Job costing, WIP and Texas tax handled the way Gulf Coast contractors actually need
In Houston the money is rarely lost in the field. It goes missing between finishing the work and getting paid for it. You are three tiers down on a Ship Channel turnaround, retainage is sitting on two closed jobs, a Texas Medical Center phase has change orders nobody has priced, and payroll still runs every Friday. The company looks profitable on the P&L and feels tight in the bank. That is an accounting problem, not a production problem. We fix it with real job costing to the cost code, monthly WIP that catches over and underbillings before your bank does, retainage tracked by contract, and Texas sales and franchise tax positions that match the contracts you actually signed.
On the ground
Downtown Houston, Texas
Houston is an industrial market with long payment chains, heavy compliance, and tax rules that treat construction differently from every other business. The accounting has to match that reality, not a generic small business template.
They didn’t just record transactions and call it a day. They built a custom chart of accounts around how a remodeling company actually runs, did a full catch-up on years of bookkeeping inside QuickBooks Online, and now stay on top of my monthly bookkeeping and payroll. Every step, they broke it down in simple terms instead of burying me in accountant talk.
FinTruction rebuilt the whole thing from the ground up, with real job costing, work in progress, and retainage. They didn’t just hand me reports and disappear; they walked me through my numbers until I understood them.
Sahil and his team handle the bookkeeping and job costing for my painting business. They cleaned up my books and set up integrations that give me accurate, timely job costing with solid weekly data. Reliable, detailed, and genuinely invested in getting the numbers right.
FinTruction is the only bookkeeping team we’ve found that truly understands construction accounting and WIP reporting. They aligned our income and costs across 21 jobs and gave us full, monthly transparency. Fast, accurate, and an indispensable partner.
When I came to FinTruction I had no financial structure. No job costing, no WIP tracking, books behind. They did a full cleanup and rebuilt job costing and WIP tracking in QuickBooks. Now I know what’s billed, what’s owed, and where every job stands.
A couple of minutes from a contractor we support, sharing what working with FinTruction has been like and what changed once their numbers finally made sense.
A Houston contractor's jobs rarely look alike. A unit-rate turnaround, a lump-sum tilt-wall warehouse in Katy, a time and materials medical fit-out and a public drainage contract all need different cost structures. We build the cost code structure around the work you actually take, then keep labor, materials, equipment and subcontractor costs posted to it every week so job profitability is a fact rather than an estimate.
Every construction platform claims to have a "QuickBooks integration." Most break the moment your books need to be accurate. Sales tax mismaps, retainage disappears, change orders create duplicates, and job costing reports stop matching project reality. We fix the integration so your software, your books, and your job‑level numbers all tell the same story.
Also work with Foundation, Sage 100, Bill.com, ADP, Gusto, Ramp, and more. See all platforms we integrate →
Long industrial and healthcare phases are where underbillings hide. We prepare a monthly work in progress schedule that compares cost to date against the estimate, calculates earned revenue on percentage of completion, and shows exactly where you are overbilled and underbilled by job. That is the report your surety and your bank actually read, and it is the one most Houston contractors only see once a year at tax time.
On Houston industrial and public work you can be several tiers below the owner, with pay-when-paid terms above you and retainage held on both sides. Most contractors know roughly what they are owed. Very few can produce it by contract, by tier and by age on demand. We track retainage receivable and payable separately from ordinary AR and AP, monitor release conditions, and give you an aged position you can act on.
Texas taxes construction in a way that catches out general bookkeepers. Lump-sum and separated contracts are handled differently, labor to repair or remodel nonresidential property is generally taxable while new construction labor is not, and the franchise tax runs on margin with a cost of goods sold deduction that depends entirely on your job cost records. Our construction tax planning keeps these positions aligned with the contracts you actually signed.
Labor is the largest and least forgiving cost on most Houston jobs. Crews move between jobs mid-week, plant work adds per diem and shift premiums, and public and federally funded contracts add wage determinations and certified payroll on top. We allocate labor and burden to the job it was worked on and produce certified payroll from the same data, so the compliance report and the job cost report agree.
Growth is where Houston contractors get hurt, because bonding capacity and working capital are what limit the size of job you can chase. Our controller services and CFO services give you the financial side of that decision: what you can carry, what a job will do to cash before it pays, and what the surety needs to see to raise your limit.
A general bookkeeper can record transactions. Construction accounting is a different job.
| What you need | Generic local bookkeeper | FinTruction |
|---|---|---|
| Job-level costing | Lumps all jobs into one P&L | Cost codes and margin per project |
| WIP & revenue recognition | Cash-basis, no WIP schedule | Monthly WIP with over/underbilling |
| Retainage tracking | Buried in AR/AP, often missed | Tracked receivable & payable by contract |
| Bonding & lender packages | Not equipped to produce them | Bonding-ready statements and backlog |
| Construction software | QuickBooks set up like a retail shop | QuickBooks + integrations tuned for contractors |
Houston is an industrial construction market first. The Houston Ship Channel corridor running through Baytown, Deer Park, Pasadena and La Porte holds one of the largest concentrations of petrochemical capacity in the world, and the maintenance turnarounds and capital projects that come with it drive a steady stream of unit-rate and time and materials work. That work pays well and moves fast, which is exactly why it is easy to close a turnaround before the cost side is fully captured.
