How should an HVAC or plumbing company handle bookkeeping?
The biggest thing that sets HVAC and plumbing bookkeeping apart from other businesses is the mix of revenue types. You have service and repair calls that are quick, one-time transactions. You also have larger installation or new construction projects that play out over days or weeks. Your books need to separate these revenue streams so you can see the margins on each. A company doing $1.2 million in revenue might look profitable overall but be losing money on installs and making it all back on service calls. You won’t know unless the books are structured to show it.
For service calls, the bookkeeping is relatively straightforward. Revenue comes in, parts and labor go out. The key is making sure every transaction gets categorized properly and that you’re tracking the cost of parts used on each call. If your techs pull parts from a truck or warehouse without recording what was used, your inventory numbers drift and your true cost per job is a mystery.
Larger projects need job costing. Each installation or bid project should be tracked as its own job in your accounting software so you can see labor, materials, and any subcontractor costs against the revenue for that specific project. This is how you figure out which types of jobs are actually worth pursuing and which ones you’re underpricing. A QuickBooks ProAdvisor in Chandler can set up your chart of accounts and job tracking so this data flows naturally without creating extra work for your office staff.
Seasonal cash flow is a real concern, especially for HVAC. Summer in Arizona means the phones don’t stop ringing for AC repairs and replacements. Winter slows down considerably. Your bookkeeping should feed into a basic cash flow forecast so you’re setting aside money during busy months to cover the slow periods. Too many skilled trades businesses spend everything they earn in the summer and then scramble to make payroll in January.
Payroll deserves attention too. Technicians often earn overtime, and some shops pay flat rate or commission on top of base wages. Make sure your payroll is set up correctly and that labor costs are allocated to the right jobs. Misclassifying employees as contractors is another common issue in the trades that creates serious tax problems down the road.
Vehicle and equipment costs add up fast when you’re running a fleet of service vans. Track fuel, maintenance, insurance, and depreciation for each vehicle if possible. This helps you decide when it’s time to replace a van instead of sinking more money into repairs, and it gives your tax accountant the documentation they need to maximize your deductions.
Reconcile your bank and credit card accounts monthly without exception. Trade businesses tend to have a high volume of supply house charges, fuel purchases, and small vendor payments that are easy to lose track of. Monthly reconciliation catches duplicate charges, missed deposits, and transactions that slipped through without being recorded. The longer you wait to reconcile, the harder it is to figure out what happened and the less reliable your financial picture becomes.
Bookkeeping for East Valley Small Businesses
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More Questions
How do I build a financial model for a new business venture?
Start with realistic revenue assumptions, map out every cost you can identify, and project your cash flow month by month. The goal isn't a perfect prediction. It's a tool that helps you understand when you'll break even and how much cash you need to get there.
Read answerWhat insurance costs should a contractor track separately?
Track general liability, workers' compensation, builder's risk, vehicle, and equipment insurance in separate accounts. Each one affects your books differently, and lumping them together makes it impossible to accurately cost jobs or set overhead rates for bidding.
Read answerHow often should I update my financial projections?
Most small businesses should review and update financial projections monthly. At minimum, do it quarterly. Any time something significant changes in your business, your projections should reflect it within days, not months.
Read answerWhen should I write off an unpaid invoice as bad debt?
It depends on your accounting method. If you use cash basis, there's usually nothing to write off because you never recorded the income. For accrual basis businesses, write off an invoice once you've exhausted reasonable collection efforts, typically after 90 to 120 days.
Read answerWhat's the best way to manage cash flow in a seasonal business?
Map out your monthly revenue and expenses across a full year, then build a cash reserve during peak months to cover the gaps. The businesses that handle seasonality well treat reserve contributions like a required expense, not something optional.
Read answerShould I let QuickBooks automatically categorize my transactions?
Use it as a starting point, not a final answer. QuickBooks auto-categorization gets things wrong often enough that blindly accepting suggestions will create messy books and potentially incorrect tax filings.
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