Subcontractor Bookkeeping Queensland

Running as a subcontractor is not the same as running a regular small business.

You work under head contractors. You get paid in stages. You deal with retentions. You invoice for progress claims. You have GST to manage, TPAR to think about, and super to pay if you have anyone working for you. And through all of that, you are trying to keep the work moving and the cash flowing.

Most subcontractors we talk to are either doing the books themselves after hours, or they have someone who does not really understand how the construction industry works. Either way, things get missed. The ATO notices. And fixing it later costs more than doing it right the first time.

Accounts Advantage works with subcontractors across Queensland. Concreters, formworkers, electricians, plumbers, tilers, plasterers, painters, steel fixers, scaffolders, and more. We know how a subcontractor business runs and we know the ATO rules that apply to your industry.

Why Subcontractors Need a Specialist Bookkeeper

A subcontractor’s books have specific complexity that most bookkeepers are not trained for.

You invoice head contractors on progress claims, not standard invoices. Retentions get withheld from your payments and need to be tracked separately. If you pay your own subbies, you have TPAR obligations. If you have employees, you have payroll and super. GST on construction retentions is treated differently to normal accruals. And your cashflow is tied to when head contractors pay you, not when you invoice them.

A bookkeeper who handles cafes or retail shops will look at a construction subcontractor’s file and get lost. They will miscategorise retention amounts. They will get the GST wrong. They will not know about TPAR. They will lodge your BAS incorrectly and you will either overpay or end up with a liability you did not see coming.

We know this industry. We set up Xero specifically for subcontractors and we stay current on the ATO rules that apply to building and construction businesses.

Progress Claims and Retention

This is where most generic bookkeepers come unstuck.

You do not send a standard invoice when you bill a head contractor. You send a progress claim tied to a stage of work. The head contractor may withhold a retention amount from your payment. That retention sits in their hands until practical completion. Getting this right in your books matters for your true financial position and for your cash flow reporting.

We manage progress claims, progress payments and track head-contract retentions so your numbers always reflect what is actually happening on each job. You will not have phantom income on your books that is not actually in your account. You will know exactly what is owed to you, what is retained, and what has been paid.

GST on Retention Amounts

This is one of the most misunderstood areas in construction bookkeeping, and it catches a lot of subcontractors out.

When you raise a progress claim invoice, most accounting software will automatically calculate GST on the full invoice amount, including the portion that is being withheld as retention. That means you could be paying GST to the ATO on money you have not received and may not receive for months.

The ATO has a specific ruling that defers GST on retention amounts in construction contracts. You do not account for it until the retention is actually released and paid to you. This applies even if your business is on an accrual basis for GST. Construction retentions are treated differently to normal accrual accounting.

Most bookkeepers do not know this rule exists. We do. We set up your Xero accounts to handle retention GST correctly from the start so you are never pre-paying tax on money you have not received.

TPAR – Taxable Payments Annual Report

If you are a subcontractor who also engages your own subbies, you may have TPAR obligations.

TPAR applies if 50 per cent or more of your income comes from building and construction services and you make payments to contractors or subcontractors. There is no minimum dollar threshold per payment. Every dollar you pay a subcontractor must be reported to the ATO by 28 August each year.

This catches a lot of subcontractors by surprise. They think TPAR is something only head contractors deal with. It is not. If you are paying your own labour hire or subbies, you are required to report it regardless of how much you pay them.

We track every subcontractor payment through the year as part of your regular bookkeeping. When August comes, your TPAR is ready to lodge. You do not have to dig through bank statements or chase records at the last minute.

BAS Lodgement

Your BAS is due every quarter. Miss it and the ATO charges general interest charge and failure to lodge penalties. Get it wrong and you are either overpaying or building a liability you will have to deal with later.

We prepare your BAS, check your GST figures including correct treatment of any retention amounts, and lodge it on time every quarter. We also make sure your input tax credits are claimed correctly. Subcontractors spend a lot on tools, equipment, materials, and vehicles. Every one of those is a potential credit that should be reducing your GST bill.

If you are behind on previous BAS lodgements, we can help you get caught up and manage the ATO conversation. The ATO is more cooperative when you engage proactively. We help you do that.

Payroll for Subcontractors with Employees

Some subcontractors operate as sole traders or through a company with no employees. Others have a crew. If you have employees, payroll is one more thing to get right.

You need to run pay correctly under the right award. Super needs to be paid on time at the correct rate. The super guarantee rate is 12% from 1 July 2025. Single Touch Payroll requires you to report every pay event to the ATO in real time. Get any of that wrong and you are looking at ATO notices, super guarantee charges, and potential Fair Work issues.

We manage your complete payroll including pay runs, super calculations, STP reporting, and end of year payment summaries. If you take on a new worker, we get them set up correctly from day one.

Job Costing for Subcontractors

Do you actually know which jobs are making you money?

Most subcontractors we meet cannot tell you their margin on a job until well after it is finished. They price the job, do the work, get paid, and hope it worked out. By the time they realise a type of work is unprofitable, they have taken on twenty more of them.

We set up Xero so you can track labour, materials, plant hire, and any subbies you engage against each individual job. You can see your real cost versus your contract value in real time. You know your margin before the job is complete, not six months later when your accountant reviews the year.

Over time, this data changes how you quote. You learn which jobs to take on and which ones to pass to someone else.

