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Roofing is one of the most financially intensive trades in California construction. High material costs, expensive labor, demanding insurance requirements, and project-based work with variable payment timing all create significant bookkeeping complexity for LA roofing contractors. This guide covers the financial management practices that separate thriving roofing companies from those that stay busy but struggle with cash flow and profitability.

The Financial Profile of Roofing in Los Angeles

Roofing in the LA market involves a wide range of project types: residential reroof (composition shingle, tile, flat), commercial roofing (TPO, modified bitumen, built-up), new construction roofing, and insurance restoration (fire damage, wind damage). Each has different margin profiles, material cost structures, and cash flow timing. Material costs — shingles, tile, underlayment, flat roofing membranes — are a dominant cost item and subject to significant price fluctuation. Labor costs are high in California, and roofing workers’ comp rates are among the most expensive in any trade. Insurance requirements (liability and workers’ comp) add substantially to overhead.

Setting Up QuickBooks for a Roofing Contractor

Create separate income accounts for residential reroof, commercial roofing, new construction roofing, insurance restoration roofing, and repair and maintenance. This segmentation reveals which work types are most profitable. On the cost side, track shingles and composition materials, tile roofing materials, flat roofing materials (TPO, membrane, built-up), underlayment and accessories, labor by crew, subcontractor costs, equipment rental (cranes, dumpsters), permit fees, and dumpster and disposal costs separately. Enable Projects for every job — roofing job costing data is critically valuable given the high material and labor costs per project.

Workers’ Comp: The Roofing Contractor’s Biggest Insurance Cost

Roofing carries the highest workers’ comp rates of any trade in California — rates of $20–$35 per $100 of payroll are common for roofing crews. On a roofing crew with $30,000/month in payroll, your workers’ comp premium might be $6,000–$10,500/month. This is a massive overhead cost that must be factored into every bid. Many roofing contractors make the mistake of underestimating their actual workers’ comp cost and pricing jobs that can’t cover it. Calculate your exact workers’ comp rate and include it explicitly in your job cost estimates.

Workers’ comp for roofing is subject to year-end audits based on actual payroll. If your actual payroll exceeds your estimated payroll, you’ll receive a large audit bill. If it’s lower, you’ll receive a credit. Budget and track payroll carefully throughout the year so you’re not surprised at audit time.

Subcontractor Management for Roofing

Many roofing contractors use subcontractor crews for production work. Under California AB5, most roofing subcontractor crews who work regularly for your company are likely employees, not independent contractors. The financial and legal risk of misclassification is substantial in roofing because the workers’ comp differential is so large — if your sub doesn’t carry workers’ comp and one of their workers is injured on your job, you may be liable. Always verify that any sub you use carries their own workers’ comp and general liability insurance, and obtain certificates of insurance before work begins. Track subcontractor payments in QuickBooks and issue 1099s to unincorporated subs paid $600 or more.

Insurance Restoration Roofing: Special Accounting Considerations

Insurance restoration roofing (working with homeowners who have insurance claims for fire, wind, or hail damage) involves a specific billing structure: you work with the insurance adjuster’s scope of loss, supplements are common, and payment comes from the insurance company (and sometimes a deductible from the homeowner). Track insurance restoration jobs as separate projects in QuickBooks. Document supplements carefully. Revenue recognition can be complex — make sure you’re recording revenue at the correct amounts. Work with a bookkeeper who understands insurance restoration billing if you do significant volume in this market.

Tax Deductions for Roofing Contractors

Key deductions include trucks, trailers, and equipment (Section 179 for this year’s purchases), roofing tools (nail guns, shingle cutters, safety equipment), OSHA-required safety equipment (harnesses, guardrails), workers’ comp and liability insurance premiums, dumpster rental fees (if not charged to individual jobs), CSLB C-39 license fees, estimating software (Xactimate, EagleView, RoofSnap), marketing costs, and ongoing training and certification costs. Document all of these in QuickBooks throughout the year.

Frequently Asked Questions

What CSLB license do roofing contractors need in California?

Roofing contractors in California need a C-39 (Roofing) CSLB license. This covers installation, repair, and maintenance of all types of roofing systems. Keep your license current, bond in place, and workers’ comp certificate on file with CSLB.

For more information, see our guide on job costing for roofing projects.

For more information, see our guide on tax deductions for roofing contractors.

For more information, see our guide on managing cash flow between roofing jobs.

For more information, see our guide on bookkeeping for general contractors.

Bookkeeping Champs Serves LA Roofing Contractors

Bookkeeping Champs provides specialized bookkeeping for roofing contractors throughout Los Angeles County and Ventura County. We understand workers’ comp audits, insurance restoration billing, subcontractor compliance, and roofing job costing. Call (818) 679-4451 today.

Receiving an IRS or California FTB audit notice is stressful — but contractors who maintain clean books and organized records have nothing to fear. The vast majority of small business audits are resolved quickly and favorably when the taxpayer has proper documentation. This guide explains what to expect if you’re audited as a contractor, how to prepare, and most importantly, how to build the bookkeeping systems that make audit defense simple.

Types of IRS Audits for Small Businesses

There are three main types of IRS audits. A correspondence audit is the most common — the IRS sends a letter requesting documentation for a specific item on your return (a deduction, a reported income amount, a credit). You respond by mail with supporting documents. Most correspondence audits are resolved without ever meeting an IRS agent. An office audit requires you (or your CPA/representative) to meet with an IRS examiner at a local IRS office to review specific items. A field audit is the most comprehensive — an IRS agent comes to your business to review your records. Field audits are typically reserved for more complex situations or when the IRS suspects significant issues.

What Triggers Contractor Audits

The IRS uses statistical models to flag returns with unusual patterns. Common contractor audit triggers include large Schedule C vehicle deductions, high home office deductions, consistently reporting net losses, cash income that seems inconsistent with lifestyle or bank deposits, missing or inconsistent 1099 reporting, large meals and entertainment deductions, subcontractor payments that don’t reconcile with 1099s filed, and reported income significantly below industry averages for your revenue level. The California FTB independently audits returns and may initiate California audits based on information sharing with the IRS or its own audit triggers.

What to Do When You Receive an Audit Notice

First, don’t panic — and don’t ignore it. Read the notice carefully to understand exactly what’s being examined. Note the response deadline. Contact your CPA or tax professional immediately. Don’t contact the IRS directly until you’ve spoken with your representative. Gather the records related to the items being questioned. Respond to correspondence audits with organized, labeled documentation — don’t send a disorganized pile of papers.

