January Editorial Focus Water: Irrigation, Wastewater, and Dewatering Deadline: November 15, 2026 32 NOVEMBER 2026 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Profitably Avoiding Tax Mistakes Managing a drilling business requires more than just attracting potential customers and submitting competitive bids. Behind every successful drilling contractor, distributor, supplier, and manufacturer is a reliable financial system that helps the operation’s owner and manager understand where money is coming from, where it is spent, and how profitable the business is. Unfortunately, far too many drilling professionals find themselves facing serious financial issues, such as cash flow shortages and tax penalties, as the result of mistakes. The biggest tax mistakes made by drilling business owners are mixing personal and business finances. Mistakes by a drilling professional can lead to Internal Revenue Service (IRS) audits over large write-offs, corporate minimum tax limits, and the inability to use deductions if taxable income drops to zero. Among the other mistakes often made are: a Misclassifying Workers: While treating employees as independent contractors can save on payroll taxes, it can also provide a red flag to the IRS. Following government guidelines to properly label workers greatly reduces the risk of audits and fines. a Neglecting Payroll Taxes: Failing to deposit income and employment taxes withheld from employees on time through the required electronic transfer is another mistake which leads to steep penalties. a Failing to File or Pay on Time: Missing local, state, or federal filing deadlines is a mistake which leads to late-filing and late-payment penalties and interest charges. a Overlooking Deductions: Missing out on valuable tax credits, home office write-offs, or the Qualified Business Income deductions are all-too-common mistakes. a No Taxable Income: If the structure of a project or operation reduces the operation’s net income to zero, depreciation or Intangible Drilling Costs (IDC) deductions can’t be used. Without positive taxable income to offset, the intended benefits of drilling become completely worthless. It’s no secret the IRS actively looks for large write-offs such as IDCs for labor, fuel, and chemicals. Mistakes often involve unused deductions and zero income traps. The tax laws and regulations evolve and regularly change. Every drilling professional can avoid potential mistakes by being prepared. Be aware of recent changes such as: a Bonus depreciation and Section 179, first-year expensing; a IRS Form 1099 reporting thresholds; a Research and Development amortization; and a State level compliance updates go a long way to helping avoid expensive mistakes. Avoiding mistakes requires staying informed. Seeking professional assistance can help every drilling professional adapt to changes - regardless of their complexity - and avoid mistakes. Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com See us at GROUNDWATER WEEK Booth 645 See us at GROUNDWATER WEEK Booth 1245
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