How T5018 works, and the other three numbers contractors get wrong

Your P&L says the year was fine. It does not say which jobs carried it and which ones quietly lost money. Construction accounting has four places where the books drift from reality, and a contractor who gets all four right can price, bid and bill with real numbers. Here they are, starting with the one that has a government form attached.

1. T5018: reporting what you paid subcontractors

If construction is your primary business activity, you must report payments to subcontractors annually on a T5018 information return. It is not a tax you pay; it is a report of what you paid to whom. The practical problem is that it is assembled from a year of payments, and if subcontractor payments were coded loosely through the year, the return becomes a reconstruction.

We track subcontractor payments through the year, so the T5018 is prepared from records that already exist rather than rebuilt in the spring. Subcontractor management is part of the monthly work, not a year-end event.

2. Holdbacks and HST timing

Holdbacks distort the numbers in two directions. Holdback receivable is money you have earned but cannot yet collect; holdback payable is money you owe subs but have not released. If neither is tracked, both revenue and cost are wrong by the holdback percentage on every active job.

HST adds a second layer. Holdback timing affects when HST becomes collectible. We set your billing and filing process so it lines up correctly, and we track holdback receivable and payable so revenue lands in the right period and your lender sees a clean picture.

3. Work in progress

A WIP schedule is what turns a list of invoices into project profit. Progress billing rarely matches work performed in any given month, so without WIP, a job looks wildly profitable in the month you bill and loss-making in the months you do the work. We maintain a WIP schedule alongside project-level P&L so you can see project profit while the project is still running, not months after it closed.

This is also what bonding companies and lenders ask for. Lender and bonding reporting is built from the same job-level data, so there is one set of numbers, not a management version and a bank version.

4. Employee versus subcontractor

How you pay your crews is both a cost question and an exposure question. We review how you pay your crews, handle T5018 reporting, and flag classification risk before CRA does. Payroll for field and office staff, WSIB accounting support and subcontractor management sit together in the construction books precisely because the line between them is where the risk lives.

Then: cost per job

Bids based on gut feel are the symptom all four problems produce. We report actual labour, material, sub and equipment cost per job so your next bid uses your real cost structure, not last year's assumption. Setting this up in QuickBooks Online or Xero means building a cost-code structure that fits how you actually run jobs, then keeping it clean month to month so the reports stay usable. A cost-code list nobody follows is worse than none.

What a construction engagement covers

• Job costing and cost codes, project-level P&L and progress billing.
• Holdbacks and releases, WIP schedules.
• Subcontractor management and T5018, payroll for field and office staff, WSIB accounting support.
• HST on construction contracts, equipment and vehicle accounting.
• Accounts payable and receivable, cash flow forecasting across projects.
• Lender and bonding reporting, and development accounting for builders who also develop.

Equipment, vehicles and cash across projects

Two more lines belong in the construction books. Equipment and vehicle accounting puts the cost of owning and running machinery against the jobs that use it, so an excavator that sits idle shows up in the numbers. Cash flow forecasting across projects takes progress billing, holdback releases and subcontractor payment terms and turns them into a month-by-month cash position, which is the number that decides whether you can take the next job before the last one pays.

If you already have an accountant

We request prior-year files and CRA access, review what was filed and flag anything that needs correcting before we take over. For contractors that review starts with how subcontractors were coded, whether holdbacks were tracked, and whether a WIP schedule exists at all.

Home services and trades

HVAC, plumbing, electrical, landscaping and auto repair businesses face a smaller version of the same problem: vans, crews and materials eat margin you never see itemised. The fix is the same shape, cost per job and per crew, with callbacks tracked as rework cost so quality problems show up as a monthly number.

What it costs

Monthly accounting starts from CAD 299 per month and is priced on transaction volume, payroll, entities and complexity. Contractors with crews and multiple accounts typically land in the Business or Growth plans, where AP and AR management, a monthly management reporting pack and budget versus actual variance reporting are included. We confirm an exact fixed price in writing after a short review. The Accounting Doc does not provide audit or assurance engagements.