If you're a contractor working on commercial projects, government work, or larger residential jobs, you've almost certainly dealt with retainage. But many contractors don't track it correctly — which means they're underestimating their true accounts receivable, missing release dates, and sometimes leaving money on the table entirely. What Is Retainage? Retainage (also called retention) is a percentage of each invoice that the customer holds back until the project is substanti

More contractors go out of business from cash flow problems than from lack of work. You can have a full backlog, profitable jobs, and still miss payroll if your cash timing is off. A 13-week rolling cash flow forecast is the tool that prevents this — and most small contractors don't have one. Why Monthly Cash Flow Isn't Enough for Contractors A monthly cash flow statement tells you what happened. A 13-week forecast tells you what's about to happen. For contractors whose reven

One of the most common questions small business owners ask is whether they should operate as an LLC or elect S-Corp tax status. The answer isn't one-size-fits-all — but understanding the difference can potentially save you thousands of dollars in taxes every year. Here's a plain English explanation of both. First — LLC Is a Legal Structure, S-Corp Is a Tax Election This is the most important thing to understand. An LLC (Limited Liability Company) is a legal entity that protec

Most small business owners look at their bank balance to decide if they're doing okay financially. That's like driving by only looking in the rearview mirror. There are five financial reports that will give you a complete picture of your business — and you should be reviewing all of them every single month. 1. Profit & Loss Statement (P&L) Your P&L shows your revenue, cost of goods sold, gross profit, operating expenses, and net income for a specific period. It tells you whet

Ask most contractors what their labor rate is and they'll tell you their employee's hourly wage. That's not their labor rate — that's their biggest pricing mistake. The true cost of an employee is significantly higher than their wage, and if you're not accounting for all of it in your bids, you're losing money on every job. What Is a Fully-Burdened Labor Rate? Your fully-burdened labor rate is the total cost per hour to employ a worker — including their wage, all payroll taxe

If you're a contractor — electrical, plumbing, HVAC, general contracting, or any trade — and you've never heard of a WIP schedule, you're not alone. Most small contractors haven't. But if you want a bank line of credit, contractor bonding, or accurate financial statements, your CPA is eventually going to ask for one. Here's everything you need to know. What Does WIP Stand For? WIP stands for Work in Progress. A WIP schedule is a financial report that shows the current status