Engineering firm bookkeeping: WIP, subconsultants, and hours your claims can stand on

The timesheet feeds everything downstream

Every number that matters in an engineering practice is derived from hours: the invoice on a time-and-materials mandate, percent complete on a fixed fee, the salary base of a research claim, and the utilization of every seat. That is why our first fix at most firms is not the chart of accounts — it is time discipline: hours entered weekly by person, project, and task, approved by the project manager, then locked. A firm that captures time weekly closes its month in days; a firm that reconstructs time at quarter-end is guessing at every downstream number.

The stack stays lean. Project budgets and timesheets run in BQE Core or a comparable project system; QuickBooks Online is the ledger, with labour, subconsultants, and disbursements coded to projects; Dext captures the payables. For a firm holding a PEO Certificate of Authorization, that same coding is what keeps the professional side auditable without a scramble.

WIP you can defend to a bank and to CRA

Unbilled work is income you have already earned, and it should be measured like it. On fixed-fee mandates we carry WIP as percent complete against the project budget — hours at cost against hours planned — so an over-budget design phase surfaces the month it happens, not at closeout. On hourly mandates, WIP is unbilled time at charge-out rates less a realistic allowance for what will never bill; write-offs are posted visibly, never buried by quietly deleting hours.

The receivable side needs the same honesty. Municipal, institutional, and developer clients pay slowly, and the gap between doing the work and banking the fee — WIP days plus receivable days — is financing you are extending. We track that pipeline monthly, because it is the number that decides whether the firm can afford its next hire.

Subconsultants and disbursements are not your fee

Geotechnical drilling, land survey, environmental testing — prime mandates arrive with subconsultants attached, and their fees pass through your invoices. We keep subconsultant billings and subconsultant costs on separate lines from engineering fees, matched invoice to invoice, so gross revenue never masquerades as fee growth. HST runs both ways: input tax credits on the subconsultant's bill, HST charged on the full amount invoiced to the client. Lab fees, drilling contractors, mileage, and printing get project codes and travel through as disbursements instead of dissolving into overhead.

SR&ED is won at time entry, not at year-end

For a Canadian-controlled private corporation, the SR&ED credit is refundable at the enhanced 35% rate — real cash, and engineering firms doing genuine experimental development leave it on the table more often than they overclaim. The claim lives or dies on contemporaneous records, and the books carry half that burden: we tag eligible salaries by person and by project as payroll is posted, so the T661 salary base is a report you pull, not a year-old estimate. Most claims use the proxy method, which computes overhead from eligible salaries — one more reason payroll coding has to be clean all year.

Your part is the technical record: what was attempted, why the outcome was uncertain, what failed. Paired with a ledger that already splits eligible hours from routine design work, the claim is defensible instead of reconstructed.

Four numbers that run the firm

We report all four monthly from the same time and billing data — no separate spreadsheet universe. Benchmarks vary by discipline and seniority mix, so we watch trend and pairings: high utilization with falling realization means the firm is busy eroding its own rates.

US work adds a layer: clients requesting a W-8BEN-E before releasing fees, USD receivables moving with the exchange rate, and state-level questions once engineers spend time on US sites. The bookkeeping keeps USD balances and per-contract trails clean; the tax strategy lives in our cross-border tax guide for engineering firms. For the shape of a monthly engagement, see our bookkeeping services page.

Source: CRA — Scientific Research and Experimental Development (SR&ED) tax incentives.