Your 5 Financial Mistakes That Put Contractors at Risk …and How to Avoid Them blog post
By: Joe Baldwin
5/12/20252 min read
📌 Introduction
Running a construction business isn’t easy. Between juggling job sites, managing crews, and keeping clients happy, it’s easy to lose track of your numbers.
At Baldwin Business Solutions, we work with contractors every day—people who are great at building things, but often don’t have the time or tools to manage the financial side of their business.
This guide breaks down five of the most common—and costly—financial mistakes we see contractors make, and how to avoid them.
⚠️ MISTAKE #1: Not Tracking Job Costs Accurately
You can’t fix what you can’t see. If you aren’t tracking labor, materials, and overhead per job, you have no way of knowing which projects are profitable.
How to Fix It:
Use job costing software or QuickBooks Projects
Assign every expense to a job—not just payroll and materials, but insurance, permits, and admin time
Review margins per job before you bid the next one
⚠️ MISTAKE #2: Lumping All Income and Expenses Together
If your Chart of Accounts is just “income” and “expenses,” you’re missing the big picture.
How to Fix It:
Break revenue and costs into categories: residential vs commercial, labor vs subcontractors, etc.
Separate cost of goods sold (COGS) from operating expenses
Use this visibility to guide pricing, hiring, and overhead decisions
⚠️ MISTAKE #3: Poor Cash Flow Management
You can be profitable on paper and still run out of money. Late payments from clients + early payroll = a recipe for stress.
How to Fix It:
Build a 12-week cash flow forecast
Bill faster, and shorten payment terms where you can
Schedule large purchases (like equipment or materials) around expected receivables
⚠️ MISTAKE #4: No Entity or Tax Planning
Many contractors are overpaying the IRS because they’re using the wrong business structure—or none at all.
How to Fix It:
Work with a tax advisor to see if an S-Corp or LLC structure would reduce your self-employment taxes
Track deductions correctly: mileage, tools, home office, meals, etc.
Do year-round tax planning—not just in April
⚠️ MISTAKE #5: Treating Bookkeeping Like a Side Job
You wouldn’t let someone untrained build your foundation. So why trust your books to someone who’s winging it?
How to Fix It:
Hire a qualified bookkeeper or fractional CFO who understands your industry
Set up regular financial reviews—even if it’s just once a month
Make financial visibility part of your weekly rhythm, not an annual scramble
✅ Ready to Clean Up Your Finances?
We help contractors:
Clean up messy books
Reduce tax liability
Improve cash flow
Build a real plan for growth
👉 Book a free 30-minute consult
We’ll show you exactly where your business is leaking money—and how to stop it.
🔗 [Insert link to your calendar or contact page]
👷 About Baldwin Business Solutions
With decades of experience in finance, operations, and strategy—from small businesses to Fortune 500 firms—we bring real-world insight to contractors and business owners who are ready to grow.
Whether you need clean books, a growth plan, or a trusted partner to guide your business decisions, we’re here to help.