Port Houston adds a second layer. Channel widening and deepening, terminal expansion and the logistics build-out feeding it keep civil, marine and heavy site contractors busy, and much of that work carries public or federal funding with the wage determination and reporting obligations that follow. Inland, the Texas Medical Center continues to expand, and healthcare construction brings its own accounting shape: phased work inside occupied buildings, infection control requirements, off-hours labor, and change orders that outrun the paperwork.
Then there is the growth itself. Fort Bend and Montgomery counties are among the fastest growing in the country, pulling residential, retail and school construction out into Katy, Cypress, Conroe and Sugar Land, while industrial and warehouse development follows the freight corridors. Houston also carries a permanent flood and resilience workload. After Hurricane Harvey, drainage, detention and elevation work became a standing category rather than an emergency one, and that work runs on public funding and reimbursement rules that demand clean, separate documentation.
What all of this means for a contractor's books is volume and variety at the same time. Several jobs of genuinely different types run in parallel, each with its own billing method, tax treatment and compliance requirement. Systems that were fine at three jobs quietly stop telling the truth at twelve. That is the point where most Houston contractors discover their accounting is a record of the past rather than a tool for running the business.
Texas does not issue a statewide general contractor license, which surprises contractors moving in from other states. Specific trades are licensed at state level: electricians and air conditioning and refrigeration contractors through the Texas Department of Licensing and Regulation, and plumbers through the Texas State Board of Plumbing Examiners. On top of that, the City of Houston and the surrounding jurisdictions run their own permitting and registration requirements. We track licensing, registration and permit costs by job so they land in job cost rather than disappearing into overhead.
This is where we find the most money on Houston books. The tax treatment turns on the contract type and the nature of the work. Under a lump-sum contract the contractor is generally treated as the consumer of the materials; under a separated contract, with materials and labor stated separately, tax is generally collected from the customer on the materials. Labor to repair or remodel nonresidential real property is generally taxable, while labor for new construction is not. Residential work follows different rules again. Getting this wrong is rarely dramatic, it just quietly costs margin on every job until someone checks.
Texas Government Code Chapter 2258 requires prevailing wages on public works for the state and its political subdivisions, with the rate set by the awarding body, so City of Houston, county, school district and utility district contracts frequently carry a wage determination. Federally funded work falls under the Davis-Bacon Act. Both require certified payroll reporting. We track the applicable determination per contract and produce certified payroll from the same payroll data that feeds job costing, so the two never disagree.
Texas lien rights under Property Code Chapter 53 run on strict, month-driven notice deadlines tied to when the labor or material was furnished, and the Texas Prompt Payment Act under Chapter 28 governs payment timing on private work. We do not practice law and we do not file liens. What we do is keep unpaid amounts organized by job, by tier and by month furnished, so your attorney is never reconstructing records under a deadline.
Texas has no personal income tax, but most entities file a franchise tax report calculated on taxable margin. Construction companies can generally elect the cost of goods sold deduction, which treats direct job costs favorably. The deduction is only as strong as the job cost records behind it, so a contractor whose direct costs are buried in general overhead routinely overpays. We build the chart of accounts so the franchise tax position is supported by the same job cost data you use to run the business.
Houston is unusual among large American cities in having no zoning ordinance, with land use governed largely by deed restrictions and development regulations instead. Since Hurricane Harvey the city has also applied stricter floodplain development standards, and drainage and detention requirements affect scope, schedule and cost on a great deal of Houston work. These show up in your accounting as permit and engineering costs, mobilization delays and change orders, and they belong on the job rather than in a general expense account.
We support contractors across the Houston area, from industrial crews on the Ship Channel to production builders pushing into Fort Bend and Montgomery counties. If you run jobs, hold retainage and answer to a bank or a surety, the work below is the work we do.
Running a Construction Company in Houston?
Get Your Free AuditFair question, especially if you already have a bookkeeper or a CPA who does your return. Here is the honest answer.
Most Houston contractors do not need new software. They need the software they already pay for to be configured for construction and connected to the accounting, so the office is not rekeying what the field already entered.
Most QuickBooks files we inherit were set up correctly for a business that sells products. For a contractor that means jobs are customers, cost codes do not exist, and retainage is buried in accounts receivable. We rebuild the file around the way construction actually works.
Is your QuickBooks file working against you?
If your project managers already track budgets, commitments and change orders in a construction platform, that data should not be typed again in the office. We connect the field system to the accounting so the numbers agree and the month does not start with a reconciliation argument.
