Bookkeeping & Taxes for Florida Contractors: A CPA's Guide
By Timothy LeGendre, CPA · Florida License #AC62625 · Published 2026-06-15 · Last reviewed 2026-08-20
Bookkeeping for Florida contractors, job costing, retainage, 1099 subs, equipment depreciation, and the S-Corp election. From a Florida CPA.
A generic bookkeeper sorts transactions. Your jobs need more.
Most bookkeeping services treat a contractor like any other small business: import the bank feed, categorize the transactions, produce a profit-and-loss statement, done. That works for a consultant or an online store. It falls apart for a trade, because the things that determine whether a contractor is actually making money never show up on a generic P&L.
Trades have moving parts most bookkeepers never touch: costs that belong to specific jobs, retainage you are owed but have not collected, subcontractors who need 1099s, trucks and equipment that have to be depreciated, and materials that belong in cost of goods sold. Get those wrong and your margins are fiction, your tax bill is a surprise, and your financials are not something you can hand a lender or a bonding company.
This guide walks through what contractor books need that generic bookkeeping skips, job costing, getting paid, classifying your crew, depreciating your equipment, and the one tax move that matters most for a profitable trade. It is written by a Florida CPA who does the monthly books and the year-end return for trade businesses, so you are getting the version that has to actually hold up at tax time.
What contractor books actually need.
These are the parts of the books that decide whether you can trust your own numbers. A bookkeeper who only categorizes transactions will get the company-wide total roughly right and miss every one of them.
Job costing & per-job P&L
Every dollar of labor, material, and sub cost tied to the job it belongs to, so you can see which work actually made money instead of guessing from a company-wide number.
Retainage & progress billing
Retainage tracked as its own receivable and progress draws posted cleanly, so your balance sheet reflects what you are actually owed instead of overstating cash you have not collected.
1099 subcontractors
Subs tracked all year, W-9s collected before the first check, and 1099-NEC forms filed at year-end, no January scramble and no penalties for missed filings.
Equipment & vehicle depreciation
Trucks, trailers, and heavy equipment depreciated deliberately, Section 179, bonus, or mileage chosen for your tax position, decided before the year closes instead of after.
Materials & cost of goods sold
Materials, supplies, and direct labor sorted into COGS so your gross margin is real, not buried in an expense bucket that makes every job look profitable.
Lender- & bonding-ready financials
A P&L, balance sheet, and work-in-progress schedule your bank or bonding agent can read without you having to apologize for the books first.
Job costing: the number that changes how you bid.
Job costing means every cost is tied to the job that incurred it. Not just the obvious ones, the lumber, the concrete, the sub's invoice, but the less obvious ones too: the labor hours your own crew put in, the fuel and equipment time, and a share of the overhead it takes to keep the business running. When that is done right, you get a profit-and-loss statement for each individual job, not just for the company as a whole.
The piece most contractors miss is labor burden. The cost of an employee on a job is not just their hourly wage. It is the wage plus payroll taxes, workers' comp, and any benefits. A $25/hour framer can cost you $33–$38 an hour once burden is loaded in. If your job costing uses the raw wage, every labor-heavy job looks more profitable than it is, and you bid the next one too low.
Overhead allocation is the other half. Rent, the office phone, insurance, the truck payments, none of it belongs to one job, but all of it has to be covered by your jobs collectively. A simple, defensible method (a percentage of direct cost, or a rate per labor hour) spreads it so your per-job margins reflect what it actually costs to do the work, not just the direct materials and labor.
Why this is the one that matters: when costs are tied to jobs, you stop guessing which kind of work pays. You find out the kitchen remodels carry the business while the small service calls barely break even, and you can either re-price the service calls or stop chasing them. That is a decision you can only make if the books are built to show it.
Getting paid: WIP, retainage, and progress billing.
On longer jobs, the money does not move in time with the work. You bill progress draws as you go, you hold costs before you bill them, and the customer holds back retainage until the end. If the books do not account for that timing, your financials swing wildly month to month and never reflect reality.
