--- title: "Construction chart of accounts in QuickBooks | Ledgerbrook" source: https://ledgerbrook.com/blog/chart-of-accounts-for-contractors/ description: "The 5000-series setup for job costing, retainage, and 1099 subs in QuickBooks Online, with a free downloadable Excel sheet." --- [Blogs](/blog/) # Construction chart of accounts in QuickBooks September 26, 2026 · [Omkar Moraye](/about/) [](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dlinkedin%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](https://x.com/intent/post?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dx%26utm_medium%3Dsocial%26utm_campaign%3Dshare&text=Construction%20chart%20of%20accounts%20in%20QuickBooks)[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dfacebook%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](mailto:?subject=Construction%20chart%20of%20accounts%20in%20QuickBooks&body=Construction%20chart%20of%20accounts%20in%20QuickBooks%0A%0Ahttps%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Demail%26utm_medium%3Dsocial%26utm_campaign%3Dshare) ## What is the best chart of accounts for a construction company in QuickBooks Online? A construction chart of accounts must separate direct job costs from operating overhead using 5000-series Cost of Goods Sold accounts. It requires dedicated sub-accounts for direct materials, 1099 subcontractor labor, equipment rental, and retainage liabilities to track true project gross margin across 3 or more concurrent projects without distorting general business overhead. ## Why standard QuickBooks accounts break construction books The standard QuickBooks Online chart of accounts was built for generic retail and professional service firms. It provides a single **Cost of Goods Sold** account and dumps everything else into general overhead expenses. For a general contractor or trade specialty subcontractor (electrical, plumbing, HVAC, framing), that default setup hides project profitability. When direct job materials, field labor, equipment rentals, and 1099 trade subcontractor invoices post to general expense lines alongside the shop rent and office internet, your Profit & Loss statement cannot report whether a specific job cleared its estimated 25% gross margin or bled cash. A construction chart of accounts organizes accounts into a standardized numbering system that isolates **Direct Job Costs (Cost of Goods Sold)** from **Operating Overhead (Expenses)**, creating the structural foundation required for job costing. For complete company preferences and project settings, see our [QuickBooks Online construction setup guide](/blog/quickbooks-online-setup-for-construction/). You can download this complete structure as an Excel workbook: ### Download the Construction QBO Chart of Accounts Standardized 41-account template with job costing classifications and retainage setup. [Download Excel (.xlsx)](/downloads/ledgerbrook-construction-chart-of-accounts.xlsx) ## The account numbering standard QuickBooks Online allows custom account numbering under **Account and Settings > Advanced > Chart of Accounts**. Enabling account numbers standardizes your financial reporting across all project managers and estimators: | Account Number Range | Financial Statement Section | Purpose in Construction Accounting | | --- | --- | --- | | **1000 – 1490** | Current Assets | Operating cash, payroll accounts, and contract retainage receivable | | **1500 – 1990** | Fixed Assets | Work trucks, heavy machinery, trailers, and accumulated depreciation | | **2000 – 2490** | Current Liabilities | Trade payables, subcontractor retainage payable, and overbillings | | **2500 – 2990** | Long-Term Liabilities | Equipment notes, vehicle loans, and commercial bank credit facilities | | **3000 – 3990** | Equity | Owner capital contributions, owner draws, and prior-year retained earnings | | **4000 – 4990** | Income | Progress billings, approved change orders, and time-and-materials billings | | **5000 – 5990** | Cost of Goods Sold | **Direct Job Costs:** materials, field labor, 1099 subs, rentals, permits | | **6000 – 6990** | Overhead Expenses | Shop lease, general liability insurance, estimating software, legal/tax | | **7000 – 7990** | Other Income / Expense | Financing interest expense, asset sales gains/losses | The decisive line is between the **5000s** and the **6000s**. If an expense is directly tied to a customer contract, it belongs in the 5000-series Cost of Goods Sold. If it would exist even if every job shut down tomorrow, it belongs in 6000-series Operating Overhead. ## Complete construction chart of accounts hierarchy Below is the standard 41-account hierarchy engineered specifically for general contractors and specialty subcontractors operating in QuickBooks Online: | Number | Account Name | Account Type | Detail Type | | --- | --- | --- | --- | | **1010** | Operating Checking | Bank | Checking | | **1020** | Payroll Checking | Bank | Checking | | **1100** | Accounts Receivable | Accounts Receivable | Accounts Receivable (A/R) | | **1150** | Retainage Receivable | Other Current Assets | Other Current Assets | | **1200** | Inventory - Direct Materials | Other Current Assets | Inventory | | **1300** | Costs in Excess of Billings (Underbillings) | Other Current Assets | Other Current Assets | | **1400** | Prepaid Commercial Insurance & Bonds | Other Current Assets | Prepaid Expenses | | **1510** | Commercial Vehicles | Fixed Assets | Vehicles | | **1520** | Machinery & Heavy Job Equipment | Fixed Assets | Machinery & Equipment | | **1590** | Accumulated Depreciation | Fixed Assets | Accumulated Depreciation | | **2010** | Accounts Payable | Accounts Payable | Accounts Payable (A/P) | | **2020** | Commercial Credit Card | Credit Card | Credit Card | | **2110** | Retainage Payable to Subcontractors | Other Current Liabilities | Other Current Liabilities | | **2120** | Billings in Excess of Costs (Overbillings) | Other Current Liabilities | Other Current Liabilities | | **2210** | Payroll Liabilities | Other Current Liabilities | Payroll Tax Payable | | **2220** | 1099 Backup Withholding Payable | Other Current Liabilities | Other Current Liabilities | | **2510** | Heavy Equipment Loans Payable | Long Term Liabilities | Notes Payable | | **2520** | Vehicle Loans Payable | Long Term Liabilities | Other Long Term Liabilities | | **3010** | Owner’s Capital | Equity | Owner’s Equity | | **3020** | Owner’s Draws | Equity | Owner’s Equity | | **3030** | Retained Earnings | Equity | Retained Earnings | | **4010** | Contract Revenue - Progress Billings | Income | Service/Fee Income | | **4020** | Change Order Revenue | Income | Service/Fee Income | | **4030** | Time & Materials Revenue | Income | Service/Fee Income | | **5010** | Direct Job Materials | Cost of Goods Sold | Supplies & Materials - COGS | | **5020** | Direct Field Labor | Cost of Goods Sold | Cost of Labor - COS | | **5030** | Subcontractor Expense (1099) | Cost of Goods Sold | Cost of Labor - COS | | **5040** | Job Site Equipment Rental | Cost of Goods Sold | Equipment Rental - COS | | **5050** | Municipal Permits & Engineering Fees | Cost of Goods Sold | Other Costs of Service - COS | | **5060** | Dumpsters & Job Site Cleanup | Cost of Goods Sold | Other Costs of Service - COS | | **5070** | Job Site Safety & Small Tools (< $2,500) | Cost of Goods Sold | Supplies & Materials - COGS | | **5080** | Freight & Direct Delivery Charges | Cost of Goods Sold | Shipping, Freight & Delivery - COS | | **6010** | Advertising & Bid Marketing | Expenses | Advertising/Promotional | | **6020** | Merchant & Bank Wire Fees | Expenses | Bank Charges | | **6030** | General Liability & Workers Comp Insurance | Expenses | Insurance | | **6040** | Estimating Software & Office Supplies | Expenses | Office/General Administrative Expenses | | **6050** | Professional Fees - Legal & Accounting | Expenses | Legal & Professional Fees | | **6060** | Shop & Storage Yard Lease | Expenses | Rent or Lease of Buildings | | **6070** | Utilities & Mobile Communications | Expenses | Utilities | | **6080** | Overhead Vehicle Gas & Repairs | Expenses | Auto | | **7010** | Business Loan Interest Expense | Other Expense | Other Miscellaneous Expense | ## Handling retainage on the balance sheet In commercial and large residential contracting, owners and general contractors routinely withhold 5% to 10% from every progress draw until substantial completion. If you bill $100,000 and the GC holds back $10,000, entering the invoice as an ordinary $100,000 Accounts Receivable balance corrupts your aging reports. The $10,000 retainage shows up as 90+ days past due, even though neither party expects payment until project closeout. Instead, route retainage through dedicated balance sheet accounts: 1. **Retainage Receivable (Account 1150):** An asset account that records the retainage withheld by your customers. On progress invoices, add a line item that credits contract revenue for the full milestone and debits account 1150 for the 10% retainage holdback, leaving net Accounts Receivable reflecting the true due date. 2. **Retainage Payable (Account 2110):** A liability account that records the 5% to 10% you withhold from your 1099 trade subcontractors until their work is inspected and accepted. For an in-depth breakdown of how progress billing, retainage, and job costing interact inside QuickBooks Online, see our dedicated guide to [bookkeeping for contractors](/blog/bookkeeping-for-contractors/). How the balances in 1300 and 2120 are worked out each month, from a schedule of open jobs, is in our post on [WIP in accounting](/blog/wip-accounting/). ## Subcontractor 1099 compliance in the 5000s Trade subcontractors must be separated from in-house W-2 labor. In QuickBooks Online, post subcontractor invoices to **Account 5030 (Subcontractor Expense)** and ensure each