Bookkeeping for contractors and trades in Ontario
You'd rather be on the tools than in QuickBooks. Here's what your books actually need to cover so you can tell, job by job, whether you made money.
The short answer
Bookkeeping for a trades or construction business in Ontario needs to do one thing generic bookkeeping doesn't: tell you which jobs made money, not just whether the business did overall. That means job costing, progress-billing schedules, subcontractor payment tracking, and HST handled correctly on both materials and labour — on top of the usual reconciling and remitting. Get the job-level view wrong and you can be "profitable" on paper while your best-looking jobs are quietly the ones losing you money.
Job costing: the thing generic bookkeeping skips
Most small-business bookkeeping tracks income and expenses by category — materials, fuel, subs, insurance — and calls it done. That tells you the business made money this month. It doesn't tell you which job made money, and in construction that's the number that actually matters. A job that ran long on labour or ate more materials than quoted can look fine in the aggregate books while quietly dragging your margin down, and you'll never see it unless costs are tagged to jobs from the start.
Proper job costing means every material purchase, labour hour, and sub invoice gets coded to the job it belongs to, not just an expense category. Once that's set up, "did we make money on the Smith renovation" becomes a lookup instead of a guess — and it's the single biggest reason trades bookkeeping needs to be handled differently from a retail or service business.
Progress billing and deposits
Trades work rarely gets paid in one lump at the end. Deposits up front, progress draws at milestones, a holdback until final walkthrough — each of those is a different bookkeeping event, and lumping them all into "revenue when the cheque clears" makes your books misleading in both directions. A deposit isn't income yet; it's a liability until the work it's tied to gets done. Get that wrong consistently and your monthly numbers stop reflecting reality, which matters a lot if you're using them to decide whether to take on the next job or hire another hand.
Subcontractors: tracking and reporting obligations
If you pay subs — or get paid as one — construction carries its own reporting layer that doesn't apply to most other industries. There are CRA reporting obligations specific to payments made to subcontractors in construction. We're not going to throw figures or deadlines at you here without checking them against your specific setup, because the details depend on how your business is structured. What we will say: if you're routinely paying or being paid as a sub in this industry, it's worth a direct conversation rather than assuming the rules are the same as any other T4/T4A situation.
Day to day, the more immediate problem is simpler: tracking who you owe, who's owed you, and which sub invoice belongs to which job — so a subcontractor's bill doesn't silently blow a job's cost budget without anyone noticing until the job's already closed out.
HST: materials vs. labour
| Question | What matters |
|---|---|
| Is the rate different for materials vs. labour? | No — Ontario charges HST at the same combined rate on the taxable supply regardless of whether the invoice line is materials, labour, or a bundled job price. |
| Do I need to separate them on the invoice? | Depends on the job and how you're structured — worth confirming rather than guessing. |
| Can I claim input tax credits on materials I bought? | Generally yes if you're registered and the purchase is for a taxable supply — but the bookkeeping has to actually capture it. |
The real risk isn't the rate — it's inconsistency. Charging HST one way on a residential job and a different way on a commercial one, without a clear reason, is exactly the kind of thing that turns into a headache later. If you're not sure whether you should even be registered yet, that's a separate question worth answering first.
WSIB: construction plays by different rules
Most Ontario businesses only need to register with the WSIB within 10 calendar days of hiring their first employee. Construction is the exception: expanded compulsory coverage in this industry generally reaches sole proprietors, partners, and independent operators too — not just businesses with staff on payroll. If you've been treating yourself as "just a sole proprietor, no employees, doesn't apply to me," construction is one of the industries where that assumption can be wrong. Confirm your status directly with WSIB rather than guessing.
Seasonal cash flow
Trades income is rarely a flat monthly line — it's busy season, slow season, and a few big jobs that land whenever they land. That makes cash flow the thing that actually sinks trades businesses, not profitability on paper. You can have a great year on the books and still run dry in February if the money from the fall didn't get set aside for it. Before you commit to a slow-season hire, a truck upgrade, or a big materials order, run the numbers through our free runway calculator — it's a fast way to see how long your cash actually lasts at your current burn.
The truck, the tools, and what's actually deductible
Vehicle costs and tools are two of the biggest deduction categories for anyone working the trades, and two of the easiest to get wrong — either by under-claiming out of caution or over-claiming and creating a CRA problem down the line. We've written a full breakdown specifically for tradespeople, covering how vehicle use, tools, and other trade-specific expenses actually work: tax deductions for tradespeople in Canada. Worth reading before your next big tool purchase, not after.
Where AccruBooks fits
Monthly bookkeeping with us starts at $200/month, HST filings included in the fee — set up to handle job costing and sub tracking properly rather than bolting it on after the fact. If you're behind and it feels like too much to untangle, catch-up bookkeeping is quoted up front before anyone touches a receipt. And if you'd rather just see what a clean invoice or quote looks like without opening a spreadsheet, try the free quote builder. Either way, the goal is the same: you on the tools, us on the books.
Questions
Quick answers
Do I need to register for WSIB as a contractor in Ontario?
Construction is treated differently than most industries. Most Ontario businesses with employees must register with the WSIB within 10 calendar days of hiring their first employee — but construction businesses are subject to expanded compulsory coverage that also generally reaches sole proprietors, partners, and independent operators in the trade, not just employers. Outside construction, owners aren't automatically covered and can opt in. If you're a solo operator taking on subcontract work, confirm your status directly with WSIB rather than assuming you're exempt.
Do I charge HST on materials the same way as labour?
In Ontario, HST is charged at the same 13% combined rate on a taxable supply whether the invoice line is materials, labour, or a bundled job price — there isn't a separate lower rate for one versus the other. What changes job to job is how you structure the invoice and what you can claim input tax credits on, which is exactly the kind of thing worth getting right before you've issued fifty of them the wrong way.
Do I have extra CRA reporting obligations for paying subcontractors?
Construction carries its own CRA reporting obligations around payments to subcontractors that don't exist in most other industries. If you're a contractor who pays subcontractors — or a sub who gets paid by a general contractor — it's worth understanding on principle. Talk to your bookkeeper or accountant about whether and how it applies to your setup.
I'm behind on my books from a busy season. Where do I start?
You start by not trying to catch up alone at night. Catch-up bookkeeping gets the backlog months reconciled and job-costed properly, billed at your monthly rate plus 40% for the backlog work — with 20% credited back if you move onto ongoing monthly service, so it nets out to roughly 12% more than a regular month. It's always quoted up front before anyone touches your books.
The fine print: this guide is general information for Canadian businesses, current as of August 15, 2026. Rates and rules change, and your situation has details a web page can't see — so before acting on anything here, confirm it against the CRA's own pages or ask us directly.
Rather just have this handled?
A 15-minute call is enough to tell you exactly where your books stand — and what it would cost to never think about this again.