Work-in-progress (WIP) is how you reconcile costs incurred against amounts billed on open jobs. It tells you whether you are overbilled (you have billed ahead of the work, that cash is really a liability you still owe in labor and materials) or underbilled (you have done work you have not billed yet, that is an asset). Lenders and bonding agents ask for a WIP schedule specifically because it is the truest picture of a contractor's financial health.
Retainage, the 5–10% a customer holds until the job is signed off, has to live as its own receivable, not buried in regular accounts receivable. You have earned it, but you cannot count on it as cash until it is released, sometimes months later. Booking it correctly keeps you from overstating cash and from paying tax on money that has not arrived.
Progress billing ties it together: each draw is posted against the job's contract value so you always know how much of the contract is billed, how much is left, and whether you are ahead of or behind the work. Done cleanly, your balance sheet stops lying to you.
Your crew: 1099 subcontractor or W-2 employee?
This is the question that gets contractors into the most expensive trouble, and the books are where it shows up. Paying a worker as a 1099 subcontractor is cheaper and simpler, no payroll taxes, no workers' comp, no withholding. So there is constant pressure to classify everyone that way. The IRS and the Florida Department of Revenue know that, and worker misclassification is one of the things they look at hardest in the trades.
The test comes down to control. If you set the hours, provide the tools, direct how the work is done, and the person works only for you, that is an employee, regardless of what the agreement says or whether they asked to be a 1099. A true subcontractor runs their own business, carries their own insurance, works for multiple clients, and controls how they get the job done. Get this wrong and the back taxes, penalties, and interest can dwarf whatever you saved.
On the bookkeeping side, the discipline is simple but constant: collect a W-9 from every sub before you cut the first check, track every dollar paid to them across the year, and file the 1099-NEC by the deadline. Miss the W-9 and you may be required to backup-withhold; miss the filing and the per-form penalties stack up fast.
If you genuinely have employees, you need real payroll, withholding, payroll-tax deposits, and workers' comp. I do not run payroll in-house, but I make sure the books are built around it correctly and I will point you to a payroll provider that fits. The point is that the classification decision is made on purpose, with the numbers in front of you, not discovered in an audit.
Trucks and equipment: the depreciation choices.
Equipment is where a contractor's biggest one-time tax decisions live, and most of them get made by default instead of on purpose. When you buy a $45,000 truck or a $20,000 piece of equipment, you usually have a choice about how and when to deduct it, and the right answer depends on your income that year, not a blanket rule.
| Method | What it does | When it fits |
|---|---|---|
| Section 179 | Deduct the full cost in year one, up to an annual limit | High-income year; you want the deduction now |
| Bonus depreciation | Deduct a large percentage in year one, no income limit | Large purchases beyond the 179 cap; a loss year is acceptable |
| Standard depreciation | Spread the deduction over the asset’s useful life | You want steady deductions in future higher-income years |
| Standard mileage (vehicles) | A per-mile rate instead of actual vehicle costs | Lighter vehicle use where the per-mile math wins |
The mistake I see most is expensing a big purchase the moment it hits the bank feed, with no analysis. Sometimes a full first-year write-off is exactly right; other times you would rather spread the deduction into future years when your income, and your tax rate, will be higher. The decision has to be made before the year closes, while you still have options. That only happens if someone is watching the books in real time, not opening them in April.
What would clean contractor books cost you?
Tell me about your operation, revenue, entity type, and volume. I'll review it before we talk, and you'll get your number from me on the call.
Book a Discovery CallPick a time on my calendar. No obligation.
The tax move that matters most for a profitable trade.
Once a contracting business clears roughly $80,000 to $150,000 in net profit, an S-Corp election usually becomes the single biggest tax lever available. As a sole proprietor or a standard LLC, every dollar of profit is hit with 15.3% self-employment tax on top of income tax. Elect S-Corp status and you split your profit into a reasonable salary (which is subject to that tax) and distributions (which are not). On $120,000 of profit, that split commonly saves a contractor several thousand dollars a year.
