Year-End Budgeting: Where To Look for Cost-Saving Opportunities

As 2025 winds down, business owners and managers are ramping up their planning efforts for the new year. Part of the annual budgeting process is identifying ways to lower expenses and strengthen cash flow. When cutting costs, think beyond the obvious, such as wages, benefits and employee headcount. These cutbacks can make it harder to attract and retain skilled workers in today’s challenging labor market, potentially compromising work quality and productivity. Here are three creative ideas to help boost your company’s bottom line—without sacrificing its top line.

1. Analyze your vendors

Many companies find that just a few suppliers account for most of their spending. Identify your key vendors and consolidate spending with them. Doing so can strengthen your position to negotiate volume discounts. Consolidating your supplier base also helps streamline the administrative work associated with purchasing.

Early payment discounts can be another cost-saving opportunity. Some vendors may offer a discount (typically, 2% to 5%) to customers who pay invoices before they’re due. These discounts can provide significant savings over the long run. But you’ll need to have enough cash on hand to take advantage.

On a related note, how well do you know your suppliers? Consider conducting a supplier audit. This is a formal process for collecting key data points regarding a supplier’s performance. It can help you manage quality control and ensure you’re getting an acceptable return on investment.

2. Cut energy consumption

Going green isn’t just good for the environment. Under the right circumstances, it can save you money, too. For instance, research energy-efficient HVAC and lighting systems, equipment, and vehicles. Naturally, investing in such upgrades will cost money initially. But you may be able to lower energy costs over the long term.

What’s more, you might qualify for tax credits for installing certain items. However, pay attention to when green tax breaks are scheduled to expire. The One Big Beautiful Bill Act, enacted in July, accelerates the expiration of several clean energy tax incentives available under the Inflation Reduction Act.

3. Consider outsourcing

Businesses might try to cut costs by doing everything in-house—from accounting to payroll to HR. However, without adequate staffing and expertise, these companies often suffer losses because of mistakes and mismanagement.

External providers typically have specialized expertise and tools that are costly to replicate internally. For example, many organizations outsource payroll management, which requires an in-depth understanding of evolving labor laws and payroll tax rates. Outsourcing payroll can help reduce errors, save software costs and relieve headaches for your staff. Other services to consider outsourcing include administrative work, billing and collections, IT, and bookkeeping.

Outsourcing is often less expensive than performing these tasks in-house, especially when you factor in employee benefits costs. But you shouldn’t sacrifice quality or convenience. Vet external providers carefully to ensure you’ll receive the expertise, attention to detail and accuracy your situation requires.

Every dollar counts

As you finalize next year’s budget, treat cost control as a strategic exercise—not a blunt cut. Let’s discuss ways to prioritize cost-cutting measures with the biggest payback. We can help you model cash-flow impacts, verify tax treatment and incentives, and evaluate outsourcing options. Contact us to learn more.

Noncompete agreements have long been contentious. Many employers view them as critical safeguards to protecting intellectual property, customer lists, pricing structures and operational processes. Most individuals subject to noncompetes — along with numerous labor advocacy groups — disagree. They largely believe the agreements limit worker mobility, suppress wages and reduce bargaining power.

In April 2024, the long-running debate came to a head when the Federal Trade Commission (FTC) announced a final rule that would have banned the use of most noncompetes when it took effect. But that never happened, and now it won’t. On September 5, 2025, the FTC announced that it was moving to dismiss its lingering appeals to two separate legal challenges to the final rule. Here’s what employers should know about the noncompete ban that never was.

Final rule review

Had the final rule gone into effect, it would have required employers to notify affected employees that existing noncompetes would no longer be enforced as of the rule’s effective date. At that time, employers would also have been prohibited from entering into new agreements.

There was, however, a notable exception. Existing noncompetes for “senior executives” would have remained in force. The final rule defined these as employees who earn more than $151,164 a year and are in “policy-making positions.” This generally would have included:

A business entity’s president,
The chief executive officer or the equivalent,
Any other officer with policy-making authority, or
Any other “natural person” with policy-making authority who’s similar to an officer.

The FTC had expected the effective date to be September 4, 2024, but the ban was delayed because of immediate legal challenges. Most observers didn’t expect the final rule to survive under a new presidential administration. Sure enough, as mentioned, the current FTC filed motions in federal court to dismiss its appeals in September 2025, allowing earlier rulings that vacated the rule to stand.