Gathering Your Documentation

Depending on what’s being audited, you may need to produce: QuickBooks reports and account details for the year in question, bank and credit card statements, invoices for all income reported, receipts for deductions claimed, vehicle mileage logs, home office documentation (dimensions, photos, purpose), payroll records and W-2s issued, 1099s issued to subcontractors and W-9s collected, contracts for major jobs, prior year tax returns, and business entity documents. The more organized your records, the faster and cheaper the audit process will be. Clean QuickBooks records that clearly document every transaction are far more effective than a box of unsorted receipts.

How Your Bookkeeper Helps During an Audit

A good bookkeeper is invaluable during an audit. They can pull organized QuickBooks reports on short notice, explain how transactions were recorded and why, help reconstruct any records that need clarification, and coordinate with your CPA on documentation. Contractors whose books are maintained by a professional bookkeeper consistently fare better in audits because the records are organized, consistent, and defensible. DIY bookkeeping with inconsistent categorization, unexplained transactions, and missing documentation creates audit vulnerabilities that a professional bookkeeper eliminates.

The Best Audit Defense: Proactive Records

The goal isn’t to avoid deductions — it’s to take every legitimate deduction with proper documentation. A contractor who claims $15,000 in vehicle expenses with a thorough mileage log, fuel receipts, insurance records, and maintenance documentation will win an audit on that item. A contractor who claims $15,000 without any documentation will lose it. The difference is bookkeeping discipline throughout the year, not after-the-fact scrambling in response to an audit notice.

Frequently Asked Questions

How far back can the IRS audit my tax returns?

Generally 3 years from the filing or due date of the return, whichever is later. If you underreport income by more than 25%, the window extends to 6 years. If there is fraud, there is no time limit. Keep records for at least 7 years to cover the standard and extended audit windows.

Should I represent myself in an IRS audit?

For correspondence audits with clear documentation, you may be able to handle it yourself. For office audits and field audits, always have a CPA or Enrolled Agent represent you. Tax professionals who specialize in IRS representation understand audit procedures, know what rights you have, and can negotiate effectively on your behalf. Their fee is almost always worth it.

For more information, see our guide on IRS audit red flags to avoid.

For more information, see our guide on maximizing your tax deductions.

For more information, see our guide on bank reconciliation best practices.

For more information, see our guide on organizing your business receipts.

Bookkeeping Champs Keeps You Audit-Ready

Bookkeeping Champs maintains clean, well-documented books for contractors throughout Los Angeles and Ventura County — giving you the audit defense you need before you ever need it. Call (818) 679-4451.

One of the most powerful legal protections available to California contractors and subcontractors is the mechanics lien. When a client refuses to pay, delays payment unreasonably, or simply doesn’t have the money to pay you, a mechanics lien gives you a legal claim against the property itself — forcing payment as a condition of selling or refinancing the property. But mechanics liens in California are procedurally complex, with strict deadlines that must be met or the right is lost forever. This guide explains everything you need to know to protect your payment rights on every California project.

What Is a Mechanics Lien?

A mechanics lien (also called a construction lien or materialman’s lien) is a legal claim recorded against a property by contractors, subcontractors, or material suppliers who performed work or provided materials for that property but weren’t paid. The lien attaches to the property’s title, which means the owner cannot sell or refinance the property without resolving the lien. In California, mechanics lien rights are established by the Civil Code, sections 8000 through 9566. These laws protect everyone in the construction payment chain — from prime contractors to second-tier subs to material suppliers.

The Most Critical Step: The Preliminary Notice

Here’s where most contractors lose their lien rights without realizing it: in California, in order to preserve your mechanics lien rights, you must serve a Preliminary Notice on the owner, the general contractor (if you’re a sub), and the construction lender (if any) within 20 days of first furnishing labor, services, equipment, or materials to the project. Miss the 20-day window and you lose your lien rights for the work done before you served the notice (you preserve rights for work done after service, but not before). This means you can lose months of lien-able work just by being late.

Preliminary Notices must be served by certified mail or personal service. The notice must include specific statutory information: your name and address, the name of the person who hired you, the jobsite address, a description of the labor or materials furnished, and an estimate of total value. There are Preliminary Notice services and software platforms that handle this automatically for a small fee — for contractors doing multiple projects, this automation is well worth the cost.

Do Prime Contractors Need to Serve Preliminary Notice?

Prime contractors (those with a direct contract with the owner) are not required to serve a Preliminary Notice to preserve their lien rights on private works projects. However, they must still comply with all other lien procedures. On public works projects, the preliminary notice rules differ — contractors on public works projects typically must follow stop payment notice procedures rather than mechanics liens (you can’t lien government-owned property).

Recording the Mechanics Lien

If you’re not paid and you’ve properly served your Preliminary Notice, the next step is recording the mechanics lien with the County Recorder’s office in the county where the property is located. The lien must be recorded within specific deadlines. For prime contractors: within 90 days after completion of the work of improvement. For subcontractors and suppliers: within 90 days after completion of the work of improvement or within 30 days after the recording of a Notice of Completion (whichever is earlier). These are hard deadlines — missing them forfeits your lien rights entirely.

The mechanics lien itself must contain specific information required by California Civil Code Section 8416: claimant’s name and address, name of person who hired the claimant, description of the work or materials, the last date labor or materials were furnished, a description of the property (legal description and street address), the amount claimed after offsetting any credits, and a statement of acknowledgment signed under penalty of perjury.

Foreclosing on a Mechanics Lien

Recording a mechanics lien doesn’t automatically get you paid — it creates a cloud on title that pressures the owner to resolve the debt. If the owner still doesn’t pay, you must file a lawsuit to enforce (foreclose) the lien within 90 days of recording the lien. If you miss this window, the lien becomes unenforceable. Foreclosure lawsuits require an attorney — consult a construction attorney well before the deadline to evaluate your case.

Releasing a Mechanics Lien

Once you’ve been paid in full, you’re obligated to record a Release of Mechanics Lien with the County Recorder promptly. Failure to release a satisfied lien is a misdemeanor in California. When accepting final payment, you’ll typically be asked to sign an Unconditional Lien Release — make sure you only release your lien after funds have cleared, not before. There are four types of lien releases in California: Conditional Waiver on Progress Payment, Unconditional Waiver on Progress Payment, Conditional Waiver on Final Payment, and Unconditional Waiver on Final Payment. Use the right one for your situation.

