Who we work with
We work with contractors and trade business owners bringing in $1 million or more in annual revenue: general contractors, home builders and remodelers, roofing, HVAC, plumbing, electrical, concrete, excavation, landscaping, and other specialty trades.
At this size, you’re running crews, trucks, and equipment, juggling several jobs at once, and maybe working across state lines. Revenue can swing from year to year, and big equipment purchases and slow-paying jobs can make cash tight even in a profitable year. A year-round plan helps you see the tax impact of each decision before you make it.
The tax and financial challenges contractors face
Construction and trade businesses have their own accounting rules and their own planning opportunities.
Job costing
Knowing what each job really earned, after labor, materials, subs, and equipment, is the foundation for pricing, cash flow, and accurate taxes. Without it, profit is a guess.
Long-term contract accounting
Jobs that cross year-end raise questions about when income is reported. Depending on your size and the type of work, you may have choices among accounting methods that affect the timing of your taxes.
Trucks and heavy equipment
Work trucks, trailers, excavators, and other equipment are major costs. Section 179, bonus depreciation, and the rules for heavy vehicles can let you deduct much of that cost sooner.
Crews, subs, and worker classification
Large payrolls, overtime, and the line between employees and subcontractors all carry tax risk. Collecting W-9s and filing 1099s for subs on time is part of staying protected.
Sales and use tax on materials
Whether you pay or collect sales tax on materials depends on the type of job and the state you’re working in. Getting it wrong can lead to assessments years later.
Working in more than one state
Jobs across state lines can create state income tax filings, payroll withholding, and registration requirements in each state you work in.
Strategies that often fit contractors and trades
Every business is different, and we only recommend what fits your numbers and your goals. These are strategies that often come up for contractors.
- Section 179 and 100% bonus depreciationEquipment and machinery can often be deducted in the year they’re placed in service, so timing a purchase can matter as much as the purchase itself.
- Heavy vehicles and bonus depreciationWork trucks over 6,000 lbs. used in the business can qualify for a large first-year deduction.
- The S corp electionA profitable contracting business run as a sole proprietorship or regular LLC may be paying more self-employment tax than it needs to.
- S corp reasonable compensationOwners who run jobs and manage the company need a salary that fits their role and is well documented.
- The Oklahoma PTE electionOklahoma owners with S corps or partnerships may be able to turn state income tax into a federal business deduction.
- The 20% QBI deductionConstruction generally isn’t a specified service field, and wages paid and equipment owned can help support this deduction at higher incomes.
- Hiring your childrenKids who do real work for the business, from cleanup to office help, can earn income that’s largely free of federal tax when the rules are followed.
Advanced strategies for higher-income owners
Larger contractors, and owners starting to think about an exit, often need more than the basics.
- Selling to an ESOPSelling to your employees through an ESOP can let a C corp owner defer the tax on the sale with a Section 1042 rollover.
- Selling your companyAsset vs. stock sale and how the price is allocated among equipment, goodwill, and a non-compete change the tax on the same deal.
- A cash balance planProfitable owners can deduct far more for retirement than a 401(k) alone allows.
- C corp vs. S corpIf you keep profit in the company to buy equipment and bond bigger jobs, the 21% corporate rate is worth testing.
- Own your yard and shop in a separate LLCHolding real estate apart from the operating company can protect it from job liability.
- Lifetime gifts and SLATsMove future growth of the company out of your estate if the next generation will take it over.
Everything under one roof
One monthly Tax Plan covers your business and your personal taxes. Plans start at $475 per month and are priced by complexity, and you’ll know your price before you commit.
- Year-round tax planningWe project your tax bill all year and plan equipment purchases, big jobs, and new markets before you commit.
- Business and personal returnsYour business return and your personal return, included in your plan.
- Bookkeeping with job costingMonthly books that track profit by job, so your plan runs on real numbers.
- Payroll for your crewsField and office staff, with payroll tax filings handled, including in other states where needed.
- Sales and use taxTracking and filing where your work requires it.
- 1099s for your subsW-9s collected and 1099s prepared and filed for subcontractors and vendors.
- Quarterly estimated paymentsFederal and state amounts calculated for you, with personal and business taxes shown separately.
- IRS audit protection and representationIf a notice or audit comes, we represent you before the IRS and handle it with you.
- CFO-style reportingClear reports on profit by job, cash flow, and what’s coming in and going out.
- Direct access to your advisorCall before you buy the truck, not after.
An illustrative example: selling to an ESOP
Picture the owner of an electrical contractor taxed as a C corporation. The owner sells 40% of the company to a new employee stock ownership plan (ESOP) for $8,000,000. The owner’s basis in those shares is $800,000, and the owner reinvests the full proceeds in qualified replacement property within the allowed window.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Regular sale | ESOP sale with Section 1042 | |
|---|---|---|
| Sale price | $8,000,000 | $8,000,000 |
| Owner’s basis in the shares sold | $800,000 | $800,000 |
| Gain | $7,200,000 | $7,200,000 |
| Federal tax due now (20% + 3.8%) | $1,713,600 | $0, deferred |
The owner defers about $1,713,600 of federal tax and keeps running the company while employees build ownership. Oklahoma personal tax on the sale is figured separately, and we confirm how Oklahoma treats the deferral.
The tax is deferred, not forgiven, unless the replacement property is held until death. The company must be a C corporation (an S corp would convert first), the ESOP must own at least 30% after the sale, and an ESOP has real costs: an independent valuation, a trustee, and yearly administration. It works best with a strong management team and steady profit.
Illustrative example. The contractor and figures above are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes the shares were held more than three years, a 20% capital gain rate plus the 3.8% net investment income tax, and that all Section 1042 requirements are met. This page is educational and is not tax advice for your situation.
Questions contractors ask us
Should I buy equipment before year-end to lower my taxes?
Sometimes. Section 179 and bonus depreciation can let you deduct qualifying equipment in the year it’s placed in service, but buying equipment you don’t need just for a deduction rarely makes sense. We look at your income this year and next and help you time purchases that fit your plans.
How do you handle jobs that span two tax years?
It depends on your size, the type of work, and the accounting method you use. Some contractors can report income when a job is finished, while others must report as work progresses. We review your contracts and make sure you’re using the method that fits and is allowed.
Are my subcontractors employees or contractors?
It depends on how the work is controlled and paid, not just what you call them. We help you review your setup, collect W-9s, and file 1099s on time, and flag anyone who may need to be on payroll.
Do you work with contractors outside Oklahoma?
Yes. We’re based in Norman and fully virtual, and we work with contractors in Oklahoma and beyond, including companies with jobs in more than one state.
Can I sell my contracting company to my employees?
Often, yes. An ESOP buys some or all of the owner’s shares, usually financed over time by the company. If the company is a C corporation and the rules are met, the owner can defer the tax on the sale. It isn’t a fit for every company, so we look at your profit, management team, and goals first.
Should my equipment and yard be in a separate company?
Many contractors hold real estate, and sometimes equipment, in a separate LLC that leases it to the operating company. It can protect those assets from job liability and help with an eventual sale. It also adds filings and the rent must be fair, so we look at whether it fits.
Can I write off equipment I finance?
Yes. Section 179 and bonus depreciation are based on when equipment is placed in service, not when it is paid off, so financed equipment can qualify in year one. The loan payments aren’t deducted again, but the interest is.
Watch the stories
One-minute stories about owners like you. Illustrative story; the people are fictional and are not clients. See all story videos.
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What could a strategy save you?
- S corp
- Solo 401(k)
- Augusta Rule
- Hiring your kids
- Oklahoma PTE