When the agency announced it was dropping its appeals, FTC Chairman Andrew Ferguson called the final rule “patently illegal” and said it “would never survive judicial review.” However, Ferguson was quick to add that the agency’s decision to drop its appeals doesn’t mean it’s given up on challenging allegedly unlawful noncompetes. He warned that “firms in industries plagued by thickets of noncompete agreements will receive warning letters from me,” and he urged them to consider abandoning those agreements to minimize the risk of an FTC investigation and enforcement actions.

Tips to avoid scrutiny

If your organization has used noncompetes in the past and plans to continue doing so, beware of compliance challenges. Here are some suggested steps to follow:

Review existing agreements. Identify which employees are currently bound by noncompetes and assess whether those restrictions are still necessary or enforceable under applicable state laws. Some states have banned noncompetes altogether; others permit them only above certain pay thresholds.

Narrow the scope. If you intend to continue using noncompetes, limit them to key employees with genuine access to trade secrets or other sensitive data. Keep duration and geography as reasonable as possible.

Consider alternatives. Explore adopting or strengthening confidentiality, nonsolicitation and intellectual-property-protection agreements. These can often achieve similar aims without restricting future employment.

Consult legal counsel before enforcement. Review any contemplated action with an attorney who’s familiar with the current FTC position and state law.

Strengthen retention efforts. Competitive compensation and benefits, advancement opportunities, and a positive workplace culture often do more to retain talent than restrictive legal agreements.

Still in play

Although the FTC’s broad noncompete ban is off the table, scrutiny of these agreements remains very much in play. Take time to review your policies regarding noncompetes, reduce legal exposure, and foster employee loyalty through sound management and employment practices. Our team can help you identify strategies for structuring compensation, benefits and other perks to help attract and retain valued employees.

The One Big Beautiful Bill Act (OBBBA) introduced or updated numerous business-related tax provisions. The changes that are likely to have a major impact on employers and payroll management companies include new information return and payroll tax reporting rules. Let’s take a closer look at what’s new beginning in 2026 — and what businesses need to do in 2025.

Increased reporting thresholds go into effect in 2026

Businesses generally must report payments made during the year that equal or exceed the reporting threshold for rents; salaries; wages; premiums; annuities; compensation; remuneration; emoluments; and other fixed or determinable gains, profits and income. Similarly, recipients of business services generally must report payments they made during the year for services rendered that equal or exceed the statutory threshold. This information is reported on information returns, including Forms W-2, Forms 1099-MISC and Forms 1099-NEC.

Currently, the reporting threshold amount is $600. For payments made after 2025, the OBBBA increases the threshold to $2,000, with inflation adjustments for payments made after 2026.

Reporting qualified tip income and qualified overtime income

Effective for 2025 through 2028, the OBBBA establishes new deductions for employees who receive qualified tip income and qualified overtime income. Because these are deductions as opposed to income exclusions, federal payroll taxes still apply to this income. So do federal income tax withholding rules. Also, tip income and overtime income may still be fully taxable for state and local income tax purposes.

The issue for employers and payroll management companies is reporting qualified tip and overtime income amounts so that eligible workers can claim their rightful federal income tax deductions. In August, the IRS announced that for 2025 there will be no OBBBA-related changes to federal information returns for individuals, federal payroll tax returns or federal income tax withholding tables. The 2025 versions of Form W-2, Forms 1099, Form 941, and other payroll-related forms and returns will be unchanged.

Nevertheless, employers and payroll management companies should begin tracking qualified tip and overtime income immediately and implement procedures to retroactively track qualified tip and overtime income amounts that were paid going back to January 1, 2025. The IRS will provide transition relief for 2025 to ease compliance burdens.

Proposed regulations list tip-receiving occupations

In September, the IRS released proposed regs that include a list of tip-receiving occupations eligible for the OBBBA deduction for qualified tip income. Eligible occupations are grouped into eight categories:

Beverage and food services,
Entertainment and events,
Hospitality and guest services,
Home services,
Personal services,
Personal appearance and wellness,
Recreation and instruction, and
Transportation and delivery.

The IRS added three-digit codes to each eligible occupation for information return purposes.

