How to Set Up QuickBooks Online for a Construction Company (2026)

Setting up QuickBooks Online for construction is different than setting it up for a retail shop or a consulting gig. You need a chart of accounts that separates labor from materials, a customer-vs-job structure that tracks profit per project, and class tracking if you run multiple crews. I set up QBO for the pool company I worked at before building Workhand, and I watched it work great for the books but fall apart the second someone tried to run field ops from it. Here's exactly how to configure it, where it shines, and where you'll need to bolt something else on top.

Chart of Accounts for Construction Contractors

Your chart of accounts is the skeleton of your books. QuickBooks Online ships with a generic template that lumps everything into "Cost of Goods Sold" and calls it a day. That doesn't work when you need to see labor burden vs materials vs subs at a glance.

Here's the structure I used for pool construction, and it works for most trades:

• <strong>Income accounts</strong>: separate by service type (New Construction, Renovations, Service/Repair, Change Orders). This lets you see which revenue stream is growing and which is flat.
• <strong>Cost of Goods Sold</strong>: Direct Labor (field wages only), Labor Burden (payroll taxes, workers comp, health insurance tied to field headcount), Materials, Subcontractors, Equipment Rental, Permits & Fees.
• <strong>Operating Expenses</strong>: Office salaries, rent, software subscriptions, truck insurance, marketing, legal & accounting. Anything that doesn't tie to a specific job.

The split between COGS and Operating Expenses matters. COGS should move with job volume. If you do twice as many jobs, COGS should roughly double. Operating Expenses should stay flat or grow slower. If your operating expenses are climbing as fast as revenue, you've got a margin leak.

Labor burden is the line most contractors skip, and it costs them. Workers comp alone can run 15% to 40% of wages depending on your trade and your state mod. If you bury that in a generic "payroll expense" account, you can't see the real cost of putting a guy in the field. I track it separately so I can load it into my estimate templates and actually know if a job will be profitable before I sign it.

Customer vs Job Structure in QuickBooks Online

QuickBooks Online calls them "customers" and "sub-customers," but in construction you should think of them as customers and jobs. The customer is the person or entity that pays you. The job is the project.

Set it up like this: create the customer once (John Smith, ABC Property Group, whatever), then create a sub-customer for each project (Smith Pool Renovation, ABC Townhome Block 4, etc.). Every estimate, invoice, and expense gets tagged to the job-level sub-customer, not the parent.

This gives you profit-and-loss by job, which is the only way to know if you're making money. A contractor who only looks at company-level P&L is flying blind. You might show a 12% net margin for the year while half your jobs lost money and the other half carried them.

The problem: QuickBooks Online's job costing reports are slow, they don't update in real time, and they don't show you estimated-vs-actual at a glance. You have to run a Project report, wait for it to load, export to Excel, and build your own comparison. That's fine if you're reconciling once a month. It's useless if you're trying to decide whether to buy another pallet of pavers on Thursday.

Sales Tax Setup for Florida Contractors

Florida charges 6% state sales tax plus county surtax (0.5% to 2.5% depending on the county). If you're doing residential new construction or a substantial renovation, labor is usually exempt but materials are taxable. If you're doing repair or remodel work under a certain threshold, the whole invoice might be taxable as a lump sum.

QuickBooks Online can handle Florida sales tax if you set it up right. Go to Taxes, turn on automated sales tax, and select Florida. Then add the counties where you work. QBO will calculate the combined rate for you.

The catch: Florida's exemption rules are messy. A pool renovation might be exempt if it's part of a permitted new-build but taxable if it's a standalone remodel. QBO doesn't know the difference. You have to mark line items as taxable or non-taxable manually, and if you get it wrong, the state will send you a polite letter during your next audit.

I'm not a CPA, and this isn't tax advice, but here's what I did: I set materials line items to taxable by default and labor line items to non-taxable by default. Then I had my accountant review a sample invoice before I sent my first one. That caught two mistakes that would've cost me a penalty later.

Class Tracking for Multiple Crews or Divisions

If you run more than one crew, or if you have separate divisions (new construction vs service, residential vs commercial, pools vs decks), turn on Class tracking. It's under Account and Settings > Advanced > Categories.

Classes let you tag every transaction with a crew or division, then run a P&L by class. You can see which crew is profitable and which one is bleeding money on change orders and rework.

I used classes to separate new pool builds from renovation work. Renovations had higher material variance (you don't know what you'll find until you dig), so I priced them with a bigger contingency buffer. The class reports showed me that my cost overruns on renovations were running 18% while new builds were under 5%. That told me my renovation estimating process was broken, not my field execution.

One warning: QuickBooks Online forces you to pick a class on every transaction, or it throws everything into "not specified." If you forget to assign a class on a $4,000 materials delivery, your crew P&L is wrong and you won't notice until month-end. There's no validation, no reminder, no dropdown default. You just have to remember.

