Bookkeeper for Plumbers

Why do I want separate lines for service and install?

You want that split because the two kinds of work have different margins, and one line hides both. A forty-minute emergency call and a three-week repipe land in the same bank account. If they share a revenue line, you cannot tell whether the high-margin calls are paying for an install that loses money on paper.

The industry standard chart of accounts separates service and repair from installation and replacement work, and the reason is that the margins and the cost structure are not the same. If you do commercial work as well as residential, keep those separate too, because commercial runs on different volume and different payment terms. (Source: Waterford Business Solutions)

The recurring line comes next on its own row. When a customer signs a service agreement you have a fixed check that arrives without a call ryou expecting it. That base is what protects you from the slow weeks, so watch it as its own revenue line and you can see how much of your income is guaranteed rather than hoped for. (Source: Housecall Pro)

Emergency calls carry their own premium. A call at two in the morning does not wait for a bid, and the price you charge for it shows the r&&echo separate. Leave a label on those tickets so the report can tell you what the stress work actually paid. (Source: Profitability Partners)

What does a full job cost sheet include?

It lists the materials at the item level, the labor with the burden, and the truck time, and it puts all three against the same job number.

On a service call the invoice shows a new water heater and the labor. The job sheet should show the materials separated from the labor, and it should show the full cost of the person you send. Labor burden matters here, so workers comp, health insurance, and payroll tax all sit on the same hour. When you only count the wage at $25 an hour, you're missing the $8 to $10 on top that makes the actual cost.

Travel sits on the row too. The drive to the supply house and the service call itself are not free, and they get recorded on the work the boss assigned, not lumped into a branch of general truck cost. If you rent equipment or pull a permit for a job, that goes on the sheet as well. Those items are classified as direct job costs in the trade standard, alongside the credit card processing fees on the job you charge them to. (Source: Waterford Business Solutions)

When the job looks more expensive than the bid, the sheet is the only place it shows up. When the job comes in under estimate, the sheet shows that as well. There is nothing else that is comparable.

What are the costs that hide on a plumbing P&L?

Three things leave the books clean while the checking account goes thin: the owner draw, the truck payment, and the way truck stock is treated.

The owner's regular number (that's you) is drawn out of the business account, and by accounting rules a draw is not an expense; it moves equity. So the profit and loss can show a very healthy month while your personal cash is draining. Same for the two $600 truck payments on the same account. Those are real operating costs, but nothing in the P&L records them as such. Set them on their own lines, the draw as a draw and the truck below operating expenses, so the P&L tells you the truth about the normal month. (Source: plumbbooks.net)

Truck stock is the second blind spot. The parts that live in the rack at the back of each van are real money that sits idle and can get stolen. Almost no plumbing chart of accounts records it, but treating it as inventory a couple of times a year gives you a number for how much working capital is parked in the van. When you have a half dozen tubs of fittings and the same valves on the shelf, the count is the only report that flags it. (Source: Stephanie's Bookkeeping Guide, as cited in the research)

Equipment over a thousand dollars, a water heater, a compressor, the specialized drain machine, belongs on the balance sheet as a fixed asset, not in the expense column of the year you replace it. That spreads the cost over the years the op works, and the fleet of vehicles is the biggest version of the same bookkeeping problem. The depreciation treatment on the vehicles is the part of the books where a plumber's accountant does the most correcting when they take the client on. (Source: Waterford Business Solutions)

How do the books hold up through a slow month?

The books show the revenue you earned in a month, not the money that has landed in the bank, and that is the difference between knowing what you made and feeling broke.

If you only count the income when the deposit lands, January of the season you will look broke even though it's January. June mailed out a large invoice and the customer holds it. Accrual accounting means you record the job in the month you finish it, whether they paid or not, and that shows you what the business has actually earned. It is not something exotic. It is the report that shows the work is done.

The forecast question is the one that matters. If you can see the invoices still unpaid after 60 or 90 days, you know the payment to pressing on before the shortage hits the payroll. Cash flow is the main concern the owner cites: customers who pay late, the winter slump, and the sudden equipment bill. A rolling list of open invoices gives the warning that a bank statement can't.

The service agreements do most of the smoothing. A quarterly check from the same six customers that renews on the same date buys security that emergency calls do not. When we start a set of books for a plumbing, the first thing we build is the line for those agreements, so the recurring payment is the first thing the report shows.

What do I track when the crew is 1099 subs?

Each sub contractor gets a named labor account, and every payment to them carries the job number that it came from.

Plumbing often runs part of the crew as independent contractors, because a permit gas line or a specialized install doesn't justify a full time employee. The sub's work is not the same labor bucket as your employee wages. In the books, it goes on a separate cost account so the cost of the job is honest, and the payment to the sub stays trace. The sub itself is a tax number that an accountant tracks, not something the bookkeeping creates.

The field service software does the linking. When the software and the books talk to the same ticket, the materials, the sub invoice, and the job number sit on the same line and you can see the full cost of the job in one place. When they do not sync, the same job can be costed twice or not at all. The owner common question in this trade is how the software and the bookkeeping connect; the bookkeeping is there to make the connector accurate. The bottom line: track the week. If a sub also handles the weekend calls, the monthly account tells you exactly which part of the business the visits.

Which reports tell me what to do next?

Two of them: the P&L by service type that shows the margin per job, and the aged receivables that show what the customer above.

The job cost report by service line is the one that tells you whether to grow a service or drop it. When repair jobs sit next to replacements in the same row, the top line can look full while one of the two is dragging the whole company down. A clean report separates the margins. Some service lines have great gross margin but burn you hours; the overview shows that on one page. Take the decision to hire a technician or buy a new dump truck, and the job cost per soldier makes that decision, because you can see whether the new capacity will actually earn the overhead.

The second report is the unpaid invoice list. It answers whether you are earning or just not collecting. A job that is profitable in the P&L and sits unpaid for half the year is not harmless. It is a cash flow risk that no bank account figure shows.

So when we review a plumbing account every month, we rebuild both of the two: the margins by the way the work really falls, and the customers who have not paid it past the term. That is what the books do that the bank feed does not.