2026 Payroll Planning

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.

As a business owner, you know that running payroll involves much more than just compensating employees. Every paycheck represents a complex web of tax obligations that your company must handle accurately and consistently.

Indeed, staying compliant with payroll tax rules is essential to maintaining your business’s reputation and avoiding costly penalties. That’s why it’s essential to regularly review your key payroll tax responsibilities to ensure nothing falls through the cracks.

Federal, state and local

Let’s start with the big ones. As you’re well aware, employers must withhold federal income tax from employees’ paychecks. The amount withheld from each person’s pay depends on two factors: 1) the wage amount, and 2) information provided on the employee’s Form W-4, “Employee’s Withholding Certificate.” Additional withholding rules may apply to commissions and other forms of compensation.

Be sure to stay apprised of your non-federal payroll tax obligations. State income tax withholding rules, for example, apply to many employers. However, nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Certain localities also impose income taxes. And in some places, withholding is required to cover short-term disability, paid family leave or unemployment benefits.

FICA and FUTA

Many an accounting or HR staffer has had to repeatedly explain what these two abbreviations mean. The first one stands for the Federal Insurance Contributions Act (FICA). Under this law, payroll taxes consist of two individual taxes.

First is Social Security tax, which is 6.2% of wages up to an annually inflation-adjusted wage base limit. For 2025, that limit is $176,100 (up from $168,600 in 2024). Both the employee and employer pay 6.2% up to that amount, meaning the business withholds the employee’s share and contributes a matching amount for a total of 12.4%. The second is Medicare tax, which is 1.45% of all wages, with no wage base cap. Again, both the employee and employer pay the percentage for a total of 2.9%.

The other abbreviation stands for the Federal Unemployment Tax Act (FUTA). Under it, employers must pay 6% on the first $7,000 of each employee’s annual wages, before any credit. In many cases, if state unemployment taxes are paid fully and on time, the business can receive a credit of up to 5.4%, yielding an effective rate of 0.6%.

Be aware that certain states with outstanding federal unemployment-trust-fund loans may not qualify for the full credit, so employers could face higher effective FUTA rates in those jurisdictions. FUTA taxes are paid only by the employer, so you shouldn’t withhold them from employees’ wages.

Additional Medicare tax

This payroll tax often flies under the radar. Under a provision of the Affordable Care Act, an additional Medicare tax of 0.9% applies to employee wages above:

$200,000 for single filers,
$250,000 for married couples filing jointly, and
$125,000 for married couples filing separately.

Only employees pay this tax. However, employers are responsible for withholding it once an employee’s wages exceed $200,000 — even if the employee ultimately may not owe it (for example, for joint filers).

State unemployment insurance

Every state also runs its own unemployment insurance program to provide benefits to eligible workers who are involuntarily terminated. State unemployment obligations vary widely in terms of wage base, rate and employer vs. employee contributions.

Generally, the rate employers must pay is based on their experience rating. The more claims made by former employees, the higher the tax rate. States update these rates annually.

Get stronger

Managing payroll taxes can be complex — especially as rates and rules may change from year to year. But you can confidently meet your compliance requirements with the right system, procedures, employees and professional guidance in place. We’d be happy to review your current approach, flag potential risks and recommend ways to strengthen your payroll tax processes. Contact us for more information.

Projecting your business’s income for this year and next can allow you to time income and deductible expenses to your tax advantage. It’s generally better to defer tax — unless you expect to be in a higher tax bracket next year. Timing income and expenses can be easier for cash-basis taxpayers. But accrual-basis taxpayers have some unique tax-saving opportunities when it comes to deductions.

Review incurred expenses

The key to saving tax as an accrual-basis taxpayer is to properly record and recognize expenses that were incurred this year but won’t be paid until 2026. This will enable you to deduct those expenses on your 2025 federal tax return. Common examples of such expenses include:

Commissions, salaries and wages,
Payroll taxes,
Advertising,
Interest,
Utilities,
Insurance, and
Property taxes.

