How Will 2026 End For You?
Maybe you’re realizing that you started the year with too much ambition and need a reality check. Maybe things in 2026 have not gone as planned for you. Or, maybe they’ve actually gone better than expected and you are ready to take on more. Whatever your situation is, there’s still time to close the year with a bang. Doing so requires assessing the current state of your business, and then focusing on just a few action steps that will make the biggest difference for you in the remaining months of the year.
Revisiting Plans and Thinking Forward
Marty McCarthy, CPA, CCIFP, and managing director of the tax practice at CBIZ, encourages using the halfway point of the year to get “a clear understanding of jobs in progress, the trajectory of those jobs, the standing of your project pipeline and backlogs, emerging industry trends and what you can do to be a stronger contractor by the end of 2026. Those taking the initiative have their future in their hands.”
According to McCarthy, many contractors assume that tax wise, one year is the same as another, but the reality is midyear tax planning can make a big difference to preserving cash flow, which is of course critical in construction:
- The extra time allows for a more thorough analysis of what strategies are working, what compliance needs remain and the elections and opportunities available….The tax changes introduced by the One Big Beautiful Bill Act (OBBBA) make this a year that requires a fresh look at your tax strategy.
- For example, under OBBBA, new definitions apply to what the IRS deems a residential construction project. This is important to recognize and plan for, as it may unlock new accounting methodologies with potential benefits.
- There are also additional available research and experimentation (R&E), also known as research and development (R&D), and credits and expanded bonus depreciation, among other changes.
In addition to plotting your tax strategy, McCarthy also suggests using the mid point of the year to dig past your surface numbers and more fully assess financial performance, backlogs and your project pipeline, following these pointers:
- The financial statement paints a picture, but taking a closer look at financials can reveal important details. Start by comparing your revenue to forecasts, gross margin trends, job performance, job costing, work-in-progress (WIP) and cash flow versus profitability.
- A business might have cash in the bank but liabilities from overbillings on certain contracts. What does that mean? The composition of the component of working capital may reveal certain issues. Understanding these types of issues and looking at the composition of financials can be a segue to your insights.
- Cash and accounts receivable are the be-all and end-all for most businesses in the industry — but not everything. A better understanding can only be reached by digging in to understand if accounts receivable and/or cash contain overbilled liabilities. Ask yourself: “Are we borrowing on our line of credit while also overbilled?” That could foreshadow liquidity issues.
Good To Know: How Do Surety Bond Writers View Your Business?
With current, accurate work-in-progress (WIP) schedules — tracking overbillings and underbillings on each active job —in hand, and tight back office operations protecting your cash, you’ll find you are also in ship-shape for a midyear check in with your surety underwriters. Giving underwriters a real-time read on your financial position is a pragmatic step toward increasing your bonding capacity.
For more specific pointers on strengthening your position, read this: How To Increase Your Construction Bonding Capacity. Remember that the surety industry uses the “three Cs”: character, capacity, and capital. Character and capacity are built through track record. Capital is where the numbers do the talking. For example, Projul explains: most sureties use a working capital multiplier, often 10x to 15x, to set your bonding capacity — so $200,000 in working capital might support a single bonding limit somewhere around $2 million to $3 million.
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As a national, direct, and Treasury-Listed surety bond writer, Colonial Surety Company offers bonding programs for builders of all sizes.
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Once qualified, you can leverage all the benefits of The Partnership Account® for Contractors, including: a surety bond line of credit for up to 20 million single, and 40 million aggregate. Plus, you’ll:
- Issue your own Bid Bonds Instantly using our powers of attorney. Performance and payment bonds are speedier and easier than ever too.
- Gain Real-Time Visibility: Use your private dashboard to view your underwriting profile and insightful financial data in real-time.
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Bonding Programs at Colonial Surety Company
In business since 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial Surety Company is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Let’s connect today: Colonial Surety Company.
