Accounting for plumbers: cash vs accrual, a plumbing chart of accounts, expenses to track, a bookkeeping routine and the plumbing company software to run.
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Accounting for plumbers is not complicated, but it is specific. You carry parts on trucks, bill a mix of flat-rate service calls and bigger repipe or new construction jobs, take deposits, eat warranty callbacks and wait on property managers who pay when they feel like it. Generic bookkeeping advice misses most of that.
This guide covers how to set up the books for a plumbing company: cash vs accrual, a chart of accounts that fits the trade, the plumbing business expenses worth tracking separately, a weekly and monthly bookkeeping routine, and the plumbing company software most shops run to keep it all moving. It ends with the part that decides whether the numbers on paper turn into money in the bank: getting invoices paid. For the wider picture across all trades, see our guide to accounting software for construction contractors.
KEY TAKEAWAYS
A plumbing company often runs two kinds of work. Service and repair is high volume and fast: a drain call, a water heater swap, a leak under a slab. Construction and remodel work is slower, contract based and often billed in stages. Each has its own cash pattern, and your books should show them separately.
| Plumbing quirk | What it means for your books |
|---|---|
| Truck stock | Fittings, valves and parts sit on trucks before they are used. Decide whether you track them as inventory or expense them when bought, and be consistent. |
| Flat-rate pricing | Revenue per job is fixed, so labor and parts overruns come straight out of margin. Job costing tells you which price book items are underpriced. |
| Deposits | Money collected before work starts is not yet earned. Record it so you can apply it to the final invoice cleanly. |
| Warranty callbacks | Return trips cost labor and fuel with no new revenue. Track them so you can see the real cost of a job. |
| Mixed payers | Homeowners, property managers, builders and home warranty companies all pay differently. Your receivables need to show who owes what and how old it is. |
Under the cash method you record income when you receive it and expenses when you pay them. Under the accrual method you record income when you earn it (usually when you invoice) and expenses when you incur them. Many small plumbing companies keep cash-basis books for taxes but look at accrual reports to manage the business, because accrual shows what customers owe you.
Which method you can use for taxes depends on your size, whether you carry inventory and the kind of contracts you have. IRS Publication 538 explains the rules on accounting periods and methods. Ask your CPA which one fits your company before you set up the books, because changing later takes paperwork.
You do not need hundreds of accounts. You need enough to answer three questions: which kind of work makes money, where the costs go, and who owes you. Here is a starting point most plumbing shops can adapt.
| Section | Example accounts |
|---|---|
| Income | Service and repair; Drain and sewer; Water heaters; New construction; Remodel; Maintenance agreements |
| Cost of goods sold | Field labor; Payroll taxes and workers' comp on field labor; Materials and parts; Equipment rental; Subcontractors; Permits |
| Operating expenses | Vehicles and fuel; Tools; Insurance; Office wages; Rent; Software; Marketing; Licenses and continuing education |
| Assets | Operating account; Accounts receivable; Retainage receivable; Truck stock inventory (if tracked); Vehicles and equipment |
| Liabilities | Accounts payable (supply houses); Customer deposits; Sales tax payable; Payroll liabilities; Vehicle loans |
Putting field labor and materials in cost of goods sold, rather than in general expenses, gives you a gross margin number you can compare month to month and job type to job type. If your QuickBooks file is already set up, our QuickBooks for contractors guide shows how to add projects and job costing without starting over.
Most plumbing business expenses are obvious. A few are worth their own account or class, because they hide margin problems when lumped into "supplies" or "miscellaneous."
Tip: Ask your supply house to put your job or work order number on every ticket. Bills that arrive already tagged to a job take seconds to code, and you can see material overruns while the job is still open.
Good books come from a routine, not from software alone. This one fits most plumbing companies with an office manager or an outside bookkeeper. Our construction bookkeeping setup and routine has a fuller close checklist.
| Daily | Make sure every completed job has an invoice. Unbilled work is the most expensive bookkeeping mistake in service plumbing. |
| Weekly | Code supply house bills, approve timesheets, match payments to invoices, review anything past due |
| Monthly | Reconcile bank and card accounts, review gross margin by job type, run the AR aging report, send progress bills on construction jobs |
| Quarterly | Review sales tax and payroll filings with your CPA, count truck stock if you track inventory, check price book margins |
The aging report shows which invoices are current, 30, 60 and 90 days old. Read it every month; here is how to use an AR aging report.
