping and accounting? Bookkeeping records and sorts every transaction and closes the month. Accounting uses those books for tax returns, tax planning, payroll filings and the read on what the numbers mean. YetiBooks does bookkeeping, payroll, sales tax and tax returns in one firm, so your return is built on books we already keep.
How far behind is too far? Rarely too far. A cleanup starts from your bank and card statements, so months of missing entries can be rebuilt, and ours usually take about two weeks.
