What is a chart of accounts for a plumbing company?

A chart of accounts is the list of every account your books can post to — income, cost of goods sold, operating expenses, assets, and liabilities. For a plumbing shop, the version that matters splits income by line of business — service, drain and sewer, installs, repipes, new construction — with matching cost accounts underneath, so you can see the margin on each instead of one blended number that hides which side of the shop is carrying the other.

How many accounts should a plumbing shop have?

Roughly 45 to 60 for most shops, a little more than an HVAC shop of the same size because plumbing carries truck stock, retainage, and bonding that HVAC often does not. Fewer than about 35 and your P&L cannot answer pricing questions. More than about 80 and techs and office staff start miscoding, which is worse than having fewer accounts. The test is not the count — it is whether every account maps to a decision you actually make.

Should truck stock be inventory or an expense?

Inventory, until it goes onto a job. Your trucks carry thousands of dollars in fittings, valves, and copper that moves with no purchase order attached. Expensing it at purchase means a heavy restock week shows as a terrible month and the jobs that consumed the parts show as unusually profitable. Hold it in an inventory asset account, then relieve it to a 'Truck stock consumed' COGS account as it goes onto jobs. If a full perpetual count is unrealistic, do a physical count quarterly and true up.

How do you account for retainage on plumbing construction work?

Retainage — typically 5 to 10% withheld until closeout — is revenue you have earned but cannot spend, so it does not belong in ordinary accounts receivable. Give it its own asset account so a $40,000 receivable balance does not read as collectible cash when $18,000 of it is held pending final inspection. Track lien deadlines alongside it; in most states those run from your last day on the job, not from the invoice date.

What are the most common plumbing chart of accounts mistakes?

Five recur constantly: one blended income account so service and construction margin cannot be separated, truck stock expensed at purchase instead of held as inventory, direct labor sitting in operating expenses instead of COGS (which makes gross margin meaningless), retainage buried in ordinary AR, and no callback account so rework never gets charged back to the job that caused it. The last one keeps you pricing the work that generates callbacks as if it were profitable.

Plumbing Chart of Accounts: A Complete Template for Shops

A chart of accounts is the list of every account your books can post to. For a plumbing shop it is also the thing that decides whether your P&L can tell you that drain work is quietly carrying the company while new construction loses money on every draw — or whether it reports one blended margin and leaves you guessing. Most shops inherit a generic template from QuickBooks, never change it, and end up with books that reconcile perfectly and explain nothing. This guide covers the accounts a plumbing shop actually needs, why each one exists, and the setup mistakes that make a P&L useless for pricing.

Free download: Plumbing chart of accounts template (CSV) — the structure in this guide as 58 numbered accounts, with account types and a one-line note on why each exists. Imports into QuickBooks Online, Xero, and most accounting software. No email required.

Why the default template fails plumbing shops

The generic small-business chart of accounts was built for a business that sells one thing at one margin. A plumbing shop sells at least five: service and repair, drain and sewer, water heater and fixture installs, repipes and major repairs, and new construction or remodel work. Those are not variations on a theme. They have different margins, different durations, different cash profiles, and different risks.

Then there is volume. An HVAC shop might close 20 installs in a month. A service plumbing shop closes 200 tickets — a $180 drain clear, a $340 leak repair, a $2,900 water heater swap, and occasionally a $14,000 repipe. When all of that lands in one "Sales" account with one "Materials & Supplies" account underneath, your P&L reports a single blended gross margin that is the average of five different businesses.

That average is exactly the number that hides a problem. Two shops with identical blended margin can be in completely different shape: one is making money across the board, the other is losing money on every construction job and doesn't know it because high-margin drain work covers the bleed.

The fix is structural, not cosmetic. You need income split by line of business, and cost of goods sold split by what actually drives cost per job.

Income accounts

Start here, because everything downstream depends on it.

Account	What belongs in it
Service & repair revenue	Leak repair, fixture repair, general service calls
Drain & sewer revenue	Drain cleaning, camera inspection, hydro jetting, sewer repair
Water heater & fixture install revenue	Tank and tankless swaps, toilets, faucets, disposals
Repipe & major repair revenue	Whole-house repipes, slab leaks — different margin and duration from service
New construction & remodel revenue	Builder and remodel work; bills in draws, collects slowly, carries retainage
Emergency & after-hours revenue	Premium-rate nights, weekends, holidays
Service agreement revenue	Recurring plan billings — your predictable baseline
Backflow testing & certification revenue	Recurring compliance work with its own margin profile
Other income	Rebates, referral fees, warranty reimbursements — not operating revenue

Two of these earn their place more than owners expect.

