Monthly Close Checklist for Contractors (The Control System Most People Skip)
Contractor Pain Point
It’s the 10th of the month. Payroll already hit. Vendors are calling.
You pull reports, but something feels off.
Cash doesn’t match the bank. Job costs look incomplete. Last month’s numbers keep changing.
This isn’t a bookkeeping failure.
It’s a missing monthly close discipline, and specifically, skipping bank reconciliation.
Without reconciling the bank first, every report that follows is built on guesses.
Why This Happens (It’s a Systems Problem)
Contractors operate weekly. Accounting systems operate monthly.
When there’s no defined close:
Transactions hit late
Duplicate expenses go unnoticed
Payroll timing drifts
Job costs land in the wrong period
And when bank reconciliation isn’t the first step, QuickBooks becomes a wish list instead of a control system.
If the bank isn’t reconciled, nothing else matters yet.
Step-by-Step: Monthly Close Checklist for Contractors
1. Reconcile Bank & Credit Card Accounts First
What to do:
Reconcile every bank and credit card account so QuickBooks matches the actual balances.
No estimates. No “close enough.”
Why it matters:
The bank is the source of truth.
Until accounts are reconciled, you don’t know:
If expenses are missing
If payroll was duplicated
If vendor bills were entered twice
If transfers were mis-posted
If skipped:
Every report after this step is unreliable — including job costing.
2. Lock Down All Job Costs for the Month
What to do:
Confirm all vendor bills, material receipts, and subcontractor invoices for the month are entered and coded correctly.
This only works if documents are controlled upstream. Systems like those outlined in
How Contractors Should Organize Digital Receipts & Job Documents (So Job Costing Actually Works) prevent late entries from wrecking the close.
Why it matters:
Unposted costs inflate margins and create false confidence.
If skipped:
Jobs look profitable until reality shows up later.
3. Reconcile Payroll to Jobs and Cost Codes
What to do:
Confirm payroll totals match cleared bank transactions and verify hours were allocated correctly by job and cost code.
This depends on solid setup covered in
Labor Tracking & Payroll Allocation for Contractors and
How Early Job Setup Impacts Labor Performance (Before the First Hour Is Logged).
Why it matters:
Labor is your largest controllable cost.
If skipped:
Field performance gets blamed for accounting errors.
4. Validate Cost Code Integrity
What to do:
Review job costs by cost code and confirm nothing landed in:
Uncategorized
General overhead
The wrong phase
This ties directly to
How to Build a Cost Code System for Your Trade and
How Contractors Should Set Up Cost Codes in Their Accounting System.
Why it matters:
Cost codes translate field activity into financial insight.
If skipped:
Reports exist, but they explain nothing.
5. Review Subcontractor & 1099 Exposure
What to do:
Confirm subcontractor bills are entered, job-coded, and flagged properly for 1099 tracking.
Misunderstandings here are common, especially with short-term labor. Review:
W-2 vs 1099 in Construction: How Contractors Get This Wrong (And Why Short-Term Labor Still Counts)
Subcontractor 1099 Requirements for Contractors (What You’re Actually Responsible For)
Why it matters:
Compliance failures don’t show up until penalties do.
If skipped:
Year-end becomes expensive and reactive.
6. Review Job Cost Reports Before Closing the Month
What to do:
Run job profitability reports and review:
Labor overruns
Budget variances
Margin swings by cost code
This only works if invoices flowed through a clean
Contractor Invoice Approval Workflow and reliable
Vendor Invoice Tracking for Contractors.
Why it matters:
The close isn’t done until someone reviews the numbers.
If skipped:
The same problems repeat next month.
Insider Notes / Contractor Gotchas
Reconciling last makes reconciliation meaningless
One unreconciled account can distort every job
Payroll errors hide inside unreconciled balances
Generic expense buckets mask job-level issues
If numbers keep changing, you’re not actually closing
Real-World Impact of a Proper Monthly Close
When contractors reconcile first and close monthly:
Job margins stabilize
Labor issues surface early
Cash flow surprises shrink
Bidding improves because history is reliable
This is not admin work.
It’s financial control.
Summary Framing
A monthly close isn’t about tidy books.
It’s about locking reality into the system.
Contractors who reconcile first and close monthly:
Trust their job reports
Control labor instead of reacting
Protect margin proactively
If labor overruns, reporting confusion, or job cost surprises keep happening, it’s usually a setup and systems issue. Dialing in job setup and reporting early is one of the fastest ways to protect margin.
Contractor Accounting Services
Related Contractor Resources
FAQs
1. Do I really need to reconcile the bank every month?
Yes. Without reconciliation, reports are guesses—not controls.
2. How does bank reconciliation affect job costing?
Unreconciled transactions hide missing or duplicated job costs.
3. Can I review job reports before reconciling?
You can, but they should not be trusted yet.
4. Is bank reconciliation required or just best practice?
Operationally, it’s required if you want reliable job costing.
5. When should bank reconciliation happen in the close?
First—before reviewing payroll, jobs, or margins.
Disclaimer:
This content is for general educational purposes only and does not constitute tax, legal, or accounting advice. Individual circumstances vary, and tax and reporting requirements can change. Always consult a qualified CPA, tax professional, or legal advisor for guidance specific to your business.
