IT & tech services

Books and taxes for custom software development shops.

A project billed in milestones, a developer staffed onto a client's team by the hour, a maintenance retainer that renews quietly, and a deposit that covers work spanning two months. Your own bookkeeper sorts it, an accountant checks every transaction, and you get one number a month.

Book a call What we handle
  • From $197 a month
  • An accountant on every transaction
  • Cancel whenever
AugustExample month
$19,000
what you made

August came in at $19,000. Half of the milestone payment for the Kessler Group project covers work that finishes in September, so I only counted the portion of it earned so far this month.

  • Kessler Group milestone paymentMilestone billing
  • Maintenance retainer, 3 clientsMaintenance retainers
  • Contract developer, staff augmentationContractor pay
  • Developer payrollWages
  • AWS hosting for client projectsCloud infrastructure
Money in$71,000
Money out$52,000
Set aside for taxes$4,500
An example month. Yours will have your numbers.

Why your books are different

Software shop books go wrong at the milestone and the deposit.

A generalist sees a client invoice. Your business runs on milestone payments that cover work spanning several months, developers staffed onto a client's team by the hour, and maintenance retainers that quietly renew after a project ships. When the books blend those, you cannot tell how much of a payment is actually earned yet.

  1. 1

    A milestone payment gets counted before the work is done

    A client who pays a milestone up front for a project phase that finishes over the next two months can make the month of payment look flush, when most of that work, and the right to count it as earned, still lies ahead.

    What we doRecognizes milestone income against the work actually completed that month, so a big deposit does not overstate what was earned.
  2. 2

    Staff augmentation looks like ordinary payroll

    A developer billed hourly onto a client's team is really project revenue passing through, but if it gets mixed with regular development wages, you cannot tell whether staff augmentation work is actually profitable after that developer's pay.

    What we doKeeps staff augmentation billing and the contractor pay behind it in their own line, apart from regular payroll.
  3. 3

    A maintenance retainer renews quietly after launch

    Once a project ships, a small ongoing maintenance retainer can start renewing every month without much attention, and if it is not tracked as its own recurring income, you lose sight of how much steady revenue is actually building behind new project work.

    What we doTracks maintenance retainers as recurring income of their own, so the steady base is visible against project swings.
  4. 4

    Cloud costs for a client project look like overhead

    Hosting and infrastructure costs run up while building or running a client's application often belong to that project, not to your own shop's overhead, and blended together you cannot tell if a fixed-price project actually made money.

    What we doKeeps client project infrastructure costs tied to the project they belong to, apart from your shop's own overhead.
  5. 5

    A contract developer on one big build looks like a plain expense

    Bringing in a specialist developer for a single complex build and paying them like an ordinary bill hides whether that project actually made money once their pay came out of it.

    What we doKeeps contractor pay tied to the project it supported and tracks it toward the 1099 threshold.

Your categories

The categories Gus keeps for a custom software development shop.

Set up once for how you get paid and what you spend. You never pick a category. He does, and an accountant checks it.

Money in

  • Milestone billingPayments tied to project phases, tracked against work completed.
  • Staff augmentationDevelopers billed hourly onto a client's own team.
  • Maintenance retainersOngoing support and upkeep after a project ships.
  • Deposits and retainersUpfront payments held against future work.

Money out

  • WagesPay for developers on staff, kept apart from contractor pay.
  • Contractor paySpecialists brought in for a specific project or build.
  • Cloud infrastructureHosting costs tied to a specific client project.
  • Development tools and licensesSoftware used to build and manage client work.
  • Business insuranceGeneral liability and technology errors-and-omissions coverage.
  • Office rent and utilitiesFor shops with a physical workspace.

What we watch for you

  • Earned versus billed

    Milestone payments already collected against work actually completed, so income is never overstated.

  • Recurring retainer floor

    Maintenance retainer income against total income, the steady base behind project swings.

  • Contractor spend

    What outside developers are paid, tracked toward the 1099 threshold and tied to the project.

  • The set-aside

    The set-aside builds against earned milestone income, not the full deposit, so it matches what you actually made.

Ask Gus

Things software shop owners ask Gus.

Text him like you would text anybody. He answers in plain English, and when a question is above his pay grade, an accountant looks and gets back to you.

A client paid a big milestone up front for work that will take two more months. Does that count as income now?

Only the part that is actually earned this month. I hold the rest against the work still ahead, so the number stays honest.

I have a developer billed hourly onto a client's team. Does that count the same as our regular project work?

I keep staff augmentation billing and that developer's pay in their own line, so you can see if it is actually profitable on its own.

I brought in a specialist for one big client build and paid her $6,000 total. Does she need a 1099?

Yes, since she is not on payroll and it crossed $2,000. I have been tracking the total, so the form is ready by January 31.

The tax side

The tax side of a custom software development shop.

Most of what goes wrong here is timing: milestone deposits counted too early, and software development costs that sometimes need to be spread out rather than deducted right away.

What your return has to get right

Your accountant signs it, so it gets done right the first time.

  • Contractor 1099sAny developer or specialist not on payroll paid $2,000 or more in 2026 gets a 1099-NEC by January 31. Gus keeps the running list all year.
  • Software development cost treatmentSome costs to build software, whether for a client or for your own product, may need to be spread out over several years instead of deducted right away depending on the type of work. This is one to bring straight to the accountant.
  • The pass-through deductionMost owners can take up to 20 percent of business profit off their taxable income when milestone, retainer, and contractor costs are tracked apart all year.
  • Equipment write-offsDevelopment workstations and equipment bought for the business can usually be written off the year they are bought.

Deductions custom software development shops miss

Your bookkeeper knows what to look for in your statements. You never have to.

  • Cloud hosting for client projects
  • Development software licenses
  • Contractor and staff augmentation pay
  • Business insurance
  • Technology errors-and-omissions coverage
  • Office rent and utilities
  • Developer workstations
  • Code repository and project management tools
  • Continuing education courses
  • Conference and networking travel
  • Business phone and internet
  • Professional association dues

General information about 2026 federal rules, not advice for your business. Your accountant looks at your actual numbers before anything gets filed.

All year, not just April

A software shop year, kept every month.

Projects run on their own timelines, not the calendar. Your team stays on the books every month, not just at tax time. Every month in between, your bookkeeper closes the books and speaks up the moment something looks off.

  1. January

    New year, clean ledger

    Last year's return gets started, the developer 1099 list is finalized, and a monthly set-aside is planned around this year's milestones.

  2. April

    Filed, milestones settled

    Your return is filed and signed, with milestone income already matched to the work it covered.

  3. July

    Midway through the roadmap

    Where you stand, what you will owe, and whether maintenance retainers are building a steady base behind project work.

  4. October

    Before the year closes

    Gus looks at tools or equipment worth buying before December and flags any milestones still owed against work already done.

What you get

Starts at$197a month

What you pay depends on what your business needs, and it does not move after that, busy season or slow. No hourly bills, no surprise invoices, no setup fee.

Book a call
  • Monthly bookkeeping

    Every transaction sorted into categories set up for custom software development shops. You never categorize a thing.

  • An accountant checks every transaction

    Real review, every month, before your books close. Not a spot check.

  • Your business tax return, filed

    Prepared, reviewed, and signed by that same accountant every year.

  • The monthly number

    What you made, what you spent, what to set aside for taxes.

  • Your own bookkeeper

    A real person assigned to your business, in the app whenever you need them. No hold music.

  • On your books all year

    Every month, not just in April. Your team speaks up whenever something is worth your attention.

  • Cancel any time

    No contract. No cancellation call. Your books are yours.

Straight answers

Questions custom software development shop owners ask first.

A client paid a milestone deposit up front for work spanning two months. How does Gus handle that?

Only the portion of work actually completed that month gets counted as earned income, so a big deposit does not overstate what the month really brought in.

I bill a developer hourly onto a client's own team. Does that count differently than our regular projects?

It gets tracked in its own line as staff augmentation, along with that developer's pay, so you can see whether it is actually profitable on its own.

My maintenance retainers are small compared to new project work. Are they still worth tracking separately?

Yes. They build a steady recurring base, and tracking them apart from project swings shows how much of your income is dependable.

Does Gus handle the tax treatment of software I am building as our own product?

Gus keeps the costs tracked and flags them, but whether those costs get deducted now or spread out is a call for the accountant, since the rules depend on the specifics.

My books are behind because milestone payments were never matched to the work they covered. Can Gus fix that?

Yes. Send what you have. Gus sorts milestone income against completed work, the accountant checks it, and most owners know where they stand within a week.

Is a real accountant checking my books?

Yes. You get your own bookkeeper, Gus does the first pass on every transaction, and an accountant checks every one before your month closes. That same accountant prepares, signs, and files your business return. Goatkeeper is not a CPA firm, and we never pretend a person looked when they did not.

What does it cost, and can I cancel?

It starts at $197 a month, depending on what your business needs. No setup fee, no hourly bills, no contract. Cancel any time from the app, and your books go with you.

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Pick a time. That's the whole signup.

Fifteen minutes with a real person on our team. They look at where your books are, tell you straight what it takes to get caught up, and get you set up on the spot if it fits.

  • $197 a month to start
  • An accountant on every transaction
  • Cancel whenever