Best chart of accounts for contractors (job costs vs overhead)
Trades and small construction businesses need a chart of accounts that separates what it cost to do a job from what it cost to keep the doors open. That split is how you see which jobs made money. This is a plain-English starter list to take to your bookkeeper — not tax, legal or accounting advice, and not a substitute for how your books are set up today.
If you want the general small-business version first, see A simple chart of accounts for a small business.
Numbering ranges contractors actually use
| Range | Type | Contractor focus |
|---|---|---|
| 1000–1999 | Assets | Checking, receivables, tools & equipment, vehicles, inventory of materials |
| 2000–2999 | Liabilities | Credit cards, payables, sales/use tax payable, equipment loans, customer deposits |
| 3000–3999 | Equity | Owner contributions, draws, retained earnings |
| 4000–4999 | Income | Contract labor / job revenue, change orders, reimbursed expenses (ask bookkeeper how to book these) |
| 5000–5999 | Job costs (direct) | Materials, subcontractors, job supplies, equipment rental for a job, dump fees |
| 6000–7999 | Overhead (operating) | Shop rent, insurance, shop tools, vehicle (not job-billed), marketing, office, professional fees |
Rule of thumb: if you would put the cost on a job invoice or job estimate, it usually belongs in the 5000s. If you would still pay it with zero jobs this month, it usually belongs in the 6000s.
Example job-cost codes (5000s)
| Code | Account | What goes here |
|---|---|---|
| 5100 | Job materials | Lumber, concrete, fixtures, wire, pipe — bought for a named job |
| 5150 | Job supplies | Consumables used on site (fasteners, tape, blades, adhesives) tied to a job |
| 5200 | Subcontractors | Payments to other trades for work on your jobs (keep W-9 / 1099 process with your bookkeeper) |
| 5300 | Equipment rental (job) | Lift, trencher, generator rented for a specific job |
| 5400 | Dump / disposal / permits | Dump fees, haul-away, job permits you expense (not capitalize) |
| 5500 | Other direct job cost | Rare catch-all; review monthly with your bookkeeper |
Example overhead codes (6000s)
| Code | Account | What goes here |
|---|---|---|
| 6100 | Shop / yard rent & utilities | Shop, storage yard, shop power and internet |
| 6200 | Insurance | Liability, workers' comp, tools/equipment (confirm coding with bookkeeper) |
| 6300 | Tools & small equipment (shop) | Tools under your capitalization threshold, not billed to one job |
| 6400 | Vehicle & fuel (overhead) | Fuel, maintenance, registration when not charged to a job; ask about mileage vs actual |
| 6500 | Equipment maintenance (owned) | Service on owned trailers, saws, compressors used across jobs |
| 6600 | Marketing & advertising | Yard signs, Google/Facebook ads, website |
| 6700 | Office & software | Phone, estimating software, bookkeeping apps, office supplies |
| 6800 | Professional fees | Bookkeeper, CPA, attorney |
| 6900 | Bank & payment fees | Merchant fees, card interest (ask how interest should be treated) |
| 7900 | Uncategorized / ask bookkeeper | Use sparingly; clear it every month |
Mixed hardware-store receipts
One Home Depot or supplier ticket often mixes job materials, shop tools and personal items. Do not dump the whole total into Materials.
- Items for Job #123 → 5100 or 5150 (note the job name in the memo).
- Shop restock or a tool you will use on many jobs → 6300 or 6500.
- Personal items → owner's draw, or pay personally and leave them off the business books.
- Split the receipt so the lines add up to the total (see how to split one receipt).
Equipment and vehicles (high level)
- Small tools you buy often usually sit in overhead (6300) unless your bookkeeper sets a dollar threshold to capitalize.
- Big equipment or vehicles are often assets (1000s) with depreciation — do not invent that treatment yourself; ask.
- Rental for one job → 5300 job cost. Owned equipment repair used across jobs → 6500 overhead.
Progress billing and deposits (notes only)
Contractors often invoice in draws or bill deposits before work finishes. How revenue, deposits and retainage hit the books depends on your contracts and your bookkeeper's method. Keep a clear job name on every invoice and receipt, and let your bookkeeper map deposits and progress bills — this guide does not prescribe the accounting treatment.
When to ask your bookkeeper
- Before you add a new account code "just this once."
- Any purchase over your capitalization / tool threshold.
- Payroll vs owner draws, sales tax on materials, and progress billing / deposits.
- Whether fuel and vehicles should use mileage, actual expenses, or a job-billed rate.
Agree the list once, import it into your receipt app or spreadsheet, and stop inventing categories on the truck.