Tax strategy for trades & construction owners
Trucks, tools, crews, a yard, and a real book of business. You have more usable tax levers than almost any other business owner — and almost none of them work if the first time anyone looks is after the equipment is already bought.
Trades businesses generate the two things tax strategy needs most — real equipment purchases and real profit — and they are among the most under-planned businesses in the country. The three moves that matter are structure (an S-Corp election that stops self-employment tax on distributions), timing (Section 179 and bonus depreciation on trucks and equipment, decided before you buy), and real estate (buying the shop or yard you currently rent, then running cost segregation on it).
Not sure this is you? The Discovery Call is free and we will tell you honestly if it isn’t.
30 minutesYour books are accurate. That’s not the same as strategic.
Most trades businesses have a bookkeeper who is good at their job and a CPA who files a correct return. Both are doing what they were asked. Neither was asked the question that matters: what should we do this year, while there is still time to change the outcome?
I bought three new service trucks in November and my accountant told me in March what it would have been worth if I’d bought them differently.
An HVAC owner, first Discovery Call
You’re still paying self-employment tax on every dollar
If the business is profitable and still taxed as a sole proprietorship or a default LLC, a meaningful share of what you earn goes to self-employment tax that structure could have prevented.
Equipment gets bought, then deducted — in that order
Section 179 and bonus depreciation are planning tools. Used after the purchase they are just bookkeeping; used before, they change what and when you buy.
You pay rent on a building you could own
A shop or yard you own is a deduction engine — depreciation, cost segregation, and an asset that appreciates while the business pays for it.
Your retirement plan is a personal IRA
Profitable trades businesses can support plans that shelter many multiples of what a personal IRA allows. Most never get the conversation.
Nobody models the year until it’s over
Revenue is lumpy, big jobs land unpredictably, and one strong Q4 can push you into a bracket nobody planned for.
Structure, timing, and a building
Three levers do most of the work in a trades business. Pulled in the right order, they compound — the structure funds the equipment strategy, and the equipment strategy funds the real estate.
Where you are now
- Sole proprietor or default LLC treatment
- Equipment bought, then deducted
- Rent paid to someone else’s building
- A personal IRA as the only plan
- Finding out the number in March
Where this takes you
- S-Corp election with a defensible salary
- Purchases timed around the deduction
- A shop you own, depreciating on your return
- A plan sized to what the business can fund
- A Q3 projection you act on in Q4
S-Corp election, done right
Reasonable compensation plus distributions — the piece most DIY elections get wrong and the reason the IRS challenges them. S-Corp election.
Fleet & equipment timing
Section 179, bonus depreciation, and the vehicle weight rules — applied before the purchase order, not after the invoice.
Buy the building
Then run a cost segregation study on it. Commercial property on a 39-year schedule is the single biggest missed deduction in this industry. Cost segregation.
The Augusta Rule
Fourteen days of tax-free rental income from your own home for legitimate business use — small, clean, and almost never claimed. Augusta Rule.
What this looks like in practice
Three composite scenarios built from the strategies above. The numbers are illustrative and rounded — what they show is the shape of the outcome, not a promise of yours.
Plumbing company, $420K net profit
- Prior structure
- Single-member LLC
- Owner comp
- All profit, self-employed
- Strategy
- S-Corp election + reasonable salary
Illustrative composite. Not a client record and not a promise of savings — your result depends entirely on your facts.
HVAC contractor buying a shop
- Building
- $1.3M shop and yard
- Prior arrangement
- Leased for 9 years
- Strategy
- Purchase + cost segregation
Illustrative composite. Not a client record and not a promise of savings — your result depends entirely on your facts.
Electrical contractor, fleet expansion
- Planned purchase
- 6 service vehicles
- Timing
- Straddling year end
- Strategy
- Weight class + placed-in-service timing
Illustrative composite. Not a client record and not a promise of savings — your result depends entirely on your facts.
Trusted by investors for decades, not seasons
I’ve used Investors Accounting for many years and would recommend them to all real estate professionals that are looking for an accountant with specialized knowledge in industry specific tax strategy.
Real estate professional · long-time client
Reasonable price. This company has been our accountants for several years now and has consistently provided not only good service for our somewhat complicated tax returns, but also good advice for tax planning as we get closer to retirement. Would highly recommend!
Client for several years
Finding an accountant who actually understands the nuances of real estate is a game changer. In 2007, my previous accountant was finding it difficult to answer questions regarding my rental properties. A CPA referred me to Roger Herring and his firm Investor’s Accounting has been preparing my taxes ever since. They aren’t just number crunchers, they save me thousands. Highly recommend for any investor!
Rental property investor · client since 2007
The path from here
Four steps. The first one is free and takes half an hour.
Discovery Call — free, 30 minutes
A relaxed conversation about your situation. No documents, no preparation, no pitch. You leave knowing whether there is meaningful money on the table and roughly how much.
Comprehensive Tax Consultation
A one-hour working session plus a full review of your last three years of returns. We map your income, entities and exposure, then build a written strategy with specific action items and an order of operations.
Implementation, before the year closes
Elections filed, studies commissioned, structures formed, documentation systems started. This is the step most firms skip and the only one that actually changes your bill.
Year-round planning
Quarterly reviews, projections before Q4 decisions, and a plan that updates when your income, your portfolio or the law changes.
The strategies behind this
Plain-English guides, free to read, no email required.
Before you book
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