You can also accelerate deductions into 2025 without actually paying for the expenses in 2025 by charging them on a credit card. (This works for cash-basis taxpayers, too.)

Look at prepaid expenses

Review all prepaid expense accounts. Then write off any items that have been used up before the end of the year.

If you prepay insurance for a period of time beginning in 2025 and ending in 2026, you can expense the entire amount this year rather than spreading it between 2025 and 2026, as long as a proper method election is made.

More tips to consider

Be sure to review your outstanding receivables and write off any that you can establish as uncollectible. Also, pay interest on shareholder loans. For more information on these strategies and to discuss other ways your business can reduce 2025 taxes, contact us.

In 2024, a whopping 22.4 billion parcels were shipped in the United States, according to shipping management vendor Pitney Bowes. The average American received 78% more packages in 2024 than in 2017 (growth fueled primarily by online purchasing). And this total is expected to climb even higher in 2025.

Many consumers and businesses have already experienced package theft or shipping fraud. But even if you haven’t, know that crooks have devised ways to take advantage of shifting consumer behavior. As the holidays approach, protect your packages — whether you’re sending or receiving — by learning about common schemes and how to foil them.

Outside theft

For consumers, “porch piracy” is probably the biggest threat, and it’s particularly prevalent around the holidays. Unfortunately, home security systems, including cameras, don’t always prevent such theft.

So if you’re expecting a package, use its tracking number to monitor its progress. You might also request a delivery signature — either your own or, if you won’t be home, a neighbor’s. Some retailers provide the option of delivering to a locker at a central location or a local business. Or have packages sent to your workplace, where a receptionist or shipping department employee can accept them.

If a package seems to be taking an unusually long time to be delivered or the tracking record shows no progress after a certain point, contact the shipping vendor for more information. You may need to be persistent.

If your business ships packages to residential addresses, provide buyers with email or text notifications that include tracking numbers once packages leave your facility. Consider using plain packaging that doesn’t tip off thieves to a parcel’s content — particularly if it’s an electronic device or other pricey merchandise. Insurance is usually a good idea. Package recipients are generally responsible for stolen deliveries to their address. But you may offer customers automatic replacements or refunds if packages are stolen, and, without insurance, theft will ultimately affect your bottom line.

Inside jobs

Last year, four employees of a major delivery service provider were arrested for stealing packages from their employer’s Arizona warehouse. They were nabbed after the company discovered suspicious transaction log items, revealing surveillance camera footage and fake shipping labels that contained the workers’ home addresses. Similar “inside jobs” have been discovered by other shipping vendors.

Perhaps you suspect some of your own employees are helping themselves to goods you’re shipping or receiving. Investigate with the help of a forensic accountant. Your business may need stronger internal controls, including greater management oversight, increased stock checks and regular audits.

Happy holidays

Remain vigilant this holiday season to ensure your online purchases arrive safely or your customer orders are fulfilled without issue. If you’re a business owner, contact us for fraud prevention tips or help investigating potential workplace theft — because nothing should steal the joy of the season.

Many nonprofits rely on the generosity of longtime supporters who want to give back in a tax-smart way. One of the most powerful, yet often overlooked, tools for these individuals is the Qualified Charitable Distribution (QCD).

Helping your donors understand this giving option can increase contributions, deepen relationships, and create win-win outcomes for both donors and your organization.

What Is a QCD?

A Qualified Charitable Distribution allows individuals age 70½ or above to make direct transfers—up to certain limits each year—from their Individual Retirement Account (IRA) to a qualified charity.

For 2025, the annual QCD limit is $108,000 per individual.
For 2026, the limit increases to $115,000, adjusted for inflation.

The amount donated counts toward the donor’s Required Minimum Distribution (RMD) (which now begins at age 73) but is excluded from taxable income. In other words, donors can satisfy their RMD obligations while supporting your mission—without increasing their adjusted gross income (AGI).

