What does a bookkeeper do for a contractor?
A bookkeeper records every sale, bill, payroll and bank transaction in your accounting software, sorts each one into the right account, reconciles the accounts against the bank statements and closes the month, so you get a profit and loss statement (P&L) and a balance sheet you can trust. That's what a bookkeeper does for any small business. For a contractor, a good one also handles four jobs most skip, and those four decide whether you can run the business off the reports.
This is the short version for an owner hiring help. For how the whole system fits together, see bookkeeping for home service businesses.
The core services, week to month
The Bureau of Labor Statistics sums up the job as recording transactions, assigning each to an account, producing reports and checking them for accuracy. Here's what that looks like in a shop with trucks:
| Service | What it looks like in a trades shop | How often |
|---|---|---|
| Record and categorize transactions | Every card swipe, supply house bill and deposit lands in the right account, tagged to a job or truck | Daily or weekly |
| Collect receipts | A photo matched to each card charge, so the hardware store run has a receipt and a job | As charges happen |
| Reconcile accounts | Bank and card balances in the books match the statements to the penny | Monthly at least |
| Enter bills (accounts payable) | Supplier and sub bills entered and scheduled, so nothing gets paid twice or late | Weekly |
| Track invoices (accounts receivable) | Field software invoices tied to deposits, and a list of who owes you | Weekly |
| Book payroll | Wages and payroll taxes from Gusto or ADP posted to the right lines | Every payroll |
| Track sales tax | Collected tax held as money you owe, ready to file | Each filing period |
| Close the month | A final P&L and balance sheet in your inbox | Monthly, on a set date |
| Year-end | 1099s for subs, and clean books for your tax preparer | January |
What a bookkeeper usually doesn't do: prepare your tax return, plan your taxes or forecast cash. That's accounting and CFO work. Some firms do all of it, so ask before you hire.
What most bookkeepers skip
Plenty of bookkeepers cover the core list. The difference for a contractor is in four jobs that are easy to skip and expensive to miss.
Techs' pay in cost of goods sold
Generic setups often put every paycheck in one overhead line. In a service shop, the techs' wages, payroll taxes and workers' comp belong in cost of goods sold, so gross margin shows what the work costs. It's one of the first fixes we make when we take over a plumbing company's books, and the chart of accounts for contractors shows the split.
A close date that holds
One owner couldn't say what his July revenue was, because ServiceTitan and QuickBooks didn't agree. Brandon Vaughn, who coaches home service owners, told him to put a date on it:
…we want all the expenses, all the invoices, all of the, you know, deposits, everything all completely reconciled. By like X date each month. So, I mean, whether that's the seventh of the month or the fifth or the 15th or whatever you guys agree upon…
Pick the date with your bookkeeper and hold to it. A P&L that shows up a week after month-end can still change what you do this month.
Equipment on the balance sheet
A jetter, a trailer or shelving for a new shop usually belongs on the balance sheet as an asset, not in one month's expenses. Booked as an expense, it makes that month look awful and leaves the year's numbers wrong until someone untangles them. Clicking into the biggest lines on your P&L each month (steps below) is how you catch it.
Questions while the charge is fresh
The usual way is a list of questions after month-end. Even the good version, the one Brandon described to an owner whose QuickBooks had two months of uncategorized expenses, works like this:
…end of May has happened and you have an arrangement with them that by June 7th or by June 10th, all of the expenses are entered into May and they'll send you like a quick little list of, hey, this receipt for this much, what category is this, this receipt for this much, what was this for?
That beats doing it yourself, but by June 10th nobody remembers what the $186 at the supply house on May 3rd was for. At YetiBooks, 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.
How to check your bookkeeper's work
Half an hour after each close is enough. In QuickBooks Online:
- Open Reports and run Profit and Loss for last month.
- Click any number that looks high. QuickBooks lists the transactions behind it.
- Look for Uncategorized Expense or Uncategorized Income. Anything there hasn't been sorted yet.
- Run the Balance Sheet for the last day of the month and compare each bank and card balance with the statement.
If your techs' wages sit in overhead, or a balance doesn't match its statement, ask why before the next close.
Bookkeeper, accountant or profit specialist?
A bookkeeper keeps the books. An accountant or CPA files and plans your taxes. Someone still has to read the numbers and tell you what to change, like raising the service rate, cutting overtime or dropping a service that loses money. At YetiBooks that's your profit specialist, the same person every time, with coaching on pricing, labor, materials and overhead. Here's how it works. If you're not sure what your current bookkeeper covers, bring last month's P&L to a free profit call and we'll go through it with you.
Questions owners ask
Does a bookkeeper do my taxes? Usually not the return. The bookkeeper keeps the books your tax preparer works from. YetiBooks does both, with tax services in the same firm as the books.
Does a bookkeeper run payroll? Some do, through software like Gusto or ADP. Whoever runs it has to deposit and file the payroll taxes too; how to manage payroll taxes covers that calendar.
How much does a bookkeeper cost? It depends on how many transactions and accounts you have, whether payroll and sales tax are included, and how far behind the books are. What a bookkeeper costs a contractor breaks it down.