Plumbing company software usually means two or three tools that pass data to each other. The accounting system is the record of truth. Plumbing service software runs the field. A payments and follow-up layer gets the invoices paid.
| Layer | What it does | Common examples |
|---|---|---|
| Accounting software for plumbers | General ledger, bank reconciliation, AP, sales tax, financial statements | QuickBooks Online, Xero |
| Plumbing service and job management software | Scheduling, dispatch, price books, work orders, on-site invoices | ServiceTitan, Housecall Pro, Jobber, Service Fusion, Workiz |
| Payroll | Pay, payroll taxes, workers' comp reporting | Your accounting system's payroll or a payroll service |
| Receivables follow-up | Reminders, payment links, payment plans, aging view | AR Workflow and other AR tools |
Each field service tool above lists accounting integrations. Features change, so check each vendor's site for current details. When you compare them, ask three questions: does the invoice reach your ledger with the right customer, item and tax code; does a payment taken in the field post once, not twice; and who fixes it when the sync breaks? For larger construction-heavy plumbing contractors, our comparison of 8 construction accounting options covers systems with retainage and certified payroll built in.
A one or two truck shop can run on a shared calendar, QuickBooks invoices sent from a phone and a disciplined owner. Once you have several techs, a dispatcher or a maintenance agreement program, plumbing scheduling software usually pays for itself in jobs that stop falling through the cracks. Buy it when the calendar is the bottleneck, not before.
When you connect a field tool to your accounting system, set up the shared pieces first: one customer list (decide which system creates new customers), matching service items or price book categories, the same sales tax codes and one deposit account for payments. Then run a week of jobs and check every invoice and payment in the ledger before you trust the sync. Fixing a mapping on day five is easy. Fixing it after six months of duplicate customers is not.
All the accounting in the world does not help if invoices sit unpaid. Three habits matter most.
Invoice on site or the same day. Service customers pay fastest when the invoice arrives while the water heater is still warm. Use a clear format with the work order number, itemized parts and labor, and a payment link. Our plumbing invoice template has every field and a filled example.
Make paying easy. Offer card and ACH payment links, and payment plans on larger repairs like sewer line replacements, so a homeowner can say yes to the job and pay over a few months. See how card, ACH and payment plans work for contractors.
Follow up on a schedule. Property managers and builders often pay on their own cycle unless someone asks. A simple cadence of a reminder before the due date, a note a few days after, a call at a week and a firm notice at two weeks gets most invoices paid without drama. Copy the wording from our payment reminder email templates.
Bring one overdue invoice.
We'll show you exactly how it would be followed up, and what your customer would see when they pay.
AR Workflow is not accounting software, and it does not replace your field service tool. It handles one job: following up on open invoices until they are paid. It syncs your open invoices from QuickBooks Online and puts each one on a schedule of emails, two-way texts and ringless voicemails from a dedicated number. Customers get card and ACH payment links, you can offer payment plans, and payments post back to QuickBooks so your books stay current. It stops when the invoice is paid and pauses when a customer promises a date. See how it works for plumbing invoicing and billing, or read about automated payment reminders.
Most small and mid-size plumbing companies use QuickBooks Online or Xero as their accounting system, paired with field service software that handles scheduling, dispatch and invoicing. Larger plumbing contractors with commercial projects, retainage or union payroll sometimes use a construction accounting system instead.
Choose cash or accrual with your CPA, set up a chart of accounts that separates service and construction income and puts field labor and materials in cost of goods sold, connect your bank and field service software, and follow a weekly routine: code bills, approve time, match payments and review past due invoices.
For most plumbing companies, field labor (wages plus taxes, workers' comp and benefits) is the largest cost, followed by materials and parts, then vehicles. Insurance, tools, software, marketing and office wages make up most of the rest. Tracking truck stock and callbacks separately shows where margin is lost.
It depends on your size. A one or two truck shop can often run on accounting software and a shared calendar. Once you have several techs, a dispatcher or maintenance agreements, plumbing service software usually saves more in missed jobs and faster invoicing than it costs.
Some do and some expense parts when purchased. Tracking inventory gives better job costs and controls shrinkage, but takes more work. Tax rules on inventory depend on your size and situation, so decide with your CPA and then be consistent.
Related reading
Your invoice, not a feature tour.
Bring one overdue invoice to a demo and see what AR Workflow would send, when, and how your customer would pay.
Software features and integrations change. Check each vendor's site for current details. This article is general information, not tax or legal advice; talk to your CPA about your situation.
Sam owned and ran three restoration companies for more than 14 years and collected over $100 million in receivables. He built AR Workflow in 2020 to give contractors the collections system he wished he'd had.
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