Mechanics Liens and Your Bookkeeping

From a bookkeeping perspective, outstanding mechanics liens should be tracked in your accounts receivable records. In QuickBooks, maintain notes on each outstanding invoice’s lien status — when Preliminary Notice was served, when the lien was recorded, and the lien’s expiration deadline. Clean, accurate invoicing and accounts receivable tracking is essential for lien enforcement — you need to show exactly what was owed, when it was earned, and that it remains unpaid.

Frequently Asked Questions

Can I file a mechanics lien for the retention amount?

Yes. Retainage is part of your contract price and is lienable just like any other unpaid amount. The lien deadline runs from the completion of the work of improvement, not from when the retainage was due. Make sure your lien includes any unreleased retainage in the amount claimed.

What if I don’t know the property owner’s exact legal name?

You can look up the property owner information in the county assessor’s records online. For the Preliminary Notice and mechanics lien, use the exact name as shown on the assessor’s records. If in doubt about the legal owner, use a lien service or consult a construction attorney to ensure proper identification.

For more information, see our guide on CSLB licensing and compliance.

For more information, see our guide on managing accounts receivable.

For more information, see our guide on invoicing best practices.

For more information, see our guide on retainage in construction contracts.

Protect Your Payment Rights — And Keep Clean Books

Bookkeeping Champs helps contractors throughout Los Angeles and Ventura County maintain the clean accounts receivable records and invoice documentation needed to support lien enforcement. Call (818) 679-4451 for a free consultation.

One of the most important financial decisions a contractor makes isn’t about a specific job or client — it’s about how their business is legally structured. The right business structure provides liability protection, minimizes taxes, and positions the business for growth. The wrong structure can cost you thousands of dollars in unnecessary taxes every year and leave your personal assets exposed to business liabilities. This guide compares the three most common business structures for California contractors: sole proprietorship, LLC, and S-Corporation.

The Sole Proprietorship: Simple but Limited

A sole proprietorship is the default structure for anyone doing business without formally establishing a separate entity. If you obtained your CSLB license as an individual and never formed an LLC or corporation, you’re a sole proprietor. Business income is reported on Schedule C of your personal tax return. There’s no separation between you and your business — legally or financially.

The sole proprietorship’s biggest drawbacks are liability exposure and self-employment tax. On the liability side, there’s no separation between business and personal assets — a judgment against your business is a judgment against you personally, putting your home, savings, and personal property at risk. On the tax side, all net profit is subject to self-employment tax (15.3% on the first $160,200 in 2023, then 2.9% above that) plus federal and California income taxes. For a contractor netting $150,000, that’s over $22,000 in self-employment taxes alone.

The LLC: Essential Liability Protection

A California LLC (Limited Liability Company) provides a critical layer of protection between your business and your personal assets. If the business is sued or faces a judgment, your personal home, savings, and personal property are generally protected — as long as you maintain proper separation between business and personal finances (separate bank accounts, separate expenses, no commingling).

By default, a single-member LLC is taxed as a sole proprietor (Schedule C) and a multi-member LLC is taxed as a partnership. The liability protection is there, but the self-employment tax is the same as a sole proprietor. California adds an $800/year minimum franchise tax for LLCs, plus a graduated annual LLC fee based on gross revenue (starting at $900 for revenue over $250,000). Despite these costs, every contractor doing meaningful revenue should have an LLC for the liability protection alone — the cost of not having it is far greater than the cost of maintaining it.

The S-Corporation: The Tax Efficiency Structure

An S-Corporation is not a separate business entity — it’s a tax election that an LLC or corporation makes with the IRS. A California contractor typically forms an LLC, then elects S-Corp tax status. This changes how the business income is taxed in a significant way: instead of all profits being subject to self-employment tax, an S-Corp owner pays themselves a “reasonable salary” (subject to payroll taxes) and takes the remaining profit as a distribution (not subject to self-employment tax).

Example: A contractor netting $180,000/year. As a sole proprietor or LLC taxed as sole proprietor, all $180,000 is subject to SE tax — roughly $25,000. As an S-Corp with a $80,000 reasonable salary, only $80,000 is subject to payroll taxes — roughly $12,000. The distribution of the remaining $100,000 is not subject to self-employment tax, saving approximately $13,000/year. Over a career, this is hundreds of thousands of dollars in tax savings.

The S-Corp election adds administrative requirements: you must run formal payroll for yourself, file a separate business tax return (Form 1120-S), and maintain more rigorous corporate formalities. California also imposes an additional 1.5% state franchise tax on S-Corp net income (minimum $800). But for contractors netting $80,000+ per year, the S-Corp typically saves significant net tax even after these additional costs.

Which Structure Is Right for Your Contracting Business?

If you’re just starting out with modest revenue (under $50,000/year net), start with an LLC for liability protection. The tax efficiency of an S-Corp doesn’t outweigh the administrative costs at this income level. As revenue grows and net profit consistently exceeds $60,000–$80,000/year, analyze the S-Corp election with your CPA. The analysis should compare total taxes in both structures, including California franchise taxes, payroll administration costs, and bookkeeping costs for the more complex structure. At $100,000–$200,000+ in net profit, the S-Corp almost always wins on a net tax basis for California contractors.

CSLB Licensing and Business Structure

When you change your business structure, you may need to update your CSLB license. A license issued to an individual does not automatically transfer to an LLC or corporation — you need a new entity license. The entity must have a Qualifying Individual (RMO or RME) who holds the appropriate license classification. Work with a CSLB-experienced attorney or licensing consultant to handle the entity license properly, and ensure your bond and insurance are updated to reflect the new entity name.

Frequently Asked Questions

How do I elect S-Corp status for my existing LLC?

File IRS Form 2553 (Election by a Small Business Corporation) with the IRS. The election can be made anytime during the prior tax year or by March 15 of the current tax year for it to be effective for the current year. Late elections are sometimes accepted with reasonable cause. For California, file FTB Form 3560. Work with your CPA to make the election correctly and set up payroll immediately upon S-Corp election.

What is a “reasonable salary” for an S-Corp contractor?

The IRS requires S-Corp owner-employees to pay themselves a reasonable salary for their services to the business. “Reasonable” is generally interpreted as what you would pay someone else to do your job. For contractors doing the work themselves, this might be in the range of $60,000–$100,000 depending on your trade, experience, and the going market rate for your services. Your CPA should help you determine a defensible reasonable salary for your specific situation.

