FinTruction, 215 N MOORE Road APT 3024, Coppell, TX (2026)

10/16/2026

Reasonable compensation is the W-2 wage an S-corp owner-operator must pay themselves for services performed, before distributions. The IRS reclassifies underpayment.

Why wages vs. distributions. Wages carry F**A: 6.2% Social Security plus 1.45% Medicare, employer and employee each. Distributions don’t. Owners minimize wages to cut payroll tax, and the IRS pushes back when wages look low for the work.

How “reasonable” gets determined. No single formula. IRS and tax courts look at nine factors: training/experience, duties, time devoted, comparable salaries, bonus timing, dividend history, payments to non-shareholder employees, formal agreements, use of a formula. IRS Fact Sheet 2008-25 is the working list.

The $420K case. Owner-operator running a construction business, performing GM-level duties full-time. Reasonable wage for a construction GM might be $140-180K. $45K is well below. If audited, the IRS would likely reclassify 100K+aswages,assessbackF**A(~15K), plus penalties and interest.

Documentation defense. Written compensation study at year-end using BLS or industry survey comps, board minutes, and an employment agreement specifying duties.

The 40-60% shorthand. Some CPAs target 40-60% of profit as wages. Informal practice, not an IRS safe harbor or Tax Court standard. The nine-factor test governs.

THE FIX:
Set W-2 wages based on comparable market data, not minimum tax.

Document a reasonable compensation study annually. Salary surveys and comps.

Formalize the compensation decision in board minutes or an employment agreement.

Treat the 40-60% rule as informal shorthand, not a safe harbor.

Review with CPA before year-end. Mid-year corrections cost less than audit assessments.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/15/2026

Procore runs project management; QBO is the ledger. The connector moves specific data in specific directions.

Procore → QBO. Subcontractor invoices, prime contract owner invoices, Standard Cost Codes, companies as vendors.

QBO → Procore. Job cost transactions as Direct Costs. Vendor list syncs back for Procore commitments.

What never syncs. Budgets. Commitments (subcontracts and POs) and their change orders. Prime contract change orders. Timecards and timesheets. Project forecasts. All of it feeds Procore’s project reports and never hits QBO.

The committed-cost blind spot. QBO sees actual cost through subcontractor invoices and Direct Costs, but no commitments. A sub with $400K of commitment remaining and $100K billed leaves QBO understating job cost by $400K. Project financials have to run from Procore for anything forward-looking.

Three hard requirements in Procore’s docs. QBO Plus or Advanced only; Essentials has no Projects. Standard Cost Codes must be two tiers or deeper; single-tier blocks go-live. The integration does not write to the Class field, so if you run Classes by division, synced transactions arrive untagged.

The Direct Cost mechanic. Job costs entered in QBO come back to Procore as Direct Costs only if coded to the project-specific Service Items the integration created. Generic COGS stays invisible to Procore.

THE FIX:
Confirm QBO Plus or Advanced before implementation. Essentials blocks the sync.

Build Standard Cost Codes in Procore at two tiers minimum. Single tier blocks go-live.

Plan for the Class gap. The integration doesn’t write Classes; tag manually.

Code QBO job cost entries to integration Service Items. Generic COGS stays invisible.

Pull project financials from Procore. QBO doesn’t have budgets or forecasts.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/15/2026

Classes give you a report that looks like job costing. It isn't.

You set up a class for every job, tag the transactions, run a P&L by class. Numbers broken out job by job. Feels like job costing.

But a class is just a tag. It sorts what already happened. It doesn't know what the job was supposed to cost, or what's still coming.

That's the whole difference. A class report looks backward. Job costing looks forward.

So there's no budget vs. actual. No committed costs, a $40,000 subcontract you've signed but haven't been billed for shows up nowhere. No WIP, no percent complete, no retainage.

Job's 60% done. The class report says "on track," because nobody compared it to the estimate. Three weeks later it's over budget and nobody saw it coming. The report never flagged it. It couldn't.

A class report tells you what a job cost. Job costing tells you what it's costing, while you can still do something about it.

Is your report catching overruns, or just sorting the numbers after the damage is done?

Book your free 48-hour audit from the link in bio.

If we miss the deadline, we work free for 30 days.

10/14/2026

Two methods, two tax outcomes.

Flat allowance. Fixed monthly amount, no substantiation required. Treated as wages: income tax and F**A on both sides, FUTA and SUTA on the employer. Simple to administer, but expensive on both ends. $600/month = $7,200/year of taxable comp, and the employee nets maybe $4,500 after federal, state, and payroll tax.

