Construction accounting services, for contractors who bid on margin.
Percentage-of-completion, WIP schedules, job costing, retainage, certified payroll and equipment depreciation — handled by a CPA who has seen a lookback calculation before. Serving Houston, Katy, Sugar Land and Fort Bend County contractors.
What construction accounting services include
Construction is the most accounting-complex trade most small business owners will ever operate in, and the reason is structural: revenue is earned across periods, costs are committed before they are incurred, and the number that matters — gross margin by job — is invisible in a standard profit and loss statement.
A construction accounting engagement here covers six things:
- Job costing that ties labor, materials, subs and equipment to the job that consumed them
- WIP schedules produced monthly, so over- and under-billings are visible before the bonding agent asks
- Long-term contract accounting — method selection, and the lookback calculation when contracts close
- Monthly bookkeeping in a chart of accounts built for construction rather than retail
- Equipment and fleet depreciation planned across the buying cycle instead of at filing
- The returns — 1120-S, 1065 or 1120, plus the multi-state filings the jobs create
Published fees for the return work are on the pricing page. Monthly construction bookkeeping generally runs above the standard band because job-level coding takes real time.
Why contractors need a construction CPA rather than a general one
Accountants for contractors are not a different licence — they are a CPA who has spent enough time in the trade to know where the money hides.
A competent generalist will file a correct return for a contractor. What they will usually not do is tell you, in March, that your accounting method is costing you a year of tax deferral, or that your WIP schedule shows you have billed 82% of a job that is 61% complete and the cash you are holding is not profit.
The specific things a CPA for contractors handles that generalists routinely miss:
- Method selection under the long-term contract rules, and whether you still qualify for the small-contractor exemption
- Lookback interest at contract completion, which arrives as a surprise more often than it should
- Retainage receivable and payable treatment — and the fact that it is not taxable until it is due
- Over- and under-billing schedules that a surety will actually accept
- Change order revenue recognition when the order is approved in scope but not in price
- Equipment purchase timing across the fiscal year rather than at the end of it
Long-term contract accounting: percentage of completion vs. completed contract
Contracts spanning more than one tax year fall under special rules. The percentage-of-completion method recognises revenue as costs are incurred; the completed-contract method defers everything until the job closes. For a growing contractor the difference in when tax is paid can run into six figures.
Most large contractors are required to use percentage of completion. Completed contract remains available to contractors under the gross-receipts exemption threshold, which is indexed annually and currently sits in the low tens of millions — worth confirming each year, because crossing it is a method change, not a choice.
Two things get missed. First, home construction contracts have their own carve-out and are treated differently from commercial work. Second, the lookback method applies interest when the original estimates turn out to have been wrong, and it is calculated at completion — so an aggressive estimate two years ago becomes a bill today.
Job costing and WIP schedules
Job costing is the difference between knowing you made money last year and knowing which jobs made it. Set up properly, every labor hour, material invoice, subcontractor payment and piece of equipment time lands against a job number, and gross margin by job is available in the same close that produces the financials.
The work-in-progress schedule sits on top of that. It compares costs incurred to costs estimated, computes percent complete, and reconciles what you have billed against what you have earned. Over-billing means you are financing the job with the customer’s money — useful for cash, dangerous if you mistake it for profit. Under-billing means the opposite, and it is the more common problem.
Bonding agents and lenders read the WIP schedule before they read the P&L. If yours is produced once a year for the CPA, you are negotiating with a document you have not seen.
Construction bookkeeping, monthly
A construction chart of accounts is not a retail chart of accounts with different labels. Direct costs separate into labor, materials, subcontractors, equipment and other, because that is how estimates are built and the actuals have to compare to the estimate. Indirect costs get allocated rather than dumped into overhead. Retainage sits in its own receivable and payable accounts.
Done monthly, the close produces the job-cost report, the WIP schedule, and financials a surety will accept — on a calendar, not on request.
Equipment, fleet and depreciation
For a contractor buying $200,000 to $2 million of equipment a year, depreciation timing is the largest single tax lever available. Section 179 and bonus depreciation interact, the vehicle weight rules change the answer for pickups and work trucks, and the correct choice depends on where income is expected to land over the next three years rather than this one.
The detailed mechanics are in the bonus depreciation guide and the year-end planning guide. If equipment was placed in service in prior years and never depreciated correctly, Form 3115 recovers it without amending.
Multi-state work, prevailing wage and certified payroll
Houston contractors regularly take jobs in Louisiana, Oklahoma and Arkansas, and each one can create a filing obligation. Construction income sourcing is state-specific, and the usual failure is symmetrical: either filing in states where there was no nexus, or missing states where a single project created it.
Public and federally funded work adds Davis-Bacon prevailing wage and certified payroll reporting. That is a payroll compliance function rather than a tax one, but it lives in the same file, and the fringe-benefit calculation is where most contractors get it wrong. Payroll services covers the mechanics.
Bonding, surety and lender relationships
A surety underwrites the balance sheet, the WIP schedule and the quality of the accounting behind them — in roughly that order. Working capital and equity determine the bonding line; the reporting determines whether the underwriter believes them. Contractors trying to raise a bonding line usually need eighteen months of clean, consistently produced statements, which means the decision to fix the accounting has to come well before the decision to bid the bigger job.
Who we work with
- General contractors — commercial and residential
- Specialty and trade contractors — HVAC, electrical, plumbing, roofing, concrete, framing, drywall
- Custom home builders — spec and contract work
- Heavy civil contractors — site work, road work, utility installation
- Equipment-heavy operators and rental companies
Most are between $1 million and $30 million in annual revenue, structured as an S-corporation or partnership, and working across the Houston metro.
Houston and Fort Bend coverage
The firm is based in Richmond and works with contractors across Houston, Katy, Sugar Land, Rosenberg, Fulshear, Missouri City, Pearland and Cypress. Work is done remotely by default with site visits where the job warrants it — and for a contractor, meeting at the yard is usually more useful than meeting at an office.
Common questions
What does a construction CPA do that a regular CPA does not?
Long-term contract method selection, WIP and over/under-billing schedules, job-level cost accounting, retainage treatment, lookback calculations, and multi-state sourcing for project work. A generalist can file the return; these are the items that change what the return says.
What is the difference between percentage of completion and completed contract?
Percentage of completion recognises revenue as costs are incurred across the life of the contract. Completed contract defers all revenue and cost until the job finishes. Completed contract generally defers tax, but it is only available to contractors under the gross-receipts exemption threshold, and switching methods later is an accounting method change requiring IRS consent.
Do I need job costing if I only run a few jobs at a time?
Yes, and it is easier at that size. With three or four active jobs the setup is a week of work and it immediately tells you which of them is actually paying. Waiting until there are twenty means rebuilding history nobody tracked.
How much do construction accounting services cost?
The return work follows the published fee schedule — from $1,200 for an 1120-S, from $1,400 for a 1065. Monthly construction bookkeeping with job costing and a WIP schedule generally runs $700 to $1,500 a month depending on job volume and how many crews are being coded. Contractors needing forecasting and bonding support alongside it usually move to an outsourced CFO retainer.
Can you fix depreciation that was never taken on equipment?
Usually, and without amending returns. Form 3115 with a section 481(a) adjustment catches up missed depreciation in the current year. See the Form 3115 guide for how it works.