For more information, see our guide on tax obligations for each structure.

For more information, see our guide on CSLB licensing requirements by entity type.

For more information, see our guide on business insurance requirements.

For more information, see our guide on tax deductions available to your business.

Let Bookkeeping Champs Help With the Transition

Bookkeeping Champs helps contractors throughout Los Angeles and Ventura County set up the right business structure and the bookkeeping systems to support it — including S-Corp payroll setup, LLC accounting, and financial reporting for any entity type. Call (818) 679-4451 for a free consultation.

Chasing payments is one of the most frustrating parts of running a contracting business. You’ve done the work, delivered the quality, met the deadline — and now you’re spending time calling, emailing, and waiting for money you’ve already earned. For many contractors, outstanding accounts receivable is their biggest asset — and their biggest headache. This guide shows you how to build accounts receivable systems that minimize payment delays, reduce disputes, and ensure you get paid on time without damaging client relationships.

What Is Accounts Receivable for Contractors?

Accounts receivable (AR) is money owed to you by clients for work you’ve completed but haven’t yet been paid for. On your QuickBooks Balance Sheet, AR appears as a current asset — it’s money you’ve earned that will (hopefully) convert to cash in the near future. For contractors, AR often includes outstanding invoices for completed work, unbilled work in progress (earned but not yet invoiced), and retainage — the percentage withheld until project completion. Tracking all of these accurately in QuickBooks gives you a complete picture of what’s owed to you at any moment.

The AR Aging Report: Your Most Important Collections Tool

The Accounts Receivable Aging Report in QuickBooks shows all outstanding invoices grouped by how long they’ve been outstanding: Current (not yet due), 1–30 days past due, 31–60 days past due, 61–90 days past due, and 90+ days past due. Review this report weekly. Invoices in the 31–60 day column need immediate attention — the longer an invoice ages, the harder it becomes to collect. Invoices in the 90+ column are serious collection risks. Don’t let the report grow without acting on it.

Building Your AR Follow-Up System

Inconsistent follow-up is the primary reason contractors don’t get paid on time. Here’s a systematic approach: On invoice date, send the invoice by email with a professional message and confirmation request. Three days before due date, send an automated reminder through QuickBooks Payments or email. On the due date, verify payment was received. Day 1 past due: send a polite past-due reminder by email. Day 5 past due: follow up by phone — don’t just rely on email. A phone call communicates urgency that email doesn’t. Day 15 past due: send a formal demand letter. Day 30 past due: issue a Preliminary Notice (if not already sent) and seriously consider mechanics lien recording. Day 60+ past due: engage a collections attorney or collections agency, and evaluate whether to file suit.

Preventing AR Problems Before They Start

The best AR strategy is prevention. Require deposits before starting work — typically 30–50% for residential, 10–25% for commercial, depending on your relationship with the client. Verify credit for new commercial clients before starting work. Get a signed contract with clear payment terms before mobilizing. Include late payment fee provisions in your contracts. On larger jobs, use progress billing to collect throughout the project rather than waiting for one large payment at the end. Qualify your clients — contractors who are selective about the clients they work for have dramatically fewer collection problems than those who take every job that comes their way.

Using Mechanics Liens to Accelerate Payment

In California, contractors have powerful lien rights that provide significant leverage in collections. When a client is 30+ days past due on a significant invoice, filing a mechanics lien on the property often accelerates payment quickly. Owners cannot sell or refinance a property with a recorded lien, which creates strong incentive to resolve the debt. The mechanics lien process requires serving a Preliminary Notice within 20 days of starting work — if you haven’t done this, you may have lost lien rights for earlier work. Going forward, serve Preliminary Notices on every project as a standard procedure, not just when you think there might be a problem.

Setting Up AR Correctly in QuickBooks

In QuickBooks Online, accounts receivable is managed through Invoices (create an invoice when work is performed or a milestone is reached), Payments (apply client payments to the correct invoices), and the Customers module (view outstanding balances by client). Set up automated payment reminders in QuickBooks to send reminder emails before and after due dates automatically. QuickBooks Payments allows clients to pay by credit card or ACH directly from the invoice email — reducing payment friction significantly. Track retainage in a separate Retainage Receivable account so your AR aging report shows current invoices separately from withheld retainage.

Frequently Asked Questions

How do I write off a bad debt in QuickBooks?

If an invoice is uncollectible, you can write it off as a bad debt expense in QuickBooks. Create a Bad Debt expense account in your Chart of Accounts. Then create a credit memo for the uncollectible amount against the client, using the Bad Debt account as the category. Apply the credit memo to the outstanding invoice to zero it out. The bad debt expense reduces your taxable income by the uncollected amount (if you’re on accrual accounting — on cash basis, you never recognized the income, so there’s no deduction).

For more information, see our guide on invoicing best practices to get paid faster.

For more information, see our guide on filing a mechanics lien if needed.

For more information, see our guide on managing retainage in your contracts.

For more information, see our guide on maintaining healthy cash flow.

Let Bookkeeping Champs Manage Your AR

Bookkeeping Champs helps contractors in Los Angeles and Ventura County set up AR systems in QuickBooks, maintain weekly aging reports, and implement the invoicing and follow-up processes that get you paid faster. Call (818) 679-4451 today.

Workers’ compensation insurance is one of the most significant costs — and most significant legal obligations — for contractors with employees in California. California has some of the highest workers’ comp rates in the country, particularly for construction trades. Understanding how workers’ comp works, how rates are calculated, and how to manage costs can save your business thousands of dollars per year while keeping you fully compliant with California law.

Who Needs Workers’ Compensation in California?

Any California employer with one or more employees — even one part-time worker — is required by law to carry workers’ compensation insurance. California Labor Code Section 3700 mandates workers’ comp coverage for all employees. There are no exceptions for small employers, no minimum hours thresholds, and no grace periods. The requirement exists from the moment you have your first employee. Operating without required workers’ comp is a misdemeanor in California punishable by fines up to $100,000 and potential imprisonment. The CSLB can also suspend your contractor’s license for failure to maintain workers’ comp.

