- Bookkeeping & job costingKnow which jobs actually make money, with books reconciled every month.Learn more about Bookkeeping & job costing →
- Payroll & 1099sCrew payroll, subcontractor 1099s and year-end filings.Learn more about Payroll & 1099s →
- LLC or S corporationWhen an S corporation election starts saving self-employment tax.Learn more about LLC or S corporation →
- Employee or subcontractorGetting classification right under New Jersey’s ABC test.Learn more about Worker classification →
Best practices that save the most
- Log every business mile, as you drive. The IRS requires a record of each trip’s date, destination, business purpose and miles to support vehicle deductions, and a log rebuilt from memory at year end is weak support. A mileage app on your phone makes it automatic.
- Know the 2026 mileage rate. The IRS business rate is 72.5 cents per mile for January 1 through June 30, 2026, and 76 cents from July 1, after a mid-year increase. Keep your log by date so each trip gets the right rate.
- Choose the vehicle method carefully. You can deduct the standard mileage rate or your actual costs (fuel, repairs, insurance, depreciation). To use the standard rate for a vehicle you own, you generally have to choose it in the first year you use that vehicle for business.
- Plan big truck and equipment purchases. Trucks and vans over 6,000 pounds gross vehicle weight, tools and equipment can often be written off in the year you buy them through Section 179 or 100% bonus depreciation, if business use is over 50%. Heavy SUVs have a lower Section 179 cap. Items costing $2,500 or less per invoice or item can usually be expensed outright.
- Get a W-9 before you pay a sub. File a 1099-NEC for each unincorporated subcontractor you pay $2,000 or more in 2026 (the threshold was $600 through 2025). Ask for a certificate of insurance too: your workers’ compensation insurer may charge you premium for subs who don’t carry their own.
- Keep business and personal money apart. A separate bank account and card for the business make every deduction easier to prove. Snap a photo of each receipt when you get it.
- Set aside for taxes from every job. Self-employment tax alone is 15.3% of net earnings, on top of income tax. Quarterly estimates are due April 15, June 15, September 15 and January 15.
- Track your commute correctly. If your home is your principal place of business, trips from home to job sites generally count as business miles. If not, the first and last trips of the day can be commuting, with an exception for temporary job sites.
Job costing: which jobs make money?
Assign materials, labor and subcontractor costs to each job as they come in. Comparing what each job cost with what you bid shows which kinds of work to chase and which to price higher. On longer projects, track deposits, progress billings and retainage so the books show what you have actually earned and what you are still owed.
Sales tax for contractors in New Jersey and New York
- Capital improvements. In New Jersey, when the property owner gives you a completed Form ST-8 for a capital improvement, you don’t charge sales tax on the labor. In New York, the certificate is Form ST-124. In both states, you pay sales tax on the materials when you buy them.
- Repairs and maintenance. Repair, maintenance and installation work is generally taxable, so you charge sales tax on the bill. Not every project qualifies as a capital improvement, and holding a certificate doesn’t protect you if the work clearly isn’t one.
- Registration. New Jersey home improvement contractors must also register with the Division of Consumer Affairs.
Entity and retirement planning
Once your business is consistently profitable, an S corporation election can reduce self-employment tax by paying you a reasonable salary and taking the rest as distributions. A solo 401(k) or SEP-IRA can then shelter more of your income for retirement.
Frequently asked questions
What is the IRS mileage rate for 2026?
For business driving, 72.5 cents per mile from January 1 through June 30, 2026, and 76 cents per mile from July 1, 2026, after the IRS raised the rate mid-year.
Do I need a mileage log if I use the standard mileage rate?
Yes. The IRS requires a record of each business trip’s date, destination, purpose and miles, whichever method you use. A log kept as you go is far stronger than one rebuilt later.
Can I write off a work truck the year I buy it?
Often, yes. Trucks and vans over 6,000 pounds gross vehicle weight used more than 50% for business can generally be deducted in the first year through Section 179 or bonus depreciation. Heavy SUVs have a lower Section 179 cap.
Do I have to send 1099s to my subcontractors?
Yes, for unincorporated subcontractors you pay $2,000 or more for work in 2026 (the threshold was $600 through 2025). Collect a W-9 before the first payment so you have what you need in January.
Do I charge sales tax on my labor?
It depends on the work. Labor on a capital improvement is generally not taxed when the owner gives you a completed certificate (Form ST-8 in New Jersey, ST-124 in New York). Repair and maintenance work generally is taxable.