Accounting method matters
Completed-contract method defers income to project completion. Percentage-of-completion recognizes it as the job progresses. For long-duration contracts, method choice materially changes current-year tax. Smaller contractors under the gross-receipts threshold have the most flexibility; larger ones are pushed into percentage-of-completion with look-back interest calculations when estimates were off.
Job costing and work in progress
The tax return is only as good as the job schedule behind it. Direct labor, materials, subs, and allocated overhead have to land on the right job so over- and under-billings are visible. Retainage deserves its own line: depending on the accounting method, retainage receivable may not be income until you have the right to collect it.
1099-NEC for subcontractors
Contractors paid any subcontractor $600 or more must issue 1099-NEC by January 31. Missing 1099s create both penalty exposure and lost deduction risk in audit. Collecting a W-9 before the first check is written is the habit that prevents the January scramble.
Sales tax on materials and real property contracts
Florida treats most contractors as the final consumer of the materials that go into real property, which means you pay sales tax at the supply house and do not charge the customer sales tax on the improvement. Fabricators, retailers who also install, and contractors doing tangible personal property work fall under different rules, so the contract language matters:
- Lump-sum real property contracts: pay tax on materials, don't charge the customer
- Retail-sale-plus-installation contracts: collect tax on the materials portion
- Fabrication for your own jobs: use tax due on fabricated cost
- Out-of-county and out-of-state jobs: surtax and registration reviewed per project
Equipment depreciation and Section 179
Trucks, trailers, heavy equipment, and tools qualify for Section 179 expensing up to annual limits plus bonus depreciation. Timing purchases with income spikes is a meaningful tax lever. Heavy vehicles over the gross-weight threshold escape the passenger-auto depreciation caps, which changes the math on truck purchases.
Worker classification and payroll
Florida construction is a priority enforcement area for misclassification. A worker who uses your tools, works your schedule, and only works for you is an employee no matter what the agreement says. Reclassification in audit brings back payroll taxes, penalties, and workers' comp exposure at construction-class rates, which is why we review classifications annually rather than after a claim.
Common questions
- Do I need workers' comp if all my labor is subcontractors?
- Florida construction rules are strict. Misclassifying workers as 1099 when they're functionally employees creates serious exposure. We review classifications annually.
- Should I charge my customers Florida sales tax?
- On most real property improvement contracts, no. You pay sales tax when you buy the materials and build it into your price. Contracts that itemize and sell materials, or work on tangible personal property, follow different rules, so we review the contract form before you sign.
- When is retainage taxable?
- It depends on your accounting method. Under completed contract it lands with the rest of the job; on accrual it is generally not income until your right to it is fixed. Getting this wrong pulls income into a year you can't collect the cash.
- Can I write off a new work truck in year one?
- Often yes, through Section 179 and bonus depreciation, especially for heavier work vehicles that avoid the passenger-auto caps. The right answer depends on this year's income and next year's expectations, which is a planning conversation, not a checkbox.
Related
Corporation & Partnership Tax Returns
Forms 1120, 1120-S, and 1065 preparation for corporations, S-corps, and partnerships, plus owner K-1s, shareholder basis tracking, and multi-state filings.
Monthly Bookkeeping
Monthly, quarterly, and annual bookkeeping with bank reconciliations, a profit-and-loss report, and balance sheet within ten business days of month-end.
Business Tax Planning
S-corp reasonable salary analysis, entity elections, retirement plan structuring, and Section 179 and bonus depreciation planning for small business owners.
More industries we serve
Tax & Accounting for Retail & E-commerce
Inventory accounting, multi-state sales tax nexus, Amazon 1099-K reporting, FBA state registration, and marketplace facilitator rules for online sellers.
Tax & Accounting for Medical Practices
S-corp and PLLC elections, Section 199A QBI phase-out planning, layered retirement plan design, and partner compensation structuring for medical practices.
Tax & Accounting for Real Estate Investors
Depreciation, cost segregation, 1031 exchanges, short-term rental rules, Real Estate Professional status, and passive activity loss limits for investors.
Tax & Accounting for Consultants & Freelancers
Schedule C vs S-corp, home office deductions, self-employment tax, quarterly estimates, and Solo 401(k) retirement plans for consultants and freelancers.