How Workers’ Comp Rates Work for Contractors

Workers’ comp premiums are calculated as a rate per $100 of payroll for each job classification. Construction trades carry some of the highest rates because the work involves physical risk. For reference, approximate base rates in California (these vary by insurer and experience modification): roofing installation is $20–$35 per $100; framing/carpentry is $12–$20; painting is $6–$12; HVAC installation is $8–$15; plumbing is $8–$14; electrical is $6–$12; landscaping/tree work is $8–$18; and general building contractor is $8–$15. On a crew with $400,000 in annual payroll doing framing work, workers’ comp at $15/$100 is $60,000/year. This massive cost must be built into every job estimate.

The Experience Modification Rate (EMR)

Your workers’ comp premium is multiplied by your Experience Modification Rate (EMR), also called the “mod.” An EMR of 1.00 means average — your rate is exactly the base rate. An EMR below 1.00 (say, 0.85) means you have better-than-average claims history and you get a discount. An EMR above 1.00 (say, 1.25) means worse-than-average claims history and you pay a surcharge. A single serious workers’ comp claim can elevate your EMR for 3 years, significantly increasing your premiums. This is why job site safety isn’t just the right thing to do — it’s financially critical.

Workers’ Comp Audits: What to Expect

Workers’ comp policies are issued based on estimated payroll at the beginning of the policy year. At year end, the insurer conducts a premium audit — they review your actual payroll to see if it matched the estimate. If actual payroll is higher than estimated, you’ll owe additional premium. If lower, you’ll receive a credit. To prepare for audit: keep detailed payroll records in QuickBooks, maintain accurate time records by employee and job classification, separate office/clerical staff payroll from field labor (clerical rates are dramatically lower), document any subcontractor payments and verify their insurance certificates (uninsured subs may be treated as your employees in an audit), and have certificates of insurance from all subcontractors on file.

Workers’ Comp for Subcontractors — A Critical Risk

If you use subcontractors who don’t carry their own workers’ comp insurance, California law may treat their workers as your employees for workers’ comp purposes. This means you could be liable for workers’ comp claims from uninsured subcontractors’ workers — even though you never considered them your employees. Always obtain current certificates of insurance from every subcontractor before they start work. Store these in QuickBooks or a dedicated file, and verify they remain current throughout the project. This one practice protects you from enormous potential liability.

Sole Proprietor and LLC Owner Exemptions

In California, sole proprietors and LLC owners who are not corporate officers may exclude themselves from workers’ comp coverage for their own labor. If you’re a sole proprietor working by yourself with no employees, you don’t need workers’ comp for yourself (though you may want it as a safety net). If you form an LLC and are the sole member, the same exclusion may apply. However, the moment you have even one employee, coverage is required for them. And some clients (GCs, commercial property owners) require you to carry workers’ comp regardless, even if you technically qualify for an exclusion.

Tracking Workers’ Comp Costs in QuickBooks

Workers’ comp premiums should be tracked in QuickBooks as a business expense. For accurate job costing, allocate workers’ comp costs as a direct labor cost — include it in your labor burden rate when calculating job estimates. Your labor burden rate is the true cost of an hour of labor: base wage plus payroll taxes (FICA, FUTA, SUI) plus workers’ comp plus any benefits. Tracking labor burden correctly is essential for accurate bidding — contractors who only count base wages in their labor estimates consistently underestimate job costs.

Frequently Asked Questions

What happens if an employee gets hurt and I don’t have workers’ comp?

You are personally liable for all medical expenses, lost wages, and rehabilitation costs. You also face criminal prosecution, fines, and CSLB license suspension. The California Labor Commissioner can issue a stop order shutting down your operations. The financial exposure from a single serious injury can bankrupt a small contractor. Workers’ comp is not optional.

How can I reduce my workers’ comp premiums?

Maintain a strong safety program to reduce claims and improve your EMR over time. Correctly classify employees (misclassification can mean overpaying premium for high-rate classes). Consider a pay-as-you-go workers’ comp policy where premiums are calculated on actual payroll each payroll period rather than estimated annually. Shop your coverage annually with an independent insurance broker who specializes in construction.

For more information, see our guide on payroll management for contractors.

For more information, see our guide on hiring employees in California.

For more information, see our guide on complete guide to contractor insurance.

For more information, see our guide on CSLB licensing requirements.

Bookkeeping Champs Tracks Your Workers’ Comp Costs

Bookkeeping Champs helps contractors in Los Angeles and Ventura County set up QuickBooks to track workers’ comp costs accurately, manage payroll records for audits, and incorporate labor burden into job costing for profitable bidding. Call (818) 679-4451 today.

California contractors pay some of the highest combined federal and state tax rates in the country. Federal self-employment tax, federal income tax, and California state income tax can combine to take 35–45% of your net profit. The only legal way to reduce this burden is to claim every deduction you’re entitled to — and that requires knowing what’s deductible, documenting it properly, and having a bookkeeper who captures every dollar throughout the year. This guide is your comprehensive list of tax deductions for California contractors.

Vehicle and Transportation Deductions

Vehicles are often the largest individual deduction for contractors. You have two options for each vehicle: actual expenses or the standard mileage rate. Actual expenses include fuel, insurance, registration fees, repairs and maintenance, car washes, and depreciation (or Section 179 for the purchase year). Standard mileage rate for 2024 is 67 cents per mile. For contractors who own work trucks and drive high annual business mileage, actual expenses almost always produce a larger deduction. Track actual expenses in QuickBooks throughout the year and keep a mileage log to document business use percentage. Under Section 179, you may be able to deduct the full purchase price of a qualifying work truck or SUV (over 6,000 lbs GVWR) in the year purchased.

Equipment and Tools

All tools and equipment used for your contracting business are deductible. For major equipment purchases (over $2,500), you have two options: capitalize and depreciate over the asset’s useful life (5–7 years for most equipment), or use Section 179 to deduct the full cost in the year of purchase (up to $1,160,000 in 2024). Section 179 is almost always better for cash flow and tax savings. Bonus depreciation (60% for 2024) applies to the remaining basis after Section 179 if needed. For small tools and equipment under $2,500 each, the IRS de minimis safe harbor allows you to deduct them as current expenses without capitalizing — this is extremely useful for contractors who regularly buy hand tools, small power tools, and supplies.

Home Office Deduction

If you have a dedicated space in your home used exclusively and regularly for business administration — writing estimates, handling billing, record-keeping, client calls — you may qualify for the home office deduction. You can use the simplified method ($5/sqft, up to 300 sqft, maximum $1,500/year) or the actual expense method (percentage of home expenses based on office square footage). The actual expense method allows you to deduct a proportionate share of mortgage interest or rent, utilities, insurance, repairs, and depreciation. For contractors working primarily from home offices, the actual expense method often produces larger deductions.

