Yeo & Yeo Gives Back: Building Awareness, Hope, and Community with the Alzheimer’s Association

More than a century ago, Yeo & Yeo’s founders laid the groundwork for a culture of community service. Today, their legacy continues to thrive through the efforts of our people, including the Yeo Young Professionals (YYP) group. Each year, the YYPs lead a firm-wide service project, uniting the firm to raise funds and volunteer for a designated nonprofit organization. By taking the lead in organizing events and rallying support, these emerging leaders demonstrate that service is a powerful avenue for personal and professional growth.

This year, our YYP service project supported the Greater Michigan Chapter of the Alzheimer’s Association. Professionals across our Yeo & Yeo companies and offices participated in Walks to End Alzheimer’s and FUNdraising initiatives, raising more than $3,400 for the cause. Combined with the $9,500 allocated by the Yeo & Yeo Foundation, the firm’s total contribution reached $13,370 in support of Alzheimer’s care and research.

“Alzheimer’s has unfortunately impacted so many of our lives,” said Michael Wilson II, CPA, Manager and Foundation Board Young Professionals Service Chair. “This firm-wide initiative gave us a chance to acknowledge those experiences while doing something positive together. It was incredible to see our people unite around such an important cause.”

Yeo & Yeo’s dedication to giving back is more than a tradition—it is a defining part of our company’s culture and identity. Established in 2018, the Yeo & Yeo Foundation is an employee-run organization dedicated to supporting charitable causes throughout Michigan. Since its inception, the Foundation has allocated funds to support the YYP service project, benefiting organizations such as the American Cancer Society, Special Olympics Michigan, and Habitat for Humanity.

This Giving Tuesday, and every day, we are proud to give our time, talent, and resources to uplift others. Beyond the Foundation’s grants and service projects, Yeo & Yeo professionals serve on numerous boards and committees throughout the state, lending their expertise to nonprofits that strengthen our communities. Additionally, through our Nonprofit Services Group, we help nonprofit organizations thrive by providing specialized accounting, audit, HR, technology, and advisory services so they can focus on advancing their missions.

Whether through volunteering, professional service, or charitable giving, the Yeo & Yeo team continues to demonstrate that community building is at the heart of who we are. This year’s YYP service project is one more example of that commitment—and a reminder that when we come together, actions create lasting impact.

Financial statements aren’t just documents for your accountant—they’re powerful tools for managing and growing a successful medical practice. Your balance sheet, income statement, and cash flow statement reveal the true financial health of your practice and help you make data-driven decisions with confidence.

In this short, 15-minute on-demand session, Carrie Lapka, CPA, CPPM, walks through the fundamentals of reading and interpreting key financial statements so practice owners, managers, and administrators can better understand what the numbers really mean.

What You’ll Learn:

Why financial statements matter for every practice
How to read the balance sheet, income statement, and cash flow statement
What these reports reveal about financial health and performance
Common ratios to monitor and how to use them to guide decisions
Tips to strengthen financial oversight and planning

Why Watch:

A strong financial understanding leads to stronger operations. Learn how to monitor trends, spot concerns early, and support long-term success by getting comfortable with your practice’s financial data.

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Get Practical Resources for Your Practice

Yeo & Yeo’s Smart Medical Practice Toolkit is your go-to resource for navigating the financial, operational, and regulatory complexities of practice management. This collection includes brief, high-impact webinars, downloadable tools, and practical guidance—all built around the real challenges physicians and practice managers face.

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As year-end approaches, it’s important for employers to review upcoming payroll and compliance changes that could affect their reporting, employee communication, and filing requirements in 2025. Following are three major updates from the IRS that all businesses—large and small—should be aware of as they prepare for W-2s, ACA filings, and electronic reporting.

1. Overtime Reporting on Form W-2: Transition Relief for 2025

The IRS has issued transition relief for tax year 2025, meaning employers are not required to separately report overtime pay on Form W-2 this year. However, employees may still need this information to claim deductions under the One Big Beautiful Bill Act (OBBBA).

Employer Options for 2025

Report overtime in Box 14 of Form W-2
Pros: Helps employees claim deductions easily; proactive for future compliance.
Cons: Requires payroll system updates; adds administrative steps.
Provide a separate year-end statement to employees
Pros: Gives employees clear documentation for deductions; flexible format.
Cons: Additional administrative effort; must ensure accuracy.
Do not report overtime separately
Pros: No penalty for 2025; avoids system changes now.
Cons: Employees may lack documentation for deductions; could lead to inquiries.

What Counts as “Qualified” Overtime?

Only the premium portion of overtime required under the Fair Labor Standards Act (FLSA) is deductible. If an employee earns $20/hour and works 50 hours in a week:

Regular pay: 40 × $20 = $800
Overtime pay: 10 × $30 = $300
Qualified deduction: (10 hrs. × $10 premium) = $100

The maximum annual deduction is $12,500 for single filers or $25,000 for joint filers. Amounts phase out at higher income levels.

2. Electronic Filing Threshold: 10-Return Rule

Beginning last year, the IRS significantly lowered the threshold for mandatory electronic filing. Employers who file 10 or more combined information returns must file electronically—including W-2s, 1099s, 1098s, and other similar forms.

Action Steps for Employers

Count all information returns across all categories.
Register for an IRS-approved e-filing system:
- SSA Business Services Online
- IRS IRIS Portal
Obtain a Transmitter Control Code (TCC) if needed.

If your organization has traditionally filed paper returns, now is the time to ensure your systems and processes support electronic filing ahead of 2025 deadlines.

3. Affordable Care Act Filing Requirements & ALE Status Determination

If your organization averaged 50 or more full-time employees and full-time equivalents (FTEs) in 2024, you are considered an Applicable Large Employer (ALE) for 2025.

ALE Responsibilities Include:

Offering affordable, minimum essential health insurance coverage to full-time employees and dependents
Filing Forms 1094-C and 1095-C with the IRS
Providing Form 1095-C to employees

Calculating ALE Status

Count all full-time employees and FTEs each month of 2024.
Add them together.
Divide by 12. Employees working 30+ hours/week or 130+ hours/month count as full-time.

This calculation is critical—incorrectly assuming you are not an ALE could lead to penalties.

Next Steps for Employers

As you prepare for year-end filings, consider the following:

Decide if and how you will provide overtime information to employees.
Confirm you are set up for the required electronic filing.
Determine 2025 ALE status and begin preparing 1094/1095 forms if required.

Yeo & Yeo’s payroll and compliance professionals are here to assist with your year-end reporting needs.

Download the 2026 Payroll Brief

For a deeper look at payroll updates and year-end requirements, download Yeo & Yeo’s 2026 Payroll Planning brief.

A living trust is one of the most versatile estate planning tools available. It offers a streamlined way to manage and transfer assets while maintaining privacy and control. Unlike a traditional will, a living trust allows your assets to pass directly to your beneficiaries without going through probate. By placing assets into the trust during your lifetime, you create a clear plan for how they should be distributed, and you empower a trustee to manage them smoothly if you become incapacitated. This combination of efficiency and continuity can provide significant peace of mind for you and your family.

However, even the most carefully created living trust can’t automatically account for every asset you acquire later or forget to transfer into it. That’s where a pour-over will becomes essential.

Defining a pour-over will

A pour-over will acts as a safety net by directing any assets not already held in your living trust to be “poured over” into the trust at your death. Your trustee then distributes the assets to your beneficiaries under the trust’s terms. Although these assets may still pass through probate, the pour-over will ensures that everything ultimately ends up under the trust’s umbrella, following the same instructions and protections you’ve already put in place.

This setup offers the following benefits:

Convenience. It’s easier to have one document controlling the assets than it is to “mix and match.” With a pour-over will, it’s clear that everything goes to the trust, and then the trust document determines who gets what. That, ideally, makes it easier for the executor and trustee charged with wrapping up the estate.

Completeness. Generally, everyone maintains some assets outside of a living trust. A pour-over will addresses any items that have fallen through the cracks or that have been purposely omitted.

Privacy. In addition to conveniently avoiding probate for the assets that are titled in the trust’s name, the setup helps maintain a level of privacy that isn’t available when assets pass directly through a regular will.