Why This Matters to Your Donors

For many individuals in or nearing retirement, IRA withdrawals can push them into higher tax brackets and increase the taxation of their Social Security benefits or Medicare premiums. QCDs help avoid those problems.

When donors give through a QCD:

They can prevent phaseouts or surcharges tied to income thresholds.
They can support your organization in a way that maximizes their after-tax giving power.

Such benefits can make a meaningful difference for supporters who want to align their financial planning with their charitable goals.

Why It Matters to Your Nonprofit

Nonprofits that proactively educate donors about QCDs often see an increase in year-end and recurring gifts. Here’s why:

Untapped Giving Potential
Many supporters don’t realize they can give directly from their IRA. Highlighting this option can turn routine RMD withdrawals into impactful, tax-efficient gifts.
Larger, More Strategic Donations
Since QCDs are pre-tax transfers, donors may feel more comfortable giving larger amounts—especially when doing so doesn’t increase their taxable income.
Deeper Relationships
Conversations about QCDs position your organization as a trusted partner, not just a recipient. You’re helping donors achieve both their financial and philanthropic goals.
Year-End Opportunities
The QCD deadline is December 31 each year, which aligns perfectly with year-end fundraising campaigns, providing a timely reason to reach out.

How to Get Your Organization QCD-Ready

To make the most of this opportunity, your nonprofit should:

Educate your team. Ensure your development staff, board, and volunteers know what a QCD is and who qualifies.
Communicate clearly. Include QCD messaging in newsletters, appeal letters, and on your giving web page (e.g., “Did you know you can make a tax-free gift directly from your IRA if you’re 70½ or older?”).
Make it easy. Provide clear instructions and sample language donors can use with their IRA custodians.
Acknowledge appropriately. Send thank-you letters confirming no goods or services were provided, and note that the gift was made via QCD.
Collaborate with advisors. Partner with local CPAs, financial advisors, or estate planners to co-host informational sessions about charitable giving strategies like QCDs.

Important Rules to Remember

The donor must be age 70½ or older at the time of the distribution.
Funds must come from an IRA (not a 401(k) or donor-advised fund).
The transfer must go directly from the IRA custodian to the charity.
QCDs cannot go to donor-advised funds, supporting organizations, or private foundations.
Donors cannot claim an additional charitable deduction for the QCD.

The Bottom Line

Qualified Charitable Distributions represent one of the most powerful giving tools available to individuals with IRAs—and one of the least understood. By taking the lead in educating your donors, your organization can:

Strengthen donor relationships
Unlock larger, tax-efficient gifts
Align your fundraising strategy with your donors’ financial goals

QCDs truly are a win-win: your donors can give more effectively, and your mission can thrive.

Now is the perfect time to incorporate QCD education into your year-end fundraising and donor stewardship plans—before the December 31 deadline.

Yeo & Yeo is pleased to announce that Christopher Sheridan, CPA, CVA, and Danielle Lutz, CPA, have earned the Certified Fraud Examiner (CFE) credential. This certification recognizes professionals with advanced fraud prevention, detection, and investigation expertise.

CFEs combine knowledge of complex financial transactions with an understanding of investigation methods and legal frameworks to uncover and resolve fraud allegations. The credential requires rigorous testing across four core areas: financial transactions, law, investigation, and fraud prevention. By earning this credential, Lutz and Sheridan further strengthen Yeo & Yeo’s ability to help clients safeguard their organizations.

Christopher Sheridan is a principal based in Yeo & Yeo’s Saginaw office. He leads the firm’s Valuation, Forensics, and Litigation Support Services Group and is a member of the Manufacturing Services Group. His specialized skills include business valuation and litigation support, serving as an expert witness, providing business consultancy, and fraud investigation and prevention. Sheridan is involved in several professional organizations, including the Michigan Association of Certified Public Accountants’ (MICPA) Manufacturing Task Force and multiple regional manufacturing associations. In 2021, his leadership and expertise were recognized when he was named a “40 Under Forty” honoree by the National Association of Certified Valuators and Analysts. Just as committed to his community as he is to his profession, he serves on the boards of the Montessori Children’s House of Bay City and the Great Lakes Bay Economic Club.

