Accountant for Windsor contractors

The 10% holdback, on both sides of the ledger

Ontario’s Construction Act requires the payer on a construction contract to hold back 10% of each payment until the lien period has passed. A Windsor general contractor sits in the middle: its client holds back 10% of what it bills, and it holds back 10% of what it pays its subcontractors. Both amounts belong in the books, as holdback receivable and holdback payable, and both have to be released when the time comes. A ledger that records only the cash received shows a job as less profitable than it was and loses track of money still owed to the business. We record holdbacks by job and follow up releases, so a completed project does not leave a tenth of its value forgotten. Construction holdback accounting covers the entries.

The Act also sets prompt payment rules: once a proper invoice is given, the owner and each contractor down the chain have set periods to pay or to give notice of non-payment. Those rules only help a contractor whose invoices are dated, addressed and supported properly, and whose books show which invoice is late on which job. We keep receivables aged by project so a late draw is visible the week it becomes late, not at year-end.

Progress billing and work in progress

Most contracts of any size are billed in draws against a schedule of values or a percentage complete. HST at 13% is generally payable on each progress billing when it is invoiced or payable, so the HST return follows the invoices rather than the cash. The holdback portion is the exception: tax on it generally becomes payable when the holdback is paid or falls due, so it is tracked separately. At year-end, a job part-finished has costs sitting against revenue that has not all been billed, or billings ahead of the work done. Those differences are recorded as work in progress or deferred revenue so the year’s profit reflects the work actually performed. We set a consistent method by job, which also shows which jobs are over or under their estimate while there is still time to act.

T5018 slips for subcontractor payments

A business whose main activity is construction reports payments to subcontractors for construction services on T5018 slips and a summary. They are due six months after the end of the reporting period, which can be the calendar year or the fiscal year, chosen once and kept. The slip needs each subcontractor’s legal name, address and business number, which is much easier to collect before the first cheque than after the last. We tag subcontractor payments in the books as they are made, so the slips come straight from the ledger. The T5018 tracker helps collect the details, and T5018 reporting explains who must file.

WSIB and clearance certificates

WSIB coverage is compulsory for most construction work in Ontario, and it is separate from the CRA with its own registration, rate groups and premium reporting. Before paying a subcontractor, a Windsor contractor should hold a current clearance certificate showing the subcontractor’s WSIB account is in good standing; without one, the contractor can be held liable for the subcontractor’s unpaid premiums. Independent operators and executive officers have their own rules on whether they need coverage. We reconcile WSIB insurable earnings to payroll each period and keep a clearance record for every subcontractor on file, so the question has an answer when a general contractor or an auditor asks.

Subcontractor or employee

Construction relies on subcontractors, and the CRA looks closely at whether someone called a subcontractor is really an employee. A worker who uses the contractor’s tools, works the contractor’s hours under its direction and cannot make or lose money on the job is usually an employee, whatever the invoice says. A wrong call means CPP, EI and income tax that should have been withheld, assessed on the contractor. We review how your crews are engaged and set up payroll for those who are employees. Subcontractor or employee sets out the test.

Trucks, equipment and the winter slowdown

Pickups, dump trucks, excavators, skid steers and trailers are deducted through capital cost allowance by class, with the half-year rule generally halving the first-year claim and recapture arising when a unit is traded for more than its remaining cost. Vehicles used partly for personal driving need a log; vehicle deductions explains what it has to show. Essex County has milder winters than much of Ontario, but outdoor work still slows when the ground freezes, and a year’s cash is often made from spring to fall. Monthly books with holdbacks and receivables aged by job show whether the winter is covered. Managing cash in a seasonal business goes further.

Crews, payroll and what it costs

Construction payroll brings source deductions to the CRA, Ontario Employer Health Tax once payroll passes the exemption, WSIB premiums and records of employment each time a crew is laid off. The typical trades-corporation bundle of bookkeeping, payroll and a year-end T2 with statements is usually $450 to $650 a month, fixed in writing after a free consultation. Monthly bookkeeping on its own starts at $300 a month with HST filing included. Payroll services in Windsor and Windsor bookkeeping describe the recurring work, and the pricing page lists every fee.

Remote accounting for contractors from Abbotsford

EverStone is a one-CPA firm in Abbotsford, British Columbia, serving Windsor contractors remotely. There is no Windsor office and no local staff. Invoices, draws and subcontractor details come in through a secure upload link, calls happen after the site closes if that suits, and nobody has to leave a job to meet an accountant.