2026 Form W-2 draft version

The IRS has released a draft version of the 2026 Form W-2. It includes changes that support new employer reporting requirements for the employee deductions for qualified tip income and qualified overtime income and for employer contributions to Trump Accounts, which will become available in 2026 under the OBBBA.

Specifically, Box 12 of the draft version adds:

Code TA to report employer contributions to Trump Accounts,
Code TP to report the total amount of an employee’s qualified cash tip income, and
Code TT to report the total amount of an employee’s qualified overtime income.

Box 14b has been added to allow employers to report the occupation of employees who receive qualified tip income.

Stay on top of the latest guidance

The OBBBA makes some significant changes affecting information returns and payroll tax reporting. The IRS will likely continue to issue guidance and regulations. We can help you stay informed on any developments that will affect your business’s reporting requirements.

Navigating the complexities of employee benefit plan audits begins with understanding the foundational legislation that governs them: the Employee Retirement Income Security Act of 1974 (ERISA). Designed to protect participants in employer-sponsored benefit plans, ERISA sets rigorous standards for fiduciary conduct, reporting, and disclosure, including the requirement for independent audits of certain plans.

Why ERISA Matters

ERISA mandates that benefit plans with 100 or more participants must undergo annual audits by a qualified, independent CPA. These audits are not merely a compliance checkbox—they serve as a critical tool for ensuring the integrity of plan financial statements and the reliability of information provided to stakeholders. Audits help verify that plans are operating in accordance with United States Generally Accepted Accounting Principles (GAAP) and Department of Labor (DOL) regulations, and they often uncover opportunities to strengthen internal controls and operational efficiency and correct noncompliance.

Audit Requirements and Qualifications

Auditors performing ERISA plan audits must meet specific qualifications, including independence from the plan and its administrators. Firms must also maintain documentation of continuing professional education (CPE) to ensure auditors are up to date on ERISA standards. For example, Yeo & Yeo requires professionals managing or signing off on ERISA audits to complete at least eight hours of benefit plan-specific CPE within a three-year period.

The Audit Process and Preparation

At Yeo & Yeo, the audit process is structured into four phases: kickoff and inquiries, document requests, participant sample selection, and final testing. The firm uses Suralink, a secure cloud-based portal, to manage document submissions and streamline communication with clients. This system enhances transparency and helps clients stay on track with audit timelines.

Preparing for an audit can be daunting, but the following steps can help ensure the process runs smoothly and successfully. Plan sponsors should:

Review prior year findings and address any unresolved issues.
Organize payroll and plan documents for easy access.
Coordinate early with third-party administrators to ensure timely delivery of audit packages.
Respond promptly to document requests through platforms like Suralink.

Consequences of Noncompliance

Sometimes, noncompliance with ERISA surfaces and the consequences must be dealt with. Failure to comply with ERISA audit requirements can result in significant penalties from the DOL. Moreover, plan administrators may be held personally liable for losses if they fail to meet fiduciary standards. Selecting a qualified auditor (one with a clean peer review report and relevant experience) is essential to mitigating risk and ensuring compliance.

Conclusion

As organizations grow, so do the responsibilities tied to employee benefit plans. Understanding ERISA and its audit implications empowers plan sponsors to meet regulatory requirements, protect participants, and improve financial reporting. For firms like Yeo & Yeo, delivering high-quality audits with a client-first approach ensures that benefit plans remain compliant and well-managed.

Under the Tax Cuts and Jobs Act (TCJA), businesses, including manufacturers, have been required since 2022 to amortize domestic Section 174 research and experimental (R&E) costs over five years, rather than deduct them in the year incurred or paid. Manufacturers have consistently complained that this treatment stifles the development of new processes and products and threatens cash flow — especially for smaller companies. With China offering deductions of up to 200% for eligible research costs, U.S. manufacturers were put at a competitive disadvantage.

The One Big Beautiful Bill Act (OBBBA) changes the R&E expense deduction rules. Here’s what manufacturers need to know.

OBBBA’s Sec. 174 amendments

The OBBBA permanently reinstates the pre-TCJA treatment of domestic R&E costs for tax years beginning after 2024, so manufacturers can deduct them in the tax year they’re incurred or paid. Foreign R&E costs remain subject to 15-year amortization.

