- Job costing & WIPCosts by job and a monthly work-in-progress schedule.Learn more about Job costing & WIP →
- Payroll & certified payrollCrew payroll, prevailing wage projects and year-end filings.Learn more about Payroll →
- Trades & service workMileage, trucks, 1099 subs and sales tax for service trades.Learn more about contractors & trades →
- Equipment write-offsSection 179 and bonus depreciation for equipment and vehicles.Learn more about Equipment write-offs →
Long-term contracts: when is the profit taxed?
- The default. Contracts that span the end of a tax year generally must use the percentage-of-completion method under Section 460, taxing profit as the work progresses.
- The small contractor exception. Contractors with average annual gross receipts of $32 million or less (the 2026 threshold) can use the completed contract method or another exempt method for contracts expected to finish within two years.
- Residential work. Home construction contracts are exempt regardless of size, and the 2025 tax law broadened the exception for newer contracts to residential construction such as apartment and condominium projects.
- Timing, not total. The method changes the year profit is taxed, not how much. Changing methods usually requires a filing with the IRS.
Job costing and the WIP schedule
A monthly work-in-progress schedule shows each contract’s value, cost to date, estimated cost to complete, percent complete and billings, so you can see over- and under-billings before they become cash problems. Track change orders as they’re approved, and keep retainage receivable and payable in their own accounts.
Bonding and financial statements
Sureties and lenders often ask for reviewed or audited financial statements. We don’t perform reviews or audits, but we keep the books, job schedules and tax work in the shape your independent CPA firm needs to issue them.
Payroll on job sites
- Public work. New Jersey’s Prevailing Wage Act and New York’s Labor Law require prevailing wages and certified payroll records on public projects. New Jersey contractors must also register under the Public Works Contractor Registration Act.
- Subcontractors. Collect W-9s and certificates of insurance up front, and file a 1099-NEC for unincorporated subcontractors paid $2,000 or more in 2026.
- Classification. New Jersey’s ABC test makes many “subs” employees for state purposes.
Registration and sales tax
In New Jersey, home improvement contractors register with the Division of Consumer Affairs, and new home builders register under the New Home Warranty and Builders’ Registration Act. Sales tax depends on whether the job is a capital improvement or a repair; the details are on our contractors and trades page.
Frequently asked questions
Do I have to use percentage-of-completion for my construction contracts?
Not always. Contractors with average annual gross receipts of $32 million or less (2026) can use the completed contract method for contracts expected to finish within two years, and home construction contracts are exempt regardless of size.
What changed for residential builders in the 2025 tax law?
The exception from percentage-of-completion, which covered home construction contracts, was broadened for newer contracts to residential construction such as apartment and condominium projects.
What is a WIP schedule?
A monthly report showing each contract’s value, cost to date, estimated cost to complete, percent complete and billings, used to spot over- and under-billings and requested by sureties and lenders.
Do you prepare reviewed or audited financial statements for bonding?
No. We don’t perform reviews or audits, but we keep the books and job schedules ready for the independent CPA firm that issues them.
Do New Jersey contractors need to register?
Home improvement contractors register with the Division of Consumer Affairs, new home builders under the New Home Warranty and Builders’ Registration Act, and public works contractors under the Public Works Contractor Registration Act.