vendor is flagged as **Track payments for 1099** in their vendor profile. Two operational rules protect contractors from IRS audit penalties: - **Collect the W-9 before writing the first check:** Never release a deposit or progress payment to an independent trade contractor without a signed W-9 on file. - **Isolate backup withholding:** If a subcontractor refuses to provide an EIN or SSN, the IRS requires you to withhold 24% backup withholding. Post those withholdings to **Account 2220 (1099 Backup Withholding Payable)** until remitted on IRS Form 945. ## The 4 common errors that distort contractor books 1. **Lump-sum equipment purchases:** Expensing a $65,000 truck or skid steer immediately into an expense account swings the month’s P&L into an artificial tax loss. Capitalize equipment in **Account 1510/1520** and coordinate with your CPA on Section 179 depreciation schedules. 2. **Booking unearned customer deposits as revenue:** A 30% mobilization deposit collected before breaking ground is not income; it is an unearned liability. Depositing it directly to income overstates the start month and leaves the final completion month showing negative margins. 3. **Crew leads buying materials on personal credit cards:** When field foremen purchase lumber or plumbing fittings on personal cards without submitting itemized receipts, direct job costs are understated and job profitability figures become fictional. 4. **Failing to use sub-customers for job costing:** In QuickBooks Online, every job must be established as a **Sub-Customer** under the primary client, with **Bill with parent** enabled. Every expense line in the 5000s must carry the designated job name. Our [illustrative contractor cleanup case study](/results/contractor-cleanup/) demonstrates how nine months of miscoded job costs, misclassified owner draws, and unreconciled equipment loans are methodically audited and restructured. ## How to import into QuickBooks Online 1. Download the [`ledgerbrook-construction-chart-of-accounts.xlsx`](/downloads/ledgerbrook-construction-chart-of-accounts.xlsx) spreadsheet. 2. Log in to QuickBooks Online, select the **Gear icon**, and navigate to **Import data > Chart of Accounts**. 3. Attach the downloaded Excel file and click **Next**. 4. Map the 4 columns: Account Number, Account Name, Type, and Detail Type. 5. Review the preview table and click **Import**. ## When contractor books require a professional cleanup If historical jobs were run without sub-customer tagging, retainage was posted to bad debt, or years of direct materials were lumped into office expenses, a simple chart of accounts import will not fix past balance sheet errors. Rebuilding job-level historical records requires a specialized [QuickBooks cleanup](/quickbooks-cleanup/): $99per month of backlog20% off 6+ months If you are unsure whether your current QuickBooks file supports accurate job costing and progress billing, [send your file for a confidential review](/contact/?from=blog%2Fchart-of-accounts-for-contractors). Once clean, our [monthly bookkeeping service](/monthly-bookkeeping/) keeps job costs, subcontractor 1099s, and retainage reconciliations locked and accurate every single month. Ledgerbrook Behind on your QuickBooks books? Cleanup or catch-up $99 per month of backlog, 20% off 6+ months Turnaround 5 business days for a typical year Monthly close From $99 a client file a month [Get a free file review](/contact/?from=blog%2Fchart-of-accounts-for-contractors) Free, no card. A written answer within about 48 hours. 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Published September 26, 2026 · Updated October 12, 2026 Share this post[](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dlinkedin%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](https://x.com/intent/post?url=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dx%26utm_medium%3Dsocial%26utm_campaign%3Dshare&text=Construction%20chart%20of%20accounts%20in%20QuickBooks)[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Dfacebook%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](mailto:?subject=Construction%20chart%20of%20accounts%20in%20QuickBooks&body=Construction%20chart%20of%20accounts%20in%20QuickBooks%0A%0Ahttps%3A%2F%2Fledgerbrook.com%2Fblog%2Fchart-of-accounts-for-contractors%2F%3Futm_source%3Demail%26utm_medium%3Dsocial%26utm_campaign%3Dshare) Continue Reading[All blogs →](/blog/) [ Previous BlogSeptember 25, 2026 ### How to subcontract a QuickBooks cleanup 5 steps for a firm to subcontract a QuickBooks cleanup and keep the client, plus the AICPA disclosure rules. Read previous post → ](/blog/how-to-subcontract-a-quickbooks-cleanup/)[ Next Blog September 26, 2026 ### Restaurant chart of accounts in QuickBooks USAR-aligned chart of accounts for QuickBooks Online: Prime Cost formulas, POS clearing, pour costs, and an Excel template. Read next post → ](/blog/restaurant-chart-of-accounts/)