Cross-Functional Teams Can Boost Collaboration And Sales

“Cross-functional” sales teams that collaborate with other departments often perform more effectively than siloed ones. By providing feedback and support, employees with varied skill sets and knowledge bases can help your sales team create more holistic sales strategies, better align product offerings with customer needs and efficiently adapt to market changes. Here’s how sales can leverage the expertise of marketing, product development, customer service, finance and other internal stakeholders.

Fighting silos

A cross-functional team is any group of employees from different departments brought together to solve a problem or pursue a goal. Your company might assemble such teams to develop new products or services, implement technology upgrades, and complete short-term projects. However, the cross-functional approach really shines when applied to sales and marketing. Even though these departments are closely connected, they often operate in separate spheres.

Silos can also exist within the sales team, where individuals work largely on their own and share limited information. Many salespeople spend their time interacting with prospective customers or clients. They might only “come up for air” to share information and experiences at sales meetings or in conversations with managers. This can result in missed opportunities to communicate insights on customers, prices and other issues.

Team members

By building a cross-functional sales team, you can eliminate such silos. You should aim to create an environment where employees feel comfortable sharing information and working together. Seek early buy-in from employees who communicate well and are open to collaboration. They can help you promote the concept and encourage broader employee buy-in.

Your team will obviously need to include members of both the sales and marketing departments. But don’t stop there. Someone from your IT department could help recommend tech solutions for sales department challenges. A customer service rep might be able to provide insights into how customers are likely to respond to changes in product features. A finance team member could weigh in on profitability by product or customer.

Cross-functional sales teams don’t require complex leadership structures. In fact, appointing a team leader from within the group can encourage open participation and accountability.

Other benefits

The advantages of forming a cross-functional sales team extend beyond improving sales results: Such teams can infuse fresh perspectives into all your departments, inspire greater communication companywide and support more consistent decision-making.

Over time, this approach can lead to clearer visibility into what’s driving revenue and profitability. If you’re looking to better align sales with your overall business strategy, contact us. We can help you identify where cross-functional collaboration will likely pay off.

GASB Statement No. 103, Financial Reporting Model Improvements, marks the most significant update to governmental financial reporting since GASB 34. Its new requirements directly affect how public school districts prepare annual financial statements, particularly in the areas of MD&A, unusual or infrequent items, proprietary fund reporting, and budgetary comparisons.

A Sharper, More Analytical MD&A for School Districts

Under GASB 103, the Management’s Discussion and Analysis (MD&A) must focus on five required areas:

Overview of the financial statements
Financial summary
Detailed analyses
Significant capital and long‑term financing activity
Currently known facts or conditions

This means school districts can no longer rely on template‑style MD&A narratives. Instead, they must provide clear explanations of why enrollment changes, state funding levels, federal grants, staffing shifts, or capital project activity affected financial results.

Reclassification of Unusual or Infrequent Items

GASB 103 replaces “special” and “extraordinary” items with a single category: unusual or infrequent items. For school districts, this may apply to events such as unexpected facility damages, one‑time legal settlements, or rare funding adjustments.

Proprietary Funds and Student Service Operations

Districts with internal service funds must follow updated proprietary fund reporting requirements. GASB 103 maintains the distinction between operating and nonoperating activities but updates presentation rules to improve consistency.

Budgetary Comparison Enhancements

School districts must also adapt to improved consistency requirements for budgetary comparison schedules. GASB 103 modernizes these presentations to support better evaluation of how actual revenues and expenditures compare to board‑approved budgets.

Implementation Timeline for Schools

GASB 103 is effective for fiscal years beginning after June 15, 2025, meaning most school districts will first implement it in their June 30, 2026, financial statements.

If you need assistance or have questions, please contact your auditor or a member of Yeo & Yeo’s Education Services Group. We are here to help.

Spring cleaning is usually associated with closets, garages, and storage rooms. But financial clutter can accumulate just as easily, and often with greater long-term cost.

Recurring charges, dormant accounts, and overlooked assets rarely attract attention because none of them feel urgent on their own. Yet even modest inefficiencies can gradually erode cash flow and make your financial picture harder to manage.

Taking a few hours each spring, or even a few times a year, to review your financial accounts can uncover immediate savings, recover forgotten funds, and ensure your financial systems are still working the way you expect.

Subscription drift

One of the most common sources of financial clutter is recurring subscriptions.

Individually, these charges can seem insignificant. A $49 monthly subscription may not draw much attention when it first appears on a statement. Over the course of a year, however, that single charge becomes $588. Multiply that across several streaming services, software subscriptions, fitness memberships, or apps, and the total can easily reach several thousand dollars annually.

Because these charges are automatic, they often continue long after their usefulness has passed.

Reviewing bank and credit card statements is usually enough to identify services that are rarely used or easily replaced by platforms you already have. Even when a service is still useful, it’s worth checking whether the pricing still makes sense. Many providers quietly increase prices or introduce new plans over time.

In some cases, savings can come from bundling services together or switching to packages that combine several subscriptions at a lower overall cost. These options are not always advertised to existing customers, so a quick comparison of available plans can occasionally reveal savings without changing the services you already use.

Billing structure can also make a difference. Services used consistently throughout the year may offer meaningful discounts for annual billing, while others may be better kept on a monthly basis and canceled when they are not needed.

The goal is not to eliminate every subscription; it’s to ensure each one still delivers enough value to justify the cost and to optimize how those services are priced.

Dormant and overlooked assets

Financial clutter can also appear in the form of assets that have simply been forgotten.

Old bank accounts, small brokerage balances, uncashed checks, and refunds, sometimes remain scattered across financial institutions. If accounts remain inactive long enough, they may eventually be transferred to state custody as unclaimed property.

While most individual claims are relatively small, the process of checking is quick. Each year, billions of dollars sit in state unclaimed property divisions across the country. A search of the official database for states where you have lived or worked takes only a few minutes and can occasionally uncover funds that belong to you.

It can also be worthwhile to check for family members who may not be as comfortable navigating these systems. Many unclaimed property databases contain records that have gone unnoticed for years simply because no one thought to look.

This exercise is less about budgeting and more about recovery – identifying assets that already exist but have slipped off the radar.

Reducing administrative drag

Disorganized financial systems can also create practical risks.

Missed cancellation deadlines, outdated beneficiary designations, overlapping insurance policies, or incomplete documentation are all common examples. None of these issues may seem significant individually, but they can create unnecessary cost or complications when left unaddressed.

A periodic review provides an opportunity to verify that key financial details are still accurate. Beneficiary designations on retirement accounts and insurance policies should reflect current intentions. Insurance coverage should match the assets you actually own (and their current values), and deductibles should still align with your ability to absorb risk.

Credit cards are another area worth reviewing. Cards with annual fees may no longer justify their cost if spending patterns have changed, and rewards programs may not align with how you currently use them. In some cases, issuers may be willing to reduce or waive annual fees if you call and ask.

It can also be helpful to review credit utilization. If balances regularly approach 30% of available credit, paying those balances down (or spreading usage across multiple accounts) can improve both liquidity and credit health.

Reviewing automatic financial systems

Automation is one of the most useful financial tools available, but automated systems still need occasional review.

Savings transfers, investment contributions, and automatic payments are often set up with good intentions and then left unchanged for years. As income, expenses, and priorities evolve, those settings may no longer reflect your current financial goals.

Periodic review helps ensure these systems still operate as intended. Automatic savings transfers may need to be increased as income grows, while certain recurring payments should be confirmed to ensure they are still required.

It is also worth verifying that automatic bill payments stop when obligations end. In rare cases, outdated payment instructions can continue sending funds long after a balance has been satisfied, leaving money sitting in the wrong place instead of being invested or used more productively.

The goal is simple: automation should be working for you, not continuing indefinitely without oversight.

The return

A short financial review can produce results that extend well beyond the time invested.

Unused subscriptions can be eliminated or optimized. Forgotten assets can be recovered. Insurance coverage and credit accounts can be aligned with current needs. Automated systems can be adjusted so they continue supporting long-term financial goals.

