Not all construction follows the same model
A developer building and selling on its own account differs from a contractor performing work for a client. Subcontracting also requires a review of the agreement and duration. The description “construction business” alone does not determine the accounting or tax treatment.
Contracts spanning calendar years
For the treatment under Income Tax Law Article 42, the nature of the construction or repair work, its contractual basis and whether it extends into more than one calendar year matter. A project does not have to last over twelve months to cross calendar years. For qualifying work, profit or loss is determined by reference to the completion year; withholding on progress payments is a separate issue.
Keep costs linked to projects
Track materials, labour, subcontractors, equipment, shared-cost allocations, progress billings, advances, collections and retention amounts by project. Keep contract changes alongside those records. A single total for several building sites does not show which project is profitable.
Why completion dates matter
For work subject to provisional and final acceptance procedures, approval of the provisional acceptance record is relevant; in other cases, actual completion or cessation is considered under the applicable rule. A planned contractual date is not always the final date for tax purposes.
Use a monthly project summary
Compare the contract value, actual costs, progress invoices, collections and remaining obligations for each project. Reconcile that summary with the accounts to identify missing invoices or misallocated costs. Applicable withholding and VAT treatment still need to be checked for the specific work and customer.