QuickBooks Online is the accounting software of choice for most small and mid-size contractors. It's accessible, integrates with most bank accounts and credit cards, and gives you everything you need to keep clean books and stay ready for tax season.
The problem is that most contractors use about 20% of what QBO can do — and often not the 20% that matters most.
This article covers what you should actually be tracking in QuickBooks every month as a general contractor, and why each piece matters.
The foundation: your chart of accounts
Everything in QuickBooks flows through your chart of accounts — the list of categories where every dollar gets classified. For contractors, the default QBO chart of accounts is a starting point, not a finish line. It needs to be customized to reflect how your business actually works.
At minimum, you should have separate expense categories for:
- Materials and supplies (direct job costs, not office supplies)
- Subcontractor labor (separate from your own employees)
- Equipment rental
- Permits and inspections
- Direct labor (wages tied to specific jobs)
These are your cost of goods sold categories — the direct costs of doing the work. Everything else is overhead. Keeping these buckets clean is what makes your gross margin meaningful.
If your bookkeeper is lumping subcontractor payments and office supplies into the same miscellaneous expense category, your P&L is lying to you.
The monthly tracking checklist
Every month, your QBO should show you:
- Bank and credit card reconciliation. Every account balanced to the penny against your statements. This is non-negotiable. If it's not reconciled, you don't actually know your cash position.
- Open invoices and AR aging. How much do customers owe you, and how old is it? Anything over 45 days needs a follow-up. Anything over 90 days needs a conversation.
- Open bills and AP. What do you owe vendors and subs? Staying current with subcontractors keeps your relationships strong and your lien exposure low.
- P&L for the month. Revenue, direct costs, gross margin, overhead, net income. This is your monthly scorecard.
- Balance sheet. What you own, what you owe, and what's left. Check this monthly even if you don't fully analyze it — it catches problems the P&L misses.
The features most contractors underuse
Job costing (Projects in QBO)
QBO's Projects feature lets you assign income and expenses to specific jobs. When it's set up correctly, you can run a profitability report for each project — which tells you whether the Henderson bathroom remodel made money, not just whether the business as a whole did.
This is the single most valuable feature for contractors and the most underused. It takes some setup, but once it's running, you'll never bid the same way again.
Class tracking
If you do multiple types of work — residential, commercial, service — Classes in QBO let you segment your P&L by work type. You can see gross margin by segment, not just in total. For contractors who do both project work and service calls, this often reveals that one segment is subsidizing the other.
Recurring transactions
Insurance premiums, software subscriptions, equipment payments — these are predictable and should be set up as recurring transactions in QBO. It reduces bookkeeping time, catches missed payments, and keeps overhead categorization consistent.
1099 tracking
QBO has built-in 1099 tracking for vendors you pay as subcontractors. If you're paying subs more than $600 per year, they need a 1099-NEC. QBO can generate them automatically if you've correctly marked vendors as 1099 contractors throughout the year. Most contractors don't set this up and then scramble in January.
The most common QBO mistakes contractors make
Using cash basis when accrual is more accurate
QBO lets you toggle between cash and accrual reporting. Most small contractors use cash basis, which is simpler. But for management purposes, accrual often gives a cleaner picture of job profitability, especially on larger projects that span multiple months.
Not reconciling every month
If your books haven't been reconciled in three months, your financial statements aren't trustworthy. This is the single most common problem I see when I review a new client's books. It's also the easiest to fix — it just requires discipline.
Letting the chart of accounts become a dumping ground
Over time, QBO accounts accumulate. Someone creates a new expense category for one transaction and never uses it again. You end up with 200 accounts when you need 40. Clean books require a clean chart of accounts — reviewed and trimmed at least once a year.
The goal isn't perfect QuickBooks mastery. The goal is books you can trust, reviewed every month, that tell you something useful about your business.
When to get help
You don't need to become a QuickBooks expert. What you need is someone who knows the software well enough to keep your books clean, categorized correctly, and reconciled every month — and who can translate what they find into plain English for you.
That's the combination most contractors are missing. Not the bookkeeping itself, but the translation layer: what do these numbers actually mean for the business I'm running?
At BooksSteady, we handle the QBO work every month and then write a plain-English summary of what we found — what changed, what to watch, and what to do about it. No jargon, no guesswork, delivered by the 15th.
Want to know if your QuickBooks setup is working for you? We offer a free Business Health Review — a no-commitment look at your current books and setup with honest feedback on what we see.
Get Your Free Books ReviewThe bottom line
QuickBooks is a powerful tool that most contractors use like a glorified checkbook register. Set up correctly and reviewed monthly, it gives you real visibility into job profitability, cash position, and business health.
That visibility is what separates contractors who grow deliberately from contractors who just stay busy and hope the numbers work out.
The numbers will work out if you're watching them. Most contractors aren't.