In this article, we’ll explore how to set up QuickBooks for a construction company, its strengths, and weaknesses in construction accounting, and why integrating it with a purpose-built construction accounting system, like Planyard, provides a more complete financial management system.
Accounting in construction is far more complex than in most industries. With multiple job sites, fluctuating material costs, subcontractor payments, and progress billing, construction businesses require a robust financial system. QuickBooks is a popular choice for contractors due to its ease of use and affordability. But is it the best solution for managing construction accounting?
What Construction Companies Need From Accounting Software
Construction accounting differs from general ledger accounting in that financial tracking happens at the project level. Ideally every cost is stored against the project and the job as well as the accounting cost code. That detail pays off later, because the data from finished projects is what you estimate new ones from. Our article on construction accounting goes through the differences in more depth.
Job costing sits at the center of this. Besides tracking the company’s overall financial performance, each job and project is tracked on its own. The same data is used to estimate a new project and to add up the costs incurred on a running one.
Cash flow needs close attention. Construction projects are large and run on fixed schedules, and the invoices from suppliers and subcontractors are large too. If your suppliers bill you for more than you have billed your customer, you are in trouble, and this is exactly how many general contractors have gone bankrupt. Tracking the past cash position matters, and so does planning the future one, so you know in advance when more cash will be needed.
Budgets need forecasting as well as recording. Material prices can rise sharply within a single month, and if you do not track which jobs and materials have gone up since you budgeted, the surprise arrives when the project ends. That is why contractors want to see costs coming before they are incurred.
Is QuickBooks Good for Construction Companies?
QuickBooks is widely used in the construction industry, but is it the best option?
Pros:
- User-Friendly Interface – Easy to navigate even for non-accountants.
- Job Costing Features – Allows tracking costs per project
- Progress Invoicing – Lets you bill clients in stages.
- Integration with Payroll & Taxes – Simplifies payroll management.
Cons:
- Limited Budgeting & Forecasting – Lacks real-time cost control tools.
- Manual Data Entry – Requires frequent updates to track job expenses.
- No Built-in RFQ or Procurement Tools – Can’t manage purchase orders efficiently.
For a more in-depth analysis, check out this article on whether QuickBooks is good for construction.
Choosing the Right QuickBooks Version for Your Business
QuickBooks comes in several editions, from the cloud-based QuickBooks Online to the desktop versions and a contractor-specific desktop edition. Here is how they compare for construction work.
QuickBooks Online (QBO)
QuickBooks Online is cloud-based. It runs on any machine with an internet connection, there is nothing to install, and new features appear in your account without a manual update. It has a mobile app for doing most accounting tasks on the go and is sold as a monthly subscription.
Its other strength is the app store. If QBO does not cover a use case, there is usually an app that connects to it, so you can keep the non-accounting work in a tool built for it and send only the accounting data to QBO. Planyard’s integration is listed in the QuickBooks app store.
Where QBO falls short is construction-specific functionality. It has no construction reports or workflows, so job costing and progress reporting end up in Excel or email before the invoices are forwarded to QBO, and the information behind those invoices is neither structured nor shared. There is no budget management or financial forecasting either. QBO gives a clear picture of past financial performance and little help with planning ahead.
QuickBooks Desktop (Premier/Enterprise)
QuickBooks Desktop is the more feature-rich edition and suits businesses with complex accounting needs. FitSmallBusiness lists construction contractors among the businesses that should give it serious consideration. One subscription can run the books of several companies, although there is no good way to view that data in a consolidated form. Its features have had years of development, and a construction business can do job costing at the project and job level with relative ease.
The drawbacks matter for construction teams. Desktop does not integrate easily with modern cloud tools, so if it does not do something you need, you are stuck. It is installed locally and licensed per user and per computer, which makes it expensive to bring site and project teams on board. Those team members would also have to learn a complex accounting tool to do their part of the work, and in practice many go back to Excel.
QuickBooks Desktop Contractor Edition
The Contractor edition is a version of QuickBooks Desktop Premier built for general contractors and subcontractors who spend a lot of time tracking the cost of each job. Its workflows are set up for job costing and make sure costs are accounted for. It also suits companies that track material usage, run multiple crews, or want to see profitability at different levels of a project.
It shares the limits of the other desktop versions. It is locally installed with licenses bought per user, and experienced accountants willing to work in the desktop versions are harder to find than for QBO, which has far more community and professional support behind it.
Which Version to Choose
For most construction companies, QuickBooks Online is the better choice. It is cloud-based, it integrates with other tools, it has the widest support, and its pricing works for teams. QuickBooks Desktop has the most construction features, with no marketplace, no modern integrations, and a pricing structure that does not suit larger teams.
