Bookkeeper vs. CPA for a Contractor Business

A contractor-experienced bookkeeper typically runs $400–$900/month (or $30–$75/hour independently) — covering categorization, reconciliations, job cost tracking, and monthly financials, but not tax filing or advisory work. Most contractors either manage their own books (and miss deductions), pay a CPA to handle both bookkeeping and returns (at CPA billing rates for bookkeeping work), or have a bookkeeper with no CPA oversight — none of which is optimal.

Here is how the two functions divide and what good coordination between them produces for a trades business.

What Does a Bookkeeper Do for a Contractor Business?

A bookkeeper’s job is to record what happened financially and produce the reports that tell you where you stand. For a contractor business, that means:

• Categorizing all income and expenses in QuickBooks or equivalent
• Reconciling bank and credit card accounts monthly
• Recording and tracking accounts receivable — who owes you and for how long
• Managing accounts payable — what you owe and to whom
• Job cost tracking: Recording expenses and invoices against specific jobs so you can see job-level profitability
• 1099 subcontractor tracking: Monitoring sub payments across the year so you know who crosses the $600 threshold
• Recording payroll entries from your payroll service (if you have an S-corp or employees)
• Producing monthly P&L, balance sheet, and cash flow statement
• Producing job cost reports and WIP schedules on request

Cost: $400–$900/month for a virtual bookkeeping service experienced with contractor businesses. $30–$75/hour for an independent bookkeeper.

What they can’t do: File tax returns, give tax advice, set your S-corp salary, model retirement contributions, advise on entity structure, or represent you in an audit.

What Does a CPA Do for a Contractor Business?

A CPA is a licensed professional responsible for tax compliance and advisory. For contractors:

• Preparing and filing the S-corp return (Form 1120-S) and personal return (Form 1040 with K-1)
• Advising on entity structure and timing of S-corp election
• Setting and annually reviewing your S-corp salary
• Calculating quarterly estimated taxes
• Advising on retirement plan selection and calculating optimal contribution amounts
• Year-end tax projections and planning recommendations
• Advising on vehicle deduction method (actual vs. standard mileage, Section 179 strategy)
• Reviewing your QBI deduction eligibility and optimizing it
• Filing 1099-NECs for subcontractors (or overseeing the bookkeeper’s tracking)
• Representing you in IRS audits

Cost: $4,000–$10,000/year for a contractor S-corp with active advisory.

What they shouldn’t be doing: Monthly bank reconciliations, job cost data entry, or routine transaction categorization. When a CPA firm handles bookkeeping, you’re typically paying $150–$350/hour for work a bookkeeper does for $30–$75/hour.

What Are the Three Contractor-Specific Bookkeeping Needs?

Job Cost Tracking

Trades businesses live and die by job profitability. A $200,000 job that costs $185,000 looks profitable from the P&L — but tracking it to the job reveals a 7.5% margin that may not survive the next change order dispute or material price increase.

Job costing requires a bookkeeper who understands how to set up jobs in QuickBooks, code materials and labor to jobs, and produce job profitability reports. Not all bookkeepers have this skill. For contractors above $300,000 in revenue with multiple active jobs, this is non-negotiable.

1099 Compliance

If you use subcontractors, your bookkeeper should be tracking sub payments throughout the year so you know who needs a 1099-NEC before January. The W-9 collection process should happen at the start of each sub relationship — not in January when you’re scrambling.

A bookkeeper who isn’t tracking this creates penalty exposure: $60–$310 per form for late 1099s, with no cap for intentional disregard.

Retainage Tracking

If you work as a sub and GCs hold retainage, your bookkeeping needs to track retainage receivable separately from regular AR. Retainage that’s been earned but not yet received is an asset — it should appear on your balance sheet, and you should be following up on it systematically.

How Do You Know If Your Bookkeeper and CPA Are Well Integrated?

The bookkeeper and CPA should be working from the same data and aligned on how it’s organized. Signs of poor integration:

• The CPA is asking for a category reconciliation every February because the chart of accounts doesn’t match return categories
• The bookkeeper is using categories the CPA doesn’t recognize
• The S-corp salary is set without reference to the current-year books
• The job cost reports don’t exist or aren’t reviewed by the CPA

Signs of good integration:

• The chart of accounts was designed with the CPA’s input from the start
• The bookkeeper produces a monthly report the CPA can act on without cleanup
• The CPA’s Q4 planning call is informed by current-year books, not estimates
• The 1099 tracking is automated so January filing is a 30-minute task

CPA cost for contractor businesses — what you should expect at different price points.

Contractor cash flow management — how job cost tracking drives cash flow visibility.

This article is educational. Consult a licensed CPA for advice specific to your situation.