How is contractor bookkeeping different from a regular small business?
Contractors run project-based businesses, not transactional ones. Each open job has its own labor, materials, subcontractor costs, change orders, retainage, and billing schedule. The books have to track every cost against the right job, not just the right account. That is why generic small-business bookkeeping leaves contractors with margin numbers they cannot trust and a tax return that misses real deductions. Job costing, WIP schedules, and percentage-of-completion accounting are the three pieces that turn raw transactions into per-job profit. A contractor can use that per-job profit to bid and price the next job.
What is percentage-of-completion accounting, and is it required?
Percentage-of-completion is a revenue method that recognizes income and cost in proportion to how far along a long-term contract is at year end. IRC §460 requires it for most long-term contracts (jobs spanning more than one tax year). The small-contractor exception lets businesses under the IRS gross-receipts threshold use the completed-contract method or cash method instead. The thresholds change each year for inflation, so the right answer depends on the current tax year. ProAxis confirms the method at engagement, not after the return is filed.
Do I need a formal WIP schedule even if my sureties do not ask for it yet?
Yes. The WIP (work-in-progress) schedule reconciles earned revenue, billed amounts, and over-/under-billings for every open job. Sureties and lenders ask for it once a contractor pursues bonded work or a line of credit. But the schedule has a bigger use. It is the only reliable signal of whether a job is making money before it closes. Contractors who skip WIP reporting often discover a loss only at year end. By then there is no time to renegotiate change orders or push for retainage release.
When does a contractor benefit from an S-Corp election?
Usually once net profit clears about $60,000 per year. The election splits income between a reasonable W-2 salary and a distribution, with self-employment tax saved on the distribution portion. The savings have to cover the added payroll, return-prep, and bookkeeping cost. Contractors with crew payroll already in place absorb the added cost easily; solo trade owners need a closer look. ProAxis runs the S-Corp savings calculator on real numbers before recommending the election.
How does NJ prevailing wage compliance work on public-works jobs?
Contractors on NJ public-works contracts must pay laborers the prevailing wage rate set by the NJ Department of Labor. The rate is set for each trade and county.
Coverage turns on who awards the contract. Municipal contracts are covered above $19,375, a threshold in effect since July 1, 2024 and adjusted periodically for inflation. Every other public body — counties, boards of education, and utility authorities — is covered at $2,000. That figure does not adjust. There is no separate rule covering road work at any dollar amount.
Certified payroll records must be submitted for each payroll period within 10 days of the date the wages were paid. Submit them to the public body that awarded the contract, and at the same time to the NJ Department of Labor through the secure process on its website. Filing online with the state does not relieve you of filing with the public body.
Apprentices must be enrolled in a registered apprenticeship program. Fringe benefits count toward the rate but must be paid through a bona fide plan, not a paycheck add-on. Mistakes carry debarment risk plus back-pay liability. ProAxis runs prevailing-wage payroll alongside federal 941 and NJ-927 filings so the certifications stay clean.
Do I need to issue 1099-NECs to my subcontractors?
Yes for most U.S. subcontractors paid $2,000 or more in a calendar year. The $2,000 threshold applies to payments made after December 31, 2025. The old $600 threshold still governs 2025 and earlier payments. The threshold may be adjusted for inflation beginning in 2027.
The 1099-NEC reports services paid to non-employees and is due January 31. Payments made by card or third-party processor are reported by the processor on Form 1099-K, so do not double-report those. The real work happens at vendor onboarding: collect a W-9 with a verified TIN before the first payment goes out. Year-end scrambling for missing W-9s is the single most common contractor 1099 problem.
How does ProAxis price contractor CPA work?
Monthly retainer based on revenue tier, crew size, and job mix. Solo trade owners fit the $300 to $500 per month range. Small contractors under $500K fit the $400 to $700 range. $500K to $2M contractors fit the $700 to $1,400 range. $2M to $5M contractors fit the $1,200 to $2,500 range. Multi-entity contractors with public-works or specialty trade work above $5M scale into the $1,800 to $4,000-plus range. Quoted ranges are not an offer; the actual scope is set in the engagement letter after a free consultation.