Emergency and after-hours revenue. A Sunday-night burst pipe bills at premium rates and costs premium labor. Blended into general service revenue with a single blended labor rate, your after-hours margin is a guess. Separated, most shops discover it is the most profitable work they do — which changes how aggressively they staff for it.

New construction, separated from everything else. Service work bills immediately and collects in days. Construction bills in draws, gets 5 to 10% held back, and collects in 60 to 90 days. Same shop, two completely different businesses. Blending them at the income line makes both invisible.

Cost of goods sold

These are the costs that vary with the work. Get this section right and job costing becomes arithmetic instead of archaeology.

Account	Why it's separate
Materials — supply house	Fittings, valves, pipe, solder, copper, PEX
Fixtures & equipment	Water heaters, toilets, faucets, pumps — large, traceable, deliberately marked up
Truck stock consumed	Parts pulled off the truck onto a job
Direct labor — service (burdened)	Burdened tech cost on service work
Direct labor — after-hours (burdened)	Premium labor, tracked separately
Direct labor — construction (burdened)	Different pace and margin from service
Permits & inspections	Directly attributable and routinely forgotten
Subcontractors	Excavation, concrete cutting, electrical, restoration
Equipment rental	Excavators, trenchers, specialty tools per job
Callbacks & warranty	Return trips on work already invoiced
Freight & delivery	Supply house delivery, drop-shipped fixtures
Disposal & dump fees	Spoil haul-off, old water heaters and fixtures

Three of these deserve elaboration.

Fixtures separate from materials. A 50-gallon water heater and a box of fittings are not the same kind of cost. Fixtures are large, traceable, and marked up deliberately. Materials are consumed in volume and lost to waste. Combined into one account, a supplier price increase on water heaters looks identical to material waste in the field, and you cannot tell which one moved your margin.

Direct labor belongs in COGS, not operating expenses. This is the most common structural error I see. If tech wages sit in operating expenses, your gross margin is revenue minus parts — a number with no relationship to job profitability. Labor is a direct cost of the work. It goes above the gross margin line. Use a burdened rate: wage plus payroll taxes, workers' comp, and benefits, typically 1.3 to 1.4 times the base hourly wage. A tech you pay $34 an hour costs you $44 to $48.

Callbacks get their own account. This is the plumbing-specific margin killer. A tech goes back out on a repair that did not hold. Nobody invoices it, so nothing hits the books against that job, and the original ticket keeps showing a margin it never earned. Give return trips their own COGS account, tag each one to the job that caused it, and review callback cost by job type monthly. Shops that skip this systematically underprice exactly the work that generates callbacks.

Truck stock, and why it belongs on the balance sheet

This is the account most plumbing shops get wrong, and it is worth its own section.

Your trucks carry thousands of dollars in fittings, valves, copper, and water heaters that moves without a purchase order attached. A tech pulls a pressure-reducing valve off the shelf at 7am and installs it at 9am. If your books expense every supply-house purchase the moment it is bought, two things break at once: the week you restock four trucks looks like a catastrophic month, and the jobs that consumed those parts look unusually profitable because their materials were already expensed weeks earlier.

The correct treatment is to hold truck stock in an inventory asset account at purchase, then relieve it to a Truck stock consumed COGS account as it goes onto jobs. That way the cost lands in the same period as the revenue it produced, which is the entire point of accrual accounting.

Most shops cannot run true perpetual inventory on a service truck, and that is fine. The workable version is a physical count once a quarter, with a true-up entry that moves the difference into Truck stock consumed. Even at quarterly resolution, that is dramatically better than expensing at purchase — and the count itself usually turns up shrink nobody knew about.

Operating expenses

These are the costs of being in business regardless of which jobs you run. They belong below the gross margin line.