Understanding the roles of your executor and trustee

Your executor must handle specific bequests included in the will, as well as the assets being transferred to the trust through the pour-over provision before the trustee takes over. (Exceptions may apply in certain states for pour-over wills.) While this may take months to complete, property transferred directly to a living trust can be distributed within weeks of a person’s death.

Therefore, this technique doesn’t avoid probate completely, but it’s generally less costly and time consuming than usual. And, if you’re thorough with the transfer of assets made directly to the living trust, the residual should be relatively small.

Note that if you hold back only items of minor value for the pour-over part of the will, your family may benefit from an expedited process. In some states, your estate may qualify for “small estate” probate, often known as “summary probate.” These procedures are easier, faster and less expensive than regular probate.

After the executor transfers the assets to the trust, it’s up to the trustee to do the heavy lifting. (The executor and trustee may be the same person, and, in fact, they often are.) The responsibilities of a trustee are similar to those of an executor, with one critical difference: They extend only to the trust assets. The trustee then adheres to the terms of the trust.

Creating a coordinated estate plan

When used together, a living trust and a pour-over will create a comprehensive estate planning structure that’s both flexible and cohesive. The trust handles the bulk of your estate efficiently and privately, while the pour-over will ensures that no assets are left out or distributed according to default state laws. This coordinated approach helps maintain consistency in how your estate is managed and can reduce stress and confusion for your loved ones.

Because living trusts and pour-over wills involve legal considerations, we recommend working with an experienced estate planning attorney to finalize the documents. We can assist you with the related tax and financial planning implications. Contact us to learn more.

As a small to midsize business grows, demands on its time, talent and resources inevitably expand right along with it. Many business owners reach a point where continuing to do everything in-house — or even themselves — begins to slow progress or expose the company to unnecessary risk. Have you reached this point yet? If so, or even if you’re getting close, outsourcing could be a smart move.

Common candidates

Many business activities can be outsourced. The key is identifying functions that, if handled by an external provider, would improve efficiency, strengthen compliance, and give you and your team more time to focus on revenue-generating work. Here are some common candidates:

Accounting and financial reporting. A reputable provider can manage your books, collect payments, pay invoices and keep accounting technology up to date. It should also be able to prepare financial statements that meet the standards expected by lenders, investors and other outside parties.

Customer service. This may seem an unlikely candidate because you might believe that someone must work for your business to truly represent it. But that’s not necessarily true. Internal customer service departments often have high turnover rates, which drives up costs and reduces service quality. Outsourcing to a provider with a more stable, well-trained team can improve both customer satisfaction and operational consistency.

Information technology (IT). Bringing in an outside firm or consultant to manage your IT needs can provide significant benefits. For starters, you’ll be able to better focus on your mission without the constant distraction of changing technology. Also, a provider will stay current on the best hardware and software for your business, as well as help you securely access, store and protect your data.

Payroll and human resources (HR). These functions are governed by complex regulations that change frequently — as does the necessary software. A qualified vendor can help your business comply with current legal requirements while giving you and your employees a better, more secure platform for accessing payroll and HR information.

Downsides to watch out for

Naturally, outsourcing comes with potential downsides. You’ll need to spend time and resources researching and vetting providers. Then each engagement will involve substantial ongoing expenses.

You’ll also have to place considerable trust in providers — especially in today’s environment, where data breaches are common and cybersecurity is critical. Finally, even a solid outsourcing arrangement requires ongoing communication and management to maintain a productive relationship.

Not a one-size-fits-all solution

Every business owner must carefully consider when to outsource, which services are worth the money and how to measure return on investment over time. If you’d like help evaluating your options or better understanding the financial and tax implications of outsourcing, contact us.

Whether you’re selling your business or acquiring another company, the tax consequences can have a major impact on the transaction’s success or failure. So if you’re thinking about a merger or acquisition, you need to consider the potential tax impact.

Asset sale or stock sale?

From a tax standpoint, a transaction can basically be structured as either an asset sale or a stock sale. In an asset sale, the buyer purchases just the assets of a business. This may happen if a buyer only wants specific assets or product lines. And it’s the only option if the target business is a sole proprietorship or a single-member limited liability company (LLC) that’s treated as a sole proprietorship for tax purposes.

Alternatively, if the target business is a corporation, a partnership or an LLC that’s treated as a partnership for tax purposes, the buyer can directly purchase the seller’s stock or other form of ownership interest. Whether the business being purchased is a C corporation or a pass-through entity (that is, an S corporation, partnership or, generally, an LLC) makes a significant difference when it comes to taxes.

The flat 21% corporate federal income tax rate under the Tax Cuts and Jobs Act (TCJA), which the One Big Beautiful Bill Act (OBBBA) didn’t change, makes buying the stock of a C corporation somewhat more attractive. Why? The corporation will pay less tax and generate more after-tax income. Plus, any built-in gains from appreciated corporate assets will be taxed at a lower rate when they’re eventually sold.

The TCJA’s reduced individual federal tax rates, which have been made permanent by the OBBBA, may also make ownership interests in S corporations, partnerships and LLCs more attractive than they once were. This is because the passed-through income from these entities will be taxed at the TCJA’s lower rates on the buyer’s personal tax return. The buyer may also be eligible for the TCJA’s qualified business income deduction, which was also made permanent by the OBBBA.

Note: In some circumstances, a corporate stock purchase can be treated as an asset purchase by making a Section 338 election. Contact us for more information. We’d be pleased to help determine if this would be beneficial in your situation.

Seller or buyer?

Sellers generally prefer stock sales for tax and nontax reasons. One of their main objectives is to minimize the tax bill from a sale. That can usually be best achieved by selling ownership interests in the business (corporate stock or interests in a partnership or LLC) as opposed to selling the business’s assets.

With a sale of stock or other ownership interest, liabilities generally transfer to the buyer and any gain on sale is typically treated as lower-taxed long-term capital gain (assuming the ownership interest has been held for more than one year).

Buyers, however, usually prefer to purchase assets. Generally, a buyer’s main objective is to generate enough cash flow from an acquired business to pay any acquisition debt and provide an acceptable return on the investment. Therefore, buyers want to limit exposure to undisclosed and unknown liabilities and minimize taxes after the deal closes.

A buyer can step up (increase) the tax basis of purchased assets to reflect the purchase price. Stepped-up basis lowers taxable gains when certain assets, such as receivables and inventory, are sold or converted into cash. It also increases depreciation and amortization deductions for qualifying assets.

Keep in mind that other factors, such as employee benefits, can cause unexpected tax issues when merging with or acquiring a business.

We can help

Selling the business you’ve spent years building or becoming a first-time business owner by buying an existing business might be the biggest financial move you ever make. We can assess the potential tax consequences before you start negotiating to help avoid unwelcome tax surprises after a deal is signed. Contact us to get started.

With Notice 2025–67, the IRS has issued its 2026 inflation-adjusted retirement plan contribution limits. Although the changes are more modest than in recent years, most retirement-plan-related limits will still increase for 2026. Depending on your plan, these adjustments may provide extra room to boost your retirement savings.

Type of limitation	2025 limit	2026 limit
Elective deferrals to 401(k), 403(b) and 457 plans	$23,500	$24,500
Annual benefit limit for defined benefit plans	$280,000	$290,000
Contributions to defined contribution plans	$70,000	$72,000
Contributions to SIMPLEs	$16,500	$17,000
Contributions to traditional and Roth IRAs	$7,000	$7,500
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 50 or older*	$7,500	$8,000
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 60, 61, 62 or 63*	$11,250	$11,250
Catch-up contributions to SIMPLE plans for those age 50 or older	$3,500	$4,000
Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63	$5,250	$5,250
Catch-up contributions to IRAs for those age 50 or older	$1,000	$1,100
Compensation for benefit purposes for qualified plans and SEPs	$350,000	$360,000
Minimum compensation for SEP coverage	$750	$800
Highly compensated employee threshold	$160,000	$160,000

*Starting in 2026, the SECURE 2.0 Act requires the catch-up contributions of higher-income taxpayers to be treated as post-tax Roth contributions. Generally for 2026, the requirement will apply to taxpayers who earned more than $150,000 during the prior year. However, new final regulations state that the deadline for plan amendments to implement this change is December 31, 2026. So there might not be any adverse consequences for plans that continue to allow non-Roth account catch-up contributions for higher-income taxpayers in 2026.

