1) Module HUD
- Module #: 1 / 13
- Time: 10–15 min
- Outcome: “After this, you can explain contractor accounting in plain English, set up clean ‘job containers,’ and know exactly where detail should live (and where it shouldn’t).”
- Prereqs: None
- Stop here if: you only need clean monthly financials and simple invoicing (you’re not ready to measure job profit yet).
- Level tags used in this module: ✅ Baseline / 🛠️ Operator Upgrade / ⚠️ Advanced
2) Answer Box (snippet block)
- What it is (2 lines)
The contractor accounting map: what each “thing” is (job, cost, revenue, overhead) and where it belongs.
This keeps you from building a monster setup that still can’t answer basic profit questions. - When to use it (2–4 bullets)
- You’re setting up QBO (or rebuilding) and want a clean foundation
- You want profit by job and job type without turning your books into a science project
- Your categories are messy and reports don’t match reality
- You’re tired of “we’ll fix it later” (you won’t)
- The common mistakeS (1-2 line)
Trying to track detail in the Chart of accounts instead of using job containers and item-level detail. - The fixES (1-2 line)
Keep the COA simple. Put detail in Products and services and (optionally) Project custom fields like Job Type.
3) The mental model (keep short)
- Your books have two jobs: (1) taxes/compliance, (2) decision-making. Don’t sabotage either.
- COA = “where money lands.” Keep it stable and boring.
- Jobs live in Projects (job containers), not in 47 income accounts.
- Detail comes from Products and services + optional Project custom fields (Job Type).
- Job Type (service / remodel / new construction / commercial) is a reporting lens, not a new chart of accounts.
- If your Profit and Loss and Balance Sheet are clean, you can build anything else on top.
4) Do this in QBO (step-by-step)
- Confirm you can answer this sentence without sweating: “What did we profit last month?”
- Go to Reports → run Profit and Loss for last month → Run report
- Go to Reports → run Balance Sheet for the same date range → Run report
- Decide your baseline path (don’t overthink it):
- ✅ Baseline: clean monthly financials + clean invoicing
- 🛠️ Operator Upgrade: profit by job + job type
- ⚠️ Advanced: progress billing/retainage + labor costing + deeper profitability
- Commit to the structure:
- COA stays simple
- Jobs live in Projects
- Detail lives in Products and services
- Job Type lives in a Project custom field (if you’re doing job-type reporting)
- If you’re building job clarity: create a “payer vs job” split
- Payer = Customers
- Job/site = Projects under the customer
Pro tip: If you can’t explain your structure to your CPA in 60 seconds, it’s too complicated.
5) Real-world example (mandatory)
You do four kinds of work:
- Service
- Remodel
- New Construction
- Commercial
One customer (payer) can have multiple jobs (projects):
- Customer: “ABC Builders”
- Project: “123 Pine St – Remodel” (Job Type = remodel)
- Project: “456 Oak Ave – Service” (Job Type = service)
Where things post:
- Invoice lines use Products and services (Labor, Material, Service Call)
- Revenue hits your income accounts (simple)
- Bills/expenses hit Job Costs (simple)
- Reporting slices profit by:
- Project (job)
- Job Type (service/remodel/new construction/commercial)
Dry truth: if you try to make the COA do all that, it won’t. It’ll just get ugly.
6) Run this report now (mandatory checkpoint)
- Report name: Profit and Loss
- Filters/settings:
- Last full month
- (If you already use jobs) “Group by” Project reporting later—don’t force it today
- Click Run report
- What “good” looks like:
- Income is believable (close to what actually hit the bank, adjusted for timing)
- Major costs aren’t living in random categories
- Net profit isn’t wildly swinging from misc coding
- What “broken” looks like:
- Income is missing invoices/deposits or duplicated
- Job costs are mixed into overhead with no pattern
- “Ask My Accountant” is doing cardio
- One fix if broken:
- Pick your top 10 expenses and recode them into consistent categories in Expenses, then rerun Profit and Loss.
7) Lab (do it on your file)
- [PASS/FAIL] You ran Profit and Loss for last full month
- [PASS/FAIL] You ran Balance Sheet for the same period
- [PASS/FAIL] You can explain (in one sentence) what your COA is for
- [PASS/FAIL] You can explain (in one sentence) what a job container is (Projects)
- [PASS/FAIL] You can name your chosen path: Baseline / Operator Upgrade / Advanced
- [PASS/FAIL] You wrote down your 4 Job Types: service / remodel / new construction / commercial
- [PASS/FAIL] You can say where detail should live: Products and services (not COA)
- [PASS/FAIL] You can name one thing you will NOT track in the COA (ex: “framing vs drywall”)
8) Knowledge check (3 questions)
- What is the COA supposed to do for a contractor (in one sentence)?
- Where should “profit by trade/service” detail mainly live: COA or Products and services?
- If one customer has 5 jobs, what’s the clean structure in QBO: Customers only, or Customers + Projects?
9) Next + Related
- Previous: [Module 13 — Glossary + Cheatsheets]
- Next: [Module 2 — Essential QBO Setup for Contractors]
- Related modules (2–3)
- [Module 3 — Easy COA Your CPA Will Love]
- [Module 5 — Advanced Products & Services (Start simple → grow)]
- [Module 9 — Enhanced Job Costing & Profit Reporting]
- Don’t do this warnings
- Don’t build a “trade-by-trade” COA unless your hobby is reclassifying transactions forever.
- Don’t skip Balance Sheet. A pretty Profit and Loss can still be lying.
- Don’t use job type as a COA workaround. That’s how you get 97 income accounts and zero clarity.
Fast now = slow forever.
FAQ (short)
Do I need job costing to have clean books?
No. Clean books come first. Job costing is a layer you add when the base is stable.
Should I track job type (service/remodel/new construction/commercial) in the COA?
No. Keep COA simple; use Project custom fields (Job Type) for reporting.
What reports matter most at the start?
Profit and Loss and Balance Sheet. If those are wrong, everything else is noise.
Why not just track everything in one “Job Costs” account?
You can at baseline. The upgrade is using Products and services (and job containers) to get detail without bloating the COA.