QuickBooks Online Setup Checklist for Construction Contractors

QuickBooks Online works fine out of the box for a lot of small businesses. Construction isn't one of them. A generic setup — one income account, one expense list, no job-level detail — will reconcile just fine at month-end and still tell you almost nothing about whether any individual job actually made money.

Here's the checklist we use whenever we set up or clean up a QBO file for a contractor.

1. Turn on project/job tracking

QBO's built-in Projects feature (or class tracking, depending on your plan) needs to be turned on from the start, not bolted on later. Every job should be trackable as its own entity so income and costs roll up to it specifically — not just to your business as a whole.

2. Build a chart of accounts around job costing, not just tax categories

A chart of accounts copied from a generic template groups everything by tax-return category. For construction, you also need enough detail to separate:

• Materials (ideally by major category, not one lump "supplies" account)
• Subcontractor labor (separate from your own payroll)
• Equipment costs, owned vs. rented
• Direct job costs vs. overhead — this split is what makes job profitability numbers mean anything

3. Set up an items list that mirrors how you actually bid jobs

If your estimates and change orders are built around line items — labor, materials, equipment, subs — your QBO items list should mirror that structure. Otherwise you end up manually reconciling two different systems every time you invoice.

4. Configure progress invoicing correctly

For any job billed in draws or percentage-complete milestones, progress invoicing needs to be set up against the original estimate, not created as one-off invoices each time. Done right, it keeps a running tally of what's been billed against the contract so nothing gets double-billed or missed.

5. Track retainage separately

Retainage held by a GC or owner isn't just "unpaid" — it's a specific, trackable asset that shouldn't disappear into your regular accounts receivable. It needs its own account so you can see exactly what's being held back, by job, and follow up on it when it's due.

6. Reconcile credit card and bank feeds weekly, not quarterly

This one isn't construction-specific, but it matters more here: the more job-costed detail you're tracking, the more a backlog of uncategorized transactions costs you in lost accuracy. A weekly cadence keeps job costing numbers usable in something close to real time.

Why this matters more than it seems

None of this shows up as a problem in your bank balance. It shows up six months later when you can't tell which jobs were actually profitable, or when a bonding agent asks for job-level financials you don't have. Getting the QBO structure right from the start is the difference between books that just reconcile and books that actually help you run the business.

If your QuickBooks file needs a cleanup, or you're setting one up for the first time, book a free consultation and we'll walk through exactly where it stands.