Your modified adjusted gross income (MAGI) may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits will all increase for 2026:

Traditional IRAs. MAGI phaseout ranges apply to the deductibility of contributions if a taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
- For a spouse who participates, the 2026 phaseout range limits will increase by $3,000, to $129,000–$149,000.
- For a spouse who doesn’t participate, the 2026 phaseout range limits will increase by $6,000, to $242,000–$252,000.
For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2026 phaseout range limits will increase by $2,000, to $81,000–$91,000.

Taxpayers with MAGIs in the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $7,500 contribution limit for 2026 (plus $1,100 catch-up, if applicable, and reduced by any Roth IRA contributions) still applies.

Nondeductible traditional IRA contributions may also be beneficial if your MAGI is too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs. Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

For married taxpayers filing jointly, the 2026 phaseout range limits will increase by $6,000, to $242,000–$252,000.
For single and head-of-household taxpayers, the 2026 phaseout range limits will increase by $3,000, to $153,000–$168,000.

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for traditional and Roth IRAs.)

When reviewing your retirement plan, be sure to take these 2026 contribution limits into account. We can help you review your retirement plan and make any necessary revisions.

Managing people is fundamental to being an employer. And while doing so is often rewarding, it can also be difficult. Even the strongest teams may occasionally include employees who consistently perform poorly, engage in unacceptable behavior or are simply a mismatch for their positions. With the right approach, you can address problems and reduce your financial and legal risks.

Considering your options

If a staff member isn’t working out, you have three basic options. First, you can retrain the person under a formal performance improvement plan (PIP). Bear in mind, though, that issues related to misconduct, such as harassment or safety violations, may entail disciplinary action outside of a typical PIP’s scope. Second, you could transfer the individual to a different, more suitable job. And third, depending on the circumstances, termination may be permissible under applicable laws.

None of these options is easy, but the last one likely presents the greatest immediate risk. Taking an adverse employment action, such as firing, could lead to a costly lawsuit. Meanwhile, finding a replacement will consume time, money and resources. Legal guidance is essential.

Firing an employee also opens the door to unemployment claims, which can affect your unemployment tax rate. Even if termination is for cause, the employer must respond to the state agency and may need to provide documentation that proves misconduct to deny benefits. Poor performance alone usually does not disqualify someone from receiving unemployment benefits.

Confronting a staff member about troublesome performance or behavior is typically awkward and potentially contentious. And getting the individual to change for the better can take a while. However, never let substandard performance or inappropriate behavior slide. Doing so sends the wrong message to everyone and could lead to significant declines in productivity and work quality — and even disruptive or dangerous incidents. Of course, you should avoid knee-jerk reactions as well.

Conducting an investigation

Before doing anything, investigate what’s going on. Did the person materially misrepresent skills or experience during the hiring process? Have the employee’s actions clearly been unprofessional, unethical or even potentially dangerous? If so, there may be grounds for termination.

However — and this is the tough part — you also need to determine whether your organization bears some responsibility for the situation. Many employers have room for improvement in onboarding and training. Did your hiring staff clearly communicate the position’s duties and performance expectations? Was the employee warmly welcomed, thoroughly introduced to the organization, properly trained and provided the tools (such as adequate workspace and equipment) to perform well?

Ultimately, you want to identify the source of the problem. Sometimes the most direct route to resolution is simply to ask. Engage in an open, good-faith dialogue with the employee in which someone, usually a supervisor at first, states your organization’s concerns and openly listens to the staff member’s point of view.

Taking a measured approach

If a simple conversation (or two) fails to set things right, you’ll likely need to undertake a lengthier process to either get a problematic employee back on track or bid the person adieu. Work with your attorney to develop formal policies and procedures that require supervisors to:

Consult HR or legal advisors before formal warnings or termination discussions,
Document the employee’s mistakes or wrongdoings, including dates and times, over a significant period,
Give an initial verbal warning in private, avoiding anger even if the individual responds emotionally,
Use neutral, professional language, avoiding statements that could imply bias, retaliation or guarantees,
Stick to documented facts and organizational policy,
Be as specific as possible about what’s wrong and what needs to change, and
Obtain reasonable assurance that the employee understands the concerns and how to fix them.

Employers can strengthen their legal basis for termination by following a measured, documented approach. For performance-related issues, developing a formal PIP in accordance with industry standards and best practices is generally advised. However, again, serious misconduct usually warrants disciplinary action administered under proper procedures rather than a PIP.

Seeking guidance

If you have any doubts about how to handle a problematic employee, seek professional guidance from your attorney to ensure compliance with employment laws. Meanwhile, contact us for help evaluating the financial impact of turnover and unemployment claims, as well as developing strategies to maintain a productive, compliant workplace.

If your business sponsors a 401(k) plan for employees, you know it’s a lot to manage. But manage it you must: Under the Employee Retirement Income Security Act (ERISA), you have a fiduciary duty to act prudently and solely in participants’ interests.

Once a plan is launched and operational, it may seem to run itself. However, problems can arise if you fail to actively oversee administration — even when a third-party administrator is involved. With 2025 winding down and a new year on the horizon, now may be a good time to review your plan’s administrative processes and fiduciary procedures.

Investment selection and management

Study your plan’s investment choices to determine whether the selections available to participants are appropriate. Does the lineup offer options along the risk-and-return spectrum for workers of all ages? Are any premixed funds, which are based on age or expected retirement date, appropriate for your employee population?

If the plan includes a default investment for participants who haven’t directed their investment contributions, look into whether that option remains appropriate. In the event your plan doesn’t have a written investment policy or doesn’t use an independent investment manager to help select and monitor investments, consider incorporating these risk management measures.

Should you decide to engage an investment manager, however, first implement formally documented procedures for selecting and monitoring this advisor. Consult an attorney for assistance. If you’re already using an investment manager, reread the engagement documentation to make sure it’s still accurate and comprehensive.

Fee structure

The fee structures of 401(k) plans sometimes draw media scrutiny and often aggravate employees who closely follow their accounts. Calculate the amount of current participant fees associated with your plan’s investments and benchmark them against industry standards.

In addition, examine the plan’s administrative, recordkeeping and advisory fees to understand how these costs are allocated between the business and participants. Establish whether any revenue-sharing arrangements are in place and, if so, assess their transparency and oversight.

It’s also a good idea to compare your total plan costs to those of similarly sized plans. This way, you can determine whether your overall fee structure remains competitive and reasonable under current market conditions.

Third-party administrator

Even if your third-party administrator handles day-to-day tasks, it’s important to periodically verify that their internal controls, cybersecurity practices and data-handling procedures meet current standards. Confirm that the administrator:

Maintains proper documentation,
Follows timely and accurate reporting practices, and
Provides adequate support when compliance questions arise.

A proactive review of their service model can help ensure your business isn’t unknowingly exposed to risks from operational errors, data breaches or outdated administrative practices.

Overall compliance

Some critical compliance questions to consider are:

Do your plan’s administrative procedures comply with current regulations?
If you intend it to be a participant-directed individual account plan, does it follow all the provisions of ERISA Section 404(c)?
Have there been any major changes to other 401(k) regulations recently?

Along with testing the current state of your plan against ERISA requirements, evaluate whether your operational practices align with your plan document — an area where many sponsors stumble. Double-check key items such as contribution timelines, eligibility determinations, vesting schedules and loan administration. Verify that procedures precisely follow the terms of your plan document.

Conducting periodic internal audits can help identify inconsistencies and operational errors before they become costly compliance failures. You might even discover fraudulent activities.

Great power, great responsibility

A 401(k) plan is a highly valuable benefit that can attract job candidates, retain employees and demonstrate your business’s commitment to participants’ financial well-being. However, with this great power comes great responsibility on your part as plan sponsor.

If your leadership team and key staff haven’t reviewed your company’s oversight practices recently, year end may be an ideal time to take stock. We can help you identify plan costs and fees, spot potential compliance gaps, and tighten internal controls.

Planning for the end of life is never easy, but including your funeral and memorial wishes in your estate plan can relieve a major burden from your loved ones. When your family is grieving, decisions about burial or cremation, service preferences, or even the type of obituary you’d like can feel overwhelming. By documenting these choices in advance, you not only help to ensure your wishes are honored but also give your family clarity and comfort.

