Accountant for Penticton construction contractors

For an incorporated contractor, the typical bundle of bookkeeping, payroll and the year-end T2 with statements usually runs $450–$650 a month. That covers job costing, the T5018 return, GST and PST filings, the CCA schedule and the small business deduction.

T5018 slips for the subtrades you pay

If construction is your main business and you pay subcontractors for construction services, you report those payments on T5018 slips. The return is due six months after the end of the reporting period, which can be your fiscal year or the calendar year. Each slip needs the subcontractor’s legal name, address and business number.

Collecting those details when a sub starts is easy. Chasing them a year later, after the framer has moved to Kelowna, is not. A sub who is paid only for materials, or a supplier who delivers but does not install, generally does not need a slip, and the distinction is worth settling with each vendor at the start. T5018 reporting sets out who is included, and the T5018 tracker helps keep the list current.

PST on materials you install

In BC, a contractor who supplies and installs materials into real property is usually the consumer of those materials. That means paying 7% PST when buying the lumber, drywall, fixtures and windows, rather than charging PST to the homeowner. The contract price then carries GST only. Contractors who also sell goods without installing them, such as appliances or supplies, may need to collect PST on those sales. Mixed jobs need the contract wording and the invoice to match. The BC PST guide explains the contractor rules.

The same logic reaches your own purchases. PST paid on tools, a new truck, safety gear and the software you quote with is a cost, not a credit, so it is added to the price of the asset or the expense. Only the GST portion comes back. Suppliers in Penticton and Kelowna will charge both taxes at the till, and the bookkeeping has to split them on every receipt.

GST is due on the invoice, not the payment

GST on a progress claim is generally owed when the claim is issued or payment is due, not when the owner finally pays. A large claim issued in March puts GST on the March return even if the cheque arrives in May. GST paid on materials, tools and fuel comes back as input tax credits. Holdbacks have their own timing: GST on a holdback is usually payable when the holdback becomes due. Input tax credits covers what can be claimed.

Holdbacks on both sides of the ledger

Under BC’s builders lien rules, an owner or general contractor holds back part of each payment until the lien period passes. For a subcontractor, that is money earned but not yet received, recorded as a receivable. For a general contractor, it is money owed to subs, recorded as a payable. Both need tracking by job, because they are released on different dates. Forgetting a holdback receivable is one of the commonest ways a profitable year looks thinner than it was. Construction holdbacks walks through the entries.

WorkSafeBC and the clearance letter

Employers in construction register with WorkSafeBC and pay premiums on assessable payroll at their industry rate. Before paying a subcontractor, request a clearance letter confirming their account is in good standing. If the sub is not registered or is behind, the premiums on that work can become yours. Keep the letters with the job file. An owner-operator with no employees may want personal optional protection, which is a separate choice. WorkSafeBC registration covers who must register.

A building season, and a slower winter

Excavation and framing run hardest from spring through fall. Interior work and renovations carry on in winter, but most South Okanagan builders see a dip. Cash follows the same curve, with the added delay of progress claims and holdbacks. We plan for it by setting aside GST and source deductions as they are collected, sizing instalments to the actual year, and choosing a year-end that falls when work in progress is easiest to measure. Payroll in Penticton covers the seasonal crew.

Job costing, or a year you cannot explain

A contractor can be busy all season and still not know which jobs made money. Job costing assigns labour, materials, subtrades and equipment time to each project, so the margin on a fixed-price renovation is known when it finishes, not at year-end. It also makes progress billing on a percentage-of-completion basis possible. For a job that runs across your year-end, the work completed but not yet billed, and the deposits taken for work not yet done, both need to be measured, so the income lands in the right year. Trucks, trailers, a mini-excavator and tools go on the CCA schedule. Equipment CCA classes lists the common rates.

When most of your work comes from one builder

A tradesperson who incorporates and then works almost entirely for one general contractor, on that contractor’s schedule and with its tools, may be running a personal services business in the CRA’s eyes. That loses the small business deduction and limits expenses. Several customers, your own equipment and the ability to profit or lose on a job all point the other way. The PSB risk assessment walks through the tests.

Fully virtual, based in Abbotsford

EverStone is a one-CPA firm in Abbotsford working with Penticton contractors remotely. There is no Penticton office. Receipts are photographed on site and sent through a secure upload link, questions are answered by email, and returns are signed electronically. The same CPA keeps your file all year, so the holdbacks recorded in June are still there at year-end.