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Steps Contractors Should Take to Prepare for Year-End

As we approach the end of the year, contractors often find themselves focused on wrapping up projects, chasing receivables, and planning for the next year ahead. But before the books close, there is one critical task that can make or break your financial success: preparing for your year-end. 

Steps Contractors Should Take to Prepare for Year-End

Taking the time to clean up your records and analyze your numbers now not only ensures accurate reporting but also positions your business for a stronger, more profitable new year. 

Here is a step-by-step guide to help you prepare:

Review Job Costing and Work in Progress (WIP)

  • Make sure each project has updated labor, materials, and subcontractor costs
  • Reconcile open jobs against your WIP schedule to ensure revenue and expenses are recognized correctly
  • Flag any projects with cost overruns or unbilled change orders that need to be addressed before closing the year

Reconcile All Accounts

  • Reconcile bank and credit card accounts
  • Review vendor statements and match them to your accounts payable
  • Double-check accounts receivable against outstanding invoices and follow up on overdue payments now rather than carrying them into next year

Organize Receipts and Documentation

  • Ensure receipts and records are properly categorized (especially for vehicles, tools, and equipment)
  • Keep contracts, change orders, and lien waivers easily accessible
  • Document any business vs. personal usage of assets, such as vehicles

Review Fixed Assets and Depreciation

  • Verify fixed assets are properly recorded in your fixed asset ledger
  • Review eligibility for Section 179 or bonus depreciation deductions
  • Plan ahead if you are considering year-end purchases that could offer tax benefits

Evaluate Tax Planning Opportunities

  • Review your retirement plan contributions (401(k), SEP, SIMPLE IRA, etc.)
  • Prepay certain expenses or defer income if it makes sense for tax purposes
  • Meet with your accountant to run projections and estimate your tax liability

Assess Cash Flow and Debt

  • Forecast your cash needs for the first quarter
  • Review outstanding debt and consider refinancing if interest rates have shifted
  • Plan your working capital strategy so you are not caught off guard by payroll or supplier obligations in January

Evaluate Your Overall Financial Health by Asking

  • Did your profit margins meet expectations?
  • Are overhead costs under control?
  • Do you have the right financial systems and software in place?
  • Is your accounting team giving you the insight you need to grow?

Set Goals for the Coming Year

  • Identify top-performing project types and clients to target more work
  • Set profitability and cash flow goals for the upcoming year
  • Discuss budgeting and forecasting with your accountant to create a roadmap for success

Preparing for year-end is not just about cleaning up paperwork—it is about creating clarity, avoiding tax headaches, and setting your construction business up for a stronger, more profitable year ahead. By taking these steps, you will gain the insight you need to make better business decisions.

If you are ready to finish the year strong and start the next one with confidence, contact us today.

*The information provided in this blog post is for general informational purposes only and does not constitute accounting, tax, financial, or legal advice. It is not intended as a substitute for professional consultation tailored to your specific circumstances.*

ready to run your business with the same confidence you have on the job site?

at adding technology, we know you want to focus on what you do best as a contractor. in order to do that, you need a proactive back office crew who has financial expertise in your industry.

the problem is that managing and understanding key financial compliance details for your business is a distraction when you want to spend your time focused on building your business (and our collective future).
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Ready to run your business with the same
confidence you have on the job site?

At adding technology, we know you want to focus on what you do best as a contractor. In order to do that, you need a proactive back office crew who has financial expertise in your industry.

The problem is that managing and understanding key financial compliance details for your business is a distraction when you want to spend your time focused on building your business (and our collective future).

We understand that there is an art to what contractors do, and financial worries can disrupt the creative process and quality of work. We know that many contractors struggle with messy books, lack of realtime financial visibility, and the stress of compliance issues. These challenges can lead to frustration, overwhelm, and fear that distracts from their core business.

That's where we come in. We're not just accountants; we're part of your crew. We renovate your books, implement cutting-edge technology, and provide you with the real-time job costing and financial insights you need to make informed decisions. Our services are designed to give you peace of mind, allowing you to focus on what you do best - creating and building.

Here’s how we do it:

  1. Schedule a conversation. Let’s break ground on your financial renovation.
  2. We work through an assessment together that leads to a plan based on your specific needs. Then, we execute, and you have the opportunity to evaluate us on progress from day 1.
  3. Enjoy the freedom to build our future!

Schedule a conversation today, and in the meantime, download the Contractor’s Blueprint for Financial Success: A Step by-Step Guide to Maximizing Profits in Construction.” So you can stop worrying about accounting, technology, and compliance details and be free to hammer out success in the field.

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