Express your wishes

First, make your wishes known to family members. This typically includes instructions about where you’re to be buried or cremated, the type of memorial service you prefer (if any), and even the clothing you’ll be buried in. If you don’t have a next of kin or would prefer someone else to be in charge of arrangements, you can appoint another representative.

Be aware that the methods for expressing these wishes vary from state to state. With the help of your attorney, you can include a provision in your will, language in a health care proxy or power of attorney, or a separate form specifically designed for communicating your desired arrangements.

Whichever method you use, it should, at a minimum, state 1) whether you prefer burial or cremation, 2) where you wish to be buried or have your ashes interred or scattered (and any other special instructions), and 3) the person you’d like to be responsible for making these arrangements. Some people also request a specific funeral home.

Weigh your payment options

There’s a division of opinion in the financial community as to whether you should prepay funeral expenses. If you prepay and opt for a “guaranteed plan,” you lock in the prices for the arrangements, no matter how high fees may escalate before death. With a “nonguaranteed plan,” prices aren’t locked in, but the prepayment accumulates interest that may be put toward any rising costs.

When weighing whether to use a prepaid plan, the Federal Trade Commission recommends that you ask the following questions:

What happens to the money you’ve prepaid?
What happens to the interest income on prepayments placed in a trust account?
Are you protected if the funeral provider goes out of business?

Before signing off on a prepaid plan, learn whether there’s a cancellation clause in the event you change your mind.

One alternative that avoids the pitfalls of prepaid plans is to let your family know your desired arrangements and set aside funds in a payable-on-death (POD) bank account. Simply name the person who’ll handle your funeral arrangements as the beneficiary. When you die, he or she will gain immediate access to the funds without the need for probate.

Incorporate your wishes into your estate plan

Thoughtful planning today can provide lasting peace of mind for the people you care about most. Don’t wait to incorporate your wishes into your estate plan — or to update your plan if needed.

The One Big Beautiful Bill Act (OBBBA) shifts the landscape for year-end tax planning. The law has significant implications for some of the most tried-and-true tax-reduction measures. It also creates new opportunities for businesses to reduce their 2025 tax liability before December 31. Here are potentially some of the most beneficial ones.

Investments in capital assets

Thanks to bonus depreciation, businesses have commonly turned to year-end capital asset purchases to cut their taxes. The OBBBA helps make this strategy even more powerful for 2025.

Under the Tax Cuts and Jobs Act (TCJA), 100% first-year bonus depreciation declined by 20 percentage points each year beginning in 2023, falling to 40% in 2025. The OBBBA restores and makes permanent 100% bonus depreciation for qualified new and used assets acquired and placed in service after January 19, 2025. (Qualified purchases made in 2025 on or before January 19 remain subject to the 40% limit.)

The law also boosts the Section 179 expensing election limit for small and midsize businesses to $2.5 million, with the phaseout threshold lifted to $4 million. (Both amounts will be adjusted annually for inflation.)

Most assets eligible for bonus depreciation also qualify for Sec. 179 expensing. But Sec. 179 expensing is allowed for certain expenses not eligible for bonus depreciation — specifically, roofs, HVAC equipment, fire protection and alarm systems, and security systems for nonresidential real property, as well as depreciable personal property used predominantly in connection with furnishing lodging.

Sec. 179 expensing is subject to several limitations that don’t apply to first-year bonus depreciation, especially for S corporations, partnerships and limited liability companies treated as partnerships for tax purposes. So, when assets are eligible for either break, claiming allowable 100% first-year bonus depreciation may be beneficial.

However, Sec. 179 expensing is more flexible — you can take it on an asset-by-asset basis. With bonus depreciation, you have to take it for an entire class of assets (for example, all MACRS 7-year property). Business vehicles are popular year-end purchases to boost depreciation-related tax breaks. They’re generally eligible for bonus depreciation and Sec. 179 expensing, but keep in mind that they’re subject to additional rules and limits. Also, if a vehicle is used for both business and personal use, the associated expenses, including depreciation, must be allocated between deductible business use and nondeductible personal use.

As an added perk, the OBBBA changes the business interest deduction — specifically, the calculation of adjusted taxable income — which could allow you to deduct more interest on capital purchases beginning in 2025.

Pass-through entity tax deduction

Dozens of states enacted pass-through entity tax (PTET) deduction laws in response to the TCJA’s $10,000 limit on the federal deduction for state and local taxes (SALT), also referred to as the SALT cap. The mechanics vary, but the deductions generally let pass-through entities (partnerships, limited liability companies and S corporations) pay an elective entity-level state tax on business income with an offsetting tax benefit for the owners. The organization deducts the full payment as a business expense.

Before year end, it’s important to review whether a PTET deduction is available to you and, if so, whether it’ll make sense to claim it. This can impact other year-end tax planning strategies.

The PTET deduction may be less relevant for 2025 because the OBBBA temporarily boosts the SALT cap to $40,000 (with 1% increases each year through 2029). The higher cap is subject to phaseouts based on modified adjusted gross income (MAGI); when MAGI reaches $600,000, the $10,000 cap applies.

But the PTET deduction may still be worthwhile in some circumstances. It could pay off, for example, if an owner’s MAGI excludes the owner from benefiting from the higher cap or if an owner’s standard deduction would exceed his or her itemized deductions so the owner wouldn’t benefit from the SALT deduction.

By reducing the income passed through from the business, a PTET deduction election could also help an owner reduce his or her liability for self-employment taxes and avoid the 3.8% net investment income tax. Moreover, lower income could unlock eligibility for other tax breaks, such as deductions for rental losses and the Child Tax Credit. Bear in mind, though, that while a PTET deduction could help you qualify for the Section 199A qualified business income (QBI) deduction despite the income limit (see below), it also might reduce the size of the deduction.

QBI deduction

Eligible pass-through entity owners can deduct up to 20% of their QBI, whether they itemize deductions or take the standard deduction. QBI refers to the net amount of income, gains, deductions and losses, excluding reasonable compensation, certain investments and payments to partners for services rendered.

The deduction is subject to limitations based on taxable income and, in some cases, on W-2 wages paid and the unadjusted basis of qualified property (generally, the purchase price of tangible depreciable property held at the end of the tax year). The OBBBA expands the phase-in ranges for those limits so that more taxpayers will qualify for larger QBI deductions beginning in 2026.

In the meantime, you can still take steps to increase your QBI deduction for 2025. For example, if your income might be high enough that you’ll be subject to the W-2 wage or qualified property limit, you could increase your W-2 wages or purchase qualified property. Timing tactics — generally, accelerating expenses into this year and deferring income into 2026 — might also help you avoid income limits on the deduction.

Research and experimental deduction

The OBBBA makes welcome changes to the research and experimental (R&E) deduction. It allows businesses to capitalize domestic Section 174 costs and amortize them over five years beginning in 2025.

It also permits “small businesses” (those with average annual gross receipts of $31 million or less for the previous three tax years) to claim the R&E deduction retroactive to 2022. And businesses of any size that incurred domestic R&E expenses in 2022 through 2024 can elect to accelerate the remaining deductions over either a one- or two-year period.

You don’t necessarily need to take steps before year end to benefit from these changes. But it’s important to consider how claiming larger R&E deductions on your 2025 return could impact your overall year-end planning strategies.

It’s also a good idea to start thinking about how you’ll approach the R&E expense deduction on your 2025 tax return. For example, it might make more sense to continue to amortize your qualified R&E expenses. You also should determine if it would be beneficial to recover remaining unamortized R&E expenses in 2025 or prorate the expenses across 2025 and 2026. And if you’re eligible to claim retroactive deductions, review your R&E expenses for 2022 through 2024 to decide whether it would be beneficial to do so.

Don’t delay

We’ve focused on year-end strategies affected by the OBBBA, but there are also strategies not significantly impacted by it that are still valuable. One example is accelerating deductible expenses into 2025 and deferring income to 2026 (or doing the opposite if you expect to be in a higher tax bracket next year). Another is increasing retirement plan contributions (or setting up a retirement plan if you don’t have one).

Now is the time to execute the last-minute strategies that will trim your business’s 2025 taxes. We can help you identify the ones that fit your situation.

As year-end closes in and you prepare for 2026, Yeo & Yeo’s Payroll Solutions Group would like to inform you of important payroll updates that will affect you and your employees next year.