Danielle Lutz is a manager with more than five years of public accounting experience and is based in Yeo & Yeo’s Saginaw office. Her areas of specialization include business consulting and financial statement reporting with a focus on the manufacturing, construction, and agribusiness industries. She also assists businesses and individuals with tax planning and preparation. A Michigan State University graduate with a Master of Science in Accounting, Lutz is known for her dedication to client relationships and proactive, problem-solving approach. Beyond her client work, she is engaged in the community as a member of the Bay Area Energize – Young Professionals Network and serves as treasurer of the Mid-Michigan Manufacturers Association.

“Achieving the CFE credential reflects our commitment to protecting our clients,” said Sheridan. “With the CFE designation, Danielle and I are equipped with the unique tools and training to investigate concerns over the misappropriation of funds or potential financial statement fraud, and assess clients’ vulnerabilities. This expertise can give our clients the peace of mind that their businesses are being evaluated with precision, integrity, and a proactive approach to risk.”

Yeo & Yeo’s Valuation, Forensics, and Litigation Services Group delivers trusted expertise in forensic accounting, business valuation, and litigation support. The team combines technical knowledge, third-party objectivity, and a comprehensive understanding of business operations to help business owners navigate disputes, plan for growth, and protect what they’ve built.

Financial statements report historical financial performance. But sometimes management or external stakeholders want to evaluate how a business will perform in the future. Forward-looking estimates are critical when evaluating strategic decisions, such as debt and equity financing, capital improvement projects, shareholder buyouts, mergers, and reorganization plans. While company insiders may see the business through rose-colored glasses, external accountants can prepare prospective financial reports that are grounded in realistic, market-based assumptions.

3 reporting options

There are three types of reports to choose from when predicting future performance:

1. Forecasts. These prospective statements present an entity’s expected financial position, results of operations and cash flows. They’re based on assumptions about expected conditions and courses of action.

2. Projections. These statements are based on assumptions about conditions expected to exist and the course of action expected to be taken, given one or more hypothetical assumptions. Financial projections may test investment proposals or demonstrate a best-case scenario.

3. Budgets. Operating budgets are prepared in-house for internal purposes. They allocate money — usually revenue and expenses — for particular purposes over specified periods.
Although the terms “forecast” and “projection” are sometimes used interchangeably, there are important distinctions under the attestation standards set forth by the American Institute of Certified Public Accountants (AICPA).

Leverage your financials

Historical financial statements are often used to generate forecasts, projections and budgets. But accurate predictions usually require more work than simply multiplying last year’s operating results by a projected growth rate — especially over the long term.

For example, a start-up business may be growing 30% annually, but that rate is likely unsustainable over time. Plus, the business’s facilities and fixed assets may lack sufficient capacity to handle growth expectations. If so, management may need to add assets or fixed expenses to take the company to the next level.

Similarly, it may not make sense to assume that annual depreciation expense will reasonably approximate the need for future capital expenditures. Consider a tax-basis entity that has taken advantage of the expanded Section 179 and bonus depreciation deductions, which permit immediate expensing in the year qualifying fixed assets are purchased and placed in service. Because depreciation is so boosted by these tax incentives, this assumption may overstate depreciation and capital expenditures going forward.

Various external factors, such as changes in competition, product obsolescence and economic conditions, can affect future operations. So can events within a company. For example, new or divested product lines, recent asset purchases, in-process research and development, and outstanding litigation could all materially affect future financial results.

We can help

When preparing prospective financial statements, the underlying assumptions must be realistic and well thought out. Contact us for objective insights based on industry and market trends, rather than simplistic formulas, gut instinct and wishful thinking.

