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Are you a general contractor or remodeler looking to maximize profitability and minimize your tax burden? In today's competitive construction market, implementing the right tax and growth strategies can make the difference between thriving and merely surviving.
At Whittmarsh CPA, we specialize in helping construction professionals like you keep more of your hard-earned money through strategic tax planning and business optimization. Our Miami-based team has worked with countless contractors to implement proven strategies that lead to substantial tax savings and sustainable growth.
Let's explore the 13 most effective strategies for general contractors and remodelers to reduce taxes and scale their businesses.
For general contractors and remodelers, the structure of your business can dramatically impact your tax burden. If you're still operating as a sole proprietor or standard LLC, you're likely overpaying in taxes.
As a Schedule C business owner, 100% of your net income is subject to self-employment taxes—a substantial 15.3% on the first $176,100 (for 2025). For a successful general contractor earning $200,000 in net income, that's over $27,000 in self-employment taxes alone!
By converting to an S-Corporation, you can pay yourself a reasonable salary and take the rest as distributions, which aren't subject to self-employment taxes. If that same contractor established an S-Corp and set a reasonable salary of $100,000, they'd only pay $15,300 in self-employment taxes on their salary—saving nearly $12,000 annually.
Gearl Construction implemented this strategy, allowing them to reinvest those tax savings into growing their remodeling business while maintaining full compliance with IRS guidelines.
The process involves filing a Form 2553 with the IRS to make an S-Election. The IRS provides guidance on reasonable compensation, considering factors like your industry, experience, and duties.
At Whittmarsh CPA, we've helped hundreds of general contractors determine the optimal salary-to-distribution ratio that maximizes tax savings while keeping them compliant with IRS regulations.
Simply having an S-Corp isn't enough—you need to continuously optimize it as your construction business grows. Many contractors leave money on the table by not revisiting their S-Corp strategy regularly.
The IRS requires your salary to be "reasonable," but this leaves room for strategic planning. With proper documentation and justification, you can often set a lower salary than you might think, especially if your business has multiple revenue streams or passive components.
Country Creek Builders works with tax professionals to review their S-Corp strategy annually, ensuring they're maximizing tax savings as their business evolves.
At Whittmarsh CPA, we provide ongoing tax planning to ensure our general contractor clients are taking full advantage of their S-Corp status while staying compliant.
One of the most powerful tax strategies for general contractors is establishing the right retirement plan. These plans allow you to make tax-deductible contributions toward your future while reducing your current tax burden.
For solo general contractors, a Solo 401(k) is often the best option. In 2025, you can contribute up to $23,500 as an employee, plus an additional employer contribution of up to 25% of your salary or net income (up to a combined limit of $70,000).
For a general contractor with an S-Corp salary of $100,000, this means you could potentially contribute $25,000 (25%) as an employer contribution—completely tax-deductible for your business.
For construction businesses with employees, options include:
Davis Contracting LLC implemented a retirement strategy that not only created substantial tax savings but also helped them attract and retain skilled workers in a competitive labor market.
At Whittmarsh CPA, we can help you select and implement the retirement plan that best fits your construction business's current situation and long-term objectives.
General contractors have excellent opportunities to involve family members in the business while creating significant tax benefits. By hiring your minor children to perform legitimate work, you can shift income from your high tax bracket to their lower one.
For 2025, the standard deduction is $15,000—meaning your child pays zero federal income tax on their first $15,000 of earnings. The next $11,925 is only taxed at 10%.
Construction businesses offer many legitimate roles for children:
New Spaces implements this strategy by having family members help with project documentation and customer follow-up, creating valuable content for their marketing while achieving tax benefits.
For sole proprietorships and partnerships (where each partner is a parent), wages paid to children under 18 are exempt from Social Security and Medicare taxes, and payments to children under 21 are exempt from Federal Unemployment Tax (FUTA).
At Whittmarsh CPA, we help general contractors implement this strategy correctly, maintaining proper documentation and compliance with labor laws.
As your general contracting business grows, purchasing real estate for your operations creates substantial tax advantages. By owning your shop, office, or storage facility through a separate entity, you create a powerful tax strategy.
Here's the approach: Your construction company pays rent to your real estate holding company. These rent payments are fully deductible expenses for your business, while the rental income in your real estate entity benefits from:
Charter Home Renovation implemented this strategy by purchasing their showroom and office space through a separate LLC, creating significant tax savings while building equity in real estate.