Our 2026 Payroll Planning Brief includes several payroll changes that take effect in the coming year and items to consider before year-end. Most notably, under the One Big Beautiful Bill, employers may estimate and track qualified tips and overtime premiums using reasonable methods in 2025. While no changes are required to Form W-2 this year, these amounts should be reported separately—either on a separate document or manually in Box 14. Starting in 2026, employers will be required to report these amounts directly on Form W-2.

Watch Yeo & Yeo’s website and future eAlerts for new developments.

Need guidance on closing 2025, preparing for 2026 payroll, or meeting payroll deadlines? Contact Yeo & Yeo’s Payroll Serviced Group.

Download 2026 Payroll Planning Brief

A 401(k) plan is among the most valuable benefits an employer can offer — and one of the most tempting targets for criminals. With billions of dollars held in employee retirement accounts, fraudsters are constantly seeking ways to exploit plan sponsors, administrators and participants.

If your organization sponsors a 401(k), you have a fiduciary duty under the law to act prudently and solely in participants’ interests, which includes safeguarding plan assets and sensitive personal data. That means staying alert to emerging scams, understanding your plan provider’s security measures and ensuring your team follows best practices.

Review basic safeguards

Like most plan sponsors, you likely rely on a service provider to help administer your 401(k). Staying informed about its protective systems and policies is essential. Most providers carry cyberfraud insurance that extends to plan participants, but there may be limits if the provider determines that you (the sponsor) or participants contributed to a breach.

Your plan’s documents may require participants to adopt the provider’s recommended security practices, such as checking account information “frequently” and reviewing correspondence “promptly.” Make sure everyone understands what these terms mean. And if you haven’t already, develop a strong communication and education strategy that trains new participants on antifraud measures and refreshes everyone regularly.

Fortify cybersecurity

In recent years, several 401(k) plan sponsors have faced lawsuits for failing to adequately protect participants’ personal data after accounts were hacked. Although every organization needs comprehensive and up-to-date cybersecurity, be especially vigilant if you store plan information on your own servers.

Two-factor authentication is now standard, but it may not be enough. Many cybersecurity advisors recommend implementing multifactor authentication — which combines something users know (a password), something they have (a device) and something they are (a biometric identifier) — to counter increasingly sophisticated fraud schemes.

Just as important, invest time and resources in teaching participants to follow strict cybersecurity protocols when managing their accounts. Encourage them to:

Choose unique, complex passwords and change them often,
Avoid storing usernames or passwords in browsers or unsecured files, and
Be cautious if they have trouble logging in or if a sign-in page looks unusual.

Train participants to exercise caution if they’re approached by anyone claiming to represent the government, law enforcement, the plan provider or a financial institution. Rather than responding directly, a participant should use verified contact information to independently confirm the legitimacy of any inquiry.

More complex schemes have involved criminals posing as fraud investigators or plan representatives and urging participants to transfer funds to “safer” accounts — where their money will, of course, disappear. Provide participants with a reliable number to call for official plan information or to verify any unexpected communications.

Secure funds for everyone’s benefit

Keeping employees’ retirement savings secure also means staying compliant with 401(k) contribution rules. The U.S. Department of Labor requires plan sponsors to deposit participants’ contributions as soon as they can be segregated from their employer’s assets — and no later than the 15th business day of the following month. (This is an outer limit, not a safe harbor.)

For smaller employers (those with fewer than 100 participants), a safe harbor rule specifies that contributions made within seven business days of the pay date are deemed timely. Following these timelines helps ensure compliance, protects participants’ savings and reinforces confidence in your organization’s retirement plan.

Demonstrate your commitment

Protecting your 401(k) plan from fraud is key to fulfilling your fiduciary duty. However, it’s also an opportunity to build trust and strengthen employee engagement. A secure plan encourages participation and demonstrates your commitment to participants’ long-term financial well-being. We can help you evaluate your organization’s internal controls — for your 401(k) and across all operations — to identify vulnerabilities and strengthen safeguards against fraud.

On October 7, 2025, Michigan Gov. Gretchen Witmer signed a budget package that updates important state tax rules, including decoupling from portions of the One Big Beautiful Bill Act (OBBBA), updating conformity to the Internal Revenue Code (IRC), and creating the Comprehensive Road Funding Tax Act to divert some tax revenue to road funding.

Transportation Funding Bills

H.B. 4961

While multiple bills are included in the package of bills passed as part of the 2025-2026 budget, H.B. 4961 has the widest applicability to all Michigan taxpayers doing business in the state.

For all taxpayers, H.B. 4961 decouples the state from the following IRC changes made by the OBBBA, effective for tax years beginning after December 31, 2024, as if they were not in effect:

Section 174A, immediate deduction of domestic research and experimental (R&E) expenses; and
Section 168(n), special depreciation of qualified production property.

Also, for corporate income taxpayers, Michigan will continue to fully decouple from the Section 168(k) bonus depreciation provisions.

Other IRC provisions will continue to apply to all taxpayers for tax years beginning after December 31, 2024, but H.B. 4961 provides that the IRC in effect as of December 31, 2024, must be used. That IRC conformity date will roll back some of the most taxpayer-friendly OBBBA provisions that would have taken effect, including:

Section 163(j), business interest expense deduction limitation – Michigan will continue to disallow depreciation and amortization addbacks to increase interest expense deductibility;
Section 179, immediate deductibility for depreciable business assets, including software – Michigan will retain the lower limits in place before passage of the OBBBA; and
Section 174, R&D expense capitalization and amortization – Michigan will retain the requirement to capitalize and amortize domestic and foreign R&E expenses.

Additional Resources

For more information on some basic and procedural aspects of Sections 174 and 174A, please see our Alerts from:

Also, for individual and FTE taxpayers, Michigan will continue to conform to the Section 168(k) bonus depreciation provisions, with an important caveat. H.B. 4961 provides that the IRC in effect on December 31, 2024, which provides for a phase out of bonus depreciation immediate deductibility (40% for 2025, 20% for 2026, and 0% for 2027), must be used.

Another important provision of H.B. 4961 is updating the general IRC conformity date to January 1, 2025, while keeping the option to use the current IRC. It applies to corporate, individual, estate, trust and FTE tax provisions, all of which before the update had conformity dates of at least four years ago. However, despite the update and the continued ability to choose to apply current IRC provisions, the bill specifically prevents using the current IRC for the above-noted OBBBA provisions by requiring the application of the IRC in effect on December 31, 2024.

One final provision related to the above conformity updates provides that federal taxable adjusted gross income for tax years beginning after December 31, 2021, must be calculated as if the transition rules under OBBBA (Section 70302 of P.L.119-21) do not apply.

On the individual income tax side, H.B. 4961 conforms to the OBBBA’s taxpayer-friendly treatment of tip and overtime wages, while restricting the eligible deduction for nonresidents to only services performed in Michigan. It also creates a three-tier system to determine the taxation of retirement income. Both provisions apply for tax years beginning on and after January 1, 2026, and before January 1, 2029.

While not part of H.B. 4961, between passage of the OBBBA and enactment of the state’s budget bills, the Michigan Department of Treasury issued a notice that provided limited relief for taxpayers that made FTE tax elections before the OBBBA was enacted. Only taxpayers opting into the first year of the three-year FTE election period that have not yet filed their annual FTE returns for the tax period are eligible. Taxpayers that have made election payments and filed their annual FTE returns for the period are ineligible for relief. Requests must be made before the end of the election window for the applicable tax year (for instance, September 30, 2026, for 2025 calendar-year taxpayers).

Tie-Barred Bills

H.B. 4961 is tie-barred to three other tax bills: H.B. 4183 and H.B. 4951, which are part of the transportation package, and H.B. 4968.

H.B. 4183 amends the Motor Fuel Tax Act to increase the motor fuel tax from $0.31 to $0.51 per gallon beginning January 1, 2026, and with inflation thereafter. Motor fuel includes gasoline, diesel fuel, and kerosene. The bill also includes transition provisions to impose on licensed suppliers or importers of motor fuel held in storage or outside the bulk transfer system in excess of 3,000 gallons the motor fuel tax based on the difference in the prior rate of $0.31 per gallon and the new rate of $0.51 per gallon. Taxpayers subject to the transition rules must determine and remit their taxes by February 20, 2026.

The increase in the gas tax is intended to offset the sales and use tax exemptions in the bills discussed below.

