Contractors need records that connect job costs, billing, retainage and cash. An Enrolled Agent is federally credentialed for IRS representation; that credential alone does not establish construction-accounting expertise or state-agency authority. Discuss the scope of bookkeeping, WIP reporting, tax preparation and representation before starting. See IRS Enrolled Agent information. Henriquez Accounting offers bookkeeping and business tax preparation; confirm which construction workflows and reporting schedule your engagement includes.
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WIP & Job Costing Over/Under Billing IRS Representation
For every contractor, having expert financial guidance is crucial for success. As a contractor, you need to ensure your finances are in order.
Clean books that tie to your estimates, pay apps, and cash—plus proactive tax strategy all year.
Top Reasons Contractors Choose an Enrolled Agent
- WIP accuracy: percent-complete, earned revenue, and over/under-billing mapped correctly.
- Job costing discipline: labor burden, materials, subs, equipment, and change orders tracked to the job and phase.
- 1099/W-9 control: collect W-9s, verify vendor types, and e-file 1099-NEC/MISC on time.
- Entity/S-Corp strategy: reasonable comp modeling, payroll setup, and documentation.
- Sales & use tax mapping: rules vary by state and scope—materials, fabrication, or retail parts.
- IRS notices: An EA may represent taxpayers before the IRS with required authorization. State-agency representation must be checked separately under that agency’s rules.
Contractor Accounting Essentials (What to Get Right)
- Retainage: use
Retainage ReceivableandRetainage Payableledgers; tie to contracts and pay apps. - Clearing accounts:
Merchant Clearingfor credit card/Zelle/ACH aggregators; daily deposits reconcile cleanly. - COI & compliance: certificates of insurance tracked for subs; lien waivers matched to payments.
- AIA/Progress billing: schedule of values, change orders, and retainage reflected in AR/AP and WIP.
- Payroll and job costs: Allocate supported payroll costs to jobs. Confirm separately whether certified-payroll or prevailing-wage reporting is included; obtain labor-law advice from a qualified advisor.
- CapEx vs. repairs: tools & equipment capitalization policy with thresholds and photos/invoices attached.
WIP, Billing, and Cash (How We Keep You Aligned)
Job Costing & WIP
- Budget vs. actual by cost code and phase; percent-complete updates.
- WIP and earned-revenue reports support management decisions. Determine financial-reporting and tax recognition methods separately, considering the contract, applicable tax year, exceptions and any required accounting-method change.
- Tie purchase orders, receiving, and vendor bills to the job.
Billing Flows
- AIA progress invoices with retainage; change orders tracked to revenue and margin.
- Time & material jobs with rate cards and materials markup policies.
Cash Control
- 13-week cash forecast; draw schedules and milestone funding.
- AR collections cadence; AP batching and early-pay discounts where useful.
- Project closeout checklist: punch items, final lien waivers, retainage release.
Compliance with an Enrolled Agent
- Collect W-9s at vendor setup and assess reporting requirements. Form 1099-NEC is generally due to the IRS January 31; electronically filed Form 1099-MISC is generally due March 31. Weekend and legal-holiday rules can move these dates. Confirm recipient deadlines and the reporting year's thresholds and exceptions separately. See the IRS filing instructions.
- Sales/use tax rules reviewed per state/scope; resale and exemption documentation where applicable.
Contractor reporting cadence: month, quarter and year
Monthly
- Reconcile bank/credit/merchant; clear Undeposited Funds and
Merchant Clearing. - Close with P&L, Balance Sheet, Cash Flow, and WIP/over-under billing schedule.
- AR collections, AP approvals, and 13-week cash forecast refresh.
Quarterly
- Tax projections & vouchers; payroll/pay rate and burden reviews.
- Job margin review; estimate vs. actual by code; change-order profitability.
- Entity & compensation tune-ups (e.g., S-Corp reasonable comp checks).
Annually
- 1099-NEC/1099-MISC e-file; fixed-asset roll-forward and depreciation.
- Business & owner returns; bonding/lender packages with WIP and financials.
Recommended Stack (Construction)
- Accounting: QuickBooks Online/Desktop with projects & cost codes.
- Job costing: Buildertrend, Knowify, or ProjectPro; PO and time capture integrated.
- AP & spend: Bill.com or Ramp with approvals, vendor policies, and COI tracking.
- Time & payroll: Gusto/QB Payroll/ADP with job/phase allocations; certified payroll reports as needed.
- Docs: Dext/Hubdoc for receipts; lien waivers and COIs stored with vendor/job.
Pro Tip: Track retainage in separate AR/AP accounts and show it on WIP. Your cash forecast and bonding conversations will be far more accurate.
Common (Costly) Mistakes We Fix
- Bank-deposit totals alone may not explain job profitability. Use reconciled WIP and earned-revenue reports for management analysis, and determine financial-reporting and tax recognition methods separately under the applicable rules.
- No retainage ledger; cash surprises at closeout.
- Missing W-9s and late 1099s → avoidable penalties.
- Materials and subs not tied to jobs/codes → budget vs. actual meaningless.
- Sales/use tax mis-mapping on materials vs. labor where rules differ.
Confirm contractor engagement deliverables
- Clean job costing, WIP, and over/under-billing schedules—every month.
- Quarterly tax projections with vouchers and dates.
- Discuss W-9 collection, information-return preparation and IRS notice support. Confirm forms, jurisdictions and authorization in the engagement.
- Owner dashboard: cash runway, job margins, and collections focus list.
- Agree on the document portal, signature process, communication schedule and responsibilities before starting.