No QuickBooks version covers everything a construction company needs on its own. The approach we recommend is to pair tools: QBO for general ledger accounting and a job costing tool like Planyard for the project-level work. The rest of this guide covers how to set up QBO on its own, where its limits are, and how the integration with Planyard works.
How to Set Up QuickBooks for a Construction Company Without Additional Tools
Setting up QuickBooks Online (QBO) properly is crucial for tracking job costs, managing invoices, and maintaining financial control in a construction business. However, using QBO alone comes with challenges, such as limited forecasting capabilities, construction team members needing to work within QuickBooks, and restricted permission controls. Below is a step-by-step guide on how to configure QuickBooks for construction accounting, along with potential issues you may encounter.
1. Creating a Chart of Accounts for a Construction Company
A chart of accounts categorizes all financial transactions, helping construction businesses track revenue, expenses, and profitability.
QuickBooks Online includes a default chart of accounts with essential categories like construction revenue, subcontractor costs, materials, and equipment rentals. While most accounts are pre-set, construction businesses may need to customize categories to match their specific job costing and reporting needs.
Essential Accounts to Set Up in QBO
- Revenue Accounts – Construction revenue, change orders, retainage receivable
- Cost of Goods Sold (COGS) – Labor costs, materials, equipment rentals, subcontractor costs
- Operating Expenses – Office expenses, vehicle costs, insurance, permits, and licensing fees
Potential Issues
- Limited Forecasting – QuickBooks does not provide advanced budgeting tools for tracking expected vs. actual costs.
- Manual Adjustments Required – You must constantly update cost categories as projects evolve.
2. Categorizing Construction Expenses in QuickBooks
Properly categorizing expenses is critical for tracking job costs and ensuring accurate financial reporting. QuickBooks allows you to create custom expense categories to match your business needs.
Common Expense Categories for Construction
- Material Costs – Lumber, concrete, steel
- Subcontractor Payments – Labor and specialty trade costs
- Equipment Rentals – Heavy machinery, scaffolding, tools
- Job-Specific Expenses – Permits, site preparation, inspection fees
Potential Issues
- Requires Construction Team to Work in QuickBooks – Project managers and site supervisors must enter expenses directly in QuickBooks, which may not be their area of expertise.
- Limited Control Over Expense Approvals – QuickBooks lacks custom approval workflows, making it harder to prevent unauthorized expenses from being paid out.
3. Enabling Project Tracking in QuickBooks Online
QuickBooks Online’s Projects feature lets users track job costs by assigning income and expenses to specific jobs. Enabled in Settings > Advanced, it helps monitor profitability but lacks real-time budget tracking and granular permissions, meaning all users may access project financials.
Benefits of Using QuickBooks Projects
- Assign income and expenses to specific projects
- View job profitability reports
- Link invoices, bills, and payments to a job
Potential Issues
- Limited Project Budgeting Tools – QuickBooks does not provide automatic budget vs. actual cost tracking. Users must manually compare project costs with estimates.
- Lack of Granular Permissions – Any user with access to QuickBooks can view financial data, which may not be ideal for separating project financials from general accounting.
4. Tying an Expense to a Job in QuickBooks
To ensure accurate job costing, expenses should be linked to specific projects.
How to Link Expenses to a Job in QuickBooks
- Go to Expenses and select New Expense
- Choose the vendor and select the appropriate Category (e.g., subcontractor costs)
- Assign the expense to a Customer/Project
- Save the transaction
Potential Issues
- Manual Data Entry – Every transaction must be assigned manually, increasing the risk of errors and missed costs.
- No Direct Connection to Purchase Orders or Contracts – Unlike construction-specific software, QuickBooks does not automatically link expenses to purchase orders or subcontract agreements.
Managing Construction Projects in QuickBooks Alone
While QuickBooks provides essential accounting functions, it lacks the advanced project management tools needed for construction businesses.
What QuickBooks Can Handle
- Job Costing Reports – Track revenue and expenses for each project
- Invoice & Payment Tracking – Manage billing and accounts payable/receivable
- Payroll Management – Process payroll for employees and subcontractors
What QuickBooks Cannot Handle Well
- Budget Forecasting – There is no built-in feature to compare projected costs against actual expenses in real time.
- Subcontractor & Purchase Order Management – QuickBooks does not allow detailed tracking of subcontractor agreements, change orders, or procurement.
- RFQ (Request for Quote) Tracking – No tools to manage and compare supplier bids before awarding contracts.
