An electrical business can be busy every day and still not know whether it is making money. The bank balance mixes service calls paid on the spot with commercial jobs that will not pay for sixty days, and materials bought this week for a job billed next month. The books have to untangle that.
Here is how to set up bookkeeping for an electrical contracting business so each job, each truck, and each month tells you something true.
Job costing: the number that actually matters
The P&L tells you whether the company made money. Job costing tells you which jobs made it and which gave it back. Every job cost falls into a few buckets: materials such as wire, conduit, panels, breakers, and fixtures; labor at each electrician's loaded cost including payroll taxes and workers' compensation; subcontractors such as a trenching crew; and direct costs like permit fees, inspection fees, and equipment rental.
Tag every cost to a job when it is recorded, not later. A supply house invoice covering three jobs gets split three ways, and payroll gets allocated by timesheets. Reconstructing job cost after the fact is guessing, and most guesses are flattering.
Copper and wire prices move, sometimes a lot, between the estimate and the purchase. Comparing actual material cost against the estimate on every closed job is how you learn whether your bids are keeping up. Flat-rate service calls deserve the same discipline: if truck time, fuel, and the parts used are not tracked, you cannot know whether the rate is right.
Truck stock, job materials, and small tools
Electricians carry inventory on the truck: common breakers, boxes, wire nuts, a few hundred feet of the usual wire. Materials bought for a specific job are a job cost the day they are used. Truck stock is different: restocking three vans is not the cost of any particular job yet. A very small shop can expense stock as it is purchased and keep restocking steady. As the business grows, carrying truck stock as inventory on the balance sheet and expensing it to jobs as it is used gives a far more accurate monthly profit, and your CPA may require it once the amounts are material.
Either way, count the trucks periodically. Stock that walks off or gets used without being recorded shows up as a gap between purchases and billed materials, and the count is the only way to find it.
Tools follow the usual trade rule: hand tools and testers are expensed, while a wire puller, bender, trailer, or van is a fixed asset on the balance sheet, depreciated or deducted in full as your CPA decides. Keep the invoice and date clean so that decision is easy.
Progress billing, retainage, and deposits
Commercial and larger residential jobs are billed in stages. A progress invoice is revenue for the work completed to date and belongs on the books when issued, which means accrual-basis books even if your tax return is filed on cash basis. Otherwise a month of heavy work with no invoices looks like a loss and the month the invoices go out looks like a windfall, and neither is true.
Retainage is the portion of each progress billing the general contractor holds back until the project is complete. Record it as a separate retainage receivable rather than lumping it into regular accounts receivable; it can sit for months after the last day on site, and tracking it separately is the only way to make sure it is collected. Retainage you hold on your own subs is a retainage payable.
Customer deposits collected before work starts are a liability, not income, until the work is performed. On long jobs, check at each month end whether you have billed ahead of the work, which is a liability, or worked ahead of the billing, which is an asset you have not been paid for.
The tax and compliance items specific to the trade
Sales tax on materials varies by state and by the kind of work. In many states a contractor is treated as the consumer of materials installed into real property and pays sales tax to the supply house; some states tax the customer on the job instead, and repair work can differ from new construction. Know the rules where you work and book the tax consistently so materials cost is not quietly understated.
Every subcontractor who is not a corporation needs a W-9 on file before their first payment and a Form 1099-NEC in January if their payments cross the reporting threshold. Licensing fees, continuing education, bonding, and liability insurance are ordinary business expenses, and insurance paid annually is best spread across the months it covers. Van costs need a method, either actual costs or the standard mileage rate, with a log either way.
Keeping all of that straight every month is the job we do for trade businesses. Evolv Bookkeeping is $199 per month flat: every account reconciled, transactions categorized to the right job and cost category, and your P&L and Balance Sheet delivered by day 2 of the following month, with 1099 prep for your subs at year end. If the books are behind, catch-up is $199 for each month behind, finished within 2 days and guaranteed in writing. No contracts, cancel anytime. Get an instant quote from our homepage.