Separate Your Revenue Streams Before Tax Season

"How do we separate plumbing from HVAC spend and the return on either?"

A client asked me this during an onboarding call. It's one of the smartest questions I get.

Most multi-service businesses—HVAC and plumbing, electrical and handyman, landscaping and irrigation—run everything through one set of books. Revenue goes in, expenses go out, and at the end of the year, you have a number.

But that number hides everything interesting.

The Problem with Blended Numbers

Here's what happens when you don't separate your revenue streams:

You think your business made $400,000 last year with 15% profit margin. Good enough.

But what if HVAC made $250,000 at 22% margin and plumbing made $150,000 at 4% margin? Suddenly the picture is very different.

HVAC is your profit engine. Plumbing is barely breaking even—maybe even losing money when you account for your time and overhead properly.

Without separation, you can't see this. You're making business decisions blind.

Should you hire another HVAC tech or a plumber? Which services should you market more aggressively? Where should you focus your growth? You can't answer any of these questions without separated financials.

QuickBooks Can Do This

The good news: if you're using QuickBooks (and most small service businesses are), this functionality already exists. You just have to set it up.

QuickBooks has two features that matter here:

Classes let you separate your business into divisions. Think of them as departments. You'd have an HVAC class and a Plumbing class. Every transaction gets tagged with a class, and you can run separate profit and loss statements for each.

Projects (called Jobs in some versions) let you track profitability at the individual job level. You can see exactly how much revenue a specific job generated and exactly how much it cost you to complete it.

For a multi-service business, you'd use classes to separate HVAC from plumbing (the big picture) and projects to track individual jobs within each service line (the details).

Setting Up Class Tracking

If you're not using classes yet, here's the basic setup:

In QuickBooks Online Plus or Advanced, go to Settings > Account and Settings > Advanced > Categories, and turn on "Track classes."

Create a class for each major service line. For an HVAC/plumbing company, that's two classes. Keep it simple.

From now on, every invoice, every bill, every expense gets tagged with a class. HVAC work goes in the HVAC class. Plumbing goes in Plumbing. Overhead that can't be assigned to either (like rent) can go into a "General" class or be split proportionally.

Once you've done this for a few months, you can run a Profit and Loss by Class report. That report shows you each service line as its own column—revenue, costs, and profit.

That's when the real insights start.

What You'll Discover

When clients set this up, they're usually surprised by what they find.

Some service lines are way more profitable than they assumed. The work that feels hard might actually be generating the best margins.

Other service lines are barely profitable—or losing money. The work that seems easy might be eating into profits when you account for all the costs.

Labor allocation becomes visible. Which crews are working on which services? Where is your most expensive labor going?

Marketing ROI gets clearer. If you're spending money to generate leads, you can see which service lines those leads are converting into—and whether those conversions are actually profitable.

One client discovered that their highest-revenue service line was actually their least profitable. They were busy, but they weren't making money. The fix wasn't working harder—it was shifting focus to the services that actually paid.

The Tax Season Advantage

Here's a practical reason to do this now: tax season is coming.

When you meet with your accountant or CPA, having separated financials makes everything easier. You can have informed conversations about where to focus, what to write off, and how to structure things for next year.

If your books are a mess—if HVAC and plumbing are all jumbled together—your accountant can only work with the aggregate numbers. They can't give you strategic advice because they can't see the details.

Clean books make for better tax strategy. And better tax strategy means keeping more of what you earn.

Getting Granular: Job Types

Once you have class tracking working, you can go even deeper.

Within your HVAC class, you might want to separate:

• HVAC maintenance
• HVAC repair
• HVAC installation

Each of these has different margins, different labor requirements, and different customer dynamics.

Maintenance contracts might be low-margin individually but high-value because they create recurring relationships. Installations might be high-revenue but require more overhead. Repairs might be where your real profit lives.

You can set this up with sub-classes in QuickBooks, or by using the Products and Services list to track different job types.

The more granular your data, the better your decisions. But don't overcomplicate it from day one—start with the big categories and add detail as you get comfortable.

Start Before Year-End

If you haven't been tracking this way, you can't retroactively fix 2025. Those numbers are what they are.

But you can start now for 2026.

Set up your classes this week. Tag every transaction going forward. By this time next year, you'll have a full year of separated data—and you'll understand your business in a way you never have before.

The question isn't whether to separate your revenue streams. It's whether you want to wait another year before you can see what's really happening in your business.

You already have multiple services. Now make your books reflect that.