Business Insurance Premiums

All business insurance premiums are fully deductible: general liability insurance, workers’ compensation insurance, commercial auto insurance, tools and equipment insurance, builder’s risk insurance, professional liability, and umbrella liability. Track all insurance premium payments in QuickBooks under an Insurance expense account and ensure they’re deducted on your tax return.

Retirement Contributions

Retirement contributions are one of the most powerful contractor deductions — they reduce your taxable income dollar-for-dollar while building your future wealth. A SEP-IRA allows contributions up to 25% of net self-employment income (up to $69,000 in 2024). A Solo 401(k) allows up to $23,000 in employee deferrals plus 25% of compensation as employer contributions (up to $69,000 total). These contributions are deductible on your federal return and on your California return (with some differences for California’s own treatment). A contractor earning $200,000 in net profit who maximizes a SEP-IRA contributes $46,250 — saving potentially $15,000–$20,000 in combined taxes.

Professional Services

Bookkeeping fees, accounting fees, CPA fees, legal fees, and other professional service costs related to your business are fully deductible. This includes your monthly bookkeeping service, annual tax return preparation, legal fees for contract review or dispute resolution, and any consulting fees paid to business advisors. These deductions mean your professional services effectively cost significantly less than their invoice amount.

Licenses and Permits

All business licenses and permit costs are deductible: your CSLB license fees and renewal costs, your contractor’s bond premium, your city and county business license fees, DIR registration fees for public works, permit fees for specific jobs (these are job costs — deductible as cost of services), and any professional certification or continuing education costs required to maintain your license.

Marketing and Advertising

All marketing expenses are deductible: your business website and hosting fees, Google Ads and Local Service Ads, Yelp advertising, Angi (formerly Angie’s List) memberships, social media advertising, business cards and printed materials, vehicle wraps and signage, trade show or event fees, and promotional items. Track all marketing costs in a dedicated Marketing/Advertising account in QuickBooks.

Other Commonly Missed Contractor Deductions

Uniforms and protective clothing (items not suitable for everyday wear), safety equipment (hard hats, safety glasses, steel-toe boots), cell phone and data plan used for business (percentage of business use), business software and app subscriptions, office supplies, postage and shipping, trade association memberships and dues, industry publications and subscriptions, business meals with clients or prospects (50% deductible — note the business purpose), education and training costs, and bank fees on your business accounts are all deductible. Make sure every one of these is tracked in QuickBooks throughout the year so your CPA can claim them on your return.

Frequently Asked Questions

Can I deduct my cell phone as a contractor?

Yes — the business use percentage of your cell phone and data plan is deductible. If you use your phone 80% for business, you can deduct 80% of your monthly bill. Keep a record of how you determined the business use percentage in case of an audit. Many contractors use their phone almost exclusively for business, which supports a high deduction percentage.

Are subcontractor payments tax deductible?

Yes. Payments to subcontractors for business work are fully deductible as cost of services. You must issue a 1099-NEC to any unincorporated sub you pay $600 or more in a year and have a signed W-9 on file. Track all subcontractor payments in QuickBooks under a Subcontractor expense account.

For more information, see our guide on how much to set aside for taxes.

For more information, see our guide on surviving a tax audit.

For more information, see our guide on common IRS red flags for contractors.

For more information, see our guide on end-of-year bookkeeping checklist.

Stop Leaving Money on the Table

Bookkeeping Champs helps contractors throughout Los Angeles and Ventura County capture every legitimate deduction throughout the year — so your CPA has everything they need to minimize your tax bill. Call (818) 679-4451 today.

Most contractors price their services one of two ways: they guess based on what they think the client will pay, or they look at what competitors charge and price similarly. Both approaches are financially dangerous. The right way to price your services as a contractor is based on your actual costs — not market rates alone — with a built-in overhead recovery and profit margin that makes your business financially sustainable. This guide gives you a bookkeeper’s perspective on contractor pricing: how to calculate your real costs, determine your necessary markup, and use job cost data to refine your pricing over time.

Why Most Contractors Under-Price Their Work

The most common pricing mistake is failing to account for all costs. Contractors typically account for direct labor and materials — the visible costs — but miss indirect costs that are just as real: the cost of driving to job sites, the time spent estimating jobs that don’t close, workers’ comp on job labor, general liability insurance allocated per job, equipment depreciation, and the cost of their own time managing projects. When you add up all the true costs of completing a job, many contractors discover they’ve been pricing work at near-breakeven or worse. The jobs felt profitable because cash was coming in — but the business wasn’t generating real net profit.

Step 1: Calculate Your True Hourly Labor Cost

Your billable labor rate must cover more than the employee’s wage. The full cost of an hour of field labor includes the base wage, plus payroll taxes (FICA employer share 7.65%, FUTA ~0.6%, California SUI typically 1.5–5%), plus workers’ comp (varies by trade — roofing is $25–$35/$100 of wages, painting is $6–$12/$100), plus any benefits (health insurance, paid time off), plus a share of direct supervision time. This “fully loaded” or “burdened” labor rate is what each labor hour actually costs your business. For a painter earning $25/hour, the fully loaded cost might be $35–$40/hour once all costs are added. This is the number that goes into your job cost estimates — not $25/hour.

Step 2: Know Your Overhead Rate

Your overhead rate is the percentage of revenue required to cover all overhead expenses — the costs of running your business that aren’t tied to a specific job. Calculate it from your Profit & Loss in QuickBooks: divide total annual overhead expenses by total annual revenue. If your overhead is $150,000 and revenue is $500,000, your overhead rate is 30%. Every dollar of revenue you generate carries 30 cents of overhead cost before you see any profit. Your bids must include overhead recovery on top of direct job costs.

Step 3: Add Your Target Profit Margin

After covering direct costs and overhead, you need a profit margin. For most contractors in the LA market, a net profit margin of 10–15% is a realistic target for a well-run business. This is your reward for the risk you take as a business owner, your capital for reinvestment, and your cushion for unexpected costs. Build your target profit margin explicitly into every bid — don’t hope it shows up after the fact. A typical contractor markup calculation looks like this: direct job costs are $10,000. Overhead at 30% adds $3,000. Subtotal is $13,000. Profit at 15% adds $1,950. Bid price is $14,950.

