Accounting for HVAC Companies: How to Track Revenue and Costs by Job

You install systems. You handle emergency calls. You keep buildings running.

But are your jobs actually making you money?

If you’re not accurately tracking job-level revenue and expenses, your HVAC business might be busy, but not profitable. And if you're reading this, there's a good chance you want to tighten that up.

Let's walk through how proper HVAC job costing and accurate bookkeeping practices help HVAC companies run smarter, grow faster, and stop losing money without realizing it.

Why Job Costing Matters in HVAC

Job costing = knowing exactly what you earned and spent on a job.

Sounds simple. But most HVAC businesses lump everything into broad buckets like “labor,” “materials,” or “overhead.” That’s where the problem starts.

Because if you don’t break down each job...

• You can’t tell which projects are profitable

• You might be overpricing (and losing deals) or underpricing (and bleeding cash)

• You won’t know where to cut waste

Job costing brings clarity. And clarity brings better decisions.

Here’s What You Need to Track, Every Job, Every Time

1. Direct Labor (Field Hours Only)

Many HVAC businesses incorrectly label all labor as "overhead." Labor hours spent directly on a job should be tracked as Cost of Goods Sold (COGS).

Use time tracking software or clear manual logs to track:

• Who worked the job

• For how many hours

• At what labor rate (including benefits, not just base pay)

Pro Tip: Don't overlook unapplied time, travel, waiting, idle hours. This often becomes a significant hidden cost affecting your HVAC’s profits.

2. Materials and Parts (Per Job)

Your vans are moving warehouses. If you're not logging part usage per job, you're either under-billing or eating the cost.

Track every:

• Part pulled from van or warehouse

• Purchase order tied to that job

• Equipment used (especially if billed separately)

Using inventory systems integrated with job tickets helps simplify bookkeeping.

3. Job-Specific Overhead (Yes, it exists)

Expenses like permits, rentals, or subcontractor payments should be tied directly to the job in your accounting system, so they're not lost in general overhead.

4. Revenue Received or Billed

HVAC companies benefit from accrual accounting, which tracks revenue when earned, not just when payments arrive.

Directly match invoices and costs to each job to keep your financial records clear.

What Your Financials Should Look Like

After completing installations, your accounting system should detail:

Your Estimate Form Should Mirror Your P&L

If your estimates include labor, parts, warranty, and commissions but these don’t appear similarly in your financial reports, something’s off.

Ensure commissions and warranties are accurately tracked as COGS to avoid absorbing these costs into your profit margins.

Most Common Mistakes HVAC Businesses Make (We See These All the Time)

• No separation of field vs. office labor

• No warranty or commission accounts on the income statement

• Tracking labor as one big line item, no job-level breakdown

• Using cash accounting only (instead of accrual for management)

• Thinking retained earnings = cash (they’re not!)

These issues significantly affect profitability and cash flow.

Use Your Reports the Right Way

Many HVAC business owners rarely look beyond basic Profit & Loss (P&L) statements. Instead, do the following:

• Track gross margin per job

• Compare actual vs. estimated costs

• Check if operating cash flow is healthy (not just net profit)

• Review your balance sheet monthly, not just at tax time

• Use your cash flow statement to spot where money is leaking

Final Thoughts: Track. Review. Adjust.

Regularly checking job profitability helps you make smarter business decisions when pricing new jobs or expanding services.

You don’t need complex software, just a clear, reliable system for tracking costs, comparing margins, and making timely adjustments.

Want Help Setting This Up?

We've helped HVAC businesses organize their numbers clearly to simple systems showing:

• Which jobs are profitable

• Which techs are most efficient

• Where margins are leaking

Schedule a free call today, and we'll help you simplify your bookkeeping, spot areas for improvement, and keep your HVAC business profitable.