Best accounting software for contractors: an honest answer

The honest answer for most small and mid-sized contractors is QuickBooks Online — and not because it is the best accounting software ever written.

It is because almost everyone you will ever hand your books to already knows it. Your CPA, most bookkeepers, lenders, the field service app you dispatch from, the payroll provider, the project management tool your office uses. For a contractor, the software that connects to everything else is worth more than the software with the best features on its own.

That is the default. Here is when it is the wrong answer, and what to look for either way.

What actually matters for a contractor

Software comparisons tend to list features. For a contracting business, six things matter, roughly in this order:

1. Job or project tracking. Revenue and costs attached to individual jobs, with a report that shows profit per job. This is the whole reason contractor books differ from anyone else's. See job costing for contractors.
2. Class or division tracking. Service versus install, residential versus commercial, one crew versus another.
3. Connections to the tools you already use. Field service software, payroll, your bank and cards, your supplier's portal. See connecting ServiceTitan, Housecall Pro or Jobber to QuickBooks.
4. Progress invoicing. Billing a job in stages against a contract, rather than one invoice at the end.
5. Accountant access. Your CPA and bookkeeper able to log in with their own credentials, rather than you sharing a password.
6. Bank feeds that work. Transactions arriving automatically and reliably from every account.

QuickBooks Online

The default for good reason: the widest set of integrations, the largest pool of people who know it, and the features above are all available.

The catch is the tier. Job-level features such as projects and class tracking have historically sat in the higher plans, not the entry-level one. Contractors regularly buy the cheapest plan and discover a year later that it cannot produce the job reports they needed. Check what the plan you are buying includes before you set up the file, not after — migrating tiers is easy, but a year of transactions coded without jobs is not.

QuickBooks Desktop

Many established contractors still run Desktop, sometimes the Contractor edition, and it does job costing well. But Intuit has been moving customers from Desktop to Online for several years and has stopped selling most Desktop editions to new US subscribers, with the larger Enterprise edition the main exception at the time of writing.

If you are starting fresh, Desktop is not a realistic choice. If you already run it and it works, there is no need to panic — but plan a move on your own schedule rather than waiting to be forced into one at an awkward time of year.

Xero

Xero is good software, and many accountants prefer its design. For US contractors the practical drawbacks are fewer contractor-specific integrations than QuickBooks has, and a smaller pool of US bookkeepers and CPAs who work in it daily. If your CPA uses Xero and your other tools connect to it, it is a perfectly sound choice. If you would be the only Xero user in your circle, it adds friction without adding much.

Construction-specific accounting software

There is a category of software built specifically for construction — Sage 100 Contractor, Foundation, Viewpoint and similar. These handle things general accounting software does poorly: WIP schedules, AIA-style pay applications, certified payroll, union payroll, equipment costing, committed costs against subcontracts.

They are also considerably more expensive and more complex to run, and they typically need someone trained to operate them.

You probably need one when you are running a meaningful number of long commercial jobs at once, you are producing WIP schedules and certified payroll reports every month in spreadsheets, and the spreadsheets have become a job in themselves. Until then, QuickBooks with a well-built setup and good reporting will serve most contractors better.

Project management tools that sync to accounting

Tools such as Buildertrend and JobTread for residential builders and remodelers, or Procore on larger commercial work, handle estimating, scheduling, change orders and client communication, and sync financial data to your accounting software. They are not accounting systems themselves.

They are genuinely useful. They also create the most common mess we see: the same bill entered in both systems, or a sync that pushes data one way while someone edits it in the other. Decide which system is the source of truth for each kind of transaction — invoices, bills, payments — and make sure everyone knows.

Software does not do the bookkeeping

Every product above will produce a professional-looking report from badly coded transactions. The software determines what is possible; what the books actually say depends on the coding, the reconciliation and the monthly review. Plenty of contractors pay for the premium tier and use none of its job features. See seven QuickBooks mistakes contractors make and do I need a bookkeeper if I have QuickBooks.

When to switch

If you are changing systems, switch at the start of a fiscal year where you can. Migrate opening balances and open items — unpaid invoices, unpaid bills, retainage, deposits — rather than trying to bring over every historical transaction. Keep read-only access to the old system for as long as your CPA advises keeping records.

And do not switch in the middle of tax season, however frustrated you are in February.

Related

• Construction bookkeeping, step by step
• The chart of accounts a contractor needs
• WIP schedules for contractors

General information. Software features, plans and availability change — confirm current details with the vendor before you buy. We are not affiliated with any product mentioned.