Bookkeeper for Roofing Companies

How does money flow through a roofing company?

A roofing company gets paid in chunks, one job at a time, so revenue is job-sized, not steady. You get a contract, you buy the shingles, you put a crew or a sub on the roof, and the check shows up somewhere between a few days and a few months later, depending on whether the customer or the insurance carrier is paying.

Because of that, the books have to mark the type of job before anything else. Split the income into Roofing Revenue from Insurance and Roofing Revenue from Retail, and if you take commercial work, set up a separate commercial line as well. The margins on those three are different, and mixing them hides which part of the company is paying for the other parts (https://www.primeman.com/books, https://www.jobcost.com/right).

Keep in mind that the value of one job decides a lot of the structure. Practice reported in some markets puts a typical roof in the $35,000 to $45,000 range, meaning one missing invoice or one incorrectly booked cost hits the year instead of the monthly margin (https://www.reddit.com/r/Roofing/comments/1p…).

What does a roof actually cost?

A roof spends its money on materials first, and that is the main reason roofing margins come in below, say, an HVAC call. Shingles alone are the largest single cost, and on a typical roof materials run roughly 35 percent of the job, labor (paid crew and subs together) about 18 percent, and sales commissions around 6 to 10 percent. The job typically settles between 60 and 65 percent of the revenue before a single overhead cost is paid, so gross profit generally sits in a 35 to 40 percent band (https://www.profitpage.com/roofing-profit-margins/).

Then comes the operating part. Overhead without marketing at 12 to 15 percent of revenue is reasonable, and above 18 percent is a red flag. Marketing at 6 to 10 percent is common, and anything beyond roughly 12 percent signals that the lead prices are too high (https://www.profitpage.com/roofing-profit-margins/). Each of those needs its own line, or the amounts move between buckets at year end without anyone meaning it to.

The notable part of those ranges: gross profit stays roughly flat no matter how big you get. A $15 million shop still buys the same shingles; the change comes from healthier overhead or tighter marketing per dollar, not from the roof itself (https://www.profitpage.com/roofing-profit-margins/).

Which lines need their own line in the books?

A roof has several line items that have to be kept separate, and moving them around can hide the true economics of a job. Here are the balances that a roofing set of books keeps in separate bush.

• Shingles get their own account, and underlayment and accessories also get their own line. The single biggest material cost in the business is otherwise invisible at a glance (https://www.jobwork.com/bookkeeping-for-roofing).
• Subcontractor labor and employee labor have to live in separate lines. Mixed, you cannot securely report the job costs or file 1099 forms (https://www.jobwork.com/blog/bookkeeping-for-roofing).
• Insurance revenue and retail revenue stay in separate income lines, and commercial roofing goes out on its own (https://www.prophet.com/example-herding).
• Retainage is its own receivable asset, not ordinary accounts receivable. It is money you have already earned and are still waiting on.
• Depreciation holdback, the difference between cash value and replacement cost on insurance jobs, is a balance asset called something like Depreciation Holdback Receivable (https://www.jobcost.com/bookkeeping-for-roofers).
• Permits and roof teardown disposal are job costs, so they belong on the job, not in abstract overhead.

Cash or accrual?

Highly written, this is exactly the right question. For a roofing company that does more than about $1 million in revenue, the books usually need to be converted to accrual, and the reason is the timing of a check (https://www.jobcost.com/blog/bookkeeping-for-roofers).

Example the accountants use: a $60,000 insurance payment arrives in October, and the roof was perfectly different, the shingles came in September, the subcontractor showed it in late October, and the permit fee is still owed at the end of the month. On a cash basis, October looks like $60,000 of profit. The actual job margin on that roof is about $18,000 (https://www.jobcost.com/blog/bookkeeping-for-roofers).

So as a result, the P&L matches the job, not the checking account. That is the best accrual result. At under half a million in top revenue you can keep cash, but the match is exact: banks and bonding companies, and often your accountant when you cross over $1 million, want accrual. The only way is that switching from cash at the point where a single insurance job can send the whole year off isn't worth it (https://www.jobcost.com/blog/bookkeeping-for-roofers).

Where do roofing books go wrong?

Four mistakes put the roofing company at risk. You can see them in the P&L if you know where they are.

• Owner pay just, buried in the cost of goods sold. Owner compensation is not the kind of job owners cost. If it sits in COGS your gross margin stays low by design (https://www.profitpage.com/roofing-profit-margins/).
• Every job isn’t job-numbered. If materials, labor, permits, and dumpster haul are often destroyed, the store-level profitability that matters is not stained at the owner.
• Sales commissions booked into overhead. When a commission drives the cost of getting a job, it has to separate appointments to the job margin. On once-clear basis, you can't see the cost of the job closes.
• Running on cash basis gravity. As long as the entry habit says cash, your month-close puts the flow of money right on top of every job at the wrong time, and any change in the timing makes the books look wrong (https://www.jobcost.com/blog/bookkeeping-for-roofers).

All four mistakes produce the same symptom: a P&L that shows a company in the midpoint of industry margins, while the owner lacks the job-by-job data to know which work to pursue. The fix is month-end data, not a stronger incentive.

What should you review each month?

It comes down to four signals, and not many of them: gross margin by job type, net margin, overhead in line, and a question that matters the day you sell. We want to begin the month by asking, which did we actually get paid?

Look first at how the gross margin changes per job type: insurance, customer, commercial. When one line sits at 35 to 40 percent and the other at 25, that line is the one to adjust your pricing or negotiate your material spend (https://www.jobcost.com/blog/bookkeeping-for-roofers).

Second, watch the operating overhead line: 12 to 15 percent is your benefit target, and a few spikes above 18 drop a year of predictable profit. Third, marketing as its own guessed: compare what it actually takes to keep the schedule full (https://www.profitpage.com/roofing-profit-margins/).

A fourth number matters when you want to sell or bring outside capital. A buyer takes it over the top question: what happens to revenue when the owner steps back? Where the revenue is dependent on the owner, the exit multiple goes down (https://profitpage.com/sell-roofing-business/, https://entry.com/10-key-factors-in-evaluating-your-roofing-business/) and do a great job at that point. Many roofing companies make the transition to the accrual basis at that point, because the job closes.

By getting these four anywhere on the month you will be able to tell a disposable mechanical job from a valuable one, and even without a clean culture, the underlying question: is the change worth it? We do the hard work of reporting with the job detail, not just a plausible total.