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Flooring and tile installer bookkeeping: costing every job by the square foot
A flooring business makes money twice on every job, once on the material markup and once on the install labour, and loses it when the books cannot tell the two apart. We build books that cost each job by the square foot: supplier bills matched to jobs, sub-crew payments tracked for T5018, builder holdbacks kept separate from ordinary receivables, and showroom stock counted rather than guessed.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Two margins on every job, and the books must keep them apart
A supply-and-install flooring job carries two separate profits: the markup on the product and the margin on the labour that lays it. Lump them into one sales line and you cannot tell whether a losing month came from a supplier price increase you never passed on or from a crew that took three days on a two-day job. We set the chart of accounts so material revenue and install revenue post separately, with material cost and crew cost sitting directly beneath each.
That split matters more in flooring than in most trades because the product share of the invoice is so large. On a hardwood or porcelain job the material can be more than half the price, so a small slip in markup discipline moves the bottom line further than a big change in labour productivity.
From supplier bill to job: how material gets costed
Every supplier invoice, whether from a national distributor such as Shnier or Goodfellow, a tile importer or a big-box trade account, gets attached to a job before it is posted. In QuickBooks Online that means a customer and project on each bill line; if you run RFMS or QFloors, the job costing lives there and the accounting file receives the summaries. Either way, the bill lands in the job that consumed it, not in a general materials bucket.
Three flooring-specific items need their own treatment:
- Waste and overage. The estimate carried a waste allowance; the boxes actually ordered are what get costed. The gap between the two is a number we report back to you, because a pattern of over-ordering is a margin leak you can fix at the measure.
- Remnants and returns. Unopened boxes returned for credit reduce the job cost when the credit note arrives. Opened partial boxes kept for future repairs become a small inventory item at cost or get written off, but they do not stay parked in a job that has already been invoiced.
- Setting materials and sundries. Thinset, grout, underlay, transitions, adhesive and levelling compound are direct costs, not shop supplies. Where one bill covers several jobs we allocate it by square footage.
Builder contracts: holdbacks, back-charges and the deficiency list
Work for a production builder is invoiced differently from a retail job, and the books need to show it. The builder pays on its own schedule, retains the 10 percent statutory holdback under Ontario's Construction Act, and may issue back-charges for damaged product, missed deficiency deadlines or pre-delivery inspection items. We record the holdback as a separate receivable, so your ordinary aging report shows what is collectable now and the holdback ledger shows what is waiting on the lien period.
HST on a holdback is not due when you invoice the contract. Under the Excise Tax Act the tax on the held-back portion becomes payable on the earlier of the day the holdback is paid and the day the holdback period expires, and we time the HST return to match. Back-charges are posted against the specific job with the builder's documentation attached, so the job's real margin survives instead of vanishing into a write-off account at year-end.
| Transaction | How we post it | Why it matters |
|---|---|---|
| Supply-and-install invoice to a homeowner | Material revenue and install revenue on separate lines, HST on the full amount | Markup and labour margin stay visible independently |
| Deposit on a special-order product | Customer deposit liability; HST when the deposit is applied to the invoice | Unearned cash stays out of revenue and HST timing stays correct |
| Builder progress invoice with holdback | 90 percent to trade receivables, 10 percent to holdbacks receivable | Aging stays honest; holdback HST deferred until due |
| Sub-crew invoice for install labour | Direct labour cost on the job, payee flagged for T5018 | Year-end slips come from the ledger, not a shoebox |
| Boxes returned to the distributor | Credit note reduces that job's material cost | Job margin reflects what was actually installed |
| Showroom sample boards and displays | Expensed as selling cost, never counted as inventory | Samples are not saleable stock |
Sub crews: the T5018 trail is built all year
Most flooring companies pay at least some installers as subcontractors by the square foot. Because flooring installation is a construction activity, those payments are reported on T5018 slips rather than T4As, and CRA matches the slips against the crew's own returns. We tag each sub-crew payee in the ledger, capture their business number and HST registration at onboarding, and verify the HST number before we claim the input tax credit on their invoice. Our answer page on who has to file T5018 slips walks through the $500 threshold and the reporting-period choice.
Whether a crew paid per square foot should be a subcontractor at all is a payroll question, and a serious one. We cover the classification test as it applies to install crews on our flooring and tile payroll page.
Showroom stock and the monthly close
If you carry stock, whether LVP in popular colours, porcelain lines you can turn quickly or roll goods, it is inventory and has to be counted, valued at cost, and written down when a discontinued line stops moving. Special-order product that arrives for a specific job is not inventory for long: it becomes job cost the day it is installed. We keep the two apart, so year-end inventory is a real number and not a plug that makes the margin look right.
Our monthly close for a flooring business runs on QuickBooks Online with Dext capturing supplier and sub-crew invoices, job-level costing either in QBO or synced from your flooring software, a holdback reconciliation, a deposit-liability reconciliation, and a T5018 payee review. If you buy product from US distributors in USD, the exchange and border-GST handling is covered on our flooring cross-border page, and the monthly package itself is described on our bookkeeping services page.
Common questions.
Should material and labour be separate lines on my invoices?
Yes, for your own margin visibility. HST applies to both at 13 percent in Ontario, so the split changes nothing for the customer, but it lets the books show whether a bad month came from markup or from crew productivity.
How do I record a builder holdback?
As a separate receivable, not part of ordinary trade A/R. HST on the holdback becomes payable when it is paid or when the holdback period expires, whichever is first, so we defer it until then.
Do I file T4As or T5018s for my install crews?
T5018s. Flooring installation is a construction activity, so subcontractor payments of $500 or more in the reporting period go on T5018 slips. Whether those crews should be employees instead is a separate question we take seriously.
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