Construction & Contractor CPA Services

Long-term contracts — ones that start in one tax year and finish in another — are generally required to be reported on the percentage-of-completion method. There is an exception for smaller contractors whose contracts are expected to be completed within two years, tested against an inflation-indexed gross receipts figure that changes annually. The current year's number is the one that governs, so it is worth re-testing rather than assuming last year's answer still holds.

Where percentage-of-completion is used, a completed contract is re-run against what the job actually cost, and interest is owed or refunded on the difference. Smaller contracts are excepted. It is not a penalty and it is not optional — it is a filing that follows the method, and it is the one contractors most often reach us not knowing about.

Money held back on a job sits between billed and collected. Whether it belongs in this year's income depends on your method of accounting and when the right to receive it becomes fixed. That answer is worth settling in advance, in writing, rather than discovering it against a filing deadline.

A work-in-progress schedule is not filing-season paperwork. It is the document a bonding agent and a bank read to decide what you can take on, and it is built from job costing that either happened during the year or did not. Books kept by job make that schedule a report; books kept by bank account make it a reconstruction.

Section 179 and bonus depreciation both let you accelerate the write-off on equipment, and federal law changed how they interact as recently as 2025 — the year the asset is placed in service is what decides the rules that apply to it. Taking the largest available deduction is not automatically right either: a deduction spent in a flat year is not available in the year the work doubles.

A contractor improving real property is generally treated as the consumer of the materials, which means the tax attaches when you buy them rather than being collected from the customer. Selling tangible goods at retail is a different transaction with a different answer. Contractors who do both need the mix tracked rather than estimated, because the invoice wording alone does not settle which one a job was.

Whether a crew member is a subcontractor is a facts test, not a preference expressed on a 1099. Getting it wrong is a payroll tax exposure with penalties attached, and it is the kind of thing that surfaces on audit or on a claim. We can tell you how the tax rules read; licensing, insurance and workers' compensation questions belong with your attorney and your carrier, and we will say so rather than guess.

A crew that takes a job in North Carolina or Georgia can create a filing obligation, a withholding obligation and a registration requirement in that state. It is far cheaper to raise before the bid than to unwind two years later.