Mileage reimbursement (accountable plan). Employee logs business miles, employer pays at or below the IRS standard rate (72.5¢/mile Jan 1 2026, bumped to 76¢/mile effective July 1 2026 per Notice 2026-10). Must sit inside an accountable plan under IRC §62(c): business connection, substantiation within 60 days, excess returned within 120 days. Tax-free to employee, deductible to employer, no payroll tax either side.

FAVR (Fixed and Variable Rate). Hybrid for high-mileage drivers. Fixed covers ownership (insurance, depreciation, registration); variable covers operating (fuel, maintenance). Also an accountable plan. $61,700 max standard automobile cost for 2026.

The math. 4 PMs at 12,000 business miles/year each at 76¢ = $36,480/year in tax-free reimbursement vs. $28,800/year in taxable allowances.

Gas cards. A gas card plus a flat allowance plus a mileage reimbursement is triple-dipping. Pick one method.

THE FIX:
Pick one method per employee class. Document it in the handbook.

Prefer mileage under accountable plan. Tax-free beats taxable every time.

Require monthly mileage logs. Date, start/end odometer, business purpose.

Don’t stack a gas card on top of mileage. Mileage already covers fuel.

Review the IRS standard rate at January 1 and mid-year. 2026 moved twice.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/12/2026

Davis-Bacon Act (40 USC §3141-3148) requires federally funded construction contractors to pay no less than the locally prevailing wage for each labor classification on the project.

Where to find the rate. SAM.gov publishes wage determinations by state, county, and construction type (building, residential, highway, heavy). The determination lists minimum base rate and fringe rate for every trade present on that project type in that county.

Base plus fringe. Base is cash wages paid to the worker. Fringe can be paid as cash on top of base or contributed to bona fide benefit plans (health, retirement, apprenticeship). Total compensation must meet or exceed base + fringe.

Certified payroll. Weekly WH-347 form submitted to the contracting agency. Lists every worker, hours, classification, rate paid, and fringe treatment. Falsification is a federal crime carrying real prison exposure.

Classification matters. A pipefitter paid at laborer rate on a federal job is a Davis-Bacon violation even if the worker agreed to it. The classification follows the actual work performed on site, not what’s on the job title.

The bid impact. On that VA job, journeyman pipefitters cost $95.40/hour total compensation vs. the contractor’s standard $42. If the bid used the $42 rate, every hour on site loses $53.40 of margin that never existed.

THE FIX:
Pull the wage determination from SAM.gov before bidding any federal job.

Price labor at base + fringe for every classification on the project.
Submit WH-347 certified payroll weekly. Agency will not release payment without it.

Classify workers by actual work performed, not by job title.

Audit sub payroll on federal jobs. Primes carry liability for sub violations.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/11/2026

One QuickBooks setting decides whether your job costing works.

Most bookkeepers never touch it.

It's called "Track expenses and items by customer," under Account and Settings in the Expenses tab. On a lot of setups it's off by default.

Here's why that's dangerous.

With it off, every expense still saves fine. The bill pays, the transaction clears, the books look normal. But nothing ties that cost to a job.

Materials for the Johnson job. A sub invoice on the Miller job. All entered, none attached. They sit in the general ledger and never make it into a job cost report.

So the report still runs. It's just incomplete. Some jobs show fatter margins than they really have, because their real costs never got tagged. Then your next bid gets built off those numbers.

The job costing report exists. It's just not telling the truth.

When did anyone last check whether your costs are actually tagged to jobs?

Book your free 48-hour audit from the link in bio.

If we miss the deadline, we work free for 30 days.

10/09/2026

WIP schedule reconciles earned revenue to billed revenue job by job. Seven columns, one row per active job, totals at the bottom.

Column 1: Contract value. Original contract plus approved COs.

Column 2: Estimated cost at completion. Updated monthly as scope and conditions change.

Column 3: Estimated gross profit. Contract value minus estimated cost. The job’s expected margin.

Column 4: Cost to date. Total cost incurred through the report date, pulled from the job cost report.

Column 5: Percent complete. Cost to date divided by estimated cost at completion (cost-to-cost method).

Column 6: Earned revenue. Contract value times percent complete. This is what belongs on the P&L for the period, not what you billed.

Column 7: Billed to date. Total invoiced through the report date, including retention.

Over/underbilled. Earned minus billed. Positive = underbilled (contract asset on the balance sheet). Negative = overbilled (contract liability). This is the number bonding looks at hardest because it reveals whether the GC is front-loading billings.

Totals tie to GL. Sum of earned revenue ties to revenue on P&L. Sum of over/underbilled ties to balance sheet contract asset and liability accounts.

THE FIX:
Build the 7-column schedule in Excel from QBO data. QBO can’t produce it natively.
Update estimated cost at completion monthly. Stale estimates break the whole report.

Tie earned revenue total to P&L revenue line. Mismatch = error somewhere.