More importantly, the process restores clarity. When accounts, subscriptions, and financial systems are reviewed periodically, it becomes much easier to identify opportunities for improvement and avoid preventable mistakes.

For many households, financial spring cleaning is not about reducing spending. It is about ensuring that the money already being spent, and the systems managing it, are working as efficiently as possible.

If you are reviewing your finances this season and discover questions about tax planning, charitable giving, account structure, or broader financial strategy, it may be worth discussing those items during your next planning conversation with your CPA. Small adjustments uncovered during a routine review can sometimes lead to meaningful improvements in your overall financial plan. For more personalized guidance, please contact our office.

“Lulling” may sound comforting, but in a fraud context, it’s far from it. This term refers to techniques fraud perpetrators use to prevent suspicious businesses or individuals from asking questions, getting angry — or even contacting law enforcement. To lull someone into inaction, a fraudster might offer excuses, make promises, blame delays on someone else or create the impression that a problem is only temporary. It’s important to recognize these warning signs and be ready to act.

What makes it dangerous

Dishonest employees, vendors and third parties might use lulling tactics to prevent detection and extend a fraud scheme’s life. Sometimes, efforts to lull victims start only after a scam is well underway. In other cases, lulling is built into the scam from the beginning with small transactions and limited follow-through designed to make the victim believe the perpetrator is well-intentioned and legitimate. These tactics are usually effective because they appear to be ordinary delays, misunderstandings or attempts to fix honest errors.

What makes lulling so dangerous is that it’s often part of the fraud itself. Communications between perpetrators and victims — including in-person and phone conversations and email and text messages — aim to soothe concerns and delay complaints. This matters because the longer a scheme continues, the costlier it’s likely to be. Buying a few more months can enable perpetrators to steal additional funds. It also gives them more time to cover their tracks, destroy records, spend ill-gotten gains, and, in many cases, find their next victim.

False sense of hope

Companies can be especially vulnerable to lulling techniques because they want to appear fair, avoid overreacting and preserve business relationships. Fraud perpetrators exploit what, in other circumstances, would be considered smart business practices.

Fraudsters might give victims hope that they’re making progress by providing a partial payment for goods or as a “return” on a fake investment. A token repayment can be enough to persuade even cautious people to hang on and wait for full payment. Similarly, a substitute item or a promise wrapped in paperwork can create just enough hope to delay scrutiny for another day.

Other lulling methods involve blaming a third party. For example, perpetrators might attribute delayed payments to bank errors or problems in their accounts payable department. Or they might buy time by claiming, for example, a death in the family or another personal emergency. In general, you should be wary of stalling efforts and emotional manipulation. Dishonest employees attempting to cover up occupational fraud schemes often use these last two tactics to control colleagues and supervisors. After all, they have the advantage of knowing their victims and their vulnerabilities.

Document, document, document

To potentially limit the duration of a fraud scheme involving lulling, document transactions and interactions — particularly if they seem “off.” Documentation enables you to objectively examine signs that someone might be lulling you into a false sense of security. Documentation also produces a paper trail of possible evidence that can be useful if you later refer a case to law enforcement or try to track down stolen funds.

Be sure to document clear timelines and retain emails, texts, voicemails, contracts, promissory notes, photos, videos, financial records, social media posts, and, where permitted under applicable law, recorded calls. If you involve legal counsel or a forensic accountant to help investigate possible fraud, provide them with copies of these records.

Pay attention

You’re busy, and lulling makes it easy to ignore suspicious behavior. But it’s important to pay attention. Recognizing reassurance tactics early can be the difference between containing losses and giving a fraudster time to inflict serious financial damage. Contact us for help investigating suspicious activity and strengthening internal controls to prevent fraud.

Most businesses close their books for tax and accounting purposes on December 31 because it aligns with the calendar year. But a calendar year isn’t always the best option. For some companies, choosing a fiscal year end that better reflects their business cycle can improve financial reporting and simplify year-end procedures and tax filing. Here’s what you should know when deciding on the right tax year end for your business.

Fiscal-year basics

A fiscal year is a 12-month accounting period that doesn’t end on December 31. For example, a company might operate on a fiscal year running from July 1 through June 30.

Some businesses use a 52- or 53-week fiscal year. These periods don’t necessarily end on the last day of a month. Instead, they may close on the same weekday each year, such as the last Friday in March. This approach is common in industries where weekly activity cycles are more meaningful than monthly reporting.

Using a fiscal year also changes tax filing deadlines. Pass-through entities — including partnerships, limited liability companies and S corporations — generally must file their tax returns by the 15th day of the third month after their fiscal year ends. For example, a business with a June 30 fiscal year end would file its return by September 15. Fiscal-year C corporations generally must file by the 15th day of the fourth month following the fiscal year close. (These correspond to the calendar-year deadlines of March 15 for pass-throughs, which is the 15th day of the third month after December 31, and April 15 for C corporations, which is the 15th day of the fourth month after December 31.)

When a fiscal year makes sense

Not every business can choose its own tax year. Sole proprietorships typically must use a calendar year because the business isn’t legally separate from its owner, who files an individual tax return based on the calendar year.

Other businesses may be able to adopt a fiscal year if they can demonstrate a valid business purpose or qualify for certain IRS elections. In practice, this usually means aligning the tax year with the company’s operating cycle. For seasonal businesses, a fiscal year can provide a clearer view of performance. Construction companies, farms, accounting firms and retailers often experience significant fluctuations throughout the year.

Consider a snowplowing company that earns most of its revenue between November and March. A December 31 year end divides one winter season into two tax years, making it harder to evaluate profitability for that period. A fiscal year ending after the winter season may present financial results more accurately than a calendar year would.

Businesses that restructure or significantly change their operations may also consider changing their tax year. Doing so generally requires IRS approval by filing Form 1128, “Application to Adopt, Change or Retain a Tax Year.” Companies that change their tax year usually must also file a return for the short period created during the transition.

Beyond taxes

The benefits of adopting a fiscal year aren’t limited to tax reporting. Choosing the right year end can also make financial reporting and planning easier.

If a company’s busiest months fall late in the calendar year, closing the books on December 31 can disrupt operations and strain accounting staff during an already demanding period. Moving the year end to a slower time can make it easier to perform inventory counts, review contracts and complete financial statements. This can be especially helpful for businesses that rely on detailed job costing or inventory management. Completing year-end accounting tasks when operations are less hectic can reduce errors and improve the financial data that business owners and stakeholders rely on for decision-making.

We can help

Selecting a fiscal year end involves more than choosing a convenient date. The right year end can streamline reporting, provide more meaningful insights and support better planning. If you’re thinking about a change, contact us. We’ll help you determine the best fit for your operations and guide you through the IRS approval process.

Yeo & Yeo CPAs & Advisors is proud to announce that Makena Welch, Marketing Associate, was awarded the Creative Marketing Award at the Troy Chamber of Commerce Business Excellence Awards program on March 5.

The Creative Marketing Award recognizes professionals who demonstrate exceptional creativity, innovation, and impact in marketing communications. Welch was honored for her dynamic contributions to Yeo & Yeo’s brand storytelling and marketing initiatives across multiple platforms.

Welch has been with Yeo & Yeo for four years and serves in the firm’s marketing department, where she leads efforts in video, social media, creative development, graphic design, and brand management. Her work plays a key role in shaping and maintaining the firm’s brand identity while engaging audiences through compelling visual storytelling. In addition to her creative responsibilities, Welch is actively involved in the Troy Chamber of Commerce and participates in a variety of Southeast Michigan business and community events, further supporting Yeo & Yeo’s regional presence.

“Makena’s creativity and talent shine through in every project,” said Kim Dahl, Director of Marketing at Yeo & Yeo. “She has a unique ability to take our ideas and transform them into powerful visuals and messages that truly resonate. Her passion for creative marketing and her commitment to excellence make her incredibly deserving of this recognition.”

Yeo & Yeo was also proud to see additional members of its team and organization recognized during the awards program. Michael Rolka, CPA, CGFM, Principal, was nominated for the Client Service Excellence Award, highlighting his dedication to delivering exceptional service and building strong client relationships. In addition, Yeo & Yeo was nominated for the Community Impact Award, recognizing the firm’s ongoing commitment to giving back and supporting the communities it serves.