At Whittmarsh CPA, we can help structure this arrangement to maximize tax benefits while ensuring compliance with IRS regulations.
General contractors can significantly reduce their tax burden through strategic timing of equipment and vehicle purchases. Section 179 deductions and bonus depreciation allow immediate deduction of qualifying equipment rather than depreciating it over several years.
For construction businesses, qualifying purchases include:
The key strategy is timing these purchases based on your current and projected taxable income. Homesbymoderno strategically schedules their equipment investments to offset high-income years, maximizing tax advantages.
Our Whittmarsh CPA team can help create a multi-year tax plan that schedules equipment investments when they'll provide the greatest tax benefit for your construction business.
In today's market, general contractors can't rely solely on referrals. A systematic approach to digital marketing can deliver consistent leads and growth.
The most successful contractors implement:
Garvin Homes uses this approach to generate a consistent flow of qualified leads, allowing them to be selective about the projects they take on.
The key is tracking your marketing metrics to understand which channels deliver the best ROI. At Whittmarsh CPA, we help contractors make data-driven decisions about their marketing investments.
For general contractors, visual proof of your work quality is essential for converting leads. Every completed project is an opportunity to build your credibility.
Create a comprehensive documentation process:
CBC Twin Cities attributes much of their growth to their extensive project documentation, which they leverage across all marketing channels.
This content should be featured on your website, Google Business Profile, social media, and in sales presentations. At Whittmarsh CPA, we understand how important this social proof is for contractors and can help you integrate it into your overall business strategy.
Many general contractors struggle with sales consistency. Implementing a structured sales process can dramatically improve your close rate and project profitability.
An effective sales process includes:
Bettencourt Construction implemented a systematic sales process that increased their close rate by over 30% while also improving project profitability.
At Whittmarsh CPA, we can help you analyze your sales metrics and identify opportunities to improve your conversion rate and profit margins.
Many general contractors don't truly know which projects are profitable and which are draining resources. Implementing proper job costing gives you the clarity needed to make strategic decisions.
Effective job costing includes:
Fredrickson Masonry uses job costing to identify their most profitable project types, allowing them to focus their marketing and sales efforts accordingly.
At Whittmarsh CPA, we specialize in construction accounting and can help you implement job costing systems that provide clear visibility into your true project profitability.
The right construction management software can transform your business, eliminating manual processes and reducing costly errors.
Key features to look for include:
GroundTech MN credits their project management software with helping them handle 40% more projects without adding administrative staff.
At Whittmarsh CPA, we can help you evaluate different software options and ensure your technology investments qualify for appropriate tax deductions.
The most profitable general contractors have documented systems for every aspect of project execution. This systemization leads to consistent quality, fewer errors, and improved efficiency.
Key areas to systemize include:
DMS Demolition attributes their growth and profitability to having clearly documented systems that ensure consistent execution across all projects.
At Whittmarsh CPA, we can help you identify areas where improved systems would have the greatest impact on your profitability.
Your subcontractor relationships can make or break your business. Developing a reliable network of quality subcontractors is a critical strategic advantage.
Consider implementing:
Legacy Painting 757 has built strong relationships with complementary trades, allowing them to deliver comprehensive solutions to their clients.
At Whittmarsh CPA, we can help you establish proper classification and payment procedures for your subcontractors to avoid potential tax issues.
Not all projects and clients are created equal. Analyzing your historical data to identify your most profitable types of work allows you to focus your resources more strategically.
Consider factors like:
Properties by ARC used this approach to identify their most profitable market segments, allowing them to specialize and significantly increase their overall profit margins.
At Whittmarsh CPA, we can help you analyze your historical project data to identify your most profitable niches and develop strategies to win more of this high-margin work.
Implementing these strategies can transform your general contracting or remodeling business, reducing your tax burden while accelerating growth. However, they require expertise to implement correctly.
At Whittmarsh CPA, we specialize in helping construction professionals navigate these complex strategies. Our team in Miami, Florida provides comprehensive accounting services designed specifically for general contractors and remodelers.
Don't leave money on the table. Book a Tax Reduction & Accounting Analysis today to discover which of these strategies would have the biggest impact on your construction business.
Looking for more insights on growing your construction business? Check out these helpful resources:
For personalized guidance on implementing these strategies in your general contracting business, contact Whittmarsh CPA today.