Tie over/underbilled total to balance sheet contract asset and liability.

Review with CPA and bonding agent quarterly. Both sign off on the format.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/06/2026

Sub payment applications are the document set required before releasing a progress payment. Standard on commercial work, often skipped on residential. Five documents:

Document 1: Signed pay application. Sub-signed AIA G702/G703 or the GC’s own equivalent, showing schedule of values, work completed this period, work completed to date, retention held.

Document 2: Conditional lien waiver from the sub for the current payment. Conditional means the waiver only takes effect once payment is received. A dozen states mandate a statutory form; the rest take any clear release.

Document 3: Unconditional lien waiver from the sub for the prior payment. Confirms the sub received the last payment and released lien rights for that work already performed.

Document 4: Tier-two lien waivers from the sub’s suppliers and lower-tier subs. Most contractors skip this one, and it’s where the lien exposure sits.

Document 5: Current COI. Coverage active through the pay period. Additional insured and waiver of subrogation confirmed on the certificate.

Payment release rule. All five documents in the file before the check cuts. Missing one, payment holds until it’s received.

The mechanics lien risk. Without tier-two waivers, an unpaid supplier can lien the customer’s job after you’ve paid the sub in full. On a $47K pay app, a $9K unpaid material invoice is enough to cloud title on the whole job.

THE FIX:
Require the five-document package on every sub pay application. No exceptions.

Distinguish conditional (current period) from unconditional (prior period) lien waivers.

Get tier-two waivers from the sub’s suppliers and lower-tier subs.

Confirm COI is current through the pay period.

Hold payment until all five are in file. Missing document = no check.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/05/2026

COA hygiene is annual discipline that pays off in report quality all year. Six steps:

Step 1: Find dead accounts. QBO has no last-activity report, so run a P&L and Balance Sheet over 24 months set to show all accounts including zero balances. Anything at $0.00 across that window is a cleanup candidate.

Step 2: Merge duplicates. Common pairs: “Materials” and “Job Materials”, “Vehicle” and “Auto Expense”. Merging moves transactions into one account. Both accounts must share the same type and detail type or QBO refuses.

Step 3: Deactivate stale accounts. No activity in 24 months gets deactivated. History stays and shows on reports; the account leaves the dropdowns. Clear any balance first, or QBO journals it to Opening Balance Equity.

Step 4: Rename for consistency. Pick one convention and rename to match.

Step 5: Enforce classification. COGS under COGS, overhead under Expense, balance sheet accounts in the right sections.

Step 6: Update the written account list so the bookkeeper stops opening new accounts.

The win. A cleaned COA runs a P&L in a couple of pages instead of eight.

Cadence. Once a year at year-end close.

THE FIX:
Run the annual COA cleanup. Find dead accounts, merge duplicates, deactivate stale, rename.

Merge duplicates rather than deactivating. Merge consolidates history into one account.

Enforce classification. COGS under COGS, overhead under Expense.

Document the account list. Reduces new-account creation.

Repeat annually. COA sprawl restarts within 12 months if the discipline lapses.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

10/04/2026

Every cost sits in one of two buckets: direct job cost or overhead. The decision is attribution.

Job cost (direct). Traceable to a job. Field labor and burden. Materials delivered. Sub costs. Equipment rate on job hours. PM salary allocated to one job. Permit fees.

Overhead (indirect). Supports the business as a whole. Office rent. Office salaries. Owner salary. Marketing. General insurance. Software across jobs.

Where PMs and estimators get miscoded. Both drive to jobs. PM time is job cost when allocated, overhead when spread. Estimator time is overhead; estimating is a business function. Fuel follows the person.

The margin effect. Overhead miscoded into job cost inflates COGS and understates gross margin; the reverse overstates it. On a $4M contractor, one $120K estimator-and-admin payroll line in the wrong bucket moves reported gross margin three points, and every bid built on it inherits the error.

The COA structure. Six COGS accounts: Materials, Labor, Burden, Sub, Equipment, Other. Overhead kept separate.

Allocation. Shared costs like shop rent split between job storage and office get allocated on a rational basis. Document it.

THE FIX:
Apply direct attribution. Traces to a job = job cost. Otherwise overhead.

Code PM time to job cost when allocated; overhead when spread. Estimator always overhead.

Set up separate COGS and overhead accounts.

Allocate shared costs by a rational basis. Document the split.

Review gross margin monthly. Miscoding shows up as margin drift.

We do a free 48-hour audit of your construction books. We review what you’ve got, flag where you’re exposed, and send back what it’s actually costing you, within 48 hours.

Comment “CLEANUP” and we will DM you the details.

This content is for educational purposes only. Every business is different. Before making any changes to your books, reach out to us for guidance specific to your situation.

FinTruction

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