Flooring bookkeeping: material, freight and installers

Flooring businesses come in a few shapes — a showroom that sells and installs, an installation contractor working for homeowners, a crew doing builder and commercial work — and most do some of each. What they share is that material is a large share of every job, and the margin is decided in a handful of places that general bookkeeping does not look at: overage, freight, returns, and how installers are paid.

Material per job, including what was left over

Every job orders more material than the floor needs, for cuts, waste and pattern matching. That is normal. What matters is whether the overage is consistent and whether it is priced in.

For each job the books should show material ordered, material returned, and material left over — the boxes that go home with the customer as attic stock or come back to your warehouse. Leftover stock in the warehouse is inventory until it is used on another job or written off; ignoring it makes one job look worse and a later job look better than either was.

A job where material cost ran well above the usual overage points to a measuring error, a mis-cut, or damaged product — all worth knowing about, and only visible if material is coded to the job.

Freight and returns

Freight on special-order material arrives on its own invoice, often after the job. Code it to the job it served. Restocking fees on returns are a real cost, and so is the time spent handling them.

Returns are also where money quietly goes missing: a return credited to your supplier account but never applied back to the job, or a credit that expires unused. Reconcile supplier statements monthly and match every credit to its job. See supplier terms and early-pay discounts.

Installers paid by the square foot

Many flooring installers are paid per square foot or per job, often as subcontractors. That makes installation cost predictable per job, which is useful. It also brings two obligations:

• Classification. An installer who works only for you, on your schedule, with your tools, may be an employee whatever the paperwork says. The tests are about control and independence — see 1099 or W-2.
• Paperwork. A W-9 before the first payment, a current insurance certificate, and payments tracked by installer for the 1099 run. See who needs a 1099.

Track installation cost per square foot by product type — carpet, LVP, tile, hardwood — and compare it with what you charge. Some product types are consistently under-priced for the labor they take, and the books are the only place that shows it.

Subfloor prep and surprises

Uneven subfloors, moisture problems, rotted sections, old adhesive that will not come up. These are some of the most common reasons a flooring job loses money, and they are billable when they are documented and approved before the work. Treat them as change orders — see change orders and getting paid — and track how often they happen by job type so estimates start allowing for them.

Retail, builder and commercial are different businesses

Retail and homeowner work usually takes a deposit and pays at completion. Builder work brings volume, thinner margins and slower payment. Commercial work adds pay applications, retainage and lien waivers. Separate them with classes or income accounts so you can see which is carrying the company. See retainage explained if commercial work is part of your mix.

Deposits and sales tax

Deposits are a liability until the floor is installed — see deposits and progress billing. And because flooring businesses often both sell material and install it, sales tax is easy to get wrong: whether you are treated as a retailer or as a contractor consuming materials can depend on your state and on how the sale is structured. Worth confirming for your state. See sales tax for contractors.

Callbacks

Gaps, cupping, cracked tile, adhesive failures. Return visits belong to the original job. Tracked that way, they show which products, subfloors or installers produce the most callbacks. See what callbacks are really costing you.

Related

• Construction bookkeeping, step by step
• Bookkeeping for remodelers
• The job profit calculator

General information, not tax or legal advice. Sales tax treatment and worker classification rules vary by state.