Conclusion
While QuickBooks Online can manage basic accounting and job costing, it lacks the specialized tools needed for comprehensive construction project management. Forecasting, real-time budget tracking, procurement, and role-based permissions are all limited in QBO, requiring manual workarounds. Many construction companies find they need additional software to bridge these gaps and avoid cost overruns, data entry errors, and inefficiencies in financial tracking.
The Downsides of Using QuickBooks Alone for Construction Accounting
While QuickBooks Online is a reliable accounting tool, it lacks many features essential for managing construction projects effectively. Construction businesses require real-time cost tracking, forecasting, and subcontractor management, which QuickBooks does not fully support. Here are some key challenges of using QuickBooks alone for construction accounting:
1. Limited Real-Time Budget Tracking
QuickBooks allows job costing, but it does not update budgets automatically as costs are incurred. Contractors must manually compare estimated vs. actual costs by pulling reports, which increases the risk of budget overruns. Without live cost updates, unexpected expenses can go unnoticed until it’s too late to adjust.
2. No Dedicated Purchase Order or Contract Management
Managing vendor contracts, purchase orders, and change orders in QuickBooks is difficult because the system is not designed for construction procurement. Contractors must track these manually or use spreadsheets, leading to errors, missed payments, and delays. Additionally, subcontractor costs are not automatically linked to budgets, making it harder to track commitments.
3. No RFQ (Request for Quote) Tracking
For large projects, contractors must collect and compare supplier bids before awarding contracts. QuickBooks lacks RFQ functionality, forcing businesses to rely on emails and spreadsheets to track pricing. This makes it harder to ensure cost efficiency and negotiate better deals with vendors.
4. Manual Expense Entry and Job Costing
Although QuickBooks supports assigning costs to projects, all expenses must be entered manually and categorized correctly. Without automation, it’s easy to misallocate costs, leading to inaccurate job profitability reports. Additionally, since expenses are not tied to purchase orders or contracts, tracking committed costs becomes difficult.
5. Lack of Granular User Permissions
QuickBooks does not allow detailed permission settings for different roles within a construction business. Project managers, site supervisors, and accountants all see the same financial data, which can create security concerns. Ideally, project teams should access only relevant job cost information without seeing company-wide financials, but QuickBooks does not provide this level of control.
6. No Advanced Forecasting or Cost Control Tools
Effective construction accounting requires forecasting tools that predict future costs based on actual project data. QuickBooks lacks built-in forecasting, requiring contractors to rely on spreadsheets or external software to estimate remaining costs and potential overruns. This increases the risk of cash flow issues and profitability loss.
7. No Integration with Construction-Specific Workflows
QuickBooks is designed for general accounting, not for the specific workflows of construction companies. Tasks like progress billing, subcontractor retainage tracking, and compliance management must be handled manually, increasing administrative work.
How Planyard Does Construction Accounting Differently
While QuickBooks is useful for general accounting, Planyard is specifically designed for construction financial management, addressing the limitations of QuickBooks in budgeting, forecasting, job costing, and procurement. Here’s how Planyard solves the challenges contractors face when using QuickBooks alone:
1. Real-Time Budget Tracking with Automatic Updates
Unlike QuickBooks, which requires manual budget comparisons, Planyard updates your budget in real time as costs are incurred. Every purchase order, invoice, and subcontractor payment is automatically reflected in the project’s budget, giving contractors a live overview of actual vs. estimated costs. This ensures better cost control and eliminates surprise overruns.
2. Built-In Purchase Order and Contract Management
Planyard integrates purchase orders, contracts, and change orders directly into the budget, preventing financial discrepancies. Every commitment made with a vendor or subcontractor is automatically linked to job costs, ensuring that nothing is overlooked or duplicated. Contractors can track who was awarded a contract, payment schedules, and committed costs without needing spreadsheets.
3. RFQ (Request for Quote) Management for Better Cost Control
Instead of handling supplier bids manually through email and spreadsheets, Planyard provides a built-in RFQ management system. Contractors can request quotes from vendors, compare offers side by side, and select the best option, ensuring better cost efficiency. All selected costs are automatically linked to the budget, eliminating manual data entry.
4. Automated Expense Entry and Job Costing
Planyard eliminates manual expense tracking by automatically categorizing costs and linking them to the correct job. When a purchase order is created or an invoice is received, the cost is automatically recorded in the budget. This reduces data entry errors, prevents cost misallocation, and ensures accurate job profitability reports.
