Many growing construction contractors fall into the same pattern without realizing it. They wait until the month-end close before having meaningful conversations about job performance. On the surface, this feels reasonable. Month-end WIP is when the numbers are “final,” and final numbers feel safer. But in practice, this approach often delays decisions that should be happening during the month – when there’s still time to course-correct. What’s surprising is that, in many cas

How often do you think about your taxes? Although the “due” months differ slightly for Corporations, Partnerships, and Sole Proprietors, we find that there are generally only three answers to the question of when owners and management of construction companies consider taxes. They are: In the month they are due, when dread, fear, and complete panic set in. A month or two before they are due when their tax preparer sends out notices to book an appointment. (Leaving little time

This three-part series on the business side of a construction business began with  How to Learn the Business Side of the Construction Business , followed by How to Understand the Business Side of the Construction Business. Today, the topic shifts from learning and understanding to mastering the business side of a construction business.   By understanding these five areas, construction business owners are better equipped to master the business side of a construction business

This is the second part of a three-part series examining the business side of the construction business. You can see the first part, How to Learn the Business Side of the Construction Business , by using the link.  Know Your Numbers Understanding the business side of the construction business begins with the vital component of knowing your numbers. It is a core skill for construction company owners. It is: The foundation for making informed decisions  The walls for understand

The Piano Example When I was a youngster, I bugged my mom for several weeks to let me take piano lessons. She finally agreed, found a piano teacher, and arranged for my first lesson. Imagine my surprise when I learned that my piano teacher expected me to know such odd things as where the C note was on the keyboard, what each symbol on the row of lines represented, how long my fingers should remain on any individual key, and all sorts of other rigamarole.   And on top of that

The purpose of this article is to discuss construction liens (also known as mechanics' liens) and how construction accounting is a vital component in reducing the risk of not getting paid for labor or materials expended on construction projects. However, before delving into that discussion, we must first address an essential aspect of dealing with the legal side of construction liens. While, when followed correctly, lien laws create a legal claim on the property’s title, ther

Adjusting the Flow For healthy and profitable construction businesses, it comes down to adjusting the flow of cash effectively. That means that construction accounting is the groundwork for establishing stability, security, and confidence for contractors.   The key to adjusting the cash flow in construction is to recognize some fundamental elements that come into play at various stages – they are:   Revenue Recognition Progress Billing Job Cost Tracking Work in Progress (WIP)

Construction accounting – it’s different. Construction accounting requires a few key practices that set it apart from “regular” accounting protocol. When you understand the key practices and how to address them, you can make the transition to sustainable growth and a more profitable construction company. Here is a breakdown of what to look for.   Revenue Recognition Let’s start with this doozy. Construction contractors must track revenue and costs over extended contract perio

Running With the Big Dogs When operating your construction business, there comes a time when you must choose; you can Run With the Big Dogs , or you can dog along running .  Construction accounting is the pivot point. No matter how good you are at the hard skills of your trade or the soft skills necessary to own a business, your numbers (the accounting) are the foundation for building your construction company. Dealing with those numbers can be either a hassle and hindrance o

There are numerous types of IRS Form 1099. This article will focus on the 1099-NEC because it is the most commonly used form in the construction industry. While many aspects remain the same when using the IRS Form 1099-NEC, a change will affect reporting for the 2026 tax year. It is essential to note that for the 2025 tax year, construction businesses must still issue Form 1099-NEC under the old reporting standards, which is due by February 2, 2026.   Here are a few things th

“The key is not to prioritize what’s on your schedule, but to schedule your priorities.” – Stephen Covey. The Linchpin for Goal Planning Goal planning in your construction business begins with understanding that the linchpin to the development of goals is the financial aspect, the numbers.   When your accounts are easily accessible, clean, and up to date, then growth, profitability, enhanced operational efficiency, and improved customer satisfaction stop feeling like hit-or-m

Putting Strategy in Its Place The strategy involved in planning begins with an understanding of how to reach goals.  The goal  is the main “big thing” you want to accomplish.  A strategy  is the path you take to achieve a goal.  Built into your strategy will be objectives .  The tactics  you use to reach each objective are the tools that make it happen. Example: Planned Weight Loss Think of it this way. Say your goal is to lose weight. Goal:  Lose 20 pounds in 4 months Strate

What you’ll find in this article is a schedule of bookkeeping tasks that successful construction contractors use to guide the financial management of their businesses. That doesn’t mean they drag out the spreadsheets and fill in the blanks at the end of the day. It does mean they have a fundamental understanding of what their accounting team is responsible for and what “next steps” must be taken. However, before we delve into the schedule, let’s take a moment to understand th

We asked Brian Harding, a leading authority on developing high-performing teams, to share with our construction contracting clients and other readers about planning for proactive problem-solving year-round. He offers excellent advice that may come as a surprise. Here is what he had to say.   It’s that time of year! With the holidays also comes the time when we plan for next year. Before going too far down the planning path, I think it’s worth asking, “Why do we typically make

Minding Your Money Tree When money trees are small, they are easy to care for with a watering can. As they mature, it will be easier to use a garden hose. Then comes the time when watering the money tree requires a full-blown irrigation system that accounts for correct timing, accurate measurements, and appropriate filtering mechanisms.  The same is true for many whose “money tree” is the construction business they own. They typically start out small, watering by hand, and th

“Overhead schmoverhead! Who cares?” Your profits  care.  Your cash flow  cares. And if you want to stay in business long-term, you   should too . Most contractors understand what profit is and why cash flow matters. However, the critical junction of the two often gets overlooked: your overhead and how you allocate it when pricing jobs. Overhead isn’t just a number your accounting professional tracks. It’s a real cash eater  if it’s not adequately accounted for—and it directly

The Bridge You can walk onto several construction job sites and find a few tools that serve multiple purposes. For instance, a power drill   can be used for drilling holes, and by changing the bit, it can also be used to tighten or loosen screws. Similarly, a pipe wrench can be adjusted to various sizes, and a circular saw performs different tasks with a blade change. In each case, the tool is the bridge. Same tool, different uses. In construction accounting, the tool known a

In a few recent posts (listed below), information was presented to help construction contractors understand how implementing the right systems in their financial dealings allows them to take control and steer toward building a debt and risk-resilient construction business.   The Hidden Cost of Debt in Subcontracting (Understanding actual job costs up front reduces the need to borrow just to stay afloat.)   Budgeting as a Financial Risk Management Tool (A proactive budget le

We’re exploring the difference between being profitable on paper and having cash available. It’s About Those Apples Do you remember those long-ago lessons concerning addition and subtraction where you were told you had ten apples and asked if you gave four apples to your friend, how many would still be in your possession? Recall it was about the plus (+) or the minus (-) and the equals (=).  In today’s lesson, boys and girls, the question is, “If you have ten apples and promi

Weak cash management habits can push subcontractors into risky financing. Yet, healthy reserves allow construction contractors to regain control of their cash flow management.  So, the big question is – how do construction contractors get to the point of having a healthy reserve when, by gosh and by golly, they have to borrow money to meet payroll, or pay the taxes, or purchase the equipment, or – you name it – spend money? They use a cash management tool, of course!  And I w