Also under the OBBBA, small manufacturers that satisfy a gross receipts test can claim the R&E deduction retroactively to 2022. (For 2025, average annual gross receipts for the previous three years must be $31 million or less.) And any manufacturer, regardless of size, that incurred domestic R&E expenses in 2022 through 2024 may elect to accelerate the remaining deductions for those expenditures over either a one- or two-year period.

The immediate deduction of qualified R&E expenses isn’t mandatory. Depending on a variety of factors, in some situations, claiming it may not be advisable. Manufacturers generally can instead elect to capitalize and amortize such expenses paid in a tax year after 2024 over at least 60 months. The election must be made by the due date, with extensions, of the original tax return for the first tax year to which the election applies. For 2025, a manufacturer that makes an accounting method change to capitalize and amortize R&E expenses will be deemed to have made the election.

R&E expenses may also qualify for the Section 41 research tax credit. But businesses can’t claim both the deduction and the credit for the same expense. If a manufacturer claims the research credit, the R&E deduction generally must be reduced by the amount of the credit. Alternatively, manufacturers can elect to claim a reduced research credit instead.

Retroactive deductions for small manufacturers

As noted, eligible small manufacturers can elect to treat the changes to Sec. 174 as if they took effect for tax years beginning after 2021, rather than after 2024. How to do this depends in part on whether the manufacturer has already filed a 2024 tax return.

If the manufacturer filed a 2024 return before August 28, 2025, an automatic extension to supersede that return to include the new guidance is available. However, the manufacturer must file that replacement return by the extended deadline (typically September 15 or October 15). Alternatively, the manufacturer can file an amended 2024 return, following one of the two options discussed below.

If the manufacturer didn’t file a 2024 return by August 28, the manufacturer can file by the applicable extended deadline and either:

Elect to expense eligible R&E expenses under the new guidance, which would also require filing amended returns for 2022 and 2023, or
Do an automatic method of accounting change and a “true-up” adjustment on the 2024 return for the 2022 and 2023 R&E expenses.

Elections must be made by the earlier of July 6, 2026, or the applicable deadline for filing a claim for a credit or refund for the tax year (generally, three years from filing the return).

Accelerated deductions for all manufacturers

Manufacturers with unamortized domestic R&E expenses under the TCJA can elect to recover those remaining expenses fully on their 2025 income tax returns or over their 2025 and 2026 returns.

Notably, the IRS guidance states that taxpayers “may elect to amortize any remaining unamortized amount” of such expenses. This language suggests that the deduction will be considered an amortization expense. This is significant in light of changes the OBBBA made to the interest expense deduction for businesses, including manufacturers.

The business interest deduction generally is limited to 30% of the manufacturer’s adjusted taxable income (ATI). (Manufacturers that meet the same annual gross receipts test discussed earlier are exempt from the limitation.)

Under the OBBBA, beginning in 2025, ATI for purposes of the interest deduction is calculated without deductions for depreciation, amortization or depletion. So amortization deductions are “added back,” potentially increasing the ATI and the allowable business interest deduction. If R&E expenses aren’t treated as an amortization deduction, they could reduce the allowable business interest deduction.

Decisions, decisions

The OBBBA’s revisions to Sec. 174 are welcome news but also require manufacturers to make some important decisions about the various election and filing options discussed earlier. Another significant decision is whether to re-shore foreign R&E activities to expedite the deduction of the related expenses. We can help answer any questions you have about the tax treatment of R&E expenses.

For decades, quarterly financial reporting has provided the cornerstone for fair, efficient and well-functioning markets. However, President Trump recently posted on social media that public companies should move to semiannual financial reporting. He believes changing the frequency would lower compliance costs and allow management to focus less on meeting short-term earnings targets and more on building long-term value. But critics say less frequent reporting could result in information gaps and increased market volatility.

While no changes have been made to the U.S. Securities and Exchange Commission’s (SEC’s) filing requirements, Trump’s statement reignites the debate over how often companies should issue their financials. While his post centered on public companies, reporting frequency can also be an important issue for private companies, particularly in today’s uncertain markets.

From Wall Street to Main Street

The SEC requires public companies to file annual reports on Form 10-K and quarterly reports on Form 10-Q on an ongoing basis. The quarterly requirement, in place since 1970, was designed to promote transparency and strengthen investor confidence.
Private companies aren’t required to follow SEC rules, so most issue financial statements only at year end. More frequent reporting is usually discretionary, but it can sometimes be a smart idea.

