What is Section 179 and how does it apply to HVAC businesses?

Section 179 allows HVAC contractors to immediately expense qualifying equipment purchases rather than depreciating them over years. For 2025, the One Big Beautiful Bill Act doubled Section 179 limits: you can now expense up to $2.5 million in qualifying equipment (up from $1.25 million), with the phase-out threshold at $4 million. Qualifying HVAC items include: service vehicles and work trucks (vehicles over 6,000 lbs GVWR get full deduction; SUVs capped at $31,300), HVAC testing equipment (refrigerant recovery machines, vacuum pumps, manifold gauges), tools and machinery (compressors, welders, pipe threaders), computers and diagnostic software, office furniture and equipment, and qualified improvement property (HVAC, fire protection, security systems in commercial buildings). Equipment must be placed in service by December 31, 2025 and used more than 50% for business to qualify.

How does job costing work for HVAC contractors?

Job costing tracks all costs associated with each HVAC project to determine actual profitability. HVAC job costing includes: Direct Labor—technician wages for time spent on the job, including travel time and callbacks. Materials—parts, refrigerants, copper tubing, ductwork, and supplies used. Equipment—portion of equipment costs allocated to the job. Overhead Allocation—percentage of fixed costs (insurance, vehicles, shop rent) applied to each job. Subcontractor Costs—any work outsourced (electrical, sheet metal). Without job costing, HVAC contractors often underprice jobs because they don't account for true costs like drive time, warranty callbacks, or overhead. Your accounting software should let you enter a job cost estimate, track actual costs as the job progresses, and compare estimated vs. actual to identify pricing issues. Key metric: gross profit margin per job should typically be 50%+ on service work and 30%+ on installations.

Should HVAC contractors use flat rate pricing software?

Flat rate pricing is standard in residential HVAC service work for good reasons. Benefits: predictable revenue per job type, eliminates price disputes with customers, accounts for all costs (labor, materials, overhead, profit margin), simplifies technician billing (no time tracking per task), and enables menu-based selling for upsells. Flat rate software like ServiceTitan or Housecall Pro includes pre-built price books you can customize. When setting flat rates, calculate: (Labor Cost + Materials + Overhead + Desired Profit) = Flat Rate Price. A typical labor rate formula: (Hourly Wage × 2.5 to 3) = Billable Rate, accounting for payroll taxes, benefits, overhead. Flat rate pricing ensures compliance with 2025 regulations (refrigerant phase-outs, tax incentives for high-efficiency systems) and simplifies pricing catalog updates as laws change.

What features should HVAC accounting software have?

Essential HVAC accounting software features include: Job Costing—track labor, materials, overhead per job; compare estimated vs. actual costs. Service Agreement Tracking—manage maintenance contracts, recurring revenue, and renewal dates. Inventory Management—track parts, refrigerants (especially with R-22 phase-out), and reorder points. Technician Payroll—handle hourly wages, overtime, on-call pay, spiffs/commissions, and certified payroll for commercial work. Equipment Depreciation—track vehicle and tool depreciation for tax purposes (Section 179, MACRS). Flat Rate Integration—sync with flat rate pricing books; update prices across systems. QuickBooks Integration—two-way sync for invoices, payments, and journal entries to avoid double entry. Mobile Access—technicians can add parts, time, and notes from the field. Seasonal Cash Flow Planning—budget for slow seasons (spring/fall in many markets). Service vs. Installation Reporting—separate P&L for service work vs. install projects with different margins.

How do I choose between QuickBooks, ServiceTitan, and Housecall Pro?

Choose based on your HVAC company size and complexity: QuickBooks Online ($35-75/month)—best for pure accounting needs when using separate field service software. Industry standard, extensive integrations, powerful reporting. Pair with a field service management tool for complete solution. Works for any size company. ServiceTitan (custom pricing, $$$)—best for mid-to-large HVAC companies ready to scale. Full suite: scheduling, dispatching, job costing, advanced reporting (30+ built-in reports), marketing tools, pricebook management. Steeper learning curve but most comprehensive. Includes accounting integration with QuickBooks Online and Sage Intacct. Housecall Pro ($59-199/month)—best for small-to-mid sized HVAC companies wanting simplicity. Clean interface, easy setup, strong QuickBooks integration. Good for companies transitioning from paper to digital. Less robust than ServiceTitan but easier to implement. Recommendation: Most small HVAC contractors start with QuickBooks + Housecall Pro, then migrate to ServiceTitan as they scale.

How do HVAC contractors handle seasonal cash flow?

HVAC businesses face significant seasonality—peak demand in summer (cooling) and winter (heating), with slow shoulder seasons in spring and fall. Cash flow management strategies: Service Agreements—sell maintenance contracts ($150-300/year per system) to create recurring revenue year-round. Collect annually or monthly for predictable cash flow. Off-Season Services—offer duct cleaning, indoor air quality, humidifier installs, or commercial maintenance during slow periods. Cash Reserves—set aside 2-3 months of operating expenses during peak season to cover slow months. Typical guideline: save 20-25% of peak season profits. Line of Credit—establish a business line of credit before you need it. Use during slow season, repay during peak. Staggered Equipment Purchases—time major equipment purchases (trucks, tools) during peak cash flow months to maximize Section 179 while maintaining liquidity. Accounting software should include cash flow forecasting based on historical seasonal patterns to help plan for these fluctuations.

HVAC Contractor Accounting

Best HVAC Accounting Software 2025

Compare accounting software for HVAC contractors. Master job costing, flat rate pricing, Section 179 deductions, and equipment depreciation for your heating and cooling business.