Using Job Cost Data to Refine Your Pricing

The most powerful pricing tool is your own job cost data from QuickBooks. After running Projects (job costing) for 6–12 months, you have real data showing actual costs versus estimated costs for each job type. Run the Project Profitability report and analyze: which types of jobs consistently hit or beat your target margin, which types consistently fall short, where the overruns are coming from (labor, materials, or both), and what your actual average cost per unit is for your most common work types. This data transforms your bidding from estimation to precision. You’ll know exactly where you can be competitive and where you need to charge more — and you’ll have data to support your pricing to clients who push back on your rates.

Value-Based Pricing vs. Cost-Plus Pricing

Cost-plus pricing (direct costs + overhead + profit = bid price) ensures you never lose money on a job. Value-based pricing means charging based on the value you deliver to the client, which may allow higher margins on certain work types. For commodity services (basic residential maintenance, simple repairs), competitive market pricing dominates — you can’t charge dramatically above market rates. For specialized work (complex commercial projects, specialty systems, high-end residential), where your expertise and quality create real value for the client, value-based pricing can support premium rates well above your cost-plus floor. Understand where you are on this spectrum for each service line you offer.

Frequently Asked Questions

How do I know if my prices are competitive?

Get competitive intelligence by requesting quotes from competitors on work where you’ve lost bids, networking with other contractors in non-competing markets, and reviewing industry cost surveys. But remember: if you’re winning every bid, you’re probably priced too low. A healthy close rate for most contractors is 30–50% of bids submitted — if it’s higher, raise your prices.

What should I do when a client says my price is too high?

Don’t immediately discount. First, understand the objection — is it genuinely price, or is it uncertainty about your value? Explain what’s included in your price, your qualifications and warranty, and how you’re different from lower-priced competitors. If the client is comparing you to someone with no insurance or license, that’s a legitimate differentiation. If you genuinely need to compete on price, reduce scope rather than margin — cut something out of the bid rather than working for less.

For more information, see our guide on job costing to set accurate prices.

For more information, see our guide on building a business budget to support your pricing.

For more information, see our guide on how better bookkeeping helps you win more bids.

For more information, see our guide on maintaining cash flow at your target margins.

Bookkeeping Champs Gives You the Data to Price Right

Bookkeeping Champs helps contractors throughout Los Angeles and Ventura County set up job costing in QuickBooks and interpret the data to make smarter pricing decisions. Call (818) 679-4451 for a free consultation.

Running a general contracting business means managing multiple jobs simultaneously — multiple crews, multiple subcontractors, multiple clients, multiple payment schedules, and multiple cost streams all running at the same time. Without robust bookkeeping systems, the financial picture of your business becomes a blur. You can’t tell which jobs are making money and which are losing it. You don’t know when cash will be tight. You can’t see subcontractor balances across projects. This guide covers the bookkeeping practices that general contractors need to manage multiple jobs without losing financial control.

The Core Challenge: Financial Visibility Across Multiple Projects

The defining challenge for a general contractor’s bookkeeping is that your business is actually a portfolio of mini-businesses (individual projects), each with its own budget, cost stream, billing schedule, and profitability. Managing them in aggregate — without project-level visibility — means you’re always reacting rather than managing. Profitable GC operations require seeing revenue, costs, and margins at the project level so you can identify which jobs are over budget, which are behind on billing, and which are most profitable — in real time, not at job close.

Setting Up QuickBooks for Multi-Job GC Operations

For a general contractor, QuickBooks setup is more complex than for a specialty trade. Your Chart of Accounts needs separate income categories for each contract type (residential remodel, commercial TI, new construction, etc.). More importantly, every job must be set up as a QuickBooks Project from day one. The Project tracks all revenue billed, all direct costs (labor, materials, subs, permits, equipment), and calculates your gross margin by project. The Projects dashboard gives you a real-time snapshot of all active jobs — their budget, costs to date, and profitability. This is your command center as a GC.

Managing Subcontractors in QuickBooks

Subcontractor management is the most complex bookkeeping challenge for general contractors. Best practices include: set up each sub as a Vendor in QuickBooks with their W-9 information, insurance certificate expiration dates, and CSLB license number; enter every subcontract as a purchase order in QuickBooks so you track committed costs against each project; enter all sub invoices as bills in QuickBooks and assign them to the correct project; pay subs only after verifying their lien release (conditional waiver when payment is issued, unconditional after it clears); and track 1099 totals throughout the year in QuickBooks so year-end 1099 preparation is automatic. At year-end, the 1099 report in QuickBooks shows all unincorporated subs paid $600+ — no manual calculation required.

Progress Billing and Draw Management

GC jobs with durations of more than a few weeks require progress billing — scheduled invoices tied to project milestones or completion percentage. In QuickBooks, use the Progress Invoicing feature to create invoices based on a percentage of the original estimate, specific line items completed, or a custom schedule. This ensures you’re billing at the right times and tracking how much you’ve billed versus how much you’ve completed — a critical metric for avoiding over-billing or under-billing situations. Track retainage receivable (amounts withheld by the owner) in a separate QuickBooks account so it appears clearly on your balance sheet.

Job Cost Variance Analysis

The most valuable analysis a GC can run is the cost variance report: actual costs to date versus budget for each active job, categorized by cost type (labor, materials, subs, equipment). Run this weekly during construction. Any variance over 10% in any category deserves investigation. Labor overruns early in a job often predict a money-losing project — address them immediately with crew efficiency discussions, scope adjustments, or change orders. Material overruns may indicate waste, theft, or incorrect material quantities in your original estimate — both need to be corrected. Catching variances early gives you the ability to course-correct. Catching them at job close doesn’t.

Cash Flow Management Across Multiple Jobs

Running multiple jobs simultaneously creates complex cash flow patterns. You might be mobilizing on a new job (cash out for materials and labor) while waiting for a progress payment on an older job. Maintaining a 13-week cash flow forecast — updated weekly — is the tool that gives GCs visibility into upcoming cash needs and surpluses. In QuickBooks, you can use the Customer and Vendor Center to see all outstanding receivables and payables by due date, giving you the inputs for a cash flow forecast. Maintain a revolving business line of credit as a backup for timing gaps — this is standard practice for growing GC operations.

Frequently Asked Questions

How do I track committed costs (subcontract obligations) in QuickBooks?

