Construction & Trades

The job is profitable. The year might not be.

A 30-minute consultation is $150, credited against your first engagement if you go ahead with us.

Construction is the industry where the books and the bank account tell the most different stories. You have been paid for work you have not done, done work you have not billed, and have money held back on jobs you finished months ago. A contractor who reads only the bank balance is flying blind, and a contractor whose accountant only shows up in March is making every decision without the numbers.

Which method you are on is not a preference

Long-term contracts are governed by section 460, which generally requires the percentage-of-completion method. The exception that matters to most small and mid-sized contractors exempts a contract you expect to complete within two years of commencement, if you meet the gross receipts test for the year the contract is entered into. That threshold is indexed annually, so eligibility is a question to re-answer every year rather than once. Home construction contracts have their own separate exception, on different conditions.

This is not a filing technicality. The method determines when income is recognized, which determines what you owe and when. We test your eligibility each year, document the position, and tell you early if growth is about to push you off the exception — because that transition is far cheaper to plan for than to discover.

WIP, retainage, and the schedule your bonding agent wants

We produce a real work-in-progress schedule: contract value, costs to date, estimated cost to complete, percent complete, billings to date, and the resulting over- or under-billing. Overbillings are a liability, not profit, and treating them as profit is how contractors run out of cash in a good year. Retainage receivable is tracked separately from ordinary receivables, because it ages differently and it is not collectible on the same terms.

One part of that schedule is not ours to produce. The estimate to complete has to come from you or your project manager — nothing in an accounting file knows how much work is left on a job. What we do is build the schedule around your estimates, keep it current every month rather than the week your surety asks for it, and tell you when the estimates and the costs have stopped agreeing with each other. That divergence is usually the first sign a job is going wrong, and it shows up in the schedule long before it shows up in the bank account.

If you carry a bond or a line of credit, the WIP schedule is what your surety and your lender are reading. It should not be assembled the week they ask for it.

Job costing that survives contact with the field

Materials, subs and equipment are coded to the job in QuickBooks Online from the bills as they come in. Labor is the piece that depends on you: it can only be costed to a job as well as your crews record their time, and for most contractors fixing that is the first job rather than the last.

Once it is in place, gross margin is visible by job and by type of work while the job is still running — which is what tells you which work to bid more of, which crew is costing you, and which customer is not worth the trouble.

Crews, subs, and equipment

Subcontractor payments mean Form 1099-NEC (IRS: About Form 1099-NEC), W-9s collected before the first check rather than chased in January, and a worker classification question that is examined harder in construction than almost anywhere else (IRS: Independent contractor or employee?).

On the equipment side, section 179 expensing and bonus depreciation can reshape a year's tax bill, and the right answer depends on your income, your method and what you plan to buy next year rather than on a rule of thumb. If you work across state lines, registration, withholding and sales and use tax are scoped per engagement — we will tell you what is in and what is out before you sign.

Common questions

Do I have to use percentage-of-completion?

Not necessarily. There is an exception for contracts you expect to finish within two years if your gross receipts are under the threshold for the year the contract starts, and home construction contracts have their own. The threshold is indexed, so the answer can change as you grow — which is why we test it every year and tell you before growth moves you rather than after.

Can you produce a WIP schedule my surety will accept?

Yes, provided you can give us a cost-to-complete on each open job. That number comes from your side; everything else on the schedule comes from the books. We build it monthly rather than the week it is asked for, which is the difference between a schedule your surety trusts and one they question.

My guys are on 1099s. Is that going to be a problem?

It might be. Construction is examined harder on classification than almost any other industry, and the test is who controls the work rather than what the agreement says. Tell us how your crews actually operate and we will tell you plainly which arrangements will hold up — and what fixing one costs against what leaving it costs.

This page is about whether we recognize your situation. The look-back computation that can follow percentage-of-completion, the uniform capitalization rules that can reach indirect costs, and the conditions on the home construction exception are worked through in an engagement against your own contracts. We will tell you which of them actually reach you rather than listing them to sound thorough.