Introduction

Many construction and trades business owners say the same thing:

“We’re busy, but we don’t know where the money is going.”

Electricians, general contractors, HVAC companies, plumbers, and renovation firms often complete jobs successfully yet still feel cash flow pressure or end a year unsure which projects were profitable.

On industry forums and Reddit, contractors frequently ask:

• “Why do some jobs feel profitable but don’t show income?”
• “How do I track labour, materials, and subcontractors accurately?”
• “Is there a simple way to see which projects make money?”
• “Why do project estimates keep missing actual costs?”

The answer often comes down to one accounting tool many contractors overlook: job costing.

Job costing provides real-time visibility into project expenses, profitability, and performance, helping contractors price accurately and avoid financial surprises.

Key Takeaways

• Job costing tracks revenue, materials, labour, subcontractors, and overhead by project.
• Without job costing, contractors often undercharge or lose profit unknowingly.
• Tools like Buildertrend, Knowify, and QuickBooks Online make job costing easier.
• Real-time job costing supports accurate quoting, budgeting, billing, and forecasting.
• Implementing job costing improves cash flow and protects margins, especially as businesses grow.

What Is Job Costing?

Job costing is a system that assigns expenses and revenue to individual projects rather than grouping all income and expenses together.

According to CRA accounting standards, businesses are required to maintain accurate books and records that clearly show revenue and expenses.

(Source: CRA, Keeping Records)

For contractors, job costing is one of the most efficient ways to meet this requirement and support profitability.

Why Job Costing Matters for Construction and Trades Businesses

Most project losses don’t happen on paper — they happen in the field:

• last-minute material runs
• untracked labour overtime
• subcontractor cost overruns
• mispriced change orders
• inaccurate estimates

Job costing exposes these issues early instead of after year-end.

The Core Components of Job Costing

Job costing typically tracks:

Cost CategoryExamples

Labour

payroll hours, overtime, subcontractors

Materials

lumber, fixtures, concrete, hardware

Equipment

rentals, maintenance, tool depreciation

Overhead allocation

administrative expenses, fuel, insurance

Change orders

additional client-approved costs

Revenue

progress billing, retainage, completion invoices

Tracking these separately allows owners to see exact profit per job rather than relying on estimated margins.

How Job Costing Supports Profitability

1. More Accurate Estimates

Historical cost data helps contractors quote confidently and competitively.

2. Better Cash Flow

Tracking real-time costs helps decide:

• when to invoice
• whether deposits need adjustment
• if progress billing should be used

3. Reduced Variances and Errors

Variance reports show where a job drifted from the estimate and why.

4. Accountability and Efficiency

Supervisors understand where costs are trending before it's too late to correct.

Software That Supports Job Costing

Modern cloud accounting makes job costing more accessible.

Popular platforms include:

• Buildertrend
• Knowify
• QuickBooks Online with Projects
• Procore
• ClockShark for time tracking integration

These tools help contractors move away from spreadsheets and paper receipts, improving accuracy and reducing admin time.

Best Practices for Implementing Job Costing

To get the most value:

• track labour hours by job from day one
• record subcontractor invoices against the correct project
• keep material receipts organized digitally
• review job profitability regularly, not just year-end
• adjust contracts when you see patterns like underbidding or scope creep

Even simple improvements can significantly improve margins.

Signs Your Construction Company Needs Job Costing

You may need job costing if:

• you can’t explain why profit varies between jobs
• estimates are hit-or-miss
• you struggle with cash flow despite being busy
• invoicing feels reactive, not planned
• overhead isn’t factored into pricing
• materials and labour costs feel unpredictable

These problems are extremely common — and job costing is one of the fastest ways to fix them.

FAQ

Is job costing required for contractors in Canada?

Not legally, but CRA does require clear books and supported expenses. Job costing helps meet that standard.

Can small contracting businesses benefit, or is this only for large firms?

Even a single-crew operation benefits from knowing which jobs make money.

Do I need software to do job costing?

Spreadsheets can work early on, but software improves accuracy, billing, and reporting as the business grows.

Does job costing help with taxes?

Yes — accurate cost allocation supports deductions, input tax credits, and financial reporting.

Professional Guidance Supports Better Profitability

Contractors and trades businesses grow rapidly, but unmanaged costs can erode profit if systems aren’t in place. Job costing is one of the most effective tools to create clarity, protect margins, and build a financially stable business.

Rotaru CPA helps construction companies implement job costing workflows, integrate accounting software, and understand real project profitability.

📍 Book a consultation to streamline your accounting system and build a job costing model that supports long-term profitability.