Bookkeeping for contractors is mostly preparation. Receipts and supplier invoices have to be collected and tied to a job, customer invoices and progress bills have to go out on time, open invoices need watching, and every month your bookkeeper or CPA needs a complete package. Posting entries, filing returns and closing the year usually happen on their side. What sets contractors apart from an office business: many supply-house invoices that belong to specific jobs, progress billing and retainage, subcontractors who need a W-9 and possibly a 1099, and vehicles and fuel cards that produce small receipts all month. An AI can do much of the groundwork: screen and match receipts, list what's missing, assemble the month-end package. Posting and tax judgement stay with you and your accountant.
This is not legal or tax advice. US references are to IRS guidance; there is a separate section for Germany, all as of November 2026. The examples come from plumbing and HVAC, construction and roofing; the principle works for any trade. What else AI can take on in a plumbing or HVAC office is in AI for Plumbers: Quotes, Inbox and Receipts.
Bookkeeping for contractors: who does what
Where the line sits, you agree with your bookkeeper: either they post and you deliver documents, or you post and they review. How much time the groundwork alone takes, I know from my own business: my bookkeeper otherwise needs about 9 hours a month just for screening and matching receipts.
Keep records weekly, not in a shoebox
The shoebox that goes to the accountant once a quarter costs twice: receipts go missing, and job costs show up months late. Better: weekly collect, match, tag the job, note what's missing.
How long to keep records: the IRS page "How long should I keep records?" says to "Keep records for 3 years" in the standard case, and "Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later." Longer periods apply in special cases, for example 7 years for a bad debt deduction and 6 years if you underreport income by more than 25 percent of the gross income shown. A filing system that holds up is described in Digital Receipt Filing in Germany: GoBD Rules, apps for receipts from the truck in Receipt Scanning Apps for German Businesses.
The month-end package for your bookkeeper
What goes in, you agree with your bookkeeper or CPA. Typical for a contractor:
A short cover note saves the back-and-forth. A template to adapt:
Subject: Documents for [month year], [company name]
Hi [name],
attached or uploaded for [month year]:
- Bank and card statements: [accounts], complete through [date]
- Customer invoices: no. [from] to [to], progress bills: [no.]
- Supplier and subcontractor bills: [count], tagged to jobs: [yes/no]
- Fuel card: statement [period]
- Payroll: hours and changes [yes/no], details in [file]
- New subcontractors this month: [names], W-9 on file: [yes/no]
Still missing (I'll send by [date]):
- [document, amount, date, reason]
Questions:
- [e.g. which job a payment belongs to]
Thanks,
[name]
If your business is in Germany
German rules add specifics. Transactions have to be recorded promptly: the GoBD, the tax authority's bookkeeping rules, accept periodic posting if cash transactions are recorded daily, non-cash ones "within ten days", and the documents can't get lost before then (margin no. 50). Invoices and other accounting documents are kept for eight years, books and records for ten, counted from the end of the calendar year (section 147 AO). Business-to-business invoices are moving to structured e-invoices; details are in German E-Invoicing Mandate: Dates, Exemptions, the basics in Bookkeeping Basics for the Self-Employed. If you work for a contractor who regularly does construction work too, that customer owes the VAT and your invoice says "Steuerschuldnerschaft des Leistungsempfängers" (sections 13b and 14a UStG). A business customer has to withhold 15 percent construction tax unless you hand over a valid exemption certificate (section 48 EStG). If your tax adviser uses DATEV, see DATEV Integration: 3 Routes, Costs and Setup.
Open invoices and payment reminders
Cash flow often hangs on a few large invoices. Before any reminder, someone has to check whether the customer paid after all: in part, with a different reference, minus retainage. An AI takes on that check; whether and how firmly you chase a payment is your call. When it pays to automate is in Automate Payment Reminders and Dunning.
Who does what: Peter and you
In my business, Peter, my AI employee for receipts and bookkeeping, has been running since August 19, 2026. He works in my bookkeeping interface in the browser, screens new receipts, assigns the receipt type and matches the credit card statement line by line. In his first run he screened 116 receipts, matched 38 of 40 correctly and needed just over an hour. The two open ones he flagged instead of forcing them to match. He follows a written process description, and he doesn't book entries.
Peter's page lists these under "What else Peter can take on": prepare the bookkeeping, check invoices, put together the documents for your tax adviser, communicate with your tax adviser, upload to DATEV, handle billing, handle payment reminders. Peter can do all of them, tested. To set one up: he learns it in read-only mode with screenshots, you test it on real cases, then you approve it. Invoices that arrive by email can be pre-sorted by Frieda; receipts are a waystation for her, not an archive. My customer invoices are created as drafts in the accounting tool by Anton, and nothing goes out without my click.
Your accountant is part of this. Peter's page puts it this way: together you define the handoff format, responsibility boundaries and review steps, and the adviser must be able to accept the prepared data. My house rule also applies: whoever produced something does not check it. We'll look at how to set this up in your business together.
How Peter reconciles line by line is in Credit Card Reconciliation: An AI Test Run, the bigger picture in AI Bookkeeping: What Actually Works Today, the inbox setup in AI Agent for Bookkeeping and Inbox, the trades in general in AI Agents for Tradespeople: Roles, Not Tools.
For construction companies there is AI Construction Estimating: What It Can Do. Which trade software handles invoicing is in Software for Plumbers: Plans and Prices.
Frequently asked questions
What does bookkeeping for contractors include?
Supplier and subcontractor bills tagged to jobs, customer invoices and progress bills, retainage, bank and card reconciliation, fuel and cash receipts, payroll data, W-9s and 1099s, and a month-end package for your bookkeeper or CPA.
What does my accountant need every month?
Usually statements for every account and card, all customer and supplier invoices, cash receipts, payroll changes and a list of what's still missing. The exact list is something you agree with them.
Do I need to send 1099s to my subcontractors?
For services by a non-employee, the IRS threshold is $2,000 for payments made in 2026. Collect a W-9 before the first payment; whether a specific payment is reportable, your CPA decides.
Can AI do bookkeeping for contractors?
It can do the groundwork: screen and match receipts, tag them to jobs, list gaps and assemble the package for your accountant. Posting, tax judgement and approval stay with people.
What to do next
Take last month and put your bank statement next to your receipts. Count how many transactions have no receipt and how long the search takes. That's the task an AI starts with. If you want to know which work in your business depends on you the most, book a first call via contact: in 20 minutes we look at the one workflow that depends on you the most. More industries are on AI by industry.
