Why Trades and Construction Bookkeeping Is Different
Trades and construction businesses have more complex bookkeeping needs than a typical retail or professional services firm. The core differences:
- Job costing — every expense and every dollar of revenue needs to be tracked against a specific job, not just the business overall
- Progress claims — revenue is invoiced in stages against a contract, not at point of sale
- Retentions — principals hold back 5–10% of contract value until defects liability period ends — this is invoiced but not yet collectable
- Subcontractor management — multiple subcontractors per job, PAYG withholding for non-GST-registered contractors, and accurate job cost allocation
- Mixed GST supplies — some construction services (new residential) are GST-free; others are fully taxable. Incorrect coding creates BAS errors
- Cash flow volatility — large gaps between invoice and payment create cash flow management challenges
None of these require physical presence. They require a bookkeeper who understands Australian construction accounting — which a specialist Indian CA firm provides.
Job Costing — How It Works Remotely
Xero and MYOB both have built-in project or job tracking. Your Indian bookkeeper uses these to:
- Set up a job/project for each new contract with the contract value, start date, and expected completion
- Code every supplier invoice, materials purchase, and subcontractor payment to the correct job
- Track labour costs against each job (from your payroll or time records you provide)
- Generate a job profit and loss report at any time — showing revenue claimed vs costs incurred vs contract value remaining
- Flag jobs where costs are tracking above budget before they blow out
You receive a monthly job profitability report as part of your standard bookkeeping package — giving you the visibility to quote more accurately on future jobs.
Progress Claims and Retentions
| Task | What Your Indian Bookkeeper Does |
|---|---|
| Progress claim invoicing | Creates invoice in Xero/MYOB for each claim stage, coded to the job, with cumulative amounts tracked against contract total |
| Retention tracking | Records retention held by principal as a separate receivable balance — invoiced but collected later |
| Retention release alerts | Flags upcoming defects liability end dates so you can issue retention release claims on time |
| Variation tracking | Records approved variations as amendments to the original contract value in the job file |
| Disputed amounts | Holds disputed amounts in a separate GL account pending resolution — keeps your revenue figures clean |
Subcontractor Payments and PAYG Withholding
Australian construction businesses that pay subcontractors must apply PAYG withholding if the subcontractor either:
- Does not quote an ABN, or
- Quotes an ABN but is not registered for GST (where payment exceeds $75/day)
Your Indian bookkeeper checks each subcontractor invoice for ABN and GST registration status (via ABN Lookup), withholds the correct PAYG amount where required, reports it on your BAS, and pays it to the ATO. This is a common compliance failure for trades businesses doing it manually — and a straightforward process when managed systematically in Xero or MYOB.
GST on Construction Services — Mixed Supplies
GST treatment in construction is not always 10% across the board. Your Indian bookkeeper must understand:
| Supply Type | GST Treatment | Example |
|---|---|---|
| Commercial construction | Taxable (10% GST) | Office fitout, retail build |
| New residential — first supply | Taxable (10% GST) | New house sold by developer |
| New residential — margin scheme | Taxable (margin scheme) | Subdivided land sale |
| Existing residential renovation | Taxable (10% GST) | Bathroom reno on existing home |
| Long-term residential lease | Input taxed | Residential rental property |
Incorrect GST coding on construction invoices creates BAS errors and ATO audit exposure. At Sharma Jyoti and Co, we confirm GST treatment for your specific contract types at onboarding and code consistently from there.
What Trades Businesses Typically Delegate vs Keep
- ☑ Supplier invoice entry and job cost coding (materials, plant hire, subcontractors)
- ☑ Progress claim invoice creation and tracking
- ☑ Bank reconciliation and accounts payable management
- ☑ Subcontractor PAYG withholding checks and BAS coding
- ☑ Payroll for employees — PAYG, super, STP, Payday Super
- ☑ Monthly job profitability reports
- ☑ Quarterly BAS preparation (you review and approve)
- ☑ Cash flow forecasting against upcoming progress claim receipts
- ✗ Contract review and variation approval
- ✗ Security of Payment Act claims and adjudication
- ✗ Tax planning and depreciation strategy
- ✗ Annual tax return lodgement
Cost for Australian Trades and Construction Businesses
| Business Type | Indian Firm (monthly) | Local Bookkeeper (monthly) | Annual Saving |
|---|---|---|---|
| Sole trader tradesperson | A$300–A$450 | A$900–A$1,400 | A$7,200–A$11,400 |
| Small builder / contractor (2–5 staff) | A$450–A$750 | A$1,400–A$2,500 | A$11,400–A$21,000 |
| Medium construction firm (5–15 staff) | A$750–A$1,400 | A$2,500–A$4,500 | A$21,000–A$37,200 |
See our Australia bookkeeping service page for full scope details, or contact us for a quote based on your job count and employee numbers.
Written by Sharma Jyoti, CA (ICAI). We provide outsourced bookkeeping for Australian trades businesses including plumbers, electricians, builders, and construction contractors — job costing, progress claims, and BAS via Xero and MYOB. Get a trades-specific quote →
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