Industries
6 min read
Trades Bookkeeping: Job Costing, Contractors and TPAR
Busy doesn't always mean profitable. Here's how trades and construction businesses can see margin by job, pay contractors correctly and stay on top of TPAR.
Most trades businesses know if they’re busy. Far fewer know which jobs actually made money. Without job costing, a few underquoted jobs can quietly wipe out the profit from everything else.
Quick answer: track income and costs against each job, compare quoted margin with actual margin, check contractor ABNs before paying, and if you’re in building and construction, lodge a Taxable Payments Annual Report (TPAR) by 28 August each year.
Job costing: the number that matters
Job costing means tagging every material purchase, subcontractor bill and labour hour to the job it belongs to. Xero’s tracking categories or projects, or a job management app like Tradify, ServiceM8 or simPRO, can do this.
Quoted | Actual | |
|---|---|---|
Labour | $6,000 | $7,400 |
Materials | $4,500 | $4,900 |
Subcontractors | $2,000 | $2,000 |
Price to client | $16,000 | $16,000 |
Margin | $3,500 (22%) | $1,700 (11%) |
The job above looked fine on paper and earned half the expected margin. Spotting that pattern across ten jobs changes how you quote the next ten.
Paying contractors correctly
Check the ABN. If a contractor doesn’t quote a valid ABN, you may need to withhold tax from the payment.
Check if super applies. Contractors paid mainly for their labour can be treated as employees for super guarantee purposes.
Keep invoices on file. You’ll need contractor details and amounts for your TPAR.
TPAR: who lodges and when
Businesses that pay contractors for building and construction, cleaning, courier and road freight, IT, or security services may need to lodge a TPAR. If those services are only part of what you do, a 10% income test applies, although that test doesn’t apply to building and construction. The report is due by 28 August each year.
Progress claims and retentions
Larger jobs are often billed in stages, with a retention held back until completion. Track progress claims and retentions per job, so you know what’s been earned, what’s been invoiced and what you’re still owed.
Trades bookkeeping checklist
Every cost tagged to a job
Quoted vs actual margin reviewed monthly
Contractor ABNs checked before first payment
TPAR data collected all year, not in August
GST set aside from every progress claim
Built for trades
We run books for tradies and builders, including job costing and TPAR. Answer three questions to get your fixed monthly quote.