Contractor Bookkeeping in Ontario: Job Costing Basics That Prevent Tax Surprises

If you're a contractor in Ontario, your numbers can look “fine” in the bank account and still be wrong on paper. The most common reason: no job costing. Without job costing, you don't know which jobs are profitable, you miss expenses, and tax time becomes a scramble.

This post explains a simple job costing system contractors can use to keep bookkeeping clean, stay CRA-ready, and avoid surprises.

What is job costing (plain English)?

Job costing means tracking income and expenses per job/project, not just “for the month.”

So instead of only knowing “I made $25,000 this month,” you know:

• Job A profit
• Job B profit
• Job C profit

…and which job is quietly losing money.

Who this applies to

Ontario contractors and trades businesses, including:

• general contractors
• renovation companies
• electricians, plumbers, HVAC
• landscaping, fencing, roofing
• subcontractors who invoice clients directly

The minimum job costing setup (simple and fast)

You only need 4 fields to start:

1. Job name / Job code (example: “Smith Kitchen Reno”)
2. Income (invoices paid for that job)
3. Direct costs (materials, subcontractors, permits)
4. Labour (your labour estimate or payroll cost if you run payroll)

If you do nothing else, do this. It instantly improves clarity.

What to track weekly (contractor checklist)

Once a week (15–20 minutes), update:

• Invoices issued + paid (by job)
• Materials purchased (attach receipts, note which job)
• Subcontractor invoices (who, what job, how paid)
• Fuel + vehicle costs (keep receipts; track business use)
• Tools/equipment purchases (note which job)
• Permits/inspection fees (note which job)

This weekly routine prevents the “year-end clean-up nightmare.”

The 5 contractor expense categories CRA questions most

To stay CRA-ready, keep clean support for:

• Materials (supplier invoices matter)
• Subcontractors (names, invoices, proof of payment)
• Vehicle (mileage log + receipts)
• Tools/equipment (what it's for + invoice)
• Meals (business purpose + detailed receipt)

If receipts are missing or unclear, claims get weak fast.

Common contractor bookkeeping mistakes (Ontario)

• Buying materials and not assigning them to a job
• Mixing personal and business spending
• Paying subcontractors without clear invoices (creates T4A confusion later)
• No mileage log (vehicle claims become risky)
• Tracking “cash jobs” loosely (CRA risk increases)
• Waiting until HST/T2 deadlines to reconcile accounts

Simple job costing example (so it clicks)

Now you can compare jobs and spot problems early.

FAQs