Vehicles — fuel, maintenance, repairs, registration, and vehicle insurance
Insurance — general liability, workers' comp (the non-burdened portion), umbrella
Contractor bonding — license and performance bonds, required in most states
Office & administrative — rent, utilities, dispatch salaries, office supplies
Software & technology — Jobber or Housecall Pro, accounting software, phone system
Marketing — ads, truck wraps, website, review platforms
Professional fees — CPA, legal (including lien filings), bookkeeping
Licensing & continuing education — master and journeyman licensing, state fees, training
Backflow certification & testing fees — certification renewals and gauge calibration
Bank & merchant fees — processor fees, financing program costs
Small tools & consumables — blades, bits, torch gas, hand tools below your capitalization threshold
Depreciation — non-cash, but it belongs on the P&L

Merchant and financing fees deserve their own account. Consumer financing is common on repipes and water heater replacements, and the dealer fee can run several percent of the ticket. Buried in general expenses, that cost never gets attributed to the line that generated it, and your install margin reads better than it is.

Assets, liabilities, and equity

The balance sheet is where the plumbing-specific structure really shows up.

Section	Accounts
Assets	Operating bank · Payroll/tax reserve · Accounts receivable · Retainage receivable · Inventory — truck stock · Vehicles · Tools & equipment · Accumulated depreciation
Liabilities	Accounts payable · Credit cards · Equipment loans & vehicle notes · Payroll liabilities · Sales tax payable · Deferred service agreement revenue · Customer deposits
Equity	Owner's capital · Owner's draw · Retained earnings

Four of these are worth calling out.

Retainage receivable is not accounts receivable. Retainage is money you have earned but cannot spend, typically 5 to 10% withheld until the job closes out. Left in ordinary AR, a $40,000 receivable balance reads as collectible cash when $18,000 of it is sitting behind a final inspection. Give it its own account, and track lien deadlines alongside it — in most states those run from your last day on the job, not from the invoice date.

Customer deposits are a liability, not revenue. Money taken up front on a repipe before any work is done is not yours yet. It belongs in a liability account until you have performed.

Deferred service agreement revenue. Agreements are usually billed before the work is performed, which creates a liability rather than income. Worth confirming the treatment with your CPA, but the account needs to exist.

Vehicles and equipment are assets, not expenses. A $58,000 truck or a $12,000 trailer jetter expensed in the month you bought it destroys that month's P&L and misstates every margin you calculate from it. Capitalize and depreciate — and your CPA needs it recorded properly to elect Section 179 or bonus depreciation.

Setting it up without breaking your history

If you are restructuring an existing chart of accounts rather than starting clean:

Change at a period boundary — the start of a quarter or year. Mid-period changes make comparisons meaningless.
Rename before you create. If "Sales" becomes "Service & repair revenue," renaming preserves the transaction history. Creating a new account and abandoning the old one splits your history across both.
Merge rather than delete. Deleting an account with transactions either fails or orphans data. Merging moves the history somewhere sensible.
Map the old to the new in writing before you touch anything, so you can restate at least the prior year for comparison.
Tell whoever codes transactions. A chart of accounts is only as good as the coding discipline behind it. If your techs pick categories on supply-house purchases, they need the new list and a short explanation of the service/construction split.

What good looks like

Once the structure is right, your P&L should let you answer these without opening another system:

What was gross margin on service work last month, and on construction, separately?
What did callbacks cost as a percentage of service revenue?
What is after-hours margin compared to standard-hours margin?
What percentage of revenue is under service agreement before the year starts?
How much of my AR is actually retainage I cannot collect yet?
What did truck stock shrink cost me last quarter?

If your current books cannot answer those, the problem is almost certainly the chart of accounts rather than the bookkeeper. And once the structure is in place, the next step is assigning those costs to individual jobs — which, when your average ticket is $340 and you close 200 of them a month, needs its own approach. That is covered in the complete guide to plumbing bookkeeping, along with the Jobber-to-books handoff and a monthly close routine. If you run HVAC work alongside plumbing, the HVAC chart of accounts covers the equipment and maintenance-agreement structure that trade needs.

The bottom line

A chart of accounts is not administrative housekeeping. It is the structure that decides which questions your books can answer. Split income by line of business, put burdened labor in COGS where it belongs, give callbacks and retainage their own accounts, hold truck stock as inventory until it goes on a job, and capitalize your trucks. That is most of the work, and it costs nothing but an afternoon and the discipline to code consistently afterward.

If you want the structure without rebuilding it by hand, the plumbing chart of accounts template (CSV) has all 58 accounts numbered and ready to import.

*Written by Austin Semple, a former controller with 10+ years of audit and controller experience, and the founder of Poof. If you'd rather have the structure built for you and maintained every month — with per-job P&L on every close, reviewed by a controller you can text — that's what Poof Managed for Trades is.*