H.B. 4951 creates the Comprehensive Road Funding Tax Act, which, beginning January 1, 2026, imposes a new 24% excise tax on the wholesale price of recreational marijuana sales. Almost all the revenue therefrom is to be distributed to the Neighborhood Roads Fund created by S.B. 578. The act defines wholesale price broadly to include “any tax, fee, or other charge reflected on the invoice.” Because of the potential for tax on tax, legal industry commentators have noted that the effective wholesale excise tax rate would be 32%, not the stated rate of 24%.

Michigan already has a 10% cannabis excise retail tax on recreational marijuana, so the passage of H.B. 4951 will result in a total recreational marijuana excise tax of 34% and an effective rate of 42%. Medical marijuana is not subject to either excise tax. However, both medical and recreational marijuana are subject to the state’s 6% retail sales tax.

The same day Whitmer signed the new 24% wholesale excise tax into law, the Michigan Cannabis Industry Association filed a lawsuit in the Michigan Court of Claims, asserting that the 24% wholesale excise tax is unconstitutional.

H.B. 4968 allows the state’s Department of Health and Human Services to continue the insurance provider assessment tax structure that was approved December 20, 2024, by the federal Centers for Medicare and Medicaid Services (CMS) and in place July 4, 2025, unless the CMS end-dates the waiver. If the CMS ends the waiver, the Department will have to propose a tax structure in compliance with federal rules.

Sales and Use Tax Relief for Fuel

In contrast to the H.B. 4183 provisions on motor fuel discussed above, H.B. 4180 and H.B. 4182 provide relief for some taxpayers by exempting eligible fuel from sales and use taxes beginning January 1, 2026. Eligible fuel is defined as motor fuel, alternative fuel, and leaded racing fuel; motor fuel is defined as gasoline, diesel fuel, and kerosene. However, H.B. 4180 excludes some types of fuel from the definition of eligible fuel, including liquified petroleum gas and motor or alternative fuel used for aviation, residential, commercial, and industrial heating and cooling. It also eliminates the prepaid sales tax on some fuels after December 31, 2025.

Effective January 1, 2026, H.B. 4181 amends the Streamlined Sales and Use Tax Revenue Equalization Act to eliminate the sales tax on interstate motor carriers that use motor or alternative fuel in Michigan, as well as credits available to offset any sales tax paid on fuel purchased in Michigan.

Insights

Michigan taxpayers that were expecting relief as a result of some OBBBA changes, such as allowing the addback of depreciation and amortization in calculating interest expense deductions or immediate Section 174 expensing, will not get that relief. Therefore, they might face state, but not federal, taxation beginning with the 2025 tax year.
Taxpayers may want to evaluate various state credits and incentives to offset an increase in state tax, such as the new Michigan research and development credit (see our related Alert).
Michigan’s decoupling from several of the most favorable provisions of the OBBBA, while not surprising, is going to materially affect many taxpayers and require diligence in capturing the different treatment and future impact of the decoupling.
While transition periods between the application of different IRC versions often create ambiguity regarding the treatment of some deductions, Michigan has statutorily provided that taxpayer-favorable OBBBA transition rules, such as those for IRC 174A, do not apply.
FTE taxpayers that previously made the FTE tax election, which might no longer be beneficial, should consult with advisors to determine whether they are eligible for relief under the state’s limited program. FTE taxpayers that have not yet made the FTE tax election might want to consider modeling the benefit, given the decoupling provisions discussed herein.
Michigan is eliminating the sales tax, including the prepaid sales tax, on motor fuel, so taxpayers should review their internal processes and documentation to make sure they are not overpaying. Also, with the motor fuel tax increasing to $0.51 per gallon, taxpayers should look for opportunities to recoup the excise tax for any motor fuel used in an exempt manner. Licensed suppliers and importers will need to be sure to implement the transitional tax rules remitting the rate differential by the due date of February 20, 2026.
Recreational marijuana could be taxed as much as 48% when adding the existing 10% retail excise tax, the effective tax rate of 32% under the new wholesale excise tax, and the 6% retail sales tax. The cannabis industry has already filed a legal challenge to the new wholesale excise tax. BDO will provide updates as developments occur, but taxpayers also should monitor the situation.

As a business owner, your eyes may tell you that your employees are working hard. But discerning whether their efforts are truly contributing to the bottom line might be a bit hazy. The solution: Track productivity metrics. When calculated correctly and consistently, quantitative measures can help you see business reality much more clearly.

Why the numbers matter

No matter how big or small, every company has three primary resources: time, talent and capital. Productivity metrics help you understand how effectively you’re using them.

Rather than relying on assumptions or gut feelings, running the numbers sheds light on whether productivity is booming, adequate or falling short. In turn, you’ll be able to more confidently improve workflows and align employee performance with strategic objectives.

Examples to consider

The right productivity metrics for any company vary depending on factors such as industry, mission and size. Nonetheless, here are some examples to consider:

Revenue per employee. This foundational metric equals total revenue divided by the average number of employees over a given period. It offers a quick snapshot of how efficiently the company converts labor into goods or services. A rising number signals increasing productivity, while a declining figure may indicate inefficiencies, such as operational bottlenecks, overstaffing or stagnant sales.

Output per hour worked. This metric goes a step further by dividing total output (in dollars or units) by total labor hours worked. It can highlight whether productivity issues are tied to work habits, staffing levels or operational processes.

Utilization rate. Many companies — particularly professional services firms — track this metric. It’s calculated by dividing billable or productive work hours by total available hours and multiplying by 100. Utilization rate contrasts with output per hour worked by measuring activity rather than results. Low rates may signal overstaffing or excessive administrative tasks.

Customer satisfaction scores. Sometimes considered a “soft” measure, these scores provide essential context. They’re typically derived from structured feedback and converted into quantifiable insights. While a team may produce high volumes of work, consistently low satisfaction scores can reveal underlying issues in service quality or communication. On the other hand, strong scores reflect a team that’s attentive, responsive and aligned with customer expectations — key traits of sustainable productivity.

Data in action

Choosing your productivity metrics is only the first step. The second is tracking them over time. The right interval depends on the metric. For example, revenue per employee and output per hour worked, which reflect broader operational efficiency, are typically best reviewed monthly or quarterly. Utilization rate may be worth tracking weekly because even small inefficiencies can add up quickly. And customer satisfaction scores often benefit from continuous tracking, which is then summarized monthly or quarterly for trend analysis.

The third and trickiest step is interpreting and acting on the data. For instance, suppose revenue per employee is flat while sales are growing. This might indicate the need to downsize or provide better onboarding and training to new hires. If you notice a decline in output per hour worked or utilization rate, you may want to reallocate workloads, streamline administrative duties or use artificial intelligence for repetitive tasks.

Now let’s say customer satisfaction scores drop — never a good thing. In this case, you could formally review communication processes and response times. And if you haven’t already, consider implementing customer relationship management software to better track interactions.

Consistency, technology and culture

Consistency is key. Track the same productivity metrics over carefully chosen periods to spot trends and measure operational impact. If you determine that any metric isn’t adequately insightful, you can make a change. But gather an adequate sample size.

Furthermore, leverage technology. For small businesses, simple spreadsheets may be adequate. However, don’t hesitate to explore more sophisticated solutions, such as digital dashboards and project management platforms.

Finally, productivity metrics are most effective when they’re part of a culture of accountability and high performance. Inform employees of what’s being measured and why. Stress that it’s not about surveillance; it’s about meeting strategic objectives. Integrate metrics into job reviews and team meetings.

Optimal approach

The optimal approach to productivity metrics combines strong quantitative data with objective observations and qualitative insight. To that end, contact us. We’d be happy to help you identify and calculate relevant metrics, analyze them in the context of your financial statements, and use the knowledge gained to make better business decisions.

Thoughtful business gifts are a great way to show appreciation to customers and employees. They can also deliver tax benefits when handled correctly. Unfortunately, the IRS limits most business gift deductions to $25 per person per year, a cap that hasn’t changed since 1962. Still, with careful planning and good recordkeeping, you may be able to maximize your deductions.

When the $25 rule doesn’t apply

Several exceptions to the $25-per-person rule can help you deduct more of your gift expenses:

Gifts to businesses. The $25 limit applies only to gifts made directly or indirectly to an individual. Gifts given to a company for use in its business — such as an industry reference book or office equipment — are fully deductible because they serve a business purpose. However, if the gift primarily benefits a specific individual at that company, the $25 limit applies.

