Construction Business Books CleanupThe hold stays on its own row

The list, then the holes

Bring the job list, the last bank statements, and the draws that never quite matched the field. We will say what is knowable now and what is still a hole.

A job can look profitable on paper and still refuse a draw, because materials, subs, and the hold moved before the check did.

The month has a date. The date does not slide because a slab is curing or a punch list is still open.

Funds required to be reserved

Most construction contracts keep a slice back until the punch list is done. Ten percent is the number owners already say out loud, even when the contract uses different words. While the work is in progress, and for a stretch of days after the work is completed, that slice sits apart from profit and apart from spare cash. If the contract never named a price, the reserve is still a percent of the value of the work, and the books still need a row. The contract is what we read. A statute that names the reserve is read on the call for the state where the job sits. A national page does not guess that statute.

On a set of books that money is neither profit nor spare cash in the operating account. When you are the owner holding it, the row is a liability. When you are the contractor waiting on it, the row is a receivable. It stays until a draw actually pays it. A job that feels done in the field can still be open on that row.

The relief is ordinary and physical. The bank and the row finally name the same dollars, without anyone guessing. The worry is just as ordinary. The operating account was spent as if the hold had already landed, and the next draw bounces off a balance that was never free. We would rather say that out loud in October than discover it when a surety asks for a statement.

Nothing on this page prints a contract price. The shape is the point. If your file has the hold inside a cost code, or missing entirely, the first repair is to give it a row and to tie that row to the draws that have and have not cleared.

The list, not a new bid

Catch up on a job is a list. What you have spent. What you have billed. What has actually been deposited. What the customer is still allowed to hold. What you paid a sub that never got the job's name written on the check. If any line is blank, the profit number is a mood. You do not fill the blank with a guess so a meeting can start.

Send the job list, the bank statements, and the invoices and sub bills that are not in the file yet. Say which jobs are still open. Say whether a lender or a surety is asking for numbers. The first thing you get back is what is knowable now and what is still a hole. You should not be signing a form built on a hole, and you also should not wait for a perfect year before you can see the one job that is eating cash.

The sequence after that is simple to describe and slower to do. One open job gets its costs attached. Then the next. Closed jobs get a pass only where a deposit or a bill is still floating. You are told which paper is still on you, so you are not hunting through a truck for a receipt nobody asked for.

Messy books are what a busy company produces. Nobody here is interested in scolding the mess. The useful question is which job the money belonged to, and whether the hold was ever given a place to sit.

The cost that never reached the job

Here is the check that causes the fight at the kitchen table. You paid a sub out of operating because the invoice was due and the draw was late. The payment was booked as a general expense, or it was not booked at all. The job still looks fat. Your next draw bounces off a balance that already paid that sub.

On paper it is a cost that was never allowed to sit on the job it came from. We ask which job the check was for. You do not have to remember every check before you ask. The ones you can name get attached. The ones you cannot name stay labelled as open, which is more honest than a profit number with a hole under it.

The same habit shows up with materials picked up on a house account and dropped on whichever job was loudest that week. Budgeted cost against actual cost is the comparison that makes the drift visible. This site prints no target margin for you to chase. We show you the two columns and let the job speak.

A supplier bill that includes parts and labor for a subcontractor also has a reporting question once the year adds up. For payments made in 2026, nonemployee services, including parts and materials, are reported on Form 1099 NEC once they exceed 2,000 dollars. The cleanup is a good time to see which vendors are already over that line, while the checks are being tied to jobs anyway.

The shape of the contract changes the tax

A lump sum contract is one price. It does not state labor apart from the materials that went into the building. A separated contract divides the price into at least a charge for skill and labor and a charge for incorporated materials, or the invoices have to state those charges apart. The books have to follow the shape the contract actually used. If the invoice tells a different story, the sales tax payable and the drawer will disagree, and the disagreement shows up as a fat job with a thin payable.

We do not print one state's rule as if it covered every jobsite. Before anyone codes the invoice, we read the contract and the instructions the state published for that kind of work. On a home, and on new construction, the shape often decides who pays tax on the materials. A contractor on one price usually pays tax when buying supplies and does not add a second tax on the customer's bill. A contractor who stated the materials apart may buy those materials for resale and collect tax from the customer on the materials, while the labor charge follows the state's own line. The charge for materials has to be at least what the contractor paid. That last test is a books test. A materials line that is thinner than the supplier bill is a story the drawer will not support.

Repair of a place where people live and repair of a shop, an office, a restaurant, a farm building, a hospital, or a parking lot are often different questions. We do not collapse them into one code just because the crew used the same truck. A bill that both adds new space and remodels what was already there needs the split written when the invoice goes out. Later proof can be a written scope, bid sheets, a schedule of values, or drawings. Rebuilding the split after a notice arrives is a weaker story. The longer reading of dates that sit beside the hold lives on the May page. For the books, the invoice has to follow the contract's shape.

Scheduled, periodic maintenance on real property that is not broken is a different code from a repair of something that failed, when the paperwork says the work is scheduled and periodic. The contractor still pays tax on taxable items bought to do the work. Repainting that the contract calls maintenance is not the same labor as a reroof that goes past maintenance. We read the contract before anyone codes the whole invoice as one thing. Labor after a storm can be a different question from the materials if the bill states them apart. The paperwork is the whole question. A lumped bill leaves that question on the table, and the payable then has to be rebuilt from memory.

The books and the return may not pick the same moment

A job still in progress can be heading for a loss you can already see. Financial reporting often wants that full anticipated loss recognized now. A return that uses the completed contract method does not deduct the loss until the job is complete. A percentage of completion return deducts the loss incurred to date rather than the whole anticipated loss. The book to tax difference on a fading job is the thing worth writing down in plain words.

We do not treat an examiner's guide as a pronouncement, and we do not cite it as anyone's official position. The practical point survives without the citation. If the field already knows the job will not make money, the statements and the return may still be on different clocks. October is the month when that difference can still be talked through. January is too late to pretend the year was a surprise.

Bonding companies and lenders often ask for statements on the percentage of completion method. That request is a signature we do not hold. We can still hand you months that tie, a job list with costs attached, and a hold that has a row, so the firm that does sign is not starting from a fog. You hear that limit on the first call, not after a stack of paper exists.

One company can also be living in more than one method without anyone having planned it. Service work on cash, a small counter of parts on accrual, and the long contracts on percentage of completion. The cleanup names which method each stream is actually on, instead of forcing one story onto all three.

The provider runs the Friday

Setting up payday means the registrations, the choice of provider, the pay items, and the accounts the amounts should land in. Once setup is finished, Friday belongs to the provider you already chose. We do not run those Fridays. We never press the control that pays the crew.

On a construction file the hard part is usually the mapping. A crew works two jobs in a week, the hours land in one bucket, and both jobs lie. During setup we want the job names in the payroll file to be the same job names as the books, so a later close is a match and not a translation.

What you took home is not the same pile as crew wages. Money you took for yourself is not a job cost. Those draws should sit where you can see them without opening a materials code. We lift them off the job, write why, and leave the next close a note so they do not wander back onto lumber.

If a worker might be a subcontractor instead, we do not decide that from a hunch on a website. The facts of control and of the contract matter, and a wrong guess is expensive. Bring the question to the call. The books can hold a placeholder while the answer is still open, which is better than a confident code that is wrong.