Tax Services for Contractors and Skilled Trades Businesses

Electricians, plumbers, HVAC contractors, roofers, and other skilled trades operators often reach a point where profit has grown but the tax structure hasn't kept pace. A sole proprietorship or basic LLC that made sense at $60,000 in profit can get expensive at $150,000. We help trades business owners make the right entity change at the right time, set up owner pay that reduces self-employment tax, and build retirement plans that shelter income before it reaches the return.

The Right Entity at the Right Time

We review your business as it grows and tell you when an S corporation election starts to pay. Then we set it up properly: a reasonable salary, payroll, an accountable plan for vehicle and phone reimbursements, and quarterly estimates sized to your cash flow.

Trucks, Equipment, and Depreciation

Trucks, trailers, and tools are some of the biggest checks a trades business writes. We track them and apply Section 179 and bonus depreciation so purchases are written off when the deduction is worth the most. Sometimes that means all at once, and sometimes spreading it out to a year with higher income.

Texas Sales Tax on Contractors

Texas sales tax treats contractors differently depending on the kind of work and how the contract is written, and getting it wrong shows up in a Comptroller audit years later:

• Residential repair and remodeling is not taxable to the customer. Under a lump-sum contract you pay sales tax on the materials you buy and don't charge your customer tax. Under a separated contract (labor and materials billed separately), you buy the materials tax-free for resale and collect sales tax from the customer on the materials portion only.
• Nonresidential repair and remodeling (commercial buildings, offices, shops) is taxable. The entire charge, labor and materials, is subject to sales tax, and you buy the materials tax-free with a resale certificate.
• New construction, residential or commercial, isn't taxable labor. The lump-sum versus separated distinction still decides who pays the tax on materials and how you invoice.

We review how your contracts are written, set up the right permits and resale certificates, and make sure sales tax returns match the way you bill.

Overtime Pay and the New W-2 Reporting

The 2025 tax law (the One Big Beautiful Bill Act) created a deduction for qualified overtime pay, the extra half-time portion of time-and-a-half that the Fair Labor Standards Act requires, for 2025 through 2028. Your employees claim it on their own returns, but it only works if you report it: employers must now show each worker's qualified overtime separately on Form W-2, which means payroll has to track the premium portion of overtime apart from regular wages. For trades crews that run long weeks in busy seasons, that is real money for your people and a new payroll requirement for you. We set up the tracking with your payroll provider so the year-end W-2s come out right.

Crew, Payroll, and Classification

Whether your crew members are employees or contractors affects payroll tax, workers' comp, and your exposure if the IRS or the state looks closely. We help you classify workers correctly and file the 1099s and payroll reports that go with each choice.

Jobs Across State Lines

Taking jobs in New Mexico or other states can create gross receipts tax, nonresident income tax, and payroll obligations there. We map where you're working and set up a process so each state is filed correctly, before a notice shows up.

Contractor and Trades Tax FAQ

When should my trades business become an S corp?

Usually once profit is high enough that the self-employment tax saved outweighs the cost of payroll and an extra return. We calculate that point for your business.

Should I buy a new truck before year-end for the tax deduction?

Only if you need it. Equipment write-offs can be valuable, but spending a dollar to save a fraction of a dollar in tax isn't a strategy. We'll show you the after-tax cost so the decision is clear.

Do I charge Texas sales tax on my jobs?

It depends on the job and the contract. Repair and remodeling on a commercial building is taxable; the same work on a house isn't, though how you handle tax on the materials depends on whether the contract is lump-sum or separated. We'll go through your typical jobs and set up the right approach.

I did a job in New Mexico. What do I need to file?

Often New Mexico gross receipts tax, and possibly a nonresident income tax return. We'll review the job and sort out exactly what applies.