Who we work with
We work with owners of oil and gas service companies bringing in $1 million or more in annual revenue: water hauling and trucking, well servicing, roustabout and construction crews, equipment rental, fabrication, and other businesses that serve operators in Oklahoma and nearby basins.
Service companies at this size carry heavy equipment, large crews, and work in more than one state, and their income can swing hard from year to year. Planning ahead is how you keep a strong year from becoming an oversized tax bill.
The tax and financial challenges oilfield service owners face
Oil and gas service work brings heavy costs, uneven years, and filings in more than one place.
Boom and bust years
A strong year can put owners in the top bracket, and a slow year can bring losses. Loss carryforwards generally offset only 80% of later income, so timing deductions to the right years matters.
Heavy equipment and trucks
Trucks, trailers, pumps, and rigs are major purchases. Bonus depreciation and Section 179 can bring big deductions, and sales and trade-ins bring recapture.
Crews and per diem
Crews living on the road need per diem and lodging set up the right way, so it’s tax-free to them and deductible to you.
Work in other states
Jobs in Texas, New Mexico, and other states can bring state income or franchise tax, payroll withholding, and sales or use tax there.
Slow-paying customers
Large operators can take months to pay. Your accounting method decides whether you’re taxed when you invoice or when you’re paid.
Yards, shops, and succession
Real estate, equipment, and an eventual sale to a larger company or the next generation each need their own structure and plan.
Strategies that often fit oil and gas service companies
Every business is different, and we only recommend what fits your numbers and your goals. These are strategies that often come up for owners like you.
- Section 179 and 100% bonus depreciationTrucks, trailers, pumps, and other equipment can often be deducted in the year they’re placed in service, sized to the year you’re having.
- Heavy vehicle depreciationPickups and trucks over 6,000 pounds used for the business can bring large first-year deductions.
- The S corp electionStop paying 15.3% self-employment tax on all your profit.
- S corp reasonable compensationA salary that holds up to IRS scrutiny, with the rest of the profit as distributions.
- The Oklahoma PTE electionOklahoma owners with S corps or partnerships can turn state income tax into a federal business deduction.
- The accountable planReimburse yourself and your team tax-free for travel, phone, and mileage under the rules.
- Own your yard and shop in a separate LLCHolding real estate apart from the operating company can protect it from job liability.
Advanced strategies for higher-income owners
Owners with big years, investments in wells, or an exit in mind often need more than the basics.
- Intangible drilling costsIf you personally invest in working interests, drilling costs can bring large deductions against your other income.
- A cash balance planIn strong years, owners can deduct far more for retirement than a 401(k) alone allows.
- Selling your companyEquipment recapture, goodwill, and a non-compete are taxed differently, so the allocation of the price matters.
- Selling to an ESOPEmployees can buy the company over time, and a C corp owner may be able to defer the tax on the sale.
- C corp vs. S corpIf you keep profit in the company to ride out slow years, the 21% corporate rate is worth testing.
- Lifetime gifts and SLATsMove future growth of the company out of your estate if family 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 as the year unfolds and plan equipment purchases and retirement contributions to the year you’re having.
- Business and personal returnsYour company’s return and your personal return, included in your plan.
- BookkeepingMonthly books that track revenue and costs by customer, job, and piece of equipment.
- Payroll for your crewsField crews, drivers, and office staff, including per diem and workers in other states.
- Sales and use taxTracking and filing for taxable sales and for equipment and supplies bought out of state.
- 1099sPrepared and filed for subcontractors and vendors who need them.
- 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, cash, receivables, and equipment use, so you can plan for the next downturn.
An illustrative example: the same deduction in a boom year and a slow year
Picture a water-hauling company taxed as an S corp that needs $800,000 of new trucks and tanks. The owner can buy them in a strong year, when the owner is in the 37% federal bracket, or wait until a slower year, when the owner would be in the 24% bracket.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Strong year (37%) | Slow year (24%) | |
|---|---|---|
| First-year deduction with 100% bonus depreciation | $800,000 | $800,000 |
| Federal income tax saved by the owner | about $296,000 | about $192,000 |
The same purchase is worth about $104,000 more in federal tax savings in the strong year. That’s why we track your year as it happens and plan equipment purchases with you. The Oklahoma effect depends on whether Oklahoma follows federal bonus depreciation for the year, which we confirm before counting on it.
Buy equipment because the business needs it, not only for the deduction. You can elect out of bonus depreciation or use Section 179 for a chosen amount to fit the year. When equipment is sold or traded in later, the price up to the depreciation taken is taxed as ordinary income.
Illustrative example. The company 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 equipment is acquired after January 19, 2025, qualifies for 100% bonus depreciation, and that the owner can use the full deduction in the bracket shown. This page is educational and is not tax advice for your situation.
Questions oil and gas service companies ask us
We had a big year. Should we buy equipment before year-end?
Maybe. Equipment placed in service before December 31 can often be deducted this year, and a deduction is worth the most in a high-bracket year. But buy only what the business needs, and plan for the recapture when it’s sold. We run the numbers with you before you buy.
How do you handle crews working in Texas, New Mexico, or other states?
Work in another state can mean payroll withholding, state income or franchise tax filings, and sales or use tax there. We track where your crews work and handle the filings as part of your plan, which is one of the things that sets your price.
Can we pay crews per diem tax-free?
Yes, when it’s paid under an accountable plan at or below the federal rates and tied to real travel away from home. Then it isn’t wages to the worker and is deductible to you, though the meal portion is usually only partly deductible. We help you set it up and keep the records.
Do oil and gas deductions like IDC apply to my service company?
Usually not. Intangible drilling costs and depletion belong to owners of working interests in wells. A service company deducts its equipment and costs under the normal rules. If you personally invest in working interests, IDC can matter a great deal for you.
Do you work with service companies outside Oklahoma?
Yes. We’re based in Norman and fully virtual, and we work with oilfield service owners in Oklahoma and beyond.
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What could a strategy save you?
- S corp
- Solo 401(k)
- Augusta Rule
- Hiring your kids
- Oklahoma PTE