Accounting for Plumbers, Electricians and HVAC Contractors in BC
Mechanical and electrical trades juggle two very different kinds of work: quick service calls paid on the spot, and new-construction contracts billed in progress draws with holdbacks. Your books need to handle both without losing track of materials, labour or what the builder still owes.
EverStone CPA works online with trade contractors in every part of BC, at a fixed fee you see in writing before anything starts.
Quick answer: BC plumbers, electricians and HVAC contractors charge GST on their work but usually do not charge PST on installations. Instead they pay PST when buying materials they install into a building. If construction is your main business and you pay subtrades, you file T5018 slips. Job costing and holdback tracking keep the rest under control.
Trade contractors we serve
From a journeyman with one van to a contractor running several crews on multi-family projects, the core questions are the same. How much did this job really make, and where is the cash?
- Service plumbers and drain specialists doing residential calls
- Electrical contractors on new builds, renovations and tenant improvements
- HVAC, refrigeration and heat pump installers with maintenance plans
- Gas fitters and hydronic heating contractors
- Subtrades working for general contractors on commercial sites
- Newly licensed tradespeople leaving an employer to start out
Should a plumbing or electrical business incorporate?
Contractors often incorporate earlier than other small businesses, because of liability, builder expectations and the money needed for vans, tools and payroll.
Starting out unincorporated
Fine for a first year of service calls. Your trade income goes on the T2125, and you pay both halves of CPP on net earnings. Simple, but there is no way to keep profit at a lower rate.
Incorporated contractor
Profit retained in the company is taxed at the 11% combined small-business rate, up to the $500,000 business limit. It pays for the next van or carries payroll while a builder sits on your invoice.
Licensing comes with it
Electrical, gas and some mechanical work is licensed provincially, and the licence may be held by the business. Check with the regulator before you move the work into a new company.
Start with the incorporation calculator, then talk to us about incorporation advice. The new corporation setup checklist covers the first month.
Wage, dividends or both for a trade owner
Most trade owners are still on the tools part of the week. How you draw from the company affects personal tax, RRSP room and how a lender sees you.
Salary
Paid through payroll alongside your crew. The company deducts it, and you build CPP and RRSP room. Remittances are due on the CRA schedule.
Dividends
Paid from after-tax profit, often once the year-end numbers are in. Fewer filings, but dividends to a spouse who does not work in the business can be caught by the tax on split income.
Planned, not grabbed
Cash taken out without a plan becomes a shareholder loan. If it is still owing a year after year-end, it is generally taxed as income.
Use the salary vs dividends calculator and the shareholder loan tracker.
PST on installed materials, and GST on everything
GST is simple: register once taxable sales pass $30,000 in four consecutive calendar quarters, charge 5% on your work, and claim input tax credits on business purchases.
PST is the trap. When you supply and install pipe, wire, fixtures, panels or a furnace so that it becomes part of a building, you are generally the consumer of those materials. You pay 7% PST to your supplier and do not charge PST to your customer on the installation.
Some situations reverse that. Selling a water heater or a fixture to a customer without installing it is a retail sale, and PST is charged. Repairs to equipment that is not part of the building can be taxable too. We review your invoice templates and supplier accounts so each job carries the right tax. See the BC PST guide and our GST and PST filing.
Apprentices, subtrades and T5018 slips
Journeymen and apprentices
Employed trades are on payroll with CPP, EI and tax deducted. Apprentices leaving for school blocks need ROEs if their pay stops. Vacation pay starts at 4% and rises to 6% after five years.
Subtrades
A subcontractor running their own business invoices you, carries insurance and holds a WorkSafeBC account. Ask for a clearance letter before you pay, or you may inherit their premiums.
T5018 reporting
If construction is your principal activity, report payments to subcontractors on T5018 slips. They are due six months after the end of the reporting period, using calendar or fiscal year.
The T5018 subcontractor tracker helps through the year, and the T5018 guide explains the rules. Our payroll services handle the employed crew.
Job costing for service calls and contracts
Without job costing, a contractor sees only one profit number for the whole year. With it, you see which builders, which job types and which crews make money.
Service work
Flat-rate or time-and-materials calls are invoiced from your field service app. We reconcile its invoices and payments to the bank and track van stock used on each call.
Contract work
Materials, labour hours, rentals and subtrade invoices are coded to each job. Progress billings are compared to costs so overruns surface mid-project.
Maintenance plans
Annual HVAC or service plans paid up front are earned over the plan term. Recording them as deferred revenue keeps profit honest month to month.
Our monthly bookkeeping is set up for job costing. For a broader view, see construction and trades accounting.
Holdbacks, progress draws and rebates
On construction contracts, the general contractor holds back part of each progress payment until the project is complete. That money is earned but not yet received, and it is easy to lose.
We record holdbacks as a separate receivable for each job, with the expected release date. When a project closes, the list shows exactly what to chase. GST on a holdback is generally due when the holdback becomes payable, not when the draw is billed, so the timing matters on your returns.
Customer rebates on heat pumps or efficient equipment are sometimes paid to the contractor on the customer’s behalf. Record them against that customer’s invoice so revenue is not overstated. Read the holdbacks accounting guide and T5018, holdbacks and WorkSafeBC at year-end.
Service vans, tools and van stock
A stocked service van is a capital asset with inventory inside it. The van and its shelving go through CCA. Fittings, wire and parts carried for jobs are stock until used.
Larger tools such as pipe threaders, press tools, recovery machines and lifts are claimed through CCA. Small hand tools are often expensed. When vans go home with technicians, personal use can create a taxable benefit; a vehicle log and the vehicle benefit calculator help. See also equipment CCA classes.
Year-end checklist for a BC trade contractor
- List open jobs. Costs to date, amounts billed and percent complete for each.
- Schedule holdbacks. Every holdback owed to you, by builder and release date.
- Count stock. Shop and van inventory at year-end.
- Collect subtrade details. Names, business numbers and totals paid, for T5018.
- Get clearance letters. WorkSafeBC status for each subtrade paid in the year.
- Reconcile payroll. T4 totals against remittances and WorkSafeBC reported payroll.
- Review PST. Confirm installed materials were taxed on purchase and retail sales were charged.
- Note equipment. Vans and tools bought, sold or traded in.
Use or share this list: everstonecpa.com/accountant-for-plumbers-electricians-bc#year-end-checklist.
Fees for trade contractors
- Self-employed return for a one-van operator: commonly $250–$450
- Monthly bookkeeping with job costing and GST/PST filing: from $300 a month
- Trades-corporation bundle covering books, payroll and a year-end T2 with statements: usually $450–$650 a month
- Corporate T2 without monthly books: quoted after a free consultation
- Fractional CFO for larger contractors: from $2,500 a month
You approve a fixed, written fee before work begins. Full details are on pricing.
Questions from plumbers, electricians and HVAC owners
Do I charge PST on an installation?+
Do I need to file T5018 slips?+
When is GST due on a holdback?+
Are my apprentices employees?+
Written and reviewed by a Chartered Professional Accountant at EverStone CPA, an Abbotsford CPA firm working remotely with businesses across British Columbia. Updated . Trade owners can read what clients say before getting in touch.
Related reading
More for BC trade contractors.
Get in touch about your trade business
Service or construction, crew size, subtrades and your current software. The CPA replies within one business day with a fixed fee in writing.