Professional services
Professional services bookkeeping checklist
A professional services business sells time and expertise, so the books have to show what was billed, what is still unbilled and what it cost to deliver. The monthly request should collect the time reports, the invoices, the expense receipts, the payroll and the contractor payments. Keep the unbilled work visible so the revenue is not recorded later than the work.
Who sends itSent by the bookkeeper for a consultant, agency, architect, engineer or other professional services client after the month ends, usually by the 10th.
0 of 18 ticked
01Time and billing
02Expenses and vendors
03Payroll and contractors
04Tax and banking
What firms get wrong
- Recording revenue when the client pays instead of when the work was done or billed.
- Letting unbilled time sit in a spreadsheet that is never reconciled to the books.
- Treating a refundable retainer as revenue in the month it is received.
- Missing the W-9 for a freelancer paid through a project platform.
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Questions about this checklist
What records does a professional services business need each month?
The time report, invoices, unbilled work report, expense receipts, subcontractor invoices, payroll and contractor payments, and bank statements. The time report and the unbilled work report are what tie the revenue to the work.
When should unbilled time be recorded?
Revenue is generally recorded when the work is performed or the invoice is issued, depending on the client's accounting method. Keep the unbilled work report so the amount is visible and the cutoff is documented.
How should a retainer be recorded?
A refundable retainer is usually a liability until it is earned. A non-refundable retainer may be revenue when received, depending on the agreement. Read the retainer letter before deciding.
Do subcontractors get a 1099?
A payment to an unincorporated subcontractor for services is generally reported on Form 1099-NEC when it reaches the threshold. Collect a W-9 before the first payment and check the payee's entity type.
Sources
- IRS: Publication 334, Tax Guide for Small Business
- IRS: Publication 463, Travel, Gift, and Car Expenses
- IRS: Instructions for Forms 1099-NEC and 1099-MISC
Checked November 3, 2026. Tax rules, forms and thresholds change; confirm them with the IRS or your tax software before relying on them.
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