QuickBooks is the most widely used accounting software for construction contractors in the United States — but using a generic QuickBooks setup for a construction company is like using a standard car for an off-road race. The software is capable, but you have to configure it correctly or it won’t give you what you need. This guide covers how to set up QuickBooks for contractors — specifically for construction companies in Los Angeles and Southern California.
Don’t want to do it yourself? Bookkeeping Champs sets up and configures QuickBooks for contractors throughout LA, San Fernando Valley, Ventura County, and Santa Clarita. 📞 (818) 679-4451
Which Version of QuickBooks Is Best for Contractors?
QuickBooks Online Plus or Advanced (with Projects) — Best for contractors who want cloud access, real-time collaboration, and modern integration with apps like Buildertrend, Procore, and ServiceTitan. The Projects feature provides job costing with time tracking and profitability reports. Recommended for contractors with under 20 employees. QuickBooks Desktop Contractor (Premier or Enterprise) — Best for contractors who need maximum construction-specific features: job costing by phase and cost code, progress invoicing, estimate vs. actual reports, and more powerful reporting. Recommended for larger contractors with complex job costing needs. Our recommendation: QBO Plus/Advanced for most LA contractors under $2M revenue; QBO Advanced or QBD Contractor for $2M+ revenue contractors with complex job costing.
Construction-Specific Chart of Accounts
The most important setup step is configuring the right chart of accounts. A construction-specific chart of accounts includes: Income accounts (Contract Revenue, Change Order Revenue, Equipment Rental, Materials Sales if applicable); Cost of Goods Sold (Direct Labor, Materials, Subcontractors, Equipment Costs, Other Direct Costs); Project overhead (General Conditions Labor, Job Site Expenses); Balance sheet accounts (Retainage Receivable, Retainage Payable, Costs in Excess of Billings, Billings in Excess of Costs); and Standard overhead/operating expense accounts. Using a generic QuickBooks chart of accounts produces financial statements that don’t tell you anything useful about your construction business.
Setting Up Job Costing in QuickBooks
In QuickBooks Online with Projects: Enable the Projects feature in Settings. Create a Project for each active job. Assign all income and expenses to the appropriate Project. Use Service Items or Classes for cost codes. In QuickBooks Desktop: Set up Customers:Jobs for each project. Set up Items for cost codes (labor, materials, subs, etc.). Assign job costs when entering bills, checks, and timesheets. Run Job Profitability Summary reports monthly.
Payroll Setup for California Contractors
California-specific payroll setup in QuickBooks requires: Daily overtime (OT after 8 hours/day, not just 40 hours/week), double time (after 12 hours/day or 7th consecutive day), California SDI deduction, California sick pay accrual (1 hour per 30 hours worked, minimum 3 days/year, now 5 days for 2024), and proper paystub layout with all California-required fields. For public works, you’ll also need wage item setup for prevailing wage basic rates and fringe benefits by trade classification.
Get Your QuickBooks Set Up Right — Call (818) 679-4451
A properly configured QuickBooks is the foundation of everything else — job costing, WIP schedules, certified payroll, and accurate financial statements all depend on it. Bookkeeping Champs sets up QuickBooks correctly for contractors throughout Los Angeles and Southern California. Call (818) 679-4451 for a free QuickBooks assessment.
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