For example, a large private business might decide to issue quarterly statements if it’s considering a public offering or thinking about merging with a public company. Or a business that’s in violation of its loan covenants or otherwise experiencing financial distress may decide to (or be required to) issue more frequent reports.

Midyear assessment

Financial statements present a company’s financial condition at one point in time. When companies report only year-end results, investors, lenders and other stakeholders are left in the dark until the next year. Sometimes, they may want more frequent “snapshots” of financial performance.

Whether quarterly, semiannual or monthly, interim financial statements can provide advanced notice of financial distress due to the loss of a major customer, significant uncollectible accounts receivable, fraud or other circumstances. They also might confirm that a turnaround plan appears successful or that a start-up has finally achieved profits.

Management can benefit from interim reporting, too. Benchmarking interim reports against the same period from the prior year (or against budgeted figures) can help ensure your company meets its financial goals for the year. If your company is underperforming, it may call for corrective measures to improve cash flow and/or updated financial forecasts.

Quality matters

While interim reporting may provide some insight into a company’s year-to-date performance, it’s important to understand the potential shortcomings of these reports. This can help minimize the risk of year-end surprises.

First, unless an outside accounting firm reviews or audits your interim statements, the amounts reported may not conform to U.S. Generally Accepted Accounting Principles (GAAP). Absent external oversight, they may contain mistakes and unverified balances and exclude adjustments for accounting estimates, missing transactions and footnote disclosures. Moreover, leaders with negative news to report may be tempted to artificially inflate revenue and profits in interim reports.

When reviewing interim reports, outside stakeholders may ask questions to assess the skills of accounting personnel and the adequacy of year-to-date accounting procedures. Some may even inquire about the journal entries external auditors made to adjust last year’s preliminary numbers to the final results. This provides insight into potential adjustments that would be needed to make the interim numbers conform to GAAP. Journal entries often recur annually, so a list of adjusting journal entries can help identify which accounts your controller or CFO has the best handle on.

In addition, interim reporting can sometimes be misleading for seasonal businesses. For example, if your business experiences operating peaks and troughs throughout the year, you can’t multiply quarterly profits by four to reliably predict year-end performance. For seasonal operations, it might make more sense to compare last year’s monthly (or quarterly) results to the current year-to-date numbers.

Digging deeper

If interim statements reveal irregularities, stakeholders might ask your company to hire a CPA firm to conduct agreed-upon procedures. These procedures target high-risk account balances or those previously adjusted by auditors.

Agreed-upon procedures engagements may give your stakeholders greater confidence in your interim results. For instance, agreed-upon procedures reports can help identify sources for any irregularities, evaluate your company’s ability to service debt and address concerns that management could be cooking the books.

Find your reporting rhythm

Currently, public companies must issue financial reports each quarter. However, private companies generally have more discretion over how often they issue reports and the level of assurance provided. What’s appropriate for your situation depends on various factors, including your company’s resources, management’s needs and the expectations of outside stakeholders. Contact us for more information about reporting interim results, evaluating midyear concerns and conducting agreed-upon procedures.

Employers need to consider every angle to attract top talent in today’s challenging skilled labor market. If your organization is open to hiring regionally, nationally or even internationally, offering relocation benefits can demonstrate your commitment to employees’ well-being and enhance their onboarding experience. However, there are financial and tax implications to consider.

Budgeting matters

The purpose of relocation benefits is to ease the financial, logistical and mental-health strain of moving for a new hire. They can range from simple cash payouts to a lavish array of perks most often reserved for top executives.

When choosing which benefits to offer, establish a firm budget. Generally, employers cover moving services and transportation, such as airfare. But you might want to cover other perks, including packing and unpacking services, storage expenses, short-term housing, and spousal employment assistance.

The extent to which you should consider relocation benefits may depend on your industry. Your offerings must legitimately compete with those of rival employers casting their lines into the same hiring pool. Otherwise, you probably won’t gain the hiring edge you’re looking for.

A little tax history

Currently, payments for relocation expenses are deductible for the employer but taxable to the employee, similar to how bonuses are generally treated. But it hasn’t always been this way.