The goal is one set of numbers that the field and the office both believe.
Once the systems are connected, the reporting stops being a history lesson. These are the reports Houston contractors use to decide what to bid and what to walk away from:
See how we have done this for other contractors in our construction accounting case studies.
Houston work runs through long payment chains. On Ship Channel turnaround work, Texas Medical Center phases, Port Houston contracts and municipal flood projects, you are often three tiers down from the owner, holding retainage, waiting on pay-when-paid terms, and carrying payroll the whole time. A general bookkeeper records the transactions but cannot tell you which job is bleeding, what your true backlog is, or whether you are overbilled. Construction accounting answers those questions with job costing, WIP schedules and retainage tracked by contract.
This is the single most commonly mishandled item we see on Houston contractor books. Texas treats a lump-sum contract differently from a separated contract. Under a lump-sum contract you are generally treated as the consumer of the materials and pay tax on your purchases. Under a separated contract, where materials and labor are stated separately, you generally collect tax from the customer on the materials. On top of that, labor to repair or remodel nonresidential real property is generally taxable in Texas, while labor for new construction is not. Getting the contract type and the taxability wrong quietly moves several points of margin. We set the chart of accounts and the invoicing so the treatment matches the contract, and we work with your tax advisor on any position that is unclear.
It depends on who funds the job. Texas Government Code Chapter 2258 requires prevailing wages on public works for the state and its political subdivisions, with the rate determined by the awarding body, so City of Houston, county, school district and municipal utility district work can carry a wage determination. Federally funded work, including many Port, transit and airport projects, falls under the Davis-Bacon Act. Both require certified payroll. We track wage determinations by job and produce certified payroll that stands up to an audit, rather than reverse-engineering it at the end.
Texas has no personal income tax, but most entities pay the franchise tax, which is calculated on taxable margin rather than profit. Contractors can generally elect the cost of goods sold deduction, and construction labor, materials and subcontractor costs are treated favorably compared with most industries. The catch is that the deduction is only as good as your records. If direct job costs are mixed into overhead in your general ledger, you understate the deduction and overpay. We structure job costing so the numbers your franchise tax report needs already exist.
Yes, and it needs its own treatment. Turnarounds at Baytown, Deer Park, Pasadena and La Porte compress an enormous amount of labor into a short window, often on time and materials or unit-rate terms, with per-unit and per-area cost codes, heavy per diem and travel, equipment and rental spikes, and strict client billing back-up. The risk is that the job closes before the costs are fully captured and the margin looks better than it was. We set the cost code structure and the billing back-up process before the turnaround starts, then reconcile actual labor and equipment against the billing while the job is still open.
Yes. Houston contractors regularly take on insurance restoration and publicly funded flood mitigation work, and these need to be walled off in the books. FEMA and insurance reimbursement both depend on documentation: mobilization costs, force account labor and equipment records, materials tied to a specific scope, and clean separation from your ordinary jobs. We set up separate cost structures and document retention for this work so a reimbursement review does not turn into a reconstruction project months later.
Texas lien law under Property Code Chapter 53 is deadline-driven and runs on a monthly cycle tied to the month the labor or material was furnished, which means a missed notice month can quietly cost you the claim. We are not your attorney and we do not file liens, but the bookkeeping is where the deadline is usually lost. We track unpaid amounts by job, by month furnished and by tier, so your notice calendar is driven by real data and your attorney gets the backup the same day it is needed.
Yes. Texas Medical Center work is mostly phased construction inside occupied, operating facilities, which changes the cost picture: infection control measures, off-hours and shift premium labor, temporary partitions and negative air, tight sequencing, and change orders that arrive faster than they get priced. We track change orders as their own cost and revenue stream so you can see what unpriced work is sitting in the field, and we keep WIP current so a long phased job does not hide an underbilling.
We support contractors across Harris, Fort Bend, Montgomery, Galveston, Brazoria, Waller, Liberty and Chambers counties, including The Woodlands, Sugar Land, Katy, Cypress, Spring, Pearland, Missouri City, League City, Baytown, Pasadena, Deer Park, La Porte and Conroe. Our work is fully remote, so we serve contractors anywhere in the Houston area without you driving to an office.
Start with the free Audit. We look at your current file, your job costing setup and your last WIP or job profitability report, and we come back with what is actually wrong and what it is costing you. There is no obligation. Pricing after that is a flat monthly fee based on your transaction volume, number of active jobs and reporting needs, so you are not watching an hourly meter every time you ask a question. Sahil Ahmad, CPA reviews the work.
FinTruction provides construction accounting across Texas. Select your city below for job costing, WIP and contractor bookkeeping support in your market.
If the problem is the monthly close rather than the reporting, we also run straight construction bookkeeping for Houston contractors: coding, reconciliations, AP and AR, and job-cost entry every month.
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