Renovation company bookkeeping in Edmonton, job by job.

Renovation company bookkeeping in Edmonton is a different animal from most small business books. You might have five kitchens, two basements and a bathroom on the go at once, each with its own deposit, materials runs, subcontractors and change orders. The bank balance looks healthy because deposits just came in, yet you're not sure whether last month's jobs actually made money.

This guide covers the bookkeeping setup that works for renovators across Edmonton, St. Albert, Sherwood Park and Spruce Grove: job costing, deposits, GST, subcontractors and the year-end slips that come with them.

1Job costing: the heart of renovation bookkeeping

A renovation business doesn't really have one profit number. It has one per job. Job costing means tagging every cost to the job it belongs to, so you can see at the end whether the Glenora kitchen made the 25% margin you quoted or quietly lost money on extra tile and an extra week of labour.

• Materials: tag every lumber yard, tile shop and hardware store purchase to a job when it's entered.
• Subcontractors: enter electricians, plumbers, drywallers and painters as bills against the job.
• Labour: track employee hours by job. Even a simple timesheet beats guessing.
• Equipment rentals, dump fees and permits: City of Edmonton permits and disposal costs belong to the job too.

In QuickBooks Online, the Projects feature (on plans that include it) or customer sub-jobs let you tag income and costs to each renovation and run a profit report per project. Our guide to job costing for contractors goes deeper.

A quick example

Say you quote a basement development in Summerside at $60,000 plus GST, expecting $45,000 of costs.

Without job costing, that $6,000 slips by unnoticed. With it, you can see labour ran 25% over, and either price the next basement higher or find out why.

2Deposits, progress draws and change orders

Most renovators take a deposit up front and bill in stages. How you record that money matters.

• Deposits are generally a liability until you do the work. Recording a $15,000 deposit as income in December, for a job you start in February, overstates this year's income. Our post on customer deposits and unearned revenue shows the entries.
• Progress billing: invoice each stage (demo, rough-in, drywall, finishing) as it's completed, and apply the deposit against the invoices.
• Change orders: get them in writing and invoice them as their own line, so you can see how much extra work each job picks up.
• Holdbacks: on some contracts, particularly larger ones, the owner may hold back a portion of each payment under Alberta's prompt payment and construction lien rules. Track holdbacks owed to you as a separate receivable so they don't get forgotten.

3GST for Edmonton renovators

Renovation work is generally taxable, so once you're registered you charge 5% GST on your invoices. Alberta has no PST, which keeps things simpler than in most provinces. Most renovators cross the $30,000 small supplier threshold quickly; check the GST registration rules if you're close.

• Claim input tax credits on materials, subcontractor bills, tools, vehicle costs and rentals. On a materials-heavy business, these add up fast.
• Check your subs' GST numbers. You need proper supporting documents to claim the credit, including the supplier's GST number on larger purchases.
• GST on deposits and progress billings follows specific timing rules. Generally GST is due when you invoice or when payment is due. Set up your deposit invoicing with your accountant so GST lands in the right period.
• Flipping is different. If you buy homes, substantially renovate them and sell them yourself, separate GST builder rules can apply to the sale. That's a conversation to have with your accountant before you start.

4Subcontractors, T5018 slips and WCB

If construction is your main business and you pay subcontractors for construction services, you generally need to file T5018 slips reporting what you paid each one. The easiest way to stay ready is to enter every sub as a supplier and pay them through bills, not random e-transfers. Our T5018 guide covers deadlines and thresholds.

Also watch the line between subcontractor and employee. Someone who works only for you, on your schedule, with your tools, may be an employee in CRA's eyes, which brings payroll deductions and T4s into play.

5Tools, trucks and year end

Trailers, tools and trucks are big purchases for most renovators. Larger equipment and vehicles are generally claimed over time through capital cost allowance rather than expensed, while some small tools can be written off faster. Record them to fixed asset accounts with the GST split out, and hold on to the invoices. Your accountant will sort the classes at year end.

6A bookkeeping setup that works

7Common renovation bookkeeping mistakes

• One big "materials" account. Without job tags you can't tell which jobs ate the overruns.
• Personal purchases on the business card. A weekend at the hardware store for your own deck isn't a job cost. Pay for those personally.
• Leftover materials. Extra stock carried from job to job should move with it, or the next job looks cheaper than it was.
• Treating every deposit as income. It inflates this year's profit and tax, then leaves next year short.
• No vehicle log. Your truck is usually your second-biggest cost. CRA expects a log to support the business-use percentage.

Plum does flat-fee bookkeeping for renovators and trades across Edmonton, St. Albert, Sherwood Park, Spruce Grove and Leduc, including job costing, GST and T5018s. Behind on your books after a busy season? We offer catch-up bookkeeping too. Book a call and bring your last few job quotes.

8Questions people ask

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This article is general information for Alberta businesses and isn't tax or legal advice. Rules and thresholds change, so confirm your situation with your accountant or CRA.