Accounting Built for the Construction Industry
Construction accounting is not like other industries. Between job costing, retainage, equipment depreciation, and fluctuating project timelines, you need a CPA who understands how contractors actually make money.
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How can we help?
Understanding Your Industry
Cloonan & Associates provides accounting and tax services designed specifically for general contractors, subcontractors, and specialty trades. We help you track profitability by job, plan for estimated tax payments tied to project-based revenue, and structure your entity to protect personal assets. Whether you are a one-person operation or running crews across multiple states, we bring clarity to your numbers so you can bid with confidence.
Common Challenges We Help Solve
Job Costing Complexity
Tracking costs across multiple active projects, change orders, and subcontractor payments requires specialized systems. Without accurate job costing, you cannot know which projects are profitable and which are draining resources.
Tax Surprises from Project-Based Revenue
Large payments arriving in uneven cycles can create unexpected tax liabilities. Contractors who collect progress payments or retainage often end up owing more than expected at year-end because income recognition does not match cash flow.
Entity Structure Decisions
Choosing between an LLC, S-Corp, or C-Corp has a direct impact on self-employment taxes, liability protection, and your ability to secure bonding. The wrong structure can cost thousands in unnecessary taxes every year.
Equipment Depreciation Strategy
Heavy equipment, vehicles, and tools represent major capital expenditures. Timing purchases and choosing between Section 179 expensing, bonus depreciation, and standard schedules can dramatically shift your annual tax burden.
Contractor vs. Employee Classification
Misclassifying workers as independent contractors when they should be employees exposes you to back taxes, penalties, and potential audits from the IRS and state labor agencies. The rules vary by state and are actively enforced.
Bonding and Financial Statement Requirements
Surety companies require clean, well-organized financial statements to approve performance and payment bonds. Inaccurate books or poor financial reporting can limit your bonding capacity and disqualify you from larger projects.
How We Help
Services for Construction & Contractors
These are the services most commonly used by businesses in your industry.
Monthly Bookkeeping Services
Our monthly bookkeeping service covers every aspect of keeping your financial records accurate and up to date. We handle transaction capture, bank and credit card reconciliations, accounts receivable and payable management, month-end closing, and financial statement preparation. We also track 1099 vendor payments throughout the year so you are ready when filing season arrives.
Learn MoreBusiness Tax Preparation Services
We prepare federal and state business tax returns for S-Corporations, LLCs, partnerships, and C-Corporations. Our service goes beyond compliance. We review your entity structure, calculate quarterly estimated payments, identify all available deductions and credits, and coordinate your business return with your personal return to minimize your total tax liability. We also advise on entity selection and restructuring when it can produce meaningful tax savings.
Learn MoreSales & Use Tax Consulting
Sales and use tax compliance is one of the most complex areas of state taxation. Rules vary dramatically between jurisdictions, and the consequences of getting it wrong can be significant. We provide nexus analysis, voluntary disclosure agreements, audit defense, taxability reviews, and exemption certificate management. Whether you need to establish compliance from scratch or resolve an existing problem, we have the expertise to guide you through it.
Learn MoreRemote CFO Services
Our remote CFO service provides small businesses with the same level of financial leadership that larger companies get from their in-house finance executives. We handle budgeting, forecasting, 13-week cash flow modeling, KPI dashboard development, pricing analysis, lender relations, and board or investor reporting. We become a trusted member of your leadership team, attending meetings, advising on strategy, and helping you make financial decisions with confidence.
Learn MorePersonal Income Tax Planning
We provide personal income tax planning and preparation for business owners, executives, and professionals whose tax situations go beyond a standard W-2 return. Our approach integrates your business income, investment income, retirement contributions, real estate holdings, and multi-state filing requirements into a coordinated strategy that minimizes your total tax burden. We work with you year-round, not just at filing time.
Learn MoreCommon Questions
Frequently Asked Questions
Should my construction company use percentage-of-completion or completed-contract accounting?
It depends on your average contract size, project duration, and revenue thresholds. The percentage-of-completion method recognizes revenue as work progresses, which better matches income to expenses on long-term projects. The completed-contract method defers revenue until a project is finished, which can defer taxes but may create large income spikes. For companies with average annual gross receipts under $27 million, the completed-contract method is available and sometimes advantageous. We evaluate your project mix and help you select the method that minimizes taxes while meeting your financial reporting needs.
How do I set up job costing for my contracting business?
Effective job costing starts with a consistent chart of accounts that separates costs by project, cost category (materials, labor, subcontractors, equipment, overhead), and phase. We help you configure your accounting software to capture these categories, set up processes for tracking change orders and purchase orders, and produce job profitability reports that show exactly where money is going on every active project.
What equipment deductions are available for contractors?
Contractors can take advantage of Section 179 expensing to deduct the full cost of qualifying equipment in the year of purchase, up to the annual limit ($1.22 million for 2024). Bonus depreciation allows additional first-year deductions on new and used equipment. Standard MACRS depreciation spreads the deduction over the asset's useful life. The best strategy depends on your current year income, expected future earnings, and whether you need to manage taxable income across multiple years.
How should I handle estimated tax payments with irregular project income?
We use the annualized income installment method to calculate quarterly estimates that reflect your actual earnings pattern rather than assuming equal quarterly income. This approach prevents overpaying in slow quarters and avoids underpayment penalties during busy periods. We review your active projects, billing schedule, and expected collections each quarter to adjust your estimates throughout the year.
What entity type works best for a construction business?
Most small to mid-size contractors benefit from an S-Corporation election, which can reduce self-employment taxes while providing liability protection. However, the right structure depends on your bonding requirements, number of owners, state tax rules, and long-term goals. Some contractors use a combination of entities, separating equipment ownership from operations for additional asset protection. We analyze your specific situation and recommend the structure that balances tax savings with practical needs.
Can you help with multi-state tax obligations for contractors?
Yes. Contractors working across state lines face nexus obligations for income tax, sales tax on materials, and sometimes gross receipts taxes. Each state has different rules about when a temporary project creates a filing obligation. We track your project locations, determine where you have nexus, and handle all required state filings to keep you compliant without overpaying.
Related Industries
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Real Estate Investors
Cloonan & Associates serves residential and commercial real estate investors, from single-property landlords to portfolio owners managing dozens of units. We specialize in the tax strategies that make real estate one of the most tax-advantaged asset classes, including depreciation planning, 1031 exchanges, cost segregation analysis, and passive activity loss optimization. Our goal is to help you keep more of your rental income and build long-term wealth through smart tax planning.
Learn MoreLocal Government & Public Entities
Cloonan & Associates provides accounting and advisory services to municipalities, townships, special districts, and other public entities. We specialize in governmental fund accounting, GASB compliance, grant management, and the financial reporting requirements that public entities face. Our work helps your finance team maintain accurate records, prepare for audits, and produce reports that satisfy state oversight agencies and inform public stakeholders.
Learn MoreE-Commerce & Online Businesses
Cloonan & Associates helps e-commerce sellers, SaaS companies, and online service providers manage the unique financial complexities of doing business on the internet. We handle multi-state sales tax compliance, inventory cost accounting, payment processor reconciliation, and the tax planning strategies that help online businesses retain more of their revenue. Whether you sell on Amazon, Shopify, your own platform, or a combination, we build the financial infrastructure that supports sustainable growth.
Learn MoreReady to Work With a CPA Who Understands Your Industry?
Schedule a free consultation. We will review your situation, explain how we can help, and give you a clear picture of what working together looks like.