1. Not knowing the true profit on each job
A bank balance or company-wide profit does not show which project is making money. Labour, overtime, materials, equipment, travel and subcontractors need to be assigned to the correct job.
Job costing compares the estimate, actual costs, billings and margin. It helps identify overruns before a project ends and improves future estimates with real data.
2. Recording labour and costs too late
Incomplete timesheets and receipts submitted weeks later lead to payroll errors, delayed invoices and costs posted to the wrong project. They also make expenses harder to support during a CRA review.
Set a weekly deadline for timesheets, purchase receipts, subcontractor invoices and supervisor approvals. A short weekly review is more reliable than reconstructing a month after the fact.
3. Misclassifying employees as subcontractors
Calling someone a subcontractor does not determine their status. CRA reviews the actual relationship, including control, tools, ability to hire helpers, opportunity for profit, risk of loss and integration into the payer’s business.
A wrong classification can result in retroactive CPP, EI, income tax, interest and penalties. Written agreements help, but they must reflect how the work is actually performed.
4. Losing control of GST/HST
Common problems include failing to separate tax collected, claiming input tax credits without adequate documents, or applying the wrong rate to work outside Alberta.
Reconcile GST/HST accounts to filed returns and retain invoices that properly identify the supplier, registration number and tax paid where required.
5. Leaving T5018 reporting until year-end
Where construction is more than 50% of business income, payments to Canadian-resident subcontractors for construction services generally must be reported when they exceed $500 in the reporting period, excluding GST/HST for that threshold.
Collect legal name, address, SIN or Business Number during onboarding and maintain a separate ledger for reportable contract payments.
6. Failing to reconcile payroll, WCB and the books
Differences between payroll reports, bank payments, T4 slips, WCB records and the general ledger create year-end corrections and may expose missed remittances. Bonuses, allowances, taxable benefits and vacation pay also require proper treatment.
Monthly reconciliations make duplicate payments and missing deductions easier to detect while there is still time to correct them.
7. Managing with outdated information
Financial statements prepared months later may satisfy tax filing needs but arrive too late for management. Contractors need current accounts receivable, work in progress, job costs, payroll liabilities and cash flow information.
A consistent monthly close supports decisions about hiring, equipment purchases, project financing and overdue collections before problems grow.
What an owner should receive each month
At minimum: income statement, balance sheet, receivable and payable aging, job comparison, payroll and GST/HST obligations, and a simple cash projection.
The value is not just producing reports. It is explaining what changed, why it changed and what the owner should do next.
Official source: CRA: T5018 Statement of Contract Payments. Rules may change and their application depends on the facts.