Accounting software for contractors can make it easier to manage the financial side of a contracting business. Contractors also have to keep track of income, expenses, invoices, receipts, customers, projects, and other financial details.
Trying to manage all of that with spreadsheets or paper records can become difficult as a business grows.
That is where accounting software can help.
The right accounting software can make it easier to organize your finances, keep track of business expenses, send invoices, and understand how your business is performing.
In this guide, we’ll explain what contractors should look for in accounting software and how to choose a solution that fits their business.
Why Contractors Need Accounting Software
Contractors often have financial activity coming from many different jobs and customers at the same time.
For example, a contractor may need to keep track of:
- Customer payments
- Job-related expenses
- Materials and supplies
- Subcontractor costs
- Equipment expenses
- Invoices
- Business mileage
- Receipts
- Bank transactions
- Outstanding customer balances
Keeping everything organized is important because your financial records can help you understand whether your business is actually making money.
Accounting software can bring many of these tasks together in one place.
Instead of maintaining multiple spreadsheets or searching through paper receipts, you can use accounting software to organize financial information and make routine bookkeeping tasks easier.
What Should Contractors Look for in Accounting Software?
Not every accounting program is designed with contractors in mind.
Before choosing software, consider the features that will be most useful for your particular business.
1. Income and Expense Tracking
One of the most important functions of accounting software is tracking money coming into and going out of your business.
Contractors may have expenses for materials, tools, equipment, fuel, subcontractors, insurance, office supplies, and other business costs.
Good accounting software can help organize these transactions so you can get a clearer picture of your business finances.
2. Invoicing
Getting paid is an essential part of running any contracting business.
Accounting software with invoicing capabilities can make it easier to create professional invoices and keep track of what customers owe.
Depending on the software, you may also be able to track invoices after they are sent and identify outstanding payments.
This can be particularly helpful when you have several customers or projects at the same time.
3. Receipt and Transaction Organization
Contractors can accumulate a large number of receipts and business transactions.
Accounting software can help organize those records and make it easier to locate information when you need it.
Keeping business expenses organized throughout the year can also make tax preparation less stressful.
4. Financial Reports
Financial reports can help you understand how your contracting business is performing.
Depending on the software, reports may help you review information such as:
- Income
- Expenses
- Profit and loss
- Accounts receivable
- Business activity over time
You don’t need to be an accountant to benefit from having a clearer view of your business finances.
5. Bank Account Connections
Many accounting programs can connect with business bank accounts and import transactions.
This can reduce the amount of information you have to enter manually.
It can also make it easier to keep your accounting records up to date.
Before connecting any financial account, however, make sure you understand the software’s security practices and account permissions.
6. Ease of Use
Feature lists can look impressive, but software is only useful if you can actually use it comfortably.
Contractors are busy running their businesses and completing jobs. You probably don’t want to spend hours trying to figure out complicated bookkeeping software.
Look for software with an interface that is easy to understand and features that match the way you operate your business.
Accounting Software for Different Types of Contractors
Different contractors can have different accounting needs.
General Contractors
General contractors may manage multiple projects, customers, subcontractors, and material expenses.
They may benefit from software that provides strong expense tracking, invoicing, reporting, and organization.
Electricians and Plumbers
Electricians and plumbers may have frequent expenses for parts, materials, tools, and supplies.
Keeping those expenses organized can make bookkeeping easier and provide a better picture of job profitability.
HVAC Contractors
HVAC businesses may need to track equipment, materials, service calls, customer invoices, and other operating expenses.
Accounting software can help keep these financial records organized as the business grows.
Roofers and Construction Businesses
Roofing and construction businesses may deal with larger projects, significant material expenses, subcontractors, and customer payments.
For these businesses, it can be particularly important to choose software that can handle increasing amounts of financial information.
Handymen and Independent Contractors
Smaller one-person businesses may have simpler accounting needs.
A freelancer or independent contractor may primarily need income and expense tracking, invoicing, receipt organization, and basic financial reporting.
In this situation, paying for a large number of advanced features may not be necessary.
How Much Does Accounting Software Cost?
Accounting software can range from inexpensive basic solutions to more advanced programs with higher monthly costs.
The cheapest option is not necessarily the best option, and the most expensive option may provide features you don’t need.
When comparing software, consider the value you receive for the price.
Think about:
- How many customers you have
- How many transactions you have each month
- Whether you need invoicing
- Whether you need financial reports
- Whether you have employees
- Whether you work with subcontractors
- Whether you need payroll
- Whether your business is expected to grow
It can be worth paying a little more for software that saves you time and keeps your financial records organized.
Should a Contractor Use Separate Business and Personal Finances?
Yes.
Keeping business and personal finances separate is an important part of maintaining organized business records.
A separate business bank account can make it easier to identify business income and expenses.
It can also make your accounting records easier to understand.
If you are currently mixing personal and business transactions, consider establishing a system that keeps the two separate going forward.
For questions about your specific tax or accounting situation, consult a qualified tax or accounting professional.
When Should a Contractor Start Using Accounting Software?
There isn’t one specific business size at which every contractor should start using accounting software.
Some contractors may benefit from it from the beginning, while others may start using software once their number of customers, transactions, or expenses increases.
A useful rule is to consider accounting software when bookkeeping is becoming difficult to manage manually.
If you’re spending significant time organizing receipts, creating invoices, tracking expenses, or trying to understand your financial records, software may help simplify the process.
Starting with organized records can also make it easier to manage your finances as the business grows.
QuickBooks for Contractors
QuickBooks is one accounting software option that contractors may want to consider.
It is widely used by small businesses and offers tools for managing areas such as income, expenses, invoicing, and financial reporting.
The right choice will depend on your business size, the features you need, and how you manage your finances.
If you’re considering QuickBooks, take the time to compare its available features and plans with the specific needs of your contracting business.
You can learn more in our QuickBooks for Small Businesses guide.
How to Choose the Right Accounting Software for Your Contracting Business
Before choosing a program, make a short list of the tasks you need the software to handle.
For example, you might need:
- Income and expense tracking
- Invoicing
- Receipt organization
- Bank transaction management
- Financial reports
- Mileage tracking
- Payroll
- Contractor or subcontractor management
- Integration with other business tools
Then compare available software based on those needs.
Don’t choose software simply because it has the longest list of features.
Instead, focus on whether it can solve the problems you actually have.
Start With Your Business Needs
The best accounting software for a contractor is not necessarily the same software that works best for another contractor.
A one-person handyman business may need a simple solution for expenses and invoices.
A growing general contracting company may need more advanced accounting and reporting capabilities.
Your business size, number of customers, types of projects, expenses, and growth plans should all play a role in your decision.
Final Thoughts
Accounting software can make managing the financial side of a contracting business much easier.
The right solution can help you organize income and expenses, create invoices, keep financial records together, and better understand how your business is performing.
Before choosing software, identify the tasks you need help with and compare programs based on those needs.
For many contractors, starting with a straightforward accounting solution and moving to more advanced features as the business grows can be a practical approach.
The goal isn’t to find the software with the most features.
The goal is to find software that helps you spend less time managing your books and more time running your contracting business.