Use Purchase Orders in QuickBooks for each subcontract. Enter the full subcontract value as a purchase order assigned to the project. As the sub invoices you, enter each invoice as a bill against the purchase order. QuickBooks tracks the committed amount, the billed amount, and the remaining balance — giving you a complete picture of your cost exposure per sub per job.

How often should I reconcile my books as a GC with multiple jobs?

Bank reconciliation should happen monthly — every month, without exception. Job cost review (comparing actual to budget) should happen weekly during active construction. AR aging review should happen weekly. Full financial statement review should happen monthly. With a professional bookkeeper handling the month-end close, you can focus on the weekly operational reviews that drive project profitability.

For more information, see our guide on job costing across multiple projects.

For more information, see our guide on managing project finances from bid to payment.

For more information, see our guide on tracking retainage on multiple contracts.

For more information, see our guide on payroll for multiple crews.

Bookkeeping Champs Specializes in GC Bookkeeping

Bookkeeping Champs helps general contractors throughout Los Angeles, Ventura County, and the San Fernando Valley manage complex multi-job bookkeeping in QuickBooks — job costing, subcontractor management, progress billing, and monthly financial reporting. Call (818) 679-4451 today.

The Profit and Loss Statement (P&L) — also called the Income Statement — is the most fundamental financial report in your business. It tells you whether your business made or lost money during a specific period. Yet many small business owners and contractors never look at theirs, don’t know how to read it, or stare at the numbers without knowing what they mean. This guide teaches you to read your P&L confidently and use it to make better business decisions.

What Is a Profit and Loss Statement?

A Profit and Loss Statement summarizes your business’s financial performance over a period of time — typically a month, quarter, or year. It shows all of your income earned, all of your costs and expenses, and the resulting profit or loss. Unlike the Balance Sheet (which shows what you own and owe at a specific point in time), the P&L shows what happened over a period of time — it’s a movie of your business’s financial performance, not a snapshot. For contractors, the P&L is the primary tool for understanding whether your business is actually profitable — not just busy.

The Structure of a Contractor’s P&L

A well-organized contractor P&L has four main sections: Revenue (Income), Cost of Goods Sold (Direct Job Costs), Gross Profit, Operating Expenses (Overhead), and Net Profit.

Section 1: Revenue

Revenue is the total amount billed to clients for work performed during the period. For contractors on cash basis, this is when payments are received. For accrual basis, it’s when work is performed and invoiced. Your QuickBooks P&L can show revenue by service type if your Chart of Accounts is set up correctly — residential vs. commercial, different trades, service vs. installation. This segmentation reveals which work types drive your revenue growth.

Section 2: Cost of Goods Sold (Direct Job Costs)

Cost of Goods Sold (COGS) on a contractor’s P&L represents the direct costs of completing jobs: field labor (wages for crew members doing the work), materials and supplies, subcontractor costs, equipment rental for specific jobs, and permit fees. COGS are the costs that vary with revenue — more jobs means more direct costs. Revenue minus COGS equals Gross Profit.

Section 3: Gross Profit and Gross Margin

Gross Profit = Revenue – COGS. Gross Margin = Gross Profit / Revenue × 100%. This is the most important line on your P&L. Gross margin is the percentage of revenue left after paying direct job costs — it’s the margin available to cover overhead and generate profit. For most contractors, healthy gross margins range from 25–40%. If your gross margin is below 20%, you’re not charging enough for your work, your costs are too high, or both. Watch this number closely — a declining gross margin is an early warning signal that something is wrong with your pricing or job costs.

Section 4: Operating Expenses (Overhead)

Operating expenses are the costs of running your business that aren’t tied to specific jobs: owner’s salary or management compensation, office rent or home office, insurance (general liability, commercial auto), vehicle expenses (non-job-specific), bookkeeping and accounting fees, marketing and advertising, software subscriptions, tools and equipment (non-job-specific), and miscellaneous business expenses. Unlike direct job costs, overhead is relatively fixed — it doesn’t go down much when revenue is slow, which is why cash reserves are so important for contractors.

Section 5: Net Profit (or Loss)

Net Profit = Gross Profit – Operating Expenses. This is the bottom line — what the business earned after all costs. For contractors, a net profit margin of 8–15% is generally healthy. A negative net profit means the business is losing money — either gross margins are too low or overhead is too high (or both). Understanding which is driving the loss points you to the solution.

Key Metrics to Track on Your P&L

When you review your P&L monthly, focus on four key metrics: gross margin percentage (healthy for your trade and trending correctly), overhead as a percentage of revenue (stable or declining as revenue grows — economies of scale should improve this over time), net profit margin (8–15% target for most contractors), and revenue growth year-over-year (compare each month to the same month last year to understand true growth trends, stripping out seasonality).

Common P&L Problems and What They Mean

Revenue is growing but profit is shrinking: overhead is growing faster than revenue — investigate and cut unnecessary overhead. Gross margin is declining: job costs are increasing faster than revenue — review pricing and job cost data for overruns. Net profit is positive but cash is always tight: timing differences between when you earn revenue and when you collect it — an accounts receivable problem, not a profitability problem. Revenue is flat year-over-year: growth has stalled — evaluate your pipeline, marketing, and capacity utilization.

Frequently Asked Questions

How often should I review my P&L?

Monthly — every month, without exception. Your bookkeeper should close the prior month and deliver financial statements within the first 10 days of the new month. Schedule a 30-minute financial review on the same day each month to review your P&L, Balance Sheet, and job cost reports. This single habit creates more financial clarity than any other practice.

What’s the difference between the P&L and cash flow?

The P&L shows profitability — revenue earned minus expenses incurred. Cash flow shows actual cash movement — money in and money out. On accrual accounting, you can be profitable (positive P&L) but cash-poor (negative cash flow) if clients are slow to pay or you paid bills before collecting. On cash basis, the P&L and cash flow are more closely aligned. Understanding both is important — the P&L tells you if the business model is working; the cash flow statement tells you if you’ll have money in the bank next month.

For more information, see our guide on using financial reports to grow your business.

For more information, see our guide on cash flow vs profit.

For more information, see our guide on creating a business budget.

For more information, see our guide on when to work with a CPA.

Bookkeeping Champs Delivers Your P&L Every Month

Bookkeeping Champs closes your books monthly and delivers clean financial statements — including P&L, Balance Sheet, and cash flow — to contractors throughout Los Angeles, Ventura County, and the San Fernando Valley. Call (818) 679-4451 to get started.