Where QuickBooks Online Breaks for Construction (and What to Bolt On)

QuickBooks Online is great at the books. It's terrible at running the field. Here's where it falls apart:

• <strong>Estimates</strong>: You can build an estimate in QBO, but you can't send it from your phone with a signature box, and you can't track whether the customer opened it. You'll end up texting a PDF and asking "did you get it?" three days later.
• <strong>Daily logs and photos</strong>: QBO has no place to store jobsite photos, daily progress notes, or weather delays. You'll default to texting photos in a group chat, and six months later when the customer disputes a change order, you can't find the proof.
• <strong>Materials catalog</strong>: QBO has "products and services," but it's a flat list with no specs, no photos, no vendor lead times. If you stock 40 SKUs of pavers, good luck remembering which one the customer picked.
• <strong>Crew communication</strong>: QBO doesn't have job-level chat. If your foreman needs to ask a question about a layout, he's texting you, and that conversation disappears into your message history instead of living with the job file.

This is what I call The Field-Office Latency Gap: the time between when something happens on the jobsite (a sub shows up, a delivery arrives, a punch item gets completed) and when the office knows about it. QBO is an office tool. The latency is measured in hours or days, not minutes.

The fix: keep QuickBooks Online for accounting, but bolt a field-ops tool on top. I built Workhand for exactly this problem. Estimates with e-signature, per-job chat with photo attachments, materials catalog, daily logs, and a two-way sync with QuickBooks so your books stay clean without double entry. You can read more about the sync at workhand.app/features/quickbooks-sync.

If you want a deeper dive on when it makes sense to ditch QuickBooks entirely vs bolting something on, I wrote about that here: When to Switch from QuickBooks to Construction Software.

The Setup Checklist (Do This in Order)

Here's the order I recommend if you're setting up QuickBooks Online for construction from scratch:

• Turn on Class tracking (if you have multiple crews or divisions).
• Build your chart of accounts with the COGS structure above (Direct Labor, Labor Burden, Materials, Subs).
• Set up Florida sales tax (state + county surtax, mark labor non-taxable by default).
• Create your first customer, then create a sub-customer for the first job.
• Create a test estimate, convert it to an invoice, and make sure the classes and tax settings flow through correctly.
• Connect your bank and credit card feeds so transactions import automatically.
• Set up a recurring monthly reminder to reconcile your accounts (I do it on the 5th of every month for the prior month).

The whole process takes 2 to 3 hours if you don't get distracted. Most contractors skip the chart-of-accounts step and regret it six months later when their accountant asks for a job-costing report and they realize they've been dumping everything into one giant COGS bucket.

Frequently asked questions

Do I need QuickBooks Online Plus or will Essentials work for construction?

You need Plus. Essentials doesn't have class tracking or project profitability reports, both of which you need if you're running multiple jobs. Plus is $65/month vs $30/month for Essentials, and the $35 difference pays for itself the first time you catch a money-losing job early.

Can I use QuickBooks Online to manage subcontractor insurance certificates?

No. QBO has nowhere to upload COI documents or set expiration reminders. You'll end up tracking it in a spreadsheet or using a separate tool. Workhand has COI tracking with automatic alerts at 30, 14, and 7 days before expiration.

Should I enter time tracking in QuickBooks Online or use a separate app?

QBO has basic time tracking, but it's desktop-first and clunky on mobile. If your crew is in the field, they won't use it. A mobile-first time tracker (or a tool like Workhand that syncs time back to QBO) is faster and actually gets used.

How do I handle change orders in QuickBooks Online?

Create a new estimate for the change order, mark it as a change order in the memo field, and link it to the same job (sub-customer). Then add a Change Order income account so you can see how much of your revenue is scope creep vs base contract.

Can QuickBooks Online handle progress billing for construction?

Yes, but it's manual. You create an invoice, add a line item for the percentage of the contract you're billing, and subtract previous payments by hand. It works, but it's slow and error-prone. AIA-style progress billing (G702/G703 forms) is not supported at all.

Do I need to track labor burden separately or can I just lump it into labor?

Track it separately. Workers comp, payroll taxes, and health insurance can add 25% to 50% on top of wages depending on your trade. If you bury it, you'll underbid jobs and wonder why you're not profitable.

What's the difference between a product and a service in QuickBooks Online?

Products are things you sell or install (pavers, pumps, tile). Services are labor or expertise (installation, design, project management). For construction, most of your income lines will be services, and your COGS will be products.

Can I run payroll through QuickBooks Online or do I need a separate service?

QBO offers payroll as an add-on (QuickBooks Payroll). It works fine for small crews, and it integrates with your chart of accounts so labor costs flow into job costing automatically. It's $45/month plus $5 per employee.