Before the Tax Cuts and Jobs Act (TCJA) of 2017, how moving expenses were reported and taxed depended on the type of plan that an employer used. “Accountable” plans, which followed certain IRS rules, allowed employers to fully deduct payments while employees weren’t subject to taxation, including payroll tax. This made such plans highly favorable from a tax perspective, though they required more administrative effort.

Under a “nonaccountable plan,” pre-TCJA relocation payments were treated similarly to how a bonus would be reported and much like how the payments are now treated. That is, they were taxable compensation subject to both income tax and payroll tax. Employees could, however, deduct moving expenses — which substantially mitigated the tax hit.

The TCJA eliminated the moving expense deduction for all employees other than active-duty military members. This provision had been scheduled to sunset after 2025, which could have brought the tax break back to life next year. However, the One Big Beautiful Bill Act, enacted in July 2025, permanently eliminated the moving expense deduction while adding an exception for “intelligence community members.”

Many employees are unpleasantly surprised to discover that moving expenses paid as a relocation benefit are included in their taxable income. One way to counteract the negative tax consequences, if the budget allows, is to increase the total amount of the relocation payment. Often called a “tax gross-up,” the additional amount above the intended payment covers the employee’s tax liability. Alternatively, you could simply forewarn recipients of the tax consequences and discuss the matter with them.

Strategic tool

Under the right circumstances, relocation benefits can be a strategic tool for recruitment, retention and employee engagement. Just make sure such perks are a win-win for both parties before putting them on the table during a hiring negotiation. We can help you explore their feasibility for your organization.

For many individuals, certain assets bypass their wills or trusts and are transferred directly to loved ones through beneficiary designations. These nonprobate assets may include IRAs and certain employer-sponsored retirement accounts, life insurance policies, and some bank and brokerage accounts. This means that if you aren’t careful with your beneficiary designations, some of your assets might not be distributed as you expected. Not only does this undermine your intentions, but it can also create unnecessary conflict and hardship among surviving family members.

3 steps

Here are three steps to help ensure your beneficiary designations will align with your estate planning goals:

1. Name a primary beneficiary and a contingent beneficiary. Without a contingent beneficiary for an asset, if the primary beneficiary dies before you — and you don’t designate another beneficiary before you die — the asset will end up in your general estate and may not be distributed as you intended. In addition, certain assets are protected from your creditors, which wouldn’t apply if they were transferred to your estate. To ensure that you control the ultimate disposition of your wealth and protect that wealth from creditors, name both primary and contingent beneficiaries and don’t name your estate as a beneficiary.

2. Reconsider beneficiaries to reflect changing circumstances. Designating a beneficiary isn’t a “set it and forget it” activity. Failure to update beneficiary designations to reflect changing circumstances creates a risk that you’ll inadvertently leave assets to someone you didn’t intend to benefit, such as an ex-spouse.

It’s also important to update your designation if the primary beneficiary dies, especially if there’s no contingent beneficiary or if the contingent beneficiary is a minor. Suppose, for example, that you name your spouse as the primary beneficiary of a life insurance policy and name your minor child as the contingent beneficiary. If your spouse dies while your child is still a minor, it may be advisable to name a new primary beneficiary — such as a trust — to avoid the complications associated with leaving assets to a minor (court-appointed guardianship, etc.). Note that there are many nuances to consider when deciding to name a trust as a beneficiary.

3. Take government benefits into account. If a loved one depends on Medicaid or other government benefits — for example, a disabled child — naming that person as primary beneficiary of a retirement account or other asset may render him or her ineligible for those benefits. A better approach may be to establish a special needs trust for your loved one and name the trust as beneficiary.

Avoiding unintentional outcomes

Not paying proper attention to beneficiary designations can also expose your estate to costly delays and legal disputes. If a listed beneficiary is no longer living, or if a designation is vague or incomplete, an asset may have to go through probate, which defeats the purpose of naming beneficiaries in the first place.

This can increase expenses, delay distributions and create stress for your family during an already difficult time. Carefully making beneficiary designations and regularly reviewing and updating them helps ensure your asset distributions align with your current wishes, helps prevent disputes, and helps protect your family from unintended financial complications. Contact us with questions regarding your estate plan.

How long should you keep business records?

