Most builders obsess over material pricing, subs, and schedules but leave thousands of dollars on the table every year in payroll taxes. In our latest episode, Reece sat down with Angie Aki, a business-solutions concierge who helps owners “keep more of what they make.” They dig into where contractors routinely miss savings, why most CPAs don’t bring it up, and how to decide when W-2 vs. 1099 really serves your business.

Here are the highlights, and how to put them to work.

The big miss: payroll tax savings hiding in plain sight

Angie spends most of her time in two places that hit contractors’ P&L directly:

1. Payment processing (stupid-simple changes that shave basis points).
2. Payroll tax savings via Health Management Plans (HMPs)—not group health—structured benefits that reduce gross taxable wages and increase employee take-home.

“With the right plan, an employer can typically save $600–$1,000 per W-2 employee per year—and employees take home more. Everyone nets positive,” says Angie.

Why isn’t everyone doing this? Distribution and education. Most accountants focus on income tax and compliance; most payroll vendors file returns but don’t bring payroll tax strategies to the table. It takes a bit of explanation to understand how the money flows, so the idea rarely surfaces unless someone like Angie puts it in front of you.

Real numbers, real impact

Angie shared a few snapshots:

• 12-person shop → ~$9,000 a year back to the business.
• Multi-location operator (~400+ employees) → ~$359,000 annual savings.
• Small restaurant → $25,000 a year; the owner nearly cried—one more hire covered.

Contractors feel this more than most. Margins are tight; a clean $600–$1,000/employee/year hits net operating income without cutting quality, changing specs, or squeezing subs. It also improves valuation (you’re permanently lowering operating expense with a repeatable program).

W-2 vs. 1099: what actually matters

Yes, the industry leans heavily on subs and 1099s to manage backlog swings. That’s rational. But misclassification is a real risk—and you’ll pay for it later. The practical questions are:

• What’s the work pattern? Ongoing, controlled, core to operations → usually W-2.
• What do you want culturally? Benefits and stability make teams “sticky.”
• What does the cashflow allow? If volume whipsaws, a sub model may make sense.

“People choose jobs for benefits more than pay. If retention and quality matter, W-2 plus a lean benefits stack wins—especially when you use payroll tax strategies that lower your burden.”

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Key point: HMP-style payroll tax savings require W-2 wages (that’s where payroll taxes exist). If your core team is 1099 today, you’ll need an HR/pro compliance check before you flip anyone—and you should. (Angie always loops in HR pros; don’t wing this.)

What these plans are (and aren’t)

• Not group health. They can sit alongside major medical or stand alone for employers who can’t offer group yet.
• Mechanics: Lower gross taxable wages (legally), deliver defined benefits (e.g., claim payments/indemnity components), and increase employee take-home.
• Admin: Light lift when implemented with a competent provider; employees get real benefits, the company gets recurring tax savings.

If your eyes glaze over at the mechanics, that’s normal. What matters is the cash math and compliance. A reputable partner will model both.

Where payroll strategy meets job costing

At Adaptive, we harp on live numbers: labor is often the largest driver of project profitability.

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Two practical intersections:

• Labor burden accuracy: If your burden rate is off—even by a few bucks an hour—your job costing and WIP are lying. We’ve seen builders under/over-quote by five figures because internal labor was costed at the billable rate instead of the burdened cost.
• Scenario planning: If HMPs drop your effective labor burden, your estimates, markups, and staffing model should reflect it. Small changes here protect margin without squeezing quality.

When to consider this (contractor checklist)

• You have 10+ W-2 employees (thresholds are trending down; ask).
• Your labor burden feels high and you’re fighting to compete without discounting.
• You want to recruit/retain with benefits but can’t shoulder full group health yet.
• You’re serious about job costing and want labor rates to reflect reality, not hope.
• You’re already investing in systems (Adaptive for financial ops, solid HR support) and want the next obvious lever.

First steps (low-friction)

1. Bring HR into the loop. Confirm classification and compliance.
2. Model the math. Ask for a simple pro-forma: employees × $600–$1,000 = annual savings; layer in employee take-home impact.
3. Update burden rates. If you implement, reflect new burden in estimates, budgets, and WIP (Adaptive makes this easy).
4. Communicate like a human. “You’ll take home more, and we’re adding benefits” lands better than tax jargon.

Common objections (and clean answers)

• “This sounds too good to be true.”
• It’s not new—just under-distributed. The key is proper plan design and documentation.
• “We’re mostly 1099.”
• Then it’s a broader strategy conversation: where W-2 makes sense, how to phase, and what retention is worth. Start with core roles.
• “My CPA never mentioned it.”
• Most focus on income tax compliance. Payroll tax strategy is its own lane—loop them in early and review together.

Final word

This isn’t magic. It’s a repeatable, compliant way to lower payroll taxes, increase employee take-home, and make your labor model more competitive... without cheapening your product or bloating your back office. In an industry where margin death happens one small leak at a time, this is a lever worth pulling.

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Angie’s mission? “My job is to find money you didn’t know was available.”

Connect with Angie

• Website: angieaki.com
• Email: angie@abhcfl.com

If you’ve got 10+ W-2 employees, start the conversation. If you’re earlier, ask what thresholds are changing and what to prep now.

And if you want your labor data to be accurate, live, and decision-ready, that’s what we built Adaptive for—so strategies like this show up where it matters: in your budgets, draws, and WIP.

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