Xero for Subcontractors

We run all our subcontractor clients through Xero. It is the right software for a subcontractor business and we are a Xero Gold Partner.

Here is what it looks like in practice. Your bank feeds in automatically. You can send progress claim invoices from your phone or laptop the moment work is done. You can see what is outstanding, what is overdue, and what retention is still being held against you. You can photograph receipts through HubDoc and they land in Xero without a spreadsheet or a shoebox.

If you are currently using MYOB, QuickBooks, or a spreadsheet, we migrate you across to Xero as part of getting started. Most migrations are complete within a week. We set up the chart of accounts specifically for a subcontractor business, not a generic template someone has adapted.

Catch-Up Bookkeeping for Subcontractors

A lot of subcontractors come to us behind. Sometimes a few months. Sometimes a couple of years.

They have been too busy on the tools to keep up with admin. Or they have been doing it themselves and it has gotten away from them. Or a previous bookkeeper did not understand the industry and left a mess behind.

We have fixed files in all states of disarray. We go back through your transactions, reconcile your accounts, sort out retention amounts, fix up your GST, and get your file current. Once it is clean, we keep it that way from month to month. You should never be in this position again.

Receipt Capture – No More Shoeboxes

You buy materials. You hire plant. You fill the ute. You pick up PPE and consumables. Every one of those receipts is a legitimate business expense that reduces your tax. But only if you capture it.

We use HubDoc with all our subcontractor clients. You photograph your receipt on the spot with your phone and it uploads straight into the system. No shoebox at tax time. No scrambling to find three-month-old receipts from Bunnings. Every expense is captured, coded, and ready when your BAS comes around.

We Know the ATO Rules for Building and Construction

The ATO treats construction businesses differently to most industries. There is specific guidance on TPAR, on GST for retention amounts, on how to account for progress claims, and on the obligations that come with paying your own contractors.

A lot of bookkeepers handle construction businesses without understanding any of that. They apply standard retail or service business rules to a construction file and get it wrong. The errors build up quietly and then come to a head when the ATO starts asking questions.

We stay current on ATO guidance for the building and construction industry. It is not something we read once. It is part of how we work every day.

At Accounts Advantage, our Managing Director is CPA qualified and all our team members hold a Certificate IV in Bookkeeping. Many of our team members are registered BAS Agents in their own right, in addition to the firm itself being a registered BAS Agent. That means you get qualified, accountable professionals handling your books. Not just someone who learned on the job.

Common Questions

What is the difference between a subcontractor and an employee for bookkeeping purposes?

It depends on the working arrangement, not the label. The ATO looks at the substance of the relationship. If the person is genuinely in business for themselves, takes on risk, and invoices for work, they are likely a contractor. If they work set hours under your direction and you control how the work is done, the ATO may treat them as an employee regardless of what your contract says. Getting this wrong triggers superannuation guarantee charges and PAYG withholding obligations. We help you get the classification right from the start.

Do I need to lodge a TPAR as a subcontractor?

If you pay your own subcontractors or labour hire firms and 50 per cent or more of your income comes from building and construction services, yes. There is no minimum dollar threshold. Every payment counts. We track payments through the year and lodge your TPAR with the ATO by 28 August each year.

How does GST on retention amounts work?

When you issue a progress claim that includes a retention amount, you do not pay GST on the retained portion until it is released and paid to you. The ATO has a specific ruling that defers GST on construction contract retentions. Most accounting software does not handle this correctly by default. We set up your Xero to manage it properly so you are never pre-paying GST on money you have not received.

What if my head contractor is withholding more retention than they should?

Retention amounts and their release are governed by the terms of your subcontract and, on eligible projects, by the QBCC trust account framework. We can show you exactly what retention is outstanding on each job from your books. If you have a dispute about retention amounts, that is a legal matter, but we can give you the financial records to support your position.

Are you a registered BAS Agent?

Yes. Accounts Advantage is a registered BAS Agent as a firm. On top of that, many of our individual team members hold their own BAS Agent registration too. That means the person handling your books is qualified and accountable in their own right, not just covered under someone else’s licence. You get two layers of professional protection.

What does it cost?

It depends on your business. For childcare centres we offer a fixed monthly fee from day one. For all other businesses, we work on an hourly rate for the first three months. This gives us time to review your file, understand the scope of work, and catch up anything that is behind. By month three we know exactly how long your books take each month, and we move you to a fixed monthly price from there.

What if I am behind on my BAS?

We can help you get caught up. We go back through your transactions, prepare the outstanding BAS returns, and help you manage the ATO conversation. The sooner you engage with the ATO, the better the outcome tends to be. We have done this many times.

Do you work with subcontractors outside Loganholme?

Yes. We are based in Loganholme and we work with subcontractors across the Gold Coast, Logan, Brisbane south side, and all of Queensland. We work remotely with clients across the state.

What software do you use?

We use Xero for all bookkeeping and HubDoc for receipt capture. We are a Xero Gold Partner. If you are currently on another platform, we migrate you across as part of getting started.

Can you help me understand whether I am making money on my jobs?

Yes. Job costing is one of the main reasons subcontractors come to us. We set it up in Xero and show you how to read it. Over time you will know which types of work are worth taking on and which ones to price differently.

Ready to get your books sorted?

Call our Loganholme office on 07 3209 8266 or 1300 400 105