5. Granular User Permissions for Better Security
Unlike QuickBooks, where all users have access to company-wide financials, Planyard provides role-based permissions. Project managers, site supervisors, and accountants can access only the financial data relevant to their responsibilities, improving data security and reducing financial risks.
6. Advanced Forecasting and Cost Control Tools
Planyard includes forecasting tools that help contractors predict project costs based on actual spending trends. Unlike QuickBooks, which requires manual forecasting, Planyard allows users to see how much of the budget has been used and how much is needed to complete a project. This helps prevent cash flow shortages and profitability loss by giving contractors early warnings of potential overruns.
7. Seamless Integration with Construction Workflows
Planyard is built specifically for construction financial management, meaning it supports progress billing, subcontractor retainage, and compliance tracking—tasks that QuickBooks cannot handle efficiently. This reduces administrative workload, ensuring financial data is always accurate and aligned with the project’s status.
Conclusion
Planyard fills the gaps left by QuickBooks, ensuring that construction businesses have real-time budget tracking, automated job costing, RFQ and purchase order management, and forecasting tools. By eliminating manual processes and providing deeper financial insights, Planyard helps contractors stay profitable, reduce errors, and gain full control over their project finances.
Why Planyard + QuickBooks is the Best Combination
While QuickBooks is excellent for general accounting, tax filing, and payroll, it is not designed for detailed construction project cost tracking, forecasting, or procurement management. Many construction companies try to force QuickBooks to handle complex project financials by adding extra cost codes, detailed job categories, and manual tracking processes, leading to cluttered financial data, inefficiencies, and room for errors.
Planyard solves this by sitting in front of QuickBooks, handling all construction-specific financial management while ensuring only the most relevant data flows into QuickBooks. This allows contractors to use QuickBooks for what it does best—accounting—without overcomplicating its setup.
1. Keep QuickBooks Simple by Managing Project Finances in Planyard
When using QuickBooks alone, companies often overcomplicate their chart of accounts, adding excessive job categories, sub-accounts, and tracking codes to accommodate project-specific data. This results in messy financial reports that are hard to analyze.
Planyard eliminates this problem by managing all project-related financials—job costing, budget tracking, subcontractor payments, and purchase orders—within its system. Instead of trying to force QuickBooks into a project management role, contractors can keep their QuickBooks chart of accounts simple while Planyard organizes all job-specific costs.
2. Automated Cost Tracking Without Manual Data Entry
In QuickBooks, expenses must be manually categorized and assigned to jobs, increasing the risk of misallocations and missing costs. Planyard removes this manual process by automatically capturing and categorizing job costs as soon as an invoice is received or a purchase order is approved.
With real-time budget tracking, contractors can see live cost updates in Planyard instead of waiting for manually compiled QuickBooks reports. This prevents cost overruns before they happen, something QuickBooks alone cannot do.
3. Planyard Sends Only Clean, Accurate Data to QuickBooks
Planyard integrates with QuickBooks to ensure only the right financial data is transferred. Once an invoice is approved in Planyard, the system automatically:
- Sends the original invoice to QuickBooks with the correct vendor and project information.
- Links the invoice to the appropriate QuickBooks chart of accounts category, ensuring proper accounting.
- Keeps job-level cost details in Planyard, preventing QuickBooks from becoming overloaded with unnecessary project data.
This integration allows construction teams to manage finances without needing direct access to QuickBooks, reducing errors and ensuring only clean, structured data reaches the accounting system.
The integration is installed from the QuickBooks app store and takes little time to set up. Because the detailed job cost information stays in Planyard, you need only a limited number of user accounts in QBO, and a shorter list of accounts in its chart of accounts. The QuickBooks integration page describes what is sent and when.
4. Streamline Accounting While Maintaining Project Cost Control
Since all project-based financials stay in Planyard, accountants and bookkeepers do not need to sort through complex job costs in QuickBooks. Instead, QuickBooks remains focused on tax reporting, payroll, and high-level financials, while Planyard ensures that every dollar spent on a project is properly tracked, assigned, and controlled.
This separation of responsibilities ensures:
- Construction teams work in Planyard for cost tracking, procurement, and budget control.
- Accounting teams work in QuickBooks for general bookkeeping, tax preparation, and financial statements.
Conclusion
Instead of forcing QuickBooks to function as a construction project management tool, Planyard enhances it by handling all project-based financials separately. By keeping QuickBooks clean and optimized for accounting, Planyard eliminates manual tracking, budgeting errors, and the need for unnecessary cost codes. The integration ensures only relevant, structured data flows into QuickBooks, providing the best of both worlds—powerful construction cost management with streamlined accounting.