Gifts to married couples. When both spouses have a business relationship with you and the gift is for both of them, the limit generally doubles to $50.

Incidental costs. The expenses of personalizing, packaging, insuring or mailing a gift don’t count toward the $25 limit and are fully deductible.

Employee gifts. Cash or cash-equivalent gifts (such as gift cards) are treated as taxable wages and generally are deductible as compensation. However, noncash, low-cost items — like company-branded merchandise, small holiday gifts, or occasional meals and parties — can qualify as nontaxable “de minimis” fringe benefits. These are deductible to the business and tax-free to the employee.

How entertainment gifts are treated now

Under the Tax Cuts and Jobs Act, most entertainment expenses are no longer deductible. This includes tickets to sporting events, concerts and other entertainment, even when related to business. However, if you give event tickets as a gift and don’t attend yourself, you may be able to classify the cost as a business gift, subject to the $25 limit and any applicable exceptions.

Note that meals provided during an entertainment event may still be 50% deductible if they’re separately stated on the invoice.

Why good recordkeeping matters

To claim the full deductions you’re entitled to, document your gifts properly. Record each gift’s description, cost, date and business purpose and the relationship of the recipient to your business. Digital records are acceptable — such as accounting notes or CRM entries — as long as they clearly support the deduction.

Track qualifying expenses separately in your books. That way they can be easily identified.

Make your business gifts count

A little knowledge and planning can go a long way toward ensuring your business gifts are both meaningful and tax-smart. If you’d like help reviewing your company’s gift-giving policies or want to confirm how the deduction rules apply to your situation, contact our office. We’ll help your business keep compliant with tax law while you show appreciation to your customers and employees.

When your business is growing, billing can easily fade into the background. After all, once invoices go out and payments come in, it may seem like everything’s running smoothly. But small inefficiencies and overlooked errors can quietly chip away at cash flow.

Regularly reviewing and improving your billing systems can help you collect faster, reduce errors and strengthen customer relationships. Here are five tips to help make your billing process more efficient and effective.

1. Identify and fix issues promptly

Billing errors delay payments and erode customer trust. Invoices with incorrect amounts, missed discounts or incomplete details can lead to disputes and slow down collections. The following steps can help reduce billing issues:

Review invoices for accuracy before sending them,
Confirm that customer contact and account information is current, and
Track billing errors and complaints to identify recurring issues.

It’s equally important to address service or product issues quickly. Late deliveries, incomplete work or miscommunication can give customers an excuse not to pay on time. Encourage your team to resolve any billing or service concerns promptly — and request payment for any undisputed balances while settling disputed items.

2. Invoice faster and more consistently

Delays in billing lead directly to delays in cash inflows. If you’re waiting until the end of the month to send invoices, you’re giving up valuable days of cash flow. Consider tightening your invoicing cycle by:

Sending invoices as soon as work is completed or products are shipped,
Establishing clear payment terms that reflect industry standards and shortening them if appropriate, and
Leveraging technology to automate recurring invoices, reminders and follow-ups.

If you haven’t already, move to electronic invoicing and online payment options. Digital systems make it easier for customers to pay and for you to track payments in real time.

3. Use automation to your advantage

Modern accounting and billing software can do more than send invoices — it can alert you to overdue accounts and apply late fees. Your software can also generate cash flow reports to help you identify trends and trouble spots.

Make sure your billing system integrates smoothly with your accounting platform. Schedule periodic reviews to ensure your software is still meeting your organization’s needs and is compliant with current tax and reporting requirements. Also, confirm that your systems maintain proper data security, user permissions and backup procedures, especially when storing customers’ financial information.

4. Establish clear policies and communication

Strong billing practices start with clear communication. Provide customers with written documentation about your pricing, payment terms, late-fee policies and credit arrangements. Internally, train your finance and accounting team to consistently enforce these policies.

When billing disputes arise, handle them quickly and professionally. Maintaining goodwill while enforcing your terms is a balancing act — but it’s essential for predictable cash flow. Consistent enforcement also supports audit readiness and strengthens your internal controls.

5. Focus on what you can control

Economic shifts, customer demand and market disruptions are beyond your control. But your billing process isn’t. By proactively monitoring how invoices are issued, tracked and collected, you can protect your cash flow and reduce stress on your operations.

We can help you review your current billing systems, identify inefficiencies and implement stronger accounting practices that support steady cash flow. Contact us to schedule a review and discover practical ways to simplify and accelerate your billing process.

Unused paid time off (PTO) can be a tricky issue for both employers and employees. Many organizations want to encourage rest and work-life balance. Yet busy seasons or year-end schedules can make it hard for team members to use all their days. If you’re looking for a creative way to manage unused time off while supporting employees’ financial goals, a PTO contribution arrangement may be right for you.

Retirement savings boost

In a nutshell, a PTO contribution arrangement allows employees with unused vacation hours to elect to convert them to contributions to their employer-sponsored retirement plan. If that plan has a properly structured 401(k) feature, it can treat these amounts as pretax benefits similar to normal employee deferrals. Alternatively, the plan can treat the amounts as employer profit sharing, converting excess PTO to employer contributions.

In either case, such an arrangement typically appeals to employees who accumulate substantial unused PTO by year end that they don’t want to forfeit. It may be particularly attractive to workers who are focused on building their retirement savings or who prefer additional compensation over extra time off.

Upsides in the offing

For employers, PTO contribution arrangements often help ease staffing shortages that occur at year end, when many employees take time off for the holidays or simply use up their vacation days. Of course, you could address this issue by either allowing PTO rollovers or, if you already do, increasing your rollover limit.

However, a PTO contribution arrangement may still be a better option. High rollover limits can cause employees to accrue large balances, creating a significant liability on your books. Also, one of these arrangements can help improve recruiting and retention. Many workers today are more focused on growing their investment portfolios — including their employer-sponsored retirement plans — than on amassing PTO.

Challenges to consider

There’s no doubt that the benefits of PTO contribution arrangements can be compelling. But they bring their fair share of challenges, too.

Setting up and maintaining a compliant program will require close coordination among your HR and payroll staff, as well as with your third-party retirement plan administrator (if you use one). For starters, you’ll have to amend your plan document to include the PTO contribution arrangement feature. Going forward, you’ll need to diligently oversee the arrangement to ensure compliance with IRS rules and other legal mandates.

For example, tax treatment depends on how the arrangement is structured and documented. If the plan doesn’t meet IRS requirements, the value of converted PTO could be treated as taxable wages rather than pretax deferrals or employer contributions.

Also, contributions must comply with the same limits and nondiscrimination rules that apply to other retirement plan deferrals. And you must ensure that elections comply with IRS timing rules governing when PTO is considered earned or vested. Generally, pretax treatment requires that employees make their elections before PTO becomes available for use or cash-out. Don’t forget to review applicable state wage and hour laws, too. Some states restrict the forfeiture or conversion of accrued PTO, which could affect the feasibility of the arrangement.

Last but not least, there’s the issue of staff buy-in. If you don’t clearly explain the arrangement during rollout and follow up regularly about it, many employees might not understand its value. Some may even see it as an attempt to take away PTO. Persistent, positive messaging tailored to your plan participants is critical.

No headache required

Unused PTO doesn’t have to be a headache or a liability. Under the right circumstances, a PTO contribution arrangement transforms leftover vacation time into a meaningful financial benefit for employees while helping your organization manage staffing and increase participation in its employer-sponsored retirement plan.

Before making any changes, however, please contact us. We can help you assess whether a PTO contribution arrangement aligns with your organization’s cash flow needs, retirement plan design and workplace culture.

Now is the time of year when taxpayers search for last-minute moves to reduce their federal income tax liability. Adding to the complexity this year is the One Big Beautiful Bill Act (OBBBA), which significantly changes various tax laws. Here are some of the measures you can take now to reduce your 2025 taxes in light of the OBBBA.

1. Reevaluate the standard deduction

Taxpayers can choose to itemize certain deductions or take the standard deduction based on their filing status. Itemizing deductions saves tax if the total exceeds the standard deduction. The number of taxpayers who itemize dropped dramatically after the Tax Cuts and Jobs Act (TCJA) nearly doubled the standard deduction. The OBBBA increases it further. The standard deduction for 2025 is:

$15,750 for single filers and married individuals filing separately,
$23,625 for heads of households, and
$31,500 for married couples filing jointly.

