By Ed Hutton, Founder, Dedicated Bookkeeping · Registered BAS Agent (TPB) · Updated 24 September 2026
TL;DR: Bookkeeping for construction companies is harder than for most businesses because money moves in lumps: deposits, progress claims, retentions and subcontractor payments, often months apart. Good construction bookkeeping tracks profit job by job, keeps progress claims and retentions under control, pays subcontractors correctly (including super where it’s owed), and meets construction-specific rules such as the ATO’s Taxable Payments Annual Report (TPAR), due 28 August each year. In Queensland, some larger contracts also need QBCC project trust accounts. Get these right and you can see your real cash position, not just your bank balance.
On this page
- Why construction bookkeeping is different
- Job costing: knowing which jobs make money
- Progress claims, variations and retentions
- Paying subcontractors: TPAR and super
- GST and BAS for builders
- Project Trust Accounts in Queensland
- Cash flow: the real risk in construction
- Common construction bookkeeping mistakes
- FAQ
Why bookkeeping for construction companies is different
Most businesses sell something and get paid soon after. Construction companies often:
- pay for materials and labour weeks before they can claim for them
- get paid in stages through deposits and progress claims
- have money held back as retentions until well after completion
- use lots of subcontractors, each with their own tax and super obligations
- run several jobs at once, where one loss-making job can hide behind profitable ones
That’s why a general “do the bank reconciliation and lodge the BAS” approach often isn’t enough for builders and trades. Bookkeeping for construction companies needs to be set up around jobs, claims and contractors from day one.
Job costing: knowing which jobs make money
Job costing means tracking income and costs per job, not just for the business overall. Xero (projects or tracking categories), MYOB and QuickBooks can all do this when set up properly.
Set up your books so every bill, timesheet and invoice is tagged to a job. Then you can answer the questions that matter:
- Is this job on budget right now, or only at the end?
- Which types of work are most profitable?
- Are we quoting accurately?
Without job costing, many builders only find out a job lost money after it’s finished. It’s the single most useful habit in bookkeeping for construction companies.
Progress claims, variations and retentions
| Item | What it is | Bookkeeping tip |
|---|---|---|
| Deposit | Upfront payment at contract signing | Record it against the specific job |
| Progress claim | A staged invoice as work is completed | Match each claim to the contract schedule. Track what has been claimed vs what is still to claim |
| Variation | Extra or changed work | Invoice promptly and get it approved in writing. Unbilled variations are lost profit |
| Retention | Money held back (often a percentage of each claim) until defects are cleared | Track it as money owed to you, with a release date. It’s easy to forget |
Paying subcontractors: TPAR and super
Taxable Payments Annual Report (TPAR)
If your business is mainly in building and construction and pays contractors for building and construction services, you generally need to report those payments to the ATO in a Taxable Payments Annual Report (TPAR) by 28 August each year. For each contractor you report their ABN, name, address, the total paid and the GST included.
The simplest way to get TPAR right is to record every contractor’s ABN and details when you first pay them and code their payments consistently all year.
Super for contractors
Hiring someone as a “contractor” doesn’t always mean you don’t owe them super. Under ATO rules, if you pay a contractor mainly for their labour, you may have to pay super for them as if they were an employee. Check each arrangement. Since Payday Super started on 1 July 2026, super you owe must be paid with each pay run rather than quarterly. See our practical guide to STP, Payday Super and IAS.
GST and BAS for builders
- GST is charged when you invoice, including on each progress claim. If you account for GST on an accruals basis, you may owe GST on a claim before the client has paid it.
- Claim GST credits on materials and subcontractor invoices, provided you hold a valid tax invoice.
- Keep the paperwork for every claim, because construction BAS returns often have large amounts moving through them.
For BAS basics, see What is a BAS statement? For deadlines, including the quarterly BAS due on 28 October, see BAS due dates 2026–27. For what an outsourced bookkeeper handles and how pricing works, see outsourced bookkeeping services in Australia.
Project Trust Accounts in Queensland
Queensland’s project trust account rules (under the Building Industry Fairness Act) require head contractors on eligible contracts to hold project money in a trust account, so subcontractors are protected if something goes wrong. According to the QBCC, the requirement currently applies to eligible contracts of $10 million or more (excluding GST) with private and local government clients, and $1 million or more for certain Queensland Health contracts. Where a project trust is required, a retention trust account is also needed for retention money (QBCC).
Project Trust Accounts and Retention Trust Accounts need monthly reconciliation and careful records. Dedicated Bookkeeping provides Project Trust Account and Retention Trust Account reconciliation for builders and head contractors, so your trust records stay accurate and audit-ready. If you’re not sure whether a contract is covered, check the QBCC website or ask your lawyer or accountant.
Cash flow: the real risk in construction
Profitable builders still run out of cash, because costs come before claims and retentions come last. A rolling 13-week cash flow forecast shows:
- when big supplier and subcontractor payments fall due
- when each progress claim should come in
- the weeks where cash will be tight, so you can act early
This is one of the most valuable parts of bookkeeping for construction companies. It turns “I hope we’ll be fine” into a plan.
7 common mistakes in bookkeeping for construction companies
- Not tracking profit by job.
- Forgetting to invoice variations.
- Losing track of retentions owed to you.
- Missing contractor ABNs and details, which makes TPAR hard.
- Assuming contractors never need super.
- Treating the bank balance as profit, when GST, super and upcoming bills are still to come out.
- Leaving the books until BAS time, then rushing.
How Dedicated Bookkeeping helps builders and trades
Trades and construction is one of Dedicated Bookkeeping’s core industries. We set up job costing in Xero, MYOB or QuickBooks, manage progress claims and retentions, handle contractor payments, TPAR, payroll and Payday Super, lodge your BAS as a registered BAS Agent, reconcile your Project Trust Accounts and Retention Trust Accounts, and build cash flow forecasts you can plan with. We have more than 16 years’ experience, and pricing is agreed up front, as a fixed fee or hourly.
Book a free discovery call → or see the industries we work with.
FAQ: bookkeeping for construction companies
What is different about bookkeeping for construction companies?
Construction bookkeeping has to track profit job by job and manage progress claims, variations, retentions and many subcontractors. It also has to meet construction-specific rules such as TPAR and, in Queensland, project trust accounts for eligible contracts.
Do construction companies need to lodge a TPAR?
Generally, yes. Businesses mainly in building and construction that pay contractors for building and construction services must lodge a Taxable Payments Annual Report with the ATO by 28 August each year.
Do I have to pay super for subcontractors?
Sometimes. If you pay a contractor mainly for their labour, the ATO may treat them as an employee for super purposes, so you may need to pay super for them. Check each arrangement.
What is job costing in construction bookkeeping?
Job costing means recording income and costs against each individual job, so you can see whether each project is making or losing money while it’s still underway.
Do Queensland builders need a project trust account?
Only for eligible contracts. According to the QBCC, project trust accounts currently apply to eligible contracts of $10 million or more (excluding GST), and $1 million or more for certain Queensland Health contracts. A retention trust account is also required where a project trust applies.
What software is best for construction bookkeeping?
Xero, MYOB and QuickBooks can all handle construction bookkeeping when set up with job tracking. The right choice depends on your size, how many jobs you run and what other tools you use.