5 Questions to Ask Before Hiring a Bookkeeper for Your Contracting Business

Most bookkeeping is portable. A bookkeeper who is great for a law firm or an e-commerce brand can usually do a fine job for the next one. Contracting breaks that rule. Job costing, work-in-progress accounting, retainage, change orders, and certified payroll create a level of complexity that a generalist bookkeeper will end up learning on your books, and the tuition is your margin.

Across the 2,200+ contractors in our analysis, the single most common finding is that 91% of jobs have revenue logged with no cost data attached. That is almost never a software problem. It is a bookkeeping-workflow problem: bills, timesheets, and card charges never get coded to the job that incurred them. A specialist prevents that. A generalist does not know to.

Here are the five questions to ask before you hire, in-house or outsourced.

1. How do you handle job costing?

This is the one that matters most, and it is the fastest way to tell a specialist from a generalist. A trades bookkeeper should be able to explain, without hesitation, how they get every dollar of cost, labor, materials, equipment, subcontractors, and overhead, coded to the specific job that consumed it, so each job produces a real gross margin.

Listen for a process: every bill allocated to a job, every timesheet coded, every credit-card receipt assigned. A vague answer ("we track expenses in QuickBooks") means you will get a revenue ledger and a payroll ledger, but no job margin. See why 91% of jobs have no cost data.

2. Can you build and maintain a WIP schedule?

For any contractor doing project work, the work-in-progress schedule is the most important management report there is, and it is the one generalists most often cannot produce. Ask them to explain percentage-of-completion, and how they would compute whether each open job is overbilled or underbilled.

A specialist will talk about earned revenue (percent complete times contract value), over/under billing, and profit fade. A generalist will not know the terms. If your bookkeeper cannot maintain a WIP schedule, your bonding company and your lender will notice before you do. Learn the mechanics in the WIP calculator and WIP glossary term.

3. How do you track retainage?

Retainage, the 5 to 10% a customer withholds until a job is substantially complete, is contractually earned revenue you are not allowed to collect yet. The common, costly mistake is treating it like normal accounts receivable. It ages differently, releases on milestones rather than invoice terms, and is a leading cause of the gap between a profitable P&L and an empty bank account.

Ask how they track retainage receivable and retainage payable separately. If the answer is "it's just part of AR," that is a red flag, because on a large project the accumulated retainage can exceed your entire profit on the job.

4. How do you reconcile the field software to accounting?

Every contractor runs a field or FSM system (ServiceTitan, BuildOps, Jobber, and the rest) alongside an accounting system, and the two almost never agree on their own. Ask specifically how they reconcile the field system to the books, not whether they can "connect QuickBooks."

A specialist knows the sync carries revenue but often drops cost, that gross invoices do not match net deposits after processor fees, and that job costs can post without a job code. A generalist assumes the integration handles it. It does not, and the gap is exactly where margin goes missing.

5. How do you handle certified or union payroll?

If you do any prevailing-wage, Davis-Bacon, or union work, payroll is a compliance minefield: certified payroll reports, fringe calculations, multi-rate and multi-state work. A bookkeeper who has not done it will either refuse the work or get it wrong, and payroll compliance errors are expensive.

Even if you are not doing prevailing-wage work today, the answer tells you how deep their construction experience runs. A specialist has done it; a generalist has not heard of a WH-347.

Why specialization changes the equation

These questions matter more when you are evaluating an outsourced partner than a solo in-house hire, because the right outsourced firm brings built-in trades know-how and capacity without the fixed overhead. A team that works only with contractors has already solved job costing, WIP, retainage, and reconciliation for other clients. The processes are built, the institutional knowledge is in place, and the learning curve is not on your dime.

That is the difference between a bookkeeper who records what already happened and a finance function that tells you which jobs make money while you can still act on it. At Level, job costing, WIP, retainage, reconciliation, and trades payroll are not add-ons, they are the core of how we work with every contractor.

Related reading:

• 5 questions before hiring a fractional CFO for your contracting business
• Bookkeeper vs. accountant vs. CFO: what a contractor actually needs
• Why your QuickBooks job costing is wrong
• When a contractor outgrows QuickBooks
• The DSO and collections playbook