When creating a will, most people focus on the big-ticket items — including who gets the house, the car and specific family heirlooms. But one element that’s often overlooked is the residuary clause. This clause determines what happens to the remainder of your estate — the assets not specifically mentioned in your will. Without one, even a carefully planned estate can end up in legal limbo, causing unnecessary stress, expense and conflict for your loved ones.

Defining a residuary clause

A residuary clause is the part of your will that distributes the “residue” of your estate. This residue includes any assets left after specific bequests, debts, taxes and administrative costs have been paid. It might include forgotten bank accounts, newly acquired property or investments you didn’t specifically name in your will.

For example, if your will leaves your car to your son and your jewelry to your daughter but doesn’t mention your savings account, the funds in that account would fall into your estate’s residue. The residuary clause ensures those funds are distributed according to your wishes — often to a named individual, group of heirs or charitable organization.

Omitting a residuary clause

Failing to include a residuary clause can create serious problems. When assets aren’t covered by specific instructions in a will, they’re considered “intestate property.” This means those assets will be distributed according to state intestacy laws rather than your personal wishes. In some cases, this could result in distant relatives inheriting part of your estate or assets going to individuals you never intended to benefit.

Without a residuary clause, your executor or family members may also need to seek court intervention to determine how to handle the leftover property. This adds time, legal costs and emotional strain to an already difficult process.

Moreover, the absence of a residuary clause can lead to family disputes. When the law, rather than your will, determines who gets what, heirs may disagree over how to interpret your intentions. A simple clause could prevent these misunderstandings and preserve family harmony.

Adding flexibility to your plan

A key advantage of a residuary clause is added flexibility. Life circumstances change — new assets are acquired, accounts are opened or closed, and property values fluctuate.

If your will doesn’t specifically list every asset (and most don’t), a residuary clause acts as a safety net to ensure nothing is left out. It can even account for unexpected windfalls or proceeds from insurance or lawsuits that arise after your passing.

Providing extra peace of mind

Including a residuary clause in your will is one of the simplest ways to make sure your entire estate is handled according to your wishes. It helps avoid gaps in your estate plan, minimizes legal complications and ensures your executor can distribute your assets smoothly. Contact us for additional details. Ask your estate planning attorney to add a residuary clause to your will.

Artificial intelligence (AI) is changing the way businesses operate. Its capacity to gather and process data, as well as to mimic human interactions, offers remarkable potential to streamline operations and boost productivity.

But AI presents considerable challenges and concerns, too. With so many tools available, employees may inadvertently or purposely misuse the technology in ways that are unethical or even illegal. Compounding the problem is that many companies lack a formal AI governance policy.

Few in place

In August 2025, software platform provider Genesys released the results of an independent survey of 4,000 consumers and 1,600 enterprise customer experience and information technology (IT) leaders in more than 10 countries. It found that over a third (35%) of tech-leader respondents said their organizations have “little to no formal [AI] governance policies in place.”

This is a pointed problem, the survey notes, because many businesses are gearing up to deploy agentic AI. This is the latest iteration of the technology that can make decisions autonomously and act independently to achieve specific goals without depending on user commands or predefined inputs. The survey found that while 81% of tech leaders trust agentic AI with sensitive customer data, only 36% of consumers do.

7 steps to consider

Whether or not you’re eyeing agentic AI, its growing popularity is creating a trust-building imperative for today’s businesses. That’s why you should consider writing and implementing an AI governance policy.

Formally defined, an AI governance policy is a written framework that establishes how a company may use AI responsibly, transparently, ethically and legally. It outlines the decision-making processes, accountability measures, ethical standards and legal requirements that must guide the development, purchase and deployment of AI tools.

Creating an AI governance policy should be a collaborative effort involving your company’s leadership team, knowledgeable employees (such as IT staff) and professional advisors (such as a technology consultant and attorney). Here are seven steps your team should consider:

1. Audit usage. Identify where and how your business is using AI. For instance, do you use automated tools in marketing or when screening job applicants, auto-generated financial reports, or customer service chatbots? Inventory everything and note who’s using it, what data it relies on and which decisions it influences.