The retention of tax and business records depends on the nature of the information and how it is used. This schedule has been developed as a guide only. Various regulatory, statutory and industry practices may supersede these general recommendations and alter the holding period. Consult legal counsel before destroying records if you are uncertain and before implementing any business record retention policy. This schedule applies to both paper and electronic resources.

Download the Retention Schedule

On September 18, 2025, the Financial Accounting Standards Board (FASB) published updated guidance on how companies must account for the costs of developing software for internal applications. The changes are expected to reduce compliance costs and improve financial reporting transparency. Here are the details.

Targeted improvements

When the FASB first issued its existing “internal-use software” guidance, companies typically developed software using prescriptive, sequential methods. Today, many companies use agile and iterative development methods. This shift has made it difficult for companies to determine when to begin capitalizing internal-use software development costs on their balance sheets.

Accounting Standards Update (ASU) No. 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software, aims to clarify matters. It eliminates all references to project stages. Instead, companies will capitalize internal-use software development costs after two conditions are met:

Management has authorized and committed to funding the software project, and
It’s “probable” that the project will be completed and the software will be used to perform the intended function.

Determining the “probable-to-complete recognition threshold” may require subjective judgments, particularly when there’s significant uncertainty about the development activities. For instance, coding and testing might still be necessary to resolve uncertainty for software based on 1) technological innovations, or 2) novel, unique or unproven features or functions. Uncertainty might also exist if management hasn’t identified or finalized the software’s performance requirements.

Companies will apply the disclosure requirements for property, plant and equipment to capitalized internal-use software. This explicitly relieves them from certain intangible asset disclosures.

Scope and effective date

ASU 2025-06 applies to development costs for all internal-use software. In addition, it supersedes the existing guidance for internal website development costs. Accounting Standards Codification Subtopic 350-50, Intangibles — Goodwill and Other — Website Development Costs, will be integrated into the internal-use software guidance. However, the update won’t affect accounting for costs of developing software or websites to sell, lease or market to third parties.

All entities must implement the updated guidance for annual and interim reporting periods beginning after December 15, 2027. Companies can choose to implement the guidance:

Prospectively to new internal-use software development costs incurred as of the beginning of the adoption period,
Retrospectively by recasting comparative periods and recognizing a cumulative-effect adjustment as of the beginning of the first period presented, or
Using a modified transition approach based on the project’s status and whether software costs were capitalized before the date of adoption.

The method a company chooses must be applied consistently across all projects. Early adoption is permitted, but only at the beginning of an annual reporting period.

For more information

If your company develops internal-use software or websites, now is the time to prepare for these changes. We can help you update your capitalization policies to reflect the new “probable-to-complete” threshold and guide you through the transition. Contact us to ensure your financial reporting stays compliant and transparent.

If you’re considering guaranteeing, or are asked to guarantee, a loan to your closely held corporation, it’s important to understand the potential tax consequences. Acting as a guarantor, endorser or indemnitor means that if the corporation defaults, you could be responsible for repaying the loan. Without planning ahead, you may face unexpected tax implications.

A business bad debt

If you’re compelled to make good on the obligation, the payment of principal or interest in discharge of the obligation generally results in a bad debt deduction. This may be either a business or a nonbusiness bad debt deduction. If it’s a business bad debt, it’s deductible against ordinary income. A business bad debt can be either totally or partly worthless. If it’s a nonbusiness bad debt, it’s deductible as a short-term capital loss, which is subject to certain limitations. A nonbusiness bad debt is deductible only if it’s totally worthless.

To be treated as a business bad debt, the guarantee must be closely related to your trade or business. If the reason for guaranteeing the corporation loan is to protect your job, the guarantee is considered closely related to your trade or business as an employee. But employment must be the dominant motive. If your annual salary exceeds your investment in the corporation, this generally shows that the dominant motive for the guarantee is to protect your job. On the other hand, if your investment in the corporation substantially exceeds your annual salary, that’s evidence that the guarantee is primarily to protect your investment rather than your job.

Proving the relationship

Except in the case of job guarantees, it may be difficult to show the guarantee is closely related to your trade or business. You have to show that the guarantee is related to your business as a promoter, or that the guarantee is related to some other trade or business separately carried on by you.

If the reason for guaranteeing your corporation’s loan isn’t closely related to your trade or business and you’re required to pay off the loan, you can take a nonbusiness bad debt deduction if you show that your reason for the guarantee was to protect your investment, or you entered the guarantee transaction with a profit motive.

Note: The IRS and courts will scrutinize the dominant motive carefully. Reasonable compensation doesn’t always mean money. It can include protecting employment or business interests.

Additional requirements

In addition to satisfying the above requirements, a business or nonbusiness bad debt is deductible only if you meet these three conditions:

You have a legal duty to make the guaranty payment (although there’s no requirement that a legal action be brought against you).
The guaranty agreement is entered into before the debt becomes worthless.
You receive reasonable consideration (not necessarily cash or property) for entering into the guaranty agreement.

Any payment you make on a loan you guaranteed is deductible as a bad debt in the year you make it, unless the agreement (or local law) provides for a right of subrogation against the corporation. If you have this right, or some other right to demand payment from the corporation, you can’t take a bad debt deduction until the rights become partly or totally worthless.

These are only some of the possible tax consequences of guaranteeing a loan to your closely held corporation. Consult with us to learn all the implications and to help ensure the best tax results.

Remember the SECURE 2.0 Act? It was part of a massive year-end “omnibus” spending package signed into law in 2022. Like many laws, SECURE 2.0 contains provisions that necessitate federal implementation guidance. One area of particular concern for employers has been how the act’s provisions impact the treatment of catch-up contributions to qualified retirement plans. Earlier this month, the U.S. Department of the Treasury and the IRS issued final regulations clarifying these rules.

Two major components

According to the IRS news release, “The final regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule and reflect comments received in response to the proposed regulations issued in January.” In actuality, the final regs address two major components of the rules:

Required Roth treatment. The “Roth catch-up rule” referred to above is a provision of SECURE 2.0 that requires catch-up contributions made by certain higher-income participants to be designated as Roth contributions. This means the contributions come from after-tax earnings rather than pretax salary deferrals. The final regs stipulate that employees age 50 or above with previous-year wages exceeding $145,000 (an annually inflation-adjusted amount) must make Roth-based catch-up contributions beginning with tax years after December 31, 2026.
A higher limit for some participants. The standard catch-up contribution limit is indexed annually for inflation. For example, in 2025, it’s $7,500 for most 401(k), 403(b) and governmental 457 plans, as well as for the federal government’s Thrift Savings Plan. Under the final regs, however, the limit will rise to 110% of the standard amount for eligible participants in SIMPLE plans and to 150% of the standard amount for participants of any qualified plan (including SIMPLE plans) ages 60 through 63.

Changes to proposed rules

The IRS made several changes to the proposed rules in response to public comments. One is that plan administrators will be allowed to aggregate a participant’s previous-year wages from certain separate common law employers in determining whether the participant is subject to the Roth catch-up rule.

Another example of changes from the proposed regs to the final ones is revised guidance on corrections related to the Roth requirement. Generally, these involve either:

Transferring a pretax catch-up contribution to a Roth account and reporting it on Form W-2, or
Making an in-plan Roth rollover if Form W-2 has already been filed and reporting it on Form 1099-R.

Note that a plan needn’t use the same correction method for all participants, but it must use the same correction method for similarly situated participants. Also, a correction isn’t required unless a participant’s total erroneous pretax catch-up contributions exceed $250.

Further information

If you’d like to start early, the final regs permit plans to implement the Roth catch-up rule for taxable years beginning before 2027 using any “reasonable, good faith interpretation of statutory provisions.” The IRS news release says the final regulations don’t extend or modify the administrative transition period for the Roth requirement provided under Notice 2023-62, which generally ends on December 31, 2025. Contact us for further information about SECURE 2.0 and for help managing the costs of your organization’s employer-sponsored qualified retirement plan.

Yeo & Yeo, a leading Michigan-based accounting and advisory firm, has been recognized among Michigan’s Best and Brightest in Wellness for the twelfth consecutive year. The award honors organizations that foster a culture of wellness and show a clear commitment to supporting employee well-being and healthier communities.

Yeo & Yeo continues to expand benefits in response to employee feedback, ensuring the firm remains aligned with the changing needs of its team. This year, the firm introduced an enhanced Paid Parental Leave Program providing more financial security and flexibility for families. Other updates include additional time off for long-term employees, expanded dental coverage for orthodontics, and enhanