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Most HVAC owners we talk to are doing seven figures in revenue and somehow still wondering why the bank account looks the way it does.
The trucks are rolling, the phone is ringing, the techs are booked out two weeks.
And the take-home is fine, but it’s not what you’d think how profitable should an HVAC business be and and pay its owner.
The number that matters isn’t revenue. It’s margin.
Once you stop looking at the top line and start looking at what’s left after everything, you can finally answer the only question that counts: are you running a profitable business, or just a busy one?
A residential HVAC business in DFW running clean usually lands somewhere in the 10-15% net profit range.
New construction shops trend lower, around 5-8%.
Service-and-repair heavy shops can clear 20% if the dispatch is tight and the techs aren’t dragging callbacks.
If you’re running a $2M shop and your net profit is $80K, something’s off. Either pricing is too soft, labor utilization is low, or there’s a hole in the cost-of-goods column nobody’s looking at.
We see all three pretty regularly.
The painful truth about HVAC is that the costs you can see, wages, parts, fuel, aren’t the ones that quietly eat your margin. The hidden costs are.
Truck depreciation is the big one. A $60K service van depreciates whether you drive it or not, and most owners aren’t pricing the use of that asset into their job costs. Same with diagnostic equipment, refrigerant tanks, and the mountain of small tools that walk off jobsites.
Then there’s the warranty work nobody bills for. The callback that turns into a two-hour drive and another hour onsite.
If 5% of your revenue is unbilled callbacks, that’s coming straight out of your margin.
Here’s where it gets interesting.
A lot of HVAC owners are still running as sole proprietors or LLCs taxed as sole proprietors.
Once your net profit clears around $60-70K, you’re probably overpaying self-employment tax by a meaningful amount.
Let’s look at an example. An HVAC owner is netting $250K through an LLC. As a sole proprietor, the full $250K is hit with self-employment tax (15.3% on the first $184,500 in 2026, then 2.9% Medicare on the rest). Switch the same business to an S corp election, pay yourself a reasonable salary of, say, $110K, and the remaining $140K of profit comes out as a distribution that doesn’t owe self-employment tax. That’s real money, usually low five figures of tax savings, depending on the situation.
This isn’t a fit for everyone. The S corp election adds payroll, more compliance, a separate tax return. But for an HVAC business clearing $150K+ in net profit, it’s almost always worth a conversation.
The other place HVAC owners leave money on the table is depreciation on trucks and major equipment. Section 179 and bonus depreciation rules let you front-load the deduction in the year you buy. The bonus depreciation percentage has been stepping down each year, but there’s still real value in timing your purchases against your tax year.
A new $80K service van placed in service before year-end can deliver tens of thousands in current-year deductions.
Bought in January instead? You wait twelve months for the same benefit.
Most HVAC owners are buying trucks reactively when one dies. The shops with a year-round CPA are buying them strategically.
The owner of a healthy HVAC business should be paid two ways: a market-rate salary for the work you do, plus a return on the business itself.
If you’re running the operation day to day, $90-130K in salary is reasonable for a DFW shop your size. Then on top of that, the business should be generating profit that flows to you as an owner, not as wages, but as a return on the company you’ve built.
If your salary is $80K and the business profit is zero, you’re not running a business. You’re employing yourself in a really expensive way.
Pull your last twelve months of P&L. Write down three numbers: revenue, your owner compensation (everything that hit your personal account), and what’s left in the business after that. If the third number is negative or close to it, the priorities are pricing and labor utilization, not growth.
If you’re not sure what your numbers should look like, that’s the conversation we have with HVAC owners every week.
We help DFW HVAC businesses run leaner books, take advantage of the tax strategy that fits their situation, and stop leaving money on the table.
Reach out to Adam Traywick any time. We’ll take a look at your numbers and tell you straight where the leverage is.