2. Assign ownership for AI oversight. This may mean appointing a small internal team or naming (or hiring) an AI compliance manager or executive. Your oversight team or compliance leader will be responsible for maintaining the policy, reviewing new tools and handling concerns that arise.

3. Establish core principles. Ground your policy in ethical and legal principles — such as fairness, transparency, accountability, privacy and safety. The policy should reflect your company’s mission, vision and values.

4. Set standards for data and vendor use. Include guidelines on how data used by AI tools is collected, stored and shared. Pay particular attention to intellectual property issues. If you use third-party vendors, define review and approval steps to verify that their systems meet your privacy and compliance standards.

5. Require human oversight. Clearly state that employees must remain in control of AI-assisted work. Human judgment should always be part of the process, including approving AI-generated content and reviewing automated financial reports.

6. Include a mandatory review-and-update clause. Schedule regular reviews — at least annually — to assess whether your policy remains relevant. This is especially important as innovations, such as agentic AI, come online and new regulations emerge.

7. Communicate with and train staff. Incorporate AI governance into onboarding for new employees and follow up with regular training and reminder sessions thereafter. Ask staff members to sign an acknowledgment that they’ve read the policy and perhaps another to confirm they’ve completed the required training. Encourage everyone to ask questions and report potential issues.

Financial impact

Writing an AI governance policy is just one part of preparing your business for the future. Understanding its financial impact is another. Let us help you analyze the costs, tax implications and return on investment of AI tools so you can make informed decisions that balance innovation with sound financial management and robust compliance practices.

Now is a good time to review your business’s expenses for deductibility. Accelerating deductible expenses into this year generally will reduce 2025 taxes and might even provide permanent tax savings. Also consider the impact of the One Big Beautiful Bill Act (OBBBA). It makes permanent or revises some Tax Cuts and Jobs Act (TCJA) provisions that reduced or eliminated certain deductions.

“Ordinary and necessary” business expenses

There’s no master list of deductible business expenses in the Internal Revenue Code (IRC). Although some deductions are expressly authorized or excluded, most are governed by the general rule of IRC Section 162, which permits businesses to deduct their “ordinary and necessary” expenses.

An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your business. (It doesn’t have to be indispensable.) Even if an expense is ordinary and necessary, it may not be deductible if the IRS considers it lavish or extravagant.

OBBBA and TCJA changes

Here are some types of business expenses whose deductibility is affected by OBBBA or TCJA provisions:

Entertainment. The TCJA eliminated most deductions for entertainment expenses beginning in 2018. However, entertainment expenses for employee parties are still deductible if certain requirements are met. For example, the entire staff must be invited — not just management. The OBBBA didn’t change these rules.

Meals. Both the TCJA and the OBBBA retained the pre-2018 50% deduction for business meals. What about business meals provided in connection with nondeductible entertainment? They’re still 50% deductible, as long as they’re purchased separately from the entertainment or their cost is separately stated on invoices or receipts.

Through 2025, the TCJA also expanded the 50% deduction rule to meals provided via an on-premises cafeteria or otherwise on the employer’s premises for the convenience of the employer. (Previously, such meals were 100% deductible.) The deduction was scheduled to be eliminated after 2025. The OBBBA generally retains this deduction’s 2026 elimination, with some limited exceptions that will qualify for a 100% deduction. But meal expenses generally can be 100% deducted if the meals are sold to employees.

Transportation. Transportation expenses for business travel are still 100% deductible, provided they meet the applicable rules. But the TCJA permanently eliminated most deductions for qualified transportation fringe benefits, such as parking, vanpooling and transit passes. However, those benefits are still tax-free to recipient employees, up to applicable limits. The OBBBA doesn’t change these rules.

Before the TCJA, employees could also exclude from taxable income qualified bicycle commuting reimbursements, and this break was scheduled to return in 2026. However, the OBBBA permanently eliminates it.

Employee business expenses

The TCJA suspended through 2025 employee deductions for unreimbursed employee business expenses — previously treated as miscellaneous itemized deductions. The OBBBA has permanently eliminated this deduction.

Businesses that don’t already have an employee reimbursement plan for these expenses may want to consider implementing one for 2026. As long as the plan meets IRS requirements, reimbursements are deductible by the business and tax-free to employees.

Planning for 2025 and 2026

Understanding exactly what’s deductible and what’s not isn’t easy. We can review your current expenses and help determine whether accelerating expenses into 2025 makes sense for your business. Contact us to discuss year-end tax planning and to start strategizing for 2026.

Inventory is one of the most significant assets on a balance sheet for many businesses. If your business owns inventory, you have some flexibility in how it’s tracked and expensed under U.S. Generally Accepted Accounting Principles (GAAP). The method you use to report inventory can have a dramatic impact on your bottom line, tax obligations and financial ratios. Let’s review the rules and explore your options.

The basics

Inventory varies depending on a business’s operations. Retailers may have merchandise available for sale, while manufacturers and contractors may have materials, work in progress and finished goods.

Under Accounting Standards Codification Topic 330, you must generally record inventory when it’s received and the title (or the risks and rewards of ownership) transfers to your company. Then, it moves to cost of goods sold when the product ships and the title (or the risks and rewards of ownership) transfers to the customer.

4 key methods

While inventory is in your possession, you can apply different accounting methods that will affect its value on your company’s balance sheet. When inventory is sold, your reporting method also impacts the costs of goods sold reported on your income statement. Four common methods for reporting inventory under GAAP are:

1. First-in, first-out (FIFO). Under this method, the first items entered into inventory are the first ones presumed sold. In an inflationary environment, units purchased earlier are generally less expensive than items purchased later. As a result, applying the FIFO method will generally cause a company to report lower expenses for items sold, leaving higher-cost items on the balance sheet. In short, this method enhances pretax profits and balance sheet values, but it can have adverse tax consequences (because you report higher taxable income).

2. Last-in, first-out method (LIFO). Here, the last items entered are the first presumed sold. In an inflationary environment, units purchased later are generally more expensive than items purchased earlier. As a result, applying the LIFO method will generally cause a company to report higher expenses for items sold, leaving lower-cost items on the balance sheet. In short, this method may defer tax obligations, but its effects on pretax profits and balance sheet values may raise a red flag to lenders and investors.

Under the LIFO conformity rule, if you use this method for tax purposes, you must also use it for financial reporting. It’s also important to note that the tax benefits of using this method may diminish if the company reduces its inventory levels. When that happens, the company may start expensing older, less expensive cost layers.

3. Weighted-average cost. Some companies use this method to smooth cost fluctuations associated with LIFO and FIFO. It assigns a weighted-average cost to all units available for sale during a period, producing a consistent per-unit cost. It’s common not only for commodities but also for manufacturers, distributors and retailers that handle large volumes of similar or interchangeable products.

4. Specific identification. When a company’s inventory is one of a kind, such as artwork, luxury automobiles or custom homes, it may be appropriate to use the specific identification method. Here, each item is reported at historic cost, and that amount is generally carried on the books until the specific item is sold. However, a write-off may be required if an item’s market value falls below its carrying value. And once inventory has been written down, GAAP prohibits reversal of the adjustment.

Under GAAP, inventory is valued at the lower of 1) cost, or 2) net realizable value or market value, depending on the method you choose.

Choosing a method for your business

Each inventory reporting method has pros and cons. Factors to consider include the type of inventory you carry, cost volatility, industry accounting conventions, and the sophistication of your bookkeeping personnel and software.