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$2.5M

Section 179 Limit (2025)

50%+

Target Service Gross Margin

70¢

Standard Mileage Rate 2025

100%

Bonus Depreciation (Post Jan 19)

HVAC Accounting Software Comparison 2025

Compare features across QuickBooks, ServiceTitan, Housecall Pro, and other HVAC contractor solutions.

Software	Price	Best For	Job Costing	Flat Rate	Learning	Rating
QuickBooks Online	$35-75/mo	Pure accounting, any size	With setup	Via integrations	Moderate	4.5/5
ServiceTitan	Custom ($$$)	Mid-large, scaling companies	Advanced	Built-in pricebook	Steep	4.6/5
Housecall Pro	$59-199/mo	Small-mid, simplicity	Built-in	Built-in	Easy	4.7/5
Knowify	$149-349/mo	Service + construction	Advanced	Built-in	Moderate	4.4/5

Section 179 Deduction for HVAC Businesses (2025)

The One Big Beautiful Bill Act doubled Section 179 limits for 2025. Immediately expense qualifying equipment purchases instead of depreciating over years.

2025 Section 179 Limits

Item	Amount
Maximum Deduction (2025)	$2,500,000Doubled by OBBBA from $1.25M
Phase-Out Threshold	$4,000,000Deduction reduces dollar-for-dollar
Complete Phase-Out	$6,500,000No deduction above this amount
SUV Limit	$31,300Passenger SUVs under 6,000 lbs
Bonus Depreciation	100%Assets placed in service after Jan 19, 2025

Qualifying HVAC Equipment

Vehicles

Service trucks, cargo vans, pickups over 6,000 lbs GVWR

Full Section 179

HVAC Equipment

Recovery machines, vacuum pumps, manifold gauges, leak detectors

Full Section 179

Tools

Compressors, welders, pipe threaders, hand tools

Full Section 179

Technology

Computers, tablets, diagnostic software, fleet GPS

Full Section 179

Office

Furniture, warehouse equipment, shop buildouts

Full Section 179

SUVs <6,000 lbs

Passenger SUVs used for business

Capped at $31,300

Key Requirements

• Equipment must be placed in service by December 31, 2025
• Must be used more than 50% for business purposes
• Section 179 deduction cannot exceed business income (no loss)
• Apply bonus depreciation (100%) to remaining value after Section 179
• File Form 4562 with your business tax return

HVAC Job Costing Breakdown

Accurate job costing is essential for HVAC profitability. Track all costs per job to ensure you're pricing work correctly and identify underperforming job types.

25-35%

Direct Labor

Technician wages, travel time, callbacks

15-25%

Materials

Parts, refrigerants, copper, supplies

3-5%

Equipment

Tool/equipment allocation per job

15-25%

Overhead

Insurance, vehicles, shop, admin

40-55%

Gross Profit

Target margin after direct costs

Service Work Target

50%+

Gross profit margin on service calls. Lower margins indicate underpricing or excessive callbacks.

Installation Target

30%+

Gross profit margin on equipment installations. Account for warranty and callback reserves.

Managing HVAC Seasonal Cash Flow

HVAC businesses face significant revenue fluctuations. Plan for peak seasons (summer/winter) and shoulder seasons (spring/fall) to maintain healthy cash flow year-round.

Peak (Summer/Winter)

Maximize cash collection
Save 20-25% of profits for slow season
Time equipment purchases for Section 179

Shoulder (Spring/Fall)

Focus on maintenance agreements
Offer duct cleaning, IAQ services
Use reserves for slower weeks

Service Agreements

$150-300

Per system/year for recurring revenue. Creates predictable cash flow during slow months.

Cash Reserves

2-3 mo

Operating expenses saved during peak season to cover shoulder season cash flow gaps.

Profit Savings

20-25%

Of peak season profits set aside for slow months and equipment purchases.

HVAC Service Vehicle Depreciation

HVAC service vehicles often qualify for significant tax deductions. Vehicles over 6,000 lbs GVWR can be fully expensed under Section 179.

Qualifying Vehicles (Over 6,000 lbs GVWR)

Ford F-150/250/350

Chevy Silverado 1500/2500

Ram 1500/2500/3500

Ford Transit Vans

Chevy Express

Mercedes Sprinter

Ford Expedition

Chevy Suburban

Full Section 179up to $2.5M + 100% bonus depreciation

Alternative: Standard Mileage

70¢

per mile for 2025

• Simpler tracking than actual expenses
• Includes gas, insurance, repairs, depreciation
• Must track odometer for business vs. personal
• Cannot switch methods on same vehicle later

Tip: Section 179 is usually better for HVAC contractors with expensive service trucks. Calculate both methods before deciding.

HVAC Accounting Software FAQs

Common questions about accounting software for heating and cooling contractors.

HVAC accounting software is financial management software designed for heating, ventilation, and air conditioning contractors. Unlike generic accounting tools, HVAC-specific software handles unique requirements: job costing to track profitability per project, flat rate pricing integration, equipment depreciation for expensive tools and vehicles, seasonal revenue fluctuation management, service vs. installation income tracking with different pricing structures, technician commission calculations, and inventory management for parts and refrigerants. Popular options include QuickBooks Online ($35/month for accounting) paired with field service software like ServiceTitan or Housecall Pro, or all-in-one solutions like Knowify. The software helps HVAC contractors maximize deductions (Section 179, vehicle depreciation) and track job-level profitability.