Taxpayers age 65 or older or blind are eligible for an additional standard deduction of $2,000 or, for joint filers, $1,600 per spouse age 65 or older or blind. (For taxpayers both 65 or older and blind, the additional deduction is doubled.)

But other OBBBA changes could make itemizing more beneficial. For example, if you’ve been claiming the standard deduction recently, the expanded state and local tax (SALT) deduction might cause your total itemized deductions to exceed your standard deduction for 2025. (See No. 2 below.) If it does, you might benefit from accelerating other itemized deductions into 2025. In addition to SALT, potential itemized deductions include:

Qualified medical and dental expenses (to the extent that they exceed 7.5% of your adjusted gross income),
Home mortgage interest (generally deductible on up to $750,000 of home mortgage debt on a principal residence and a second residence),
Casualty losses (from a federally declared disaster), and
Charitable contributions (see No. 3 below).

Note, too, that higher earners will face a limit on their itemized deductions in 2026. The OBBBA effectively caps the value of itemized deductions for taxpayers in the highest tax bracket (37%) at 35 cents per dollar, compared with 37 cents per dollar this year. If you’re among that group, you may want to accelerate itemized deductions into 2025 to leverage the full value.

2. Maximize your SALT deduction

The OBBBA temporarily quadruples the so-called “SALT cap.” For 2025 through 2029, taxpayers who itemize can deduct up to $40,000 ($20,000 for separate filers), with 1% increases each subsequent year, meaning $40,400 in 2026 and so on. Deductible SALT expenses include property taxes (for homes, vehicles and boats) and either income tax or sales tax, but not both. The SALT cap is scheduled to return to the TCJA’s $10,000 cap ($5,000 for separate filers) beginning in 2030.

In the meantime, the temporary limit increase could substantially boost your tax savings, depending on your SALT expenses and your modified adjusted gross income (MAGI). The allowable deduction drops by 30% of the amount by which your MAGI exceeds a threshold of $500,000 ($250,000 for separate filers). When MAGI reaches $600,000 ($300,000 for separate filers), the $10,000 (or $5,000) cap applies.

If your 2025 SALT deductions exceed the old $10,000 cap but your total itemized deductions would still be under the standard deduction, “bunching” could help you make the most of the higher SALT cap. For example, if you receive your 2026 property tax bill before year end, you can pay it this year and deduct both your 2025 and 2026 property taxes in 2025. You might increase the deduction further by accelerating estimated state or local income tax payments into this year, if applicable. You could bunch other itemized deductions into 2025 as well. (See No. 1 above.)

In 2026, you’d go back to claiming the standard deduction. And then you’d repeat the bunching for the 2027 tax year and itemize that year.

3. Prepare for changes to charitable giving rules

Donating to charity is a valuable and flexible year-end tax planning tool. You can give as much or as little as you like. As long as the recipient is a qualified charity, you can properly substantiate the donation, and if you itemize, you’ll likely be able to claim a tax deduction. But beginning in 2026, the OBBBA imposes a 0.5% of adjusted gross income (AGI) “floor” on charitable contribution deductions.

The floor generally means that only charitable donations in excess of 0.5% of your AGI can be claimed as an itemized deduction. In other words, if your AGI for a tax year is $100,000, you can’t deduct the first $500 ($100,000 × 0.5%) of donations made that year.

So if you can afford it, you might want to bunch donations you’d normally make in 2026 into 2025 instead, so that you can avoid the new floor. (Bear in mind that a charitable deduction might nonetheless be more valuable next year if you’ll be in a higher tax bracket.)

One way to save even more taxes with your charitable donations is to give appreciated stock instead of cash. You can avoid the long-term capital gains tax you’d owe if you sold the stock and also claim a charitable deduction for the fair market value (FMV) of the shares.

On the other hand, if you don’t itemize, you may want to delay your 2025 charitable contributions until next year. Beginning in 2026, the OBBBA creates a permanent deduction for nonitemizers’ cash contributions, up to $1,000 for individuals and $2,000 for married couples filing jointly. Donations must be made to public charities, not foundations or donor-advised funds.

4. Manage your MAGI

MAGI is the trigger for certain additional taxes and the phaseouts of many tax breaks, including some of the newest deductions. For example, the OBBBA establishes a temporary “senior” deduction of $6,000 for taxpayers age 65 or older. This can be claimed in addition to either the standard deduction or itemized deductions. But the senior deduction begins to phase out when MAGI exceeds $75,000 ($150,000 for joint filers).

As discussed in No. 2, the enhanced SALT deduction is also subject to MAGI phaseouts. So, too, are the Child Tax Credit and the new temporary deductions for qualified tips, overtime pay and car loan interest. In terms of being a tax trigger, your MAGI plays a role in determining your liability for the 3.8% net investment income tax.

It can pay, therefore, to take steps to reduce your MAGI. For example, you might spread a Roth conversion over multiple years, rather than completing it in a single year. You can also max out your contributions to traditional retirement accounts and Health Savings Accounts.

If you’re age 70½ or older, qualified charitable distributions (QCDs) from your traditional IRA are another avenue for reducing your MAGI. While a charitable deduction can’t be claimed for QCDs, the amounts aren’t included in your MAGI and can be used to satisfy an IRA owner’s required minimum distribution (RMD), if applicable. This can be beneficial because charitable donation deductions (and other itemized deductions) don’t reduce MAGI and RMDs typically are included in MAGI.

Begin planning now

Don’t miss out on both new and traditional planning opportunities to reduce your 2025 taxes. The best strategies for you depend on your specific situation. We’d be pleased to help you with your year-end tax planning.

Making sure your family will be able to locate your estate planning documents when needed is one of the most important parts of the estate planning process. Your carefully prepared will, trust or power of attorney will be useless if no one knows where to find it.

When loved ones are grieving or faced with urgent financial and medical decisions, not being able to locate key documents can create unnecessary stress, confusion and even legal complications. Here are some tips on how and where to store your estate planning documents.

Your signed, original will

There’s a common misconception that a photocopy of your signed last will and testament is sufficient. In fact, when it comes time to implement your plan, your family and representatives will need your signed original will. Typically, upon a person’s death, the original document must be filed with the county clerk and, if probate is required, with the probate court as well.

What happens if your original will isn’t found? It doesn’t necessarily mean that it won’t be given effect, but it can be a major — and costly — obstacle.

In many states, if your original will can’t be produced, there’s a presumption that you destroyed it with the intent to revoke it. Your family may be able to obtain a court order admitting a signed photocopy, especially if all interested parties agree that it reflects your wishes. But this can be a costly, time-consuming process. And if the copy isn’t accepted, the probate court will administer your estate as if you died without a will.

To avoid these issues, store your original will in a safe place and tell your family how to access it.

Storage options include:

Leaving your original will with your accountant or attorney, or
Storing your original will at home (or at the home of a family member) in a waterproof, fire-resistant safe, lockbox or file cabinet.

What about safe deposit boxes? Although this can be an option, you should check state law and bank policy to be sure that your family will be able to gain access without a court order. In many states, it can be difficult for loved ones to open your safe deposit box, even with a valid power of attorney. It may be preferable, therefore, to keep your original will at home or with a trusted advisor or family member.

If you do opt for a safe deposit box, it may be a good idea to open one jointly with your spouse or another family member. That way, the joint owner can immediately access the box in the event of your death or incapacity.

Other documents

Original trust documents should be kept in the same place as your original will. It’s also a good idea to make several copies. Unlike a will, it’s possible to use a photocopy of a trust. Plus, it’s useful to provide a copy to the person who’ll become trustee and to keep a copy to consult periodically to ensure that the trust continues to meet your needs.

For powers of attorney, living wills or health care directives, originals should be stored safely. But it’s also critical for these documents to be readily accessible in the event you become incapacitated.

Consider giving copies or duplicate originals to the people authorized to make decisions on your behalf. Also consider providing copies or duplicate originals of health care documents to your physicians to keep with your medical records.

Clear communication is key

Clearly communicating the location of your estate planning documents can help ensure your wishes are carried out promptly and accurately. Let your family, executor or trustee know where originals are stored and how to access them. Contact us for help ensuring your estate plan will achieve your goals.