Also evaluate how each method will affect your financial ratios. Lenders and investors often monitor performance based on profitability, liquidity and asset management ratios. For instance, if you’re comparing LIFO to FIFO, the latter will boost your pretax profits and make your balance sheet appear stronger — but you’ll lose out on the tax benefits, which could strain your cash flow. The weighted-average cost method might smooth out your profitability, but it might not be appropriate for the types of products you sell. The specific identification method may provide the most accurate insight into a company’s profitability, but it’s reserved primarily for easily identifiable inventory.

Whatever inventory accounting method you select must be applied consistently and disclosed in your financial statements. A change in method is treated as a change in accounting principle under GAAP, requiring justification, disclosure and, if material, retrospective application.

We can help

Choosing the optimal inventory accounting method affects more than bookkeeping — it influences tax obligations, cash flow and stakeholders’ perception of your business. Contact us for help evaluating your options strategically and ensuring your methods are clearly disclosed.

Job postings aren’t as simple as they used to be. Before the advent and all-consuming influence of the internet, most “want ads” (as they were popularly known) appeared in newspapers or trade publications. They were generally short and followed a certain format.

Most job seekers are now online and have, shall we say, considerable expectations. Today’s job postings must find the right balance between hard data and enticing language to attract attention and drive engagement. One recent survey provides some interesting insights about the current state of affairs.

The dreaded “icks”

Are your job postings inadvertently turning off candidates? That’s the premise of a March 2025 study by U.K.-based consultants StandOut CV. The firm surveyed 1,092 adults in October 2024 to discover what job applicants find “most off-putting when applying for a role.” Although living and working across the pond, the survey’s participants served up some interesting food for thought in their answers.

For example, 65.5% of the study’s respondents ranked employers offering only the minimum annual leave allowance as the top “ick” in job listings. Of course, U.S. employers aren’t federally required to provide paid time off (PTO), though the Family and Medical Leave Act does mandate up to 12 weeks of unpaid leave for qualifying reasons. Nonetheless, the message is clear: Workers want to see generous PTO policies and respect for work-life balance in postings.

The second biggest ick reported by the study, with 64.6% of respondents chiming in, is employers requiring or heavily encouraging applicants to engage with social media content from the organization or its employees. This suggests that, even when a job is on the line, candidates don’t want to be forced to socialize — even digitally.

The third biggest ick cited is something most U.S. employers are familiar with by now: pay transparency. That is, 63.8% of respondents were disappointed when a job listing contained no salary information. Bear in mind that many states now have pay transparency laws on the books. So, be sure staff members who are creating job postings know the rules in your location, as well as what’s become standard in your industry.

Best practices

How can you create effective job postings that won’t give candidates the dreaded icks? Here are some best practices to consider:

Focus on clarity. Start postings with a concise, engaging summary of the role and why it matters to your organization. Avoid jargon or vague terms like “rock star” or “hustle.” Instead, use plain language that describes job responsibilities, measurable expectations, and how the position contributes to your mission and vision.

Appeal to what they value. Highlight what candidates care about most: compensation, benefits, flexibility and culture. As mentioned, today’s job seekers value pay transparency, so provide at least a salary range for the position. Also, clearly describe your organization’s PTO policy and fringe benefits, such as its health insurance and retirement plan. To both attract applicants and build trust, be transparent about everything you offer.

Be authentic. Find a voice that appropriately represents your distinctive employer brand. But keep it professional and inclusive. Define your organization’s values without slipping into buzzwords or clichés. Consider including quotes or brief testimonials from current employees to give job postings a human touch.

Make it easy. Link job postings to a straightforward and intuitive application process. Provide clear instructions, minimize unnecessary steps and enable mobile-friendly online submissions. Frustrating digital hurdles can discourage strong candidates before they even hit “submit.”

Put your best foot forward

It’s easy to make mistakes when creating job postings in today’s competitive hiring market. Take the time to craft yours with care, including just enough information and highlighting your organization’s distinctive traits. We can help you align your hiring approach with your financial goals and strategic objectives.