Further underscoring that commitment, Yeo & Yeo sponsored the Nonprofit Excellence Award, reflecting the firm’s continued support of nonprofit organizations and community-focused initiatives throughout the region.

The Troy Chamber Business Excellence Awards celebrate outstanding businesses and professionals who contribute to the vitality, innovation, and growth of the local business community. Yeo & Yeo congratulates all nominees and winners and is honored to be part of such a vibrant and impactful network.

A new but temporary special depreciation allowance for qualified production property (QPP) was created by last year’s One Big Beautiful Bill Act (OBBBA). It’s available for certain manufacturing-related real property placed in service after July 4, 2025, and before January 1, 2031. Under previous law, taxpayers had to depreciate such property over a 39-year period. The OBBBA allows them to elect a deduction equal to 100% of the property’s adjusted basis in the tax year it’s placed in service — basically, it’s bonus depreciation for certain buildings and production facilities.

The IRS recently issued interim guidance (Notice 2026-16) that taxpayers generally can rely on until proposed regulations are published. It clarifies several important issues related to the deduction.

Identifying QPP

The guidance defines QPP as any portion of nonresidential real property that is:

Subject to the Modified Accelerated Cost Recovery System,
Used by the taxpayer as “an integral part” of a qualified production activity (QPA, defined below), and
Placed in service in the United States or any of its territories.

In addition, the property’s construction must begin after January 19, 2025, and before January 1, 2029. Its original use generally must begin with the taxpayer, though certain used property may qualify as QPP under special rules.

Property (or a portion of property) is used as an integral part of a QPA if the QPA takes place in the physical space of the property (or a portion of the physical space). Each unit of property (including additions and improvements) must satisfy the integral part requirement on its own, with an exception for “integrated facilities.”

Taxpayers can treat multiple properties that operate as an integrated facility on the same piece or contiguous pieces of land as a single unit of property. For example, if a manufacturer constructs a new building to store raw materials and other manufacturing inputs for activities in two factories on the same site, the three buildings constitute a single unit of property for purposes of the integral part requirement.

The guidance also includes a de minimis rule: If 95% or more of a property’s physical space satisfies the integral part requirement when the property is placed in service, the taxpayer can elect to treat the entire property as satisfying the requirement.

For purposes of determining whether property meets the integral part requirement, property used by a lessee generally isn’t considered to be used by the lessor taxpayer as part of a QPA. The guidance provides exceptions, though, for intercompany leases within consolidated groups and commonly controlled pass-through entities.

The guidance specifies several types of ineligible property, including property used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to a QPA. Property used to store finished products is also ineligible.

Under the guidance, taxpayers may use any reasonable method to allocate a property’s unadjusted depreciable basis between eligible property and ineligible property. The use of square footage, cost segregation data, architectural or engineering plans, process diagrams, or construction invoices to allocate unadjusted depreciable basis to eligible property may be reasonable methods. Taxpayers can also use any reasonable method to allocate the basis for “dual-use infrastructure” that serves both eligible property and ineligible property (such as an HVAC or sprinkler system).

Identifying QPAs

A QPA is the manufacturing, production or refining of a qualified product that results in a “substantial transformation” of the qualified product (generally, any tangible personal property except a food or beverage prepared in the same building where it will be sold). The guidance explains that “substantial transformation” refers to the further manufacturing, production or refining of the constituent elements, raw materials, inputs or subcomponents into a final, complete and distinct item of property that’s fundamentally different from those original elements, materials, inputs or subcomponents.

The guidance interprets the term QPA somewhat broadly. It says that a QPA can include “essential activities” that are critical to the completion of the product (for example, the receiving and storage of raw materials or other inputs to be used or consumed during a QPA). A QPA also includes certain related activities, such as oversight and direction of the manufacturing, production or refining activities that result in the substantial transformation of a qualified product.

The guidance includes specific definitions for “manufacturing,” “production,” “refining” and other important terms. Notably, “production” is limited to activities in the agricultural or chemical industries.

And that’s not all

The interim guidance also includes special rules, election procedures and a safe harbor for property placed in service in 2025 — as well as information about how depreciation must be recaptured and included in ordinary income if a QPP change in use occurs within 10 years after the property is placed in service. We can help you navigate the rules and maximize this new tax break if you’re eligible.

For many organizations, the end of the month brings added pressure to finalize financial records accurately and on time. This process often requires coordination across various departments, including finance and accounting (F&A), operations, sales and payroll. When handoffs aren’t well coordinated, the risk of financial reporting delays and errors increases. The good news is that a few practical adjustments can make your month-end close far more efficient and manageable.

Create a consistent workflow

Gathering accounting data involves many moving parts throughout the organization. To reduce stress, adopt a consistent approach that follows standard operating procedures and uses detailed checklists to track responsible parties, deadlines and progress.

This minimizes the use of ad-hoc processes. It also helps ensure consistency and accuracy each month. When assigning tasks, it’s important to clearly divide responsibilities between team members to improve efficiency and ensure proper segregation of duties.

Implement effective review procedures

Too often, F&A teams spend most of their time during the close process on the mechanics. But dedicating time to review procedures is critical to maintaining effective internal controls over financial reporting. Examples of review procedures include:

Reconciling amounts in a ledger to source documents (such as invoices, contracts or bank records),
Testing a random sample of transactions for accuracy, and
Performing variance analysis by comparing monthly results to prior periods, budgeted amounts and/or external benchmarks.

Results should be accurate, complete and reasonable in light of the reviewer’s understanding of the business, the nature of underlying transactions and expected relationships among financial data.

Without adequate oversight, the probability of errors (or fraud) in the financial statements increases. Timely review procedures help identify and resolve issues early, reducing the need for more time-consuming corrections later.

Encourage ownership and adaptability

Employees who are actively involved in the month-end close are often best positioned to recognize trouble spots and bottlenecks. So, it’s important to adopt a continuous improvement mindset.

One practical approach is to hold brief post-close discussions to identify what worked well and what didn’t. From there, assign responsibility for implementing changes to individuals with clear accountability and the authority to drive change in your organization.

At the same time, many F&A departments rely heavily on certain specialized staff to complete critical tasks each month. When those individuals are unavailable, it can delay the entire timeline. Cross-training employees on key steps can help minimize frustration and delays. It may also help identify inefficiencies in the financial reporting process and improve overall team flexibility.

Leverage automation tools

Your F&A department may rely on manual processes to extract, manipulate and report data. However, these processes can be time-consuming, increase the risk of human error and make it more difficult to maintain consistent internal controls.

Fortunately, modern accounting software can now automate certain tasks, such as invoicing, accounts payable management and payroll processing. In some cases, you may need to upgrade your current accounting software to take full advantage of these efficiencies. But even modest improvements — such as automating recurring entries or bank feeds — can substantially reduce the time it takes to close your books.

Focus on efficiency

A smoother month-end close can improve the reliability and timeliness of your company’s financial reporting. By refining your procedures and making smart use of available tools, your F&A team can spend less time chasing numbers and more time interpreting them. If you’d like guidance on improving your month-end close process, we’re here to help.

A Gallup survey published in January 2026 revealed that only 30% of supervisors who responded were placed in their roles because of supervisory skills or experience. The survey also found that supervisors who received leadership education or training were 79% more likely to be engaged and 11% less likely to look for another job. The problem: Less than half of respondents had received such training in the past year.

These data points outline a long-standing challenge for many employers. That is, supervisors are often promoted because of skills and successes in areas other than leadership. Gaps in leadership skills can undermine interactions with team members and, in turn, negatively affect an organization’s financial performance.

5 key abilities

The most direct way to address the matter is to invest a reasonable amount of time and resources in carefully designed leadership training. In most cases, this involves enrolling supervisors in a series of externally provided courses or workshops that upskill their abilities to:

1. Define their style. There’s no one-size-fits-all template for being a good leader. Supervisors need to identify and develop a style that suits their distinctive personalities and strengths. Generally, leaders may be categorized as autocratic (giving orders and expecting specific results), delegative (allowing team members to work mostly independently) or participative (combining the previous two styles and soliciting feedback from the team).

2. Optimize time and priorities. Leadership quality tends to suffer when a supervisor is stretched too thin or chooses to focus on one aspect of the job more than others. For example, an organization might have a leader who’s tasked with both strategic planning and supervising employees. If that person spends 80% of the time developing operational strategies and only 20% on team building and supervision, those employees might feel largely ignored.

3. Manage team performance. Most employers, particularly larger ones, have a formal process for establishing expectations, setting goals, measuring performance and conducting reviews at least once annually. Along with doing all that, supervisors may also need to spend time directly coaching some employees or working with them on performance improvement plans. Performance management can be complex and rigorous, requiring highly skilled and patient leaders to carry it out.

4. Resolve conflicts. Conflict is an inevitable part of supervising employees. If mishandled or ignored, it can damage morale and productivity. Supervisors need to recognize potential conflicts early, resolve them proactively and follow established, legally compliant procedures — particularly when handling employee discipline or termination.

5. Interact with remote workers. The widespread use of remote work arrangements, which really took off during the pandemic, is still a relatively new leadership challenge for some employers. When employees work from home, leaders no longer have the “luxury” of seeing their team members face to face in meeting rooms and offices. So, they often need to make an extra effort to communicate and stay connected.

Make no assumptions

Internal promotions can be a great way to retain organizational knowledge, motivate staff, and save time and expense on an external hire. But excellence in other positions doesn’t automatically translate into effective leadership skills. When supervisors aren’t equipped to lead, your organization risks lower productivity, higher turnover and even legal exposure. We can help you evaluate the financial impact of leadership gaps and integrate targeted training into budgeting and workforce planning.

When most people think about estate planning, they focus primarily on tangible assets, such as real estate, investments and personal property. However, in some cases, intellectual property (IP) can make up a substantial portion of an individual’s wealth. Proper planning can help ensure that these assets are preserved, accurately valued and transferred according to your wishes.

Defining IP

IP generally falls into four main categories: patents, copyrights, trademarks and trade secrets. We’ll focus here only on patents and copyrights. They’re protected by federal law to promote scientific and creative endeavors by providing inventors and artists exclusive rights to benefit economically from their work for a certain period.

Patents protect inventions, and the two most common are utility and design patents. Under federal law, utility patents protect an invention for 20 years from the patent application filing date. (It typically takes at least a year to a year and a half from the date of filing to the date of issue.) Design patents last 15 years from the patent issue date.

Copyrights protect the original expression of ideas that are fixed in a “tangible medium of expression,” typically in the form of written works, music, paintings, film and photographs. Unlike patents, which must be approved by the U.S. Patent and Trademark Office, copyright protection kicks in as soon as a work is fixed in a tangible medium. And copyrights last much longer than patents. The specific term depends on various factors.

Valuing and transferring IP

Valuing IP is a complex process. Unlike physical assets, the value of IP often depends on future income potential. Valuation may consider factors such as licensing agreements, royalty streams, market demand, brand recognition and comparable sales. Often, a professional appraiser is needed to determine fair market value. Accurate valuation is particularly important for estate tax reporting and equitable distribution among heirs.

After you know the IP’s value, it’s time to decide whether to transfer the IP to family members, colleagues, charities or others through lifetime gifts or bequests after your death. The gift and estate tax consequences will likely affect your decision. But you also should consider your income needs, as well as who’s in the best position to monitor your IP rights and take advantage of their benefits.

If you’ll continue to depend on the IP for your livelihood, hold on to it at least until you’re ready to retire or you no longer need the income. You also might want to retain ownership of the IP if you feel that your children or other beneficiaries lack the desire or wherewithal to take advantage of its economic potential and monitor and protect it against infringers.

Whichever strategy you choose, it’s important to plan the transaction carefully to ensure your objectives are achieved. There’s a common misconception that when you transfer ownership of the tangible medium on which IP is recorded, you also transfer the IP rights. But IP rights are separate from the work itself and are retained by the creator.

Working with us

If you hold intangible assets, such as a patent or copyright, contact us. We can help ensure that these potentially valuable assets are properly accounted for in your estate plan.

Many time-consuming accounting and bookkeeping processes — from transaction coding to financial analysis — can now be handled more quickly and consistently with the help of artificial intelligence (AI). Rather than replacing humans, AI-powered automation helps finance and accounting teams work more efficiently, reduce manual workloads, and focus on higher-value analysis and decision-making.

What AI automation can (and can’t) do

Over the past few years, AI capabilities have advanced rapidly. They’ve also become more affordable and accessible for businesses of all sizes. Tools that use machine learning and generative AI can now categorize transactions, draft reports, summarize financial data and flag unusual activity. This can lead to faster reporting, fewer errors and clearer financial insights.

However, AI still struggles with areas that require professional judgment, interpretation, and deep knowledge of tax rules, regulations and business strategy. That’s why the most effective accountants and bookkeepers treat AI as a support tool rather than a replacement for human expertise.

For example, AI-powered systems can often handle repetitive bookkeeping processes such as:

Coding routine transactions,
Assisting with or generating routine journal entries,
Matching and reconciling bank transactions,
Identifying anomalies or duplicate payments, and
Assisting with forecasting models and budgeting inputs.

By automating these tasks, your team can spend less time on data entry and more time analyzing results, advising management and improving financial controls.

Where to start

For many businesses, the biggest challenge isn’t applying the technology — it’s knowing where to begin. Consider these practical tips to help ensure AI tools deliver real value:

Identify time-consuming manual work. Start by listing accounting and bookkeeping tasks that require significant manual effort. Examples include reconciliations, invoice processing, expense categorization and financial report preparation. Rank them based on time spent and complexity to identify the best candidates for automation.

Standardize workflows. Automation works best when processes follow consistent rules. Review how transactions are handled across your accounting system and create standardized procedures. The fewer exceptions and workarounds, the easier it will be to implement AI tools effectively.

Clean up and centralize financial data. AI systems rely on organized, consistent data. If information is stored across multiple spreadsheets, software platforms or formats, consider consolidating it within your accounting system. Clean data leads to better automation and more reliable insights.

Evaluate technology options carefully. AI features are now appearing in many accounting platforms, including bookkeeping software, accounts payable tools and financial analysis applications. Before adopting a solution, identify the specific capabilities you need — such as automated transaction categorization, anomaly detection or predictive forecasting.

Test results before relying on automation. Before fully implementing an AI-driven process, verify the system’s outputs. Review samples of automated journal entries, reconciliations or classifications to confirm accuracy. Ongoing monitoring helps ensure the technology continues to produce reliable results as your business evolves.

We can help

When implemented thoughtfully, AI can significantly improve the efficiency and accuracy of finance and accounting operations. However, adopting AI automation often requires changes to processes, internal controls and reporting procedures. It may also affect how your external accountant approaches audits, financial statement preparation or advisory services. Contact us to explore ways AI-enabled automation can streamline your bookkeeping, improve financial reporting and strengthen your business’s financial processes.

Did you know that you can claim tax deductions for animals that serve a bona fide business purpose? This benefit extends beyond agricultural operations. Working animals in many sectors may qualify. Here are the details.

Working animals vs. personal pets

A working animal must provide a clear and direct business benefit. Common examples include:

Dogs used to deter theft, vandalism or unauthorized entry at a business location,
Cats used to control rodents that could damage inventory, equipment or facilities, and
Animals used in agricultural operations.

In these cases, the animal’s presence directly supports business operations, making related expenses potentially deductible.

However, it’s important to distinguish bona fide working animals from those that provide personal companionship or emotional support. If an animal is a part-time worker and part-time pet, you can deduct only the percentage of expenses that correspond to the animal’s working time. For instance, if a dog spends approximately 60% of its time guarding a warehouse and 40% as a pet, only 60% of eligible expenses would typically be deductible.

The IRS will likely deny deductions for an animal that’s clearly primarily a household pet. Likewise, service animals for owners or employees aren’t eligible for business deductions.

Deductible expenses

Many costs associated with the care of a working animal may be deductible as ordinary and necessary business expenses. These include costs for raising, feeding, caring for, training and managing animals used in a trade or business. Examples include:

Food and treats,
Veterinary care and medications,
Grooming necessary for the animal’s role,
Training costs related to the animal’s work function, and
Supplies such as leashes, collars, bedding and shelter.

The deduction applies only to reasonable expenses connected to the animal’s business use. Luxury or purely personal costs may draw IRS scrutiny.

It’s important to note that different tax rules apply to farmers, ranchers and professional breeders. In general, farmers may deduct feed, veterinary care and other costs directly associated with the business use of animals. The costs associated with animals used for draft, breeding, sport or dairy purposes are typically capitalized and depreciated, rather than immediately deducted, unless they’re included in inventory.

Recordkeeping requirements

Proper documentation is key to supporting deductions for working animals. You’ll need to maintain records to demonstrate that the animal performs a legitimate business function, the expenses are ordinary and necessary for your industry, and any allocation between business and personal use is reasonable. Contact us to discuss your situation and assess your eligibility.

The many tax-related provisions that went into effect last year after the One Big Beautiful Bill Act (OBBBA) was signed into law are affecting 2025 federal income tax returns being filed now. However, some OBBBA provisions aren’t taking effect until this year. Plus, some changes under previous legislation are also taking effect in 2026. Here’s an overview of new tax provisions that individuals and businesses need to consider when conducting their 2026 tax planning.

Tax provisions affecting individual taxpayers

Changes going into effect for individual taxpayers this year include:

New charitable contribution deduction for nonitemizers. For 2026 and future years, the OBBBA reinstates the COVID-era deduction for cash donations to qualified charities by taxpayers who claim the standard deduction, subject to an increased annual limit of $1,000, or $2,000 for joint filers. (The limits were $300 and $600, respectively, for 2021 when this nonitemizer deduction was last available.)

The definition of “cash donation” may be broader than you think. It includes gifts made by debit or credit card, check, electronic bank transfer, online payment platform, and payroll deduction. If you make such gifts in 2026, be sure to retain proper substantiation so you can deduct them when you file your return next year.

New floor on charitable deduction for itemizers. Under the OBBBA, if you itemize deductions rather than claiming the standard deduction, your otherwise allowable charitable deductions are limited to the amount that, in aggregate, exceeds 0.5% of your adjusted gross income (AGI). Put another way, your 2026 charitable deduction is limited to the amount that exceeds 0.5% of your 2026 AGI.

If you’ll be affected, you may want to “bunch” donations into alternating years to minimize the negative impact of the new floor. (If you won’t itemize deductions in the nonbunching years, consider making cash donations up to the nonitemizer charitable deduction limit in those years.)

New limit on itemized deductions for taxpayers in the 37% tax bracket. Generally, this OBBBA limitation for 2026 and subsequent years means that the tax benefit from itemized deductions for taxpayers in the 37% bracket will be treated as if they were in the 35% bracket. For 2026, the 37% bracket starts when taxable income exceeds $640,600 for singles and heads of households, $768,700 for married couples filing jointly, and $384,350 for married couples filing separately.

If you may be affected, factor this into your 2026 tax planning so you don’t overestimate the tax savings your itemized deductions will provide.

Alternative minimum tax (AMT) exemption changes. You must pay the AMT if your AMT liability exceeds your regular tax liability. The top AMT rate is 28%, compared to the top regular ordinary-income tax rate of 37%. But the AMT rate typically applies to a higher taxable income base. An AMT exemption is available, but it phases out when AMT income exceeds certain levels.

Under the OBBBA, those thresholds revert to their 2018 levels for 2026 (i.e., removing the inflation adjustments made for 2019–2025), and they’ll be adjusted annually for inflation in subsequent years. Also, the OBBBA effectively phases out the exemption twice as fast beginning in 2026. The 2026 phaseout ranges are $500,000–$680,200 for singles and heads of households and $1,000,000–$1,280,400 for joint filers (half those amounts for separate filers), compared to the 2025 ranges of $626,350–$978,750 and $1,252,700–$1,800,700, respectively. Both changes mean more taxpayers could be subject to the AMT in 2026.

If it’s looking like you’ll be subject to the AMT this year, consider accelerating income and short-term capital gains into 2026. This may allow you to benefit from the lower maximum AMT rate. Also consider deferring expenses you can’t deduct for AMT purposes until next year, such as state and local taxes (SALT). You may be able to preserve those deductions — but watch out for the annual limit on the SALT deduction. Additionally, if you defer expenses you can deduct for AMT purposes to next year, such as charitable donations, the deductions may become more valuable because of the higher maximum regular tax rate.

New tax-advantaged Trump Accounts. Created under the OBBBA, these accounts are available to U.S. citizens under 18. Contributions to a properly established account can begin on July 4, 2026. Generally, up to $5,000 per year can be contributed. Although contributions aren’t tax deductible, the account can grow tax-deferred until the child is 18, when it converts into a traditional IRA.

Eligible children born between January 1, 2025, and December 31, 2028, whose parents have elected to participate in a pilot program, will receive a one-time, tax-free $1,000 federal contribution to their accounts. The $1,000 government contribution doesn’t count against the annual limit. So, if your child (or grandchild) is born this year, up to $5,000 could be contributed to his or her Trump Account in 2026 on top of the $1,000 from the government.

Increase in tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses. Distributions used to pay qualified expenses are income-tax-free for federal purposes and potentially also for state purposes, making the tax deferral a permanent savings. In recent years, certain elementary and secondary school expenses of up to $10,000 per year per beneficiary have been considered qualified and thus eligible for tax-free treatment.

Only tuition qualified through July 4, 2025. Under the OBBBA, various additional expenses after July 4, such as books, instructional materials and certain fees, also qualify. Beginning in 2026, the annual limit increases to $20,000 per year per beneficiary.

So, you may be able to take advantage of more tax-free funds from your child’s 529 plan to pay his or her elementary and secondary school expenses in 2026. And you may want to increase your contributions to your child’s (or grandchild’s) 529 plan so that funds are available in the account to take advantage of the increased limit in the future.

New Roth requirement for higher-income taxpayers’ catch-up contributions. Beginning in 2026, new rules under the SECURE 2.0 Act (signed into law in 2022) require higher-income participants in 401(k), 403(b) and 457(b) retirement plans to make any catch-up contributions as after-tax Roth contributions. For 2026, this requirement applies to participants with 2025 Social Security wages exceeding $150,000. That threshold will be annually adjusted for inflation.

If you’re subject to this limit, no longer being able to make pretax catch-up contributions could increase your 2026 taxable income. This, in turn, could push you into a higher tax bracket and impact your eligibility for various tax breaks. You may want to consider other steps for reducing your income in 2026, such as minimizing sales of stock or other investments that would generate capital gains income (or offsetting gains by selling other investments at a loss).

Elimination of certain energy-efficiency credits for homeowners. The OBBBA repealed two credits for taxpayers who take steps to make their homes more energy efficient, such as installing energy-efficient windows or adding solar panels: 1) the Energy Efficient Home Improvement Credit for qualified improvements to an existing home and 2) the Residential Clean Energy Credit for both existing and newly constructed homes. The credits aren’t available for any property placed in service after December 31, 2025.

Tax provisions affecting businesses and their owners

Business-related changes going into effect this year include:

Expansion of the income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in. Under the OBBBA, for 2026 and beyond, instead of the distance from the bottom of the range (the threshold) to the top (the amount at which the limit fully applies) being $50,000, or, for joint filers, $100,000, it’s $75,000, or, for joint filers, $150,000. This will allow larger deductions for some taxpayers.

For 2026, the ranges are $201,750–$276,750 (up from $197,300–$247,300 for 2025), double those amounts for married couples filing jointly. The threshold amounts will continue to be annually adjusted for inflation.

Consider the potential impact of the limit phase-ins on your 2026 QBI deduction. There may be steps you can take to make the most of the significantly expanded phase-in ranges.

Reduction of the threshold for the excess business loss limitation. The deductions for current-year business losses incurred by noncorporate taxpayers generally can offset income from other sources, such as salary, self-employment income, interest, dividends and capital gains, only up to the annual limit. “Excess” losses are carried forward to later tax years and can then be deducted under the net operating loss rules.

The OBBBA makes the limit permanent and reduces the threshold at which the limitation goes into effect. For 2026, the threshold is $256,000 (down from $313,000 for 2025), double that amount for joint filers. The threshold will be adjusted for inflation annually going forward.

If you’ll be affected by this change, you may want to adjust your individual tax planning strategies to help make up for a reduced loss deduction. You also might consider making changes to your business strategy to avoid generating losses that would be suspended until later years because of the lower excess business loss limitation threshold.

New option for claiming the family and medical leave credit. The OBBBA permanently extended the employer tax credit for paid family and medical leave, which was scheduled to expire on December 31, 2025. For 2025, the credit amount ranged from 12.5% to 25% of eligible wages paid to qualifying employees for up to 12 weeks of paid leave.

Beginning in 2026, the OBBBA allows employers to claim the credit for the same percentage of insurance premiums paid or incurred during the tax year for active family and medical leave coverage. You can’t claim the credit for both wages and premiums, however.

If you don’t currently offer paid family and medical leave, consider whether funding it with insurance premiums eligible for the credit would make doing so feasible while helping to achieve other business goals, such as increasing employee retention. If you do offer paid family and medical leave, you’ll need to look at whether claiming the credit for actual wages paid to employees on leave or for insurance premiums will save you more tax. (If you offer paid leave but don’t fund it with insurance, you may want to revisit whether insurance would make sense for your business now that premiums are eligible for the credit.)

Elimination of certain clean energy incentives. The Section 179D deduction for energy-efficient commercial buildings allows owners of new or existing commercial buildings to immediately deduct the cost of certain energy-efficient improvements rather than depreciate them over the 39-year period that typically applies. The base deduction is calculated using a sliding scale, ranging for 2026 from $0.59 per square foot to $5.94 per square foot, depending on energy savings and whether specific prevailing wage and apprenticeship requirements have been met. The OBBBA eliminates the deduction for property that begins construction after June 30, 2026.

The Section 30C alternative fuel vehicle refueling property credit is for property that stores or dispenses clean-burning fuel or recharges electric vehicles. The credit is worth up to $100,000 per item (each charging port, fuel dispenser or storage property). The OBBBA eliminates the credit for property placed in service after June 30, 2026.

If you’re considering one of these clean energy investments, you may want to act soon so you can be eligible for the associated tax break before it’s eliminated.

Begin planning now

All the tax law changes can be overwhelming. If you need help understanding how these provisions might affect your tax strategies, contact us. We can help you develop a plan to reduce your tax liability so you can keep more of your hard-earned income while staying compliant.

Many businesses offer health care and dependent care flexible spending accounts (FSAs) as part of their employee benefits package. These plans provide valuable tax savings to employees and payroll tax savings to employers.

If your company operates a calendar-year FSA with a 2½-month grace period, employees have until March 15 to incur eligible expenses for their 2025 plan balances. After that, any unused 2025 funds may be forfeited under the “use-it-or-lose-it” rule. Here’s a refresher on how FSAs work and what employers can do with forfeited balances.

The basics

Under an employer-sponsored FSA plan, employees may be able to contribute a portion of their pay to a:

Health care FSA. These accounts may be used for qualifying out-of-pocket medical, dental and vision expenses for the employee and his or her spouse and/or qualified dependents. For 2026, the maximum employee contribution to a health care FSA increases to $3,400 (from $3,300 in 2025). (The limit is annually indexed for inflation.)

Dependent care FSA. These accounts may be used for qualifying child care or adult dependent care expenses. For 2026, under 2025 tax legislation, the dependent care FSA contribution limit increases to $7,500 per household ($3,750 for married couples filing separately). The limit for 2025 was $5,000 ($2,500 for separate filers). (The limit isn’t inflation-indexed, so it won’t go up in the future unless another increase is passed by Congress and signed into law.)

Employee contributions are made on a pretax basis, reducing federal income tax, Social Security tax and Medicare tax (and often state income tax). The FSA plan directly pays or reimburses employees for qualified expenses, and the payments or reimbursements are tax-free.

Use-it-or-lose-it rule

If employees don’t use their full FSA balances by the end of the plan year, leftover balances generally revert to the employer under the use-it-or-lose-it rule. However, there are two exceptions:

An FSA plan can allow a grace period of up to 2½ months. Most FSA plans operate on a calendar-year basis. For a calendar-year FSA plan, the grace period gives employees until March 15 of the following year to incur qualified expenses to drain their unused FSA balances from the previous year.
A health care FSA plan can allow employees to carry over up to an annually inflation-indexed amount of unused balances from one year to the next. The amount that can be carried over from 2026 to 2027 is $680 (up from the $660 that could be carried over from 2025 to 2026).

It’s important to note that a health care FSA plan can offer either the carryover or the grace period, but not both. Dependent care FSA plans can offer only the grace period, not the carryover.

Options for forfeited FSA funds

After any applicable grace period ends, or after applying any permitted health care FSA carryover, employers may retain forfeited balances under IRS cafeteria plan rules. Many businesses use the funds to offset plan administrative expenses.

Other permitted uses generally include, on a reasonable and uniform basis: 1) reducing the amount employees need to contribute in a future year to reach a certain FSA balance (for example, employees need to contribute only $950 to have a $1,000 FSA balance, with the extra $50 funded by forfeited balances from a previous year), or 2) returning amounts to participants (typically treated as taxable wages and subject to payroll taxes and income tax withholding).

Forfeitures can’t be returned to plan participants based on individual claims experience. Any allocation of returned funds must be nondiscriminatory and consistent with plan terms.

Natural check-in point

Around the grace-period deadline is a natural time for business owners to review how their FSA plans handle unused balances. It’s also a good opportunity to confirm that your current plan design, including grace period or carryover provisions, aligns with your employees’ needs and your administrative practices. Contact us to help review and modify your FSA plan provisions, handle forfeitures properly and prepare for next year’s enrollment cycle.

Materiality is a core concept that shapes the entire financial reporting process. In simple terms, materiality helps determine which financial information is significant enough to influence decisions — and which details likely won’t affect the overall picture. Understanding how experienced certified public accountants (CPAs) evaluate materiality can help you prepare reliable financial reports and avoid surprises when working with external advisors.

Materiality defined

Under U.S. accounting standards, financial information is “material” if omitting or misstating it could influence users’ decisions based on the financial statements. Auditing standards apply the same principle, focusing on whether misstatements — individually or in the aggregate — could reasonably influence users’ economic decisions.

Although wording varies slightly across reporting frameworks, the underlying principle remains consistent: Materiality is user-focused and requires professional judgment informed by both quantitative and qualitative factors. It’s not a mechanical percentage test.

How auditors set and apply materiality thresholds

An audit provides reasonable assurance that the financial statements are free from material misstatement. External auditors rely on their professional judgment to determine what’s material for each company, based on such factors as:

Size,
Industry,
Internal controls, and
Financial performance.

When planning an audit, the auditor establishes overall materiality for the financial statements as a whole, often using a benchmark such as a percentage of pretax income, revenue or total assets. The auditor also sets “performance materiality,” a lower threshold used to reduce the risk that undetected misstatements, in aggregate, exceed overall materiality. In some cases, auditors establish separate materiality thresholds for particular high-risk accounts or disclosures.

During fieldwork, materiality affects the nature, timing and extent of audit procedures. It influences sample sizes, risk assessments and which accounts receive more scrutiny. Auditors also evaluate significant year-over-year fluctuations and unexpected trends. For example, if shipping or direct labor costs increased by 30% in 2025, it may raise a red flag, especially if it didn’t correlate with an increase in revenue. Businesses should be ready to explain why costs increased and provide supporting documents (such as invoices or payroll records) for auditors to review.