The catch, and the reason this is a CPA decision, not a rule of thumb, is the word reasonable. Set the salary too low to dodge tax and you are inviting an IRS challenge; set it too high and you give back the savings. The right number depends on what you actually do, what the work pays in your market, and your real profit. That requires someone who can see your books, which is exactly why I run the analysis on your numbers rather than handing you a percentage.
Because I keep your bookkeeping current all year, the S-Corp election is built on real data, and the salary, payroll, and distributions are handled correctly as you go instead of reconstructed at filing. Year-round tax planning is included for monthly bookkeeping clients, no separate advisory invoice, and no April surprises, because I have been watching the numbers the whole time.
The contractor bookkeeping mistakes I see most.
None of these are exotic. They are the everyday habits that quietly cost trade businesses money and make tax season harder than it needs to be.
Materials dumped into one “supplies” line
When materials are not in cost of goods sold, gross margin is meaningless. You cannot tell a 38%-margin job from a 12%-margin job, so you keep bidding both the same way.
No job costing at all
A single company-wide P&L tells you the business made money. It does not tell you that the service calls are subsidizing the remodels, or that one builder is quietly unprofitable. That is the number you actually need.
Retainage booked as income too early
Retainage you have billed but not collected is a receivable, not cash. Treating it as income inflates your numbers and sets up a tax bill on money you do not have yet.
Personal and business spending commingled
Fuel, tools, and the occasional personal charge run through one card. It is the fastest way to lose deductions in an audit and the slowest thing to untangle at year-end.
Equipment expensed without a depreciation decision
A $40,000 truck booked as a one-time expense, or capitalized with no Section 179 analysis, is a five-figure tax decision made by accident instead of on purpose.
How I run books for trade businesses.
I am a Florida CPA (license #AC62625) and I do the monthly bookkeeping and the tax return myself. In practice the books and the return are handled under one roof, so nothing gets lost in a handoff between vendors. One person on your books all year, the same person on your return at year-end. For a contractor, that means the person costing your jobs is the person who knows how they should be taxed, and nothing gets lost in a handoff.
Monthly bookkeeping is custom-quoted for your operation. Books run on Forty Two Six, the platform I built in-house, so there is no QuickBooks subscription on top. It connects straight to your bank, cards, and payment processors, so the financials are built from real data instead of hand-keyed guesses, and the books stay current enough that the job-costing and tax decisions above can actually be made on time. The same CPA prepares the return at year-end.
If you want the full breakdown of monthly deliverables and how a migration from QuickBooks or another bookkeeper works, the bookkeeping services page covers it, or book a discovery call at /contact and I'll walk your numbers with you on a call.
Frequently asked questions
- Do you actually do job costing, or just categorize transactions?
- Job costing. I tie costs to the jobs they belong to so you can see per-job profitability, not just a company-wide P&L. That is the difference between knowing your business made money and knowing which jobs made it, which is what tells you how to bid the next one.
- Can you handle my 1099 subcontractors?
- Yes. I track payments to subs throughout the year, keep W-9s on file, and file the 1099-NEC forms at year-end. No reconstructing a year of subcontractor payments in January, and no missed filings that trigger IRS penalties.
- My contractor books are months behind. Can you catch me up?
- Yes, catch-up work is scoped after a look at your accounts and quoted up front. I clean up and reconcile the backlog, then keep it current monthly. Most contractors come to me behind; with seasonal cash flow and work in the field, it is normal.
- Should my contracting business be an S-Corp?
- Often, once net profit clears roughly $80,000 to $150,000 a year, the self-employment-tax savings start to outweigh the added payroll and compliance. But it depends on your actual numbers, so I run the math on your business before you elect rather than going off a rule of thumb.
- Will my financials be ready for a lender or bonding agent?
- That is the point of having a CPA on the books. I keep your P&L, balance sheet, and work-in-progress clean enough to hand a bank or bonding company without a cleanup pass first, because I know what they look for and I am the one who reviewed the numbers.