Auditors may need to reassess materiality if circumstances change from year to year — or even during an engagement. Moreover, auditors must apply significant judgment when evaluating materiality. For instance, a relatively small misstatement may still be material if it masks a trend, affects compliance with loan covenants, triggers management bonuses or involves fraud.

Beyond audits

Materiality also plays a role in other types of accounting engagements. In a financial statement review, the CPA provides limited assurance that financial statements are free from material misstatement. The CPA performs inquiry and analytical procedures and reports whether anything came to his or her attention suggesting the financial statements may be materially misstated. Unlike an audit, a review doesn’t involve detailed testing of transactions or internal controls. However, materiality still plays an important role in designing review procedures and evaluating unusual fluctuations, significant estimates and financial statement disclosures.

In a financial statement compilation, the CPA provides no assurance. The accountant presents financial information in the proper format but doesn’t verify its accuracy. Professional standards require the CPA to consider whether the financial statements appear materially misstated or misleading. If information is incomplete, inconsistent or obviously incorrect, the CPA may need to request revisions — or, in some cases, withdraw from the engagement.

Why it matters

The concept of materiality also has strategic implications for business owners and their internal finance and accounting teams. Not every minor bookkeeping error requires immediate correction, and not every fluctuation deserves the same level of attention. Understanding materiality helps you focus attention where it matters most — on the accounts, estimates and risks that could meaningfully affect profitability, cash flow, debt covenant compliance and overall business value.

Rather than striving for perfection in every minor detail, management can use materiality as a decision-making filter. It supports smarter allocation of accounting resources, more effective internal controls and clearer financial reporting. A shared understanding of what’s truly material also strengthens discussions with lenders, investors and other stakeholders by keeping the focus on the issues that influence business outcomes.

Putting materiality to work for you

Materiality is more than an accounting concept — it’s a practical tool for better financial decision-making. Proactively evaluating significant changes in your financial statements and understanding what matters most to your stakeholders can strengthen your reporting. Contact us to learn more.

Employee benefits can quickly become outdated as tax laws change, new guidance is issued and workforce needs evolve. If your organization sponsors a cafeteria plan, regular checkups are essential to protect its tax-advantaged status and confirm that the plan continues to deliver meaningful value to your team.

Chief objective

Formally defined, a cafeteria plan is an employee benefits arrangement that meets the requirements of Section 125 of the Internal Revenue Code. Its chief objective is to give participants a choice between receiving taxable cash compensation or selecting from a menu of tax-free benefits, such as:

Group term life insurance (up to $50,000),
Accident and health coverage,
Health Flexible Spending Accounts (FSAs),
Dependent care assistance programs, and
Adoption assistance.

Benefits are typically funded through salary reductions, though employers may also provide nonelective contributions. Essentially, participants “buy” benefits with pretax compensation dollars, reducing their taxable income, and the employer-sponsor avoids payroll taxes on those purchases.

It’s a good idea to occasionally discuss with your leadership team and professional advisors whether your plan’s design still suits your organization’s strategic objectives and workforce demographics. After all, flexibility is a major advantage of cafeteria plans.

For example, premium-only plans allocate a portion of employees’ pretax earnings to pay for accident and health insurance. Alternatively, a cafeteria plan may allow employees to make pretax contributions to FSAs or Health Savings Accounts (HSAs). FSAs allow participants to set aside dollars for qualifying medical or dependent care expenses, while HSAs may be used to pay or reimburse qualified medical expenses.

Note: To be eligible to contribute to an HSA, an employee must be covered by a qualifying high-deductible health plan and meet other IRS requirements.

4 best compliance practices

Although cafeteria plans are governed primarily by Sec. 125, many of the underlying benefits they provide — such as health coverage and health FSAs — are generally subject to the reporting, disclosure and fiduciary requirements of the Employee Retirement Income Security Act (ERISA). With this in mind, here are four best compliance practices to follow carefully and emphasize with your staff:

Keep your plan document and, as applicable, summary plan description (SPD) updated and accessible. Sec. 125 requires a written cafeteria plan document. In addition, ERISA-covered benefits generally require an SPD and other disclosures. Participants must receive a current SPD when they first become eligible for coverage and when material changes occur.
Guard against providing benefits to ineligible parties. Only common-law employees may participate in a cafeteria plan on a pretax basis. Partners in partnerships and more-than-2% shareholders in S corporations, for instance, are considered self-employed and therefore ineligible. Allowing them or other ineligible parties to participate can disqualify your plan.
Conduct scheduled nondiscrimination testing. Sec. 125 requires cafeteria plans to satisfy nondiscrimination rules. That means the plan can’t discriminate in favor of highly compensated or key employees with respect to eligibility, contributions or benefits. Sponsors need to test for discrimination at least annually — and more frequently if circumstances change and create compliance risks.

Simplified nondiscrimination testing is available for small businesses (those with fewer than 100 employees) that set up “simple cafeteria plans.” These plans provide a minimum level of benefits to all eligible participants who aren’t highly compensated or key employees.

Keep up with all administrative requirements. Beyond being subject to nondiscrimination testing, cafeteria plans must comply with various recordkeeping, notice and reporting requirements. Depending on the structure of the underlying benefits, certain plan assets may also be subject to ERISA trust requirements. It’s critical to keep up with these requirements and any new or updated federal guidance.

Be a participant pleaser

A cafeteria plan can be a powerful tool for delivering tax-efficient benefits to employees, but it demands careful oversight. Many employers make the mistake of taking a “set it and forget it” approach. Contact us for help conducting a thorough review of your plan and

A comprehensive estate plan does more than simply distribute your assets after your death — it also protects your voice, your values and your loved ones during a difficult moment. One critical yet often overlooked component of an estate plan is a living will.

Living will vs. last will and testament

Many people confuse a living will with a last will and testament, but they aren’t the same. These separate documents serve different but vital purposes.

A last will and testament is what you probably think of when you hear the term “will.” This document details how your assets will be distributed upon your death. A living will (sometimes referred to as a “health care directive”) details your preferences for how life-sustaining medical treatment decisions should be made if you become incapacitated and unable to communicate them yourself.

While many people focus on wills and trusts to manage property after death, a living will addresses critical decisions during your lifetime. Including one as part of your estate plan offers significant personal and financial benefits, such as:

Easing emotional stress on family members. Few situations are more emotionally taxing than making end-of-life medical decisions for a family member. When loved ones are forced to make choices without clear guidance, feelings of guilt and doubt can arise.

A living will can provide clarity and reassurance. It relieves your family of the burden of guessing what you would have wanted. Instead of debating difficult choices, they can focus on supporting one another.

Helping to avoid family disputes. Unfortunately, disagreements over medical treatment can strain even the closest families. Different personal beliefs, religious views or interpretations of “quality of life” can lead to conflict.

By documenting your wishes in advance, you reduce the risk of disputes. Health care providers and family members can rely on a legally recognized document rather than differing opinions. This can help preserve family harmony.

Reducing unnecessary medical costs. End-of-life medical care can be expensive. While financial considerations shouldn’t drive medical decisions, unwanted or prolonged treatments can significantly impact your estate and your family’s financial security.

A living will helps ensure that you receive only the type of care you want — no more and no less. This clarity can prevent costly interventions that don’t align with your preferences, helping to protect the assets you’ve worked hard to build.

Don’t forget powers of attorney

Often, a living will is drafted in conjunction with two other documents: a durable power of attorney for property and a health care power of attorney.

A durable power of attorney identifies someone who can handle your financial affairs, such as paying bills and undertaking other routine tasks, should you become incapacitated. A health care power of attorney becomes effective if you’re incapacitated but not terminal or in a vegetative state. Your designee can make medical decisions on your behalf — for example, agreeing to a surgical procedure recommended by your physician — if you’re unable to do so. But this person can’t officially make life-sustaining choices. That requires a living will.

Seek professional help

Because laws governing living wills vary by state, it’s important to work with qualified professionals in your area to ensure your documents are properly drafted and integrated into your broader estate planning strategy. We can explain how a living will fits within your overall financial and legacy goals. Be sure to turn to your attorney to draft your living will.

If you’re contemplating a sale of your business, you probably know that any serious buyer will scrutinize your financial statements, operations, assets and legal agreements. Conducting your own due diligence now can smooth the buyer review process and ease deal negotiations. Working with financial and legal advisors, you’ll have the opportunity to fix any problems before your business goes on the market.

Anticipate buyer scrutiny

The primary goal of presale due diligence is to evaluate the quality and sustainability of earnings, identify risks, and normalize financial results before giving prospective buyers access to the company’s books. Financial advisors look for anything that could be considered negative or inconsistent by a prospective buyer and, thus, potentially cause the buyer to reduce the offering price — or even terminate the deal.

Presale due diligence generally focuses on financial performance, tax exposure and other matters that buyers might scrutinize. So, your financial advisor may:

Analyze the last three years of financial statements to assess revenue recognition policies, margin trends and earnings before interest, taxes, depreciation and amortization (EBITDA),
Evaluate inventory accounting methods, costing practices and obsolescence risks,
Look for any “off-balance-sheet” liabilities,
Assess compliance with federal and state regulations, such as those related to environmental protection and employee-related taxes,
Review customer and vendor concentrations, related-party transactions, and key contracts,
Evaluate the strength of confidentiality and nondisclosure agreements, and internal control policies, and
Identify any outstanding lawsuits.

Addressing these issues now can reduce seller and buyer uncertainty later.

Evaluating IP issues

Presale due diligence also may require your attorney to assess ownership of key intellectual property (IP) such as patents, trademarks, logos and proprietary software. And your financial advisor may review IP documentation to identify gaps or inconsistencies that could affect asset values.

Such verification is critical to a company’s value, especially in industries such as technology, pharmaceuticals and manufacturing. If, say, your business has only a tenuous claim on an internally developed product, it’s better to learn — and possibly fix — this before a prospective buyer finds out.

Start early

The earlier you start planning and preparing for a sale, the better. Ideally, you should engage a professional with merger and acquisition experience to perform presale due diligence on your business at least six months before going to market. If you’d like to make major changes before selling, such as divesting noncore operations or significantly reducing your company’s debt, give yourself even more time. Contact us with questions.

If you used one or more vehicles in your business during 2025, you may be eligible for valuable tax deductions on your 2025 income tax return. Businesses can generally deduct expenses attributable to business use of a vehicle plus depreciation. However, the rules are complicated, and your deduction may be affected by factors such as the vehicle’s weight, business vs. personal use, and whether you use the actual expense method or the cents-per-mile rate.

Actual expenses plus depreciation

The year you place a vehicle in service, you can choose to deduct the actual expenses attributable to your business vehicle use or, if the vehicle is a car, SUV, van, pickup or panel truck, claim the cents-per-mile deduction (discussed later). Deductible expenses include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. You’ll need to track and substantiate these expenses.

If you use the actual expense method, you also can claim a depreciation deduction for the vehicle by making a separate depreciation calculation for each year until the vehicle is fully depreciated. According to the general rule, you calculate depreciation over a six-year span for a percentage of the purchase cost as follows:

Year 1 — 20%
Year 2 — 32%
Year 3 — 19.2%
Year 4 — 11.52%
Year 5 — 11.52%
Year 6 — 5.76%

If a vehicle is used 50% or less for business purposes, you must use the straight-line method (10% in Years 1 and 6 and 20% in Years 2 through 5) to calculate depreciation deductions instead of the percentages listed above.

Depending on the cost of a passenger auto, your deduction may be less than the percentage of cost above because “luxury auto” annual depreciation ceilings apply. These are indexed for inflation and may change annually. For a passenger auto placed in service in 2025, generally the ceilings are as follows:

Year 1 — $20,200 ($12,200 if you don’t claim first-year bonus depreciation)
Year 2 — $19,600
Year 3 — $11,800
Each remaining year until the vehicle is fully depreciated — $7,060

These ceilings are proportionately reduced for any nonbusiness use.

More favorable depreciation rules apply to heavier SUVs, pickups and vans. For example, 100% bonus depreciation or the normal Section 179 expensing limit ($2.5 million for 2025) generally is available for vehicles with a gross vehicle weight rating (GVWR) of more than 14,000 pounds. A reduced Sec. 179 limit of $31,300 applies to vehicles (typically SUVs) rated at more than 6,000 pounds but no more than 14,000 pounds. Again, this favorable tax treatment is available only if the vehicle is used more than 50% for business.

The cents-per-mile method

The 2025 cents-per-mile rate for the business use of a car, SUV, van, pickup or panel truck is 70 cents (increasing to 72.5 cents for 2026). This rate applies to gasoline- and diesel-powered vehicles as well as electric and hybrid-electric vehicles. A depreciation allowance is built into the rate, so you can’t claim both the depreciation deductions discussed earlier and the cents-per-mile rate for the same vehicle.

The rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, including gas, maintenance, repairs and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear.

The cents-per-mile rate is beneficial if you don’t want to keep track of actual vehicle-related expenses or worry about depreciation calculations. Although you don’t have to account for all your actual expenses, you still must record certain information, such as the mileage for each business trip, the date and the destination.

Choosing or changing your method

There’s much to consider before deciding whether to use the actual expense method or cents-per-mile method to deduct expenses for a vehicle your business placed in service in 2025. For a vehicle placed in service earlier, if you previously deducted actual expenses for the vehicle, you can’t use the cents-per-mile rate for 2025 (or any other future year). However, if you previously used the cents-per-mile rate, you can switch to the actual expense method in a later year — but you can claim only straight-line depreciation.

If you lease a business vehicle, there also are deduction opportunities but the rules are different. Contact us if you’d like more information. We can also answer questions about claiming 2025 business vehicle expenses on your 2025 return or planning for and tracking 2026 expenses.

When your financial statements arrive, it’s tempting to glance at the bottom line and move on. After all, you’ve got customers to serve and employees to manage. But your income statement is more than a report card. It can be a strategic tool to help you spot growth opportunities, tighten your execution and make smarter decisions that move your business forward.

Measure what matters

The income statement is a good starting point for analyzing your financials and identifying inefficiencies and anomalies. The following ratios are commonly used to gauge profitability:

Gross profit margin. This is gross profit (revenue minus cost of goods sold) divided by revenue. It’s a good ratio to compare with industry statistics because it’s typically calculated on a consistent basis, though the definition of cost of goods sold can vary between companies.

Net profit margin. This is calculated by dividing net income by revenue. If the margin is rising, the company is generally doing something right. Often, this ratio is computed on a pretax basis to accommodate differing tax rates.

Return on assets. This is net income divided by the company’s total assets. The return shows how efficiently management is using its assets.

Return on equity. This is calculated by dividing net income by shareholders’ equity. The resulting figure shows how well the shareholders’ investment is performing compared to competing investments. However, private companies should use this ratio with caution because their equity levels can fluctuate due to owner withdrawals or tax strategies.

You can use these profitability ratios to compare your company’s performance over time and against industry norms.

Dig deeper into the details

If your company’s profitability ratios have deteriorated compared to last year or industry norms, it’s important to find the cause. If the whole industry is suffering, the decline is likely part of a macroeconomic trend. If the industry is healthy but your company’s margins are falling, it’s time to identify internal factors and take corrective measures.

Depending on the source of the problem, you might need to cut costs, reevaluate staffing levels, automate certain business functions, eliminate unprofitable segments or product lines, raise prices or possibly conduct a forensic accounting investigation. For instance, a hypothetical manufacturer might discover that its gross margin fell due to rising labor costs from excessive overtime or because supplier prices rose faster than the company adjusted its pricing.

Build a winning game plan

In today’s volatile economy, it’s easy to blame shrinking profit margins on external pressures. But assumptions can be costly. Your income statement provides insight into your team’s performance, from your operational efficiency to pricing and spending. A careful review of your income statement — including revenue trends, cost drivers and operating expenses — often uncovers actionable opportunities for improvement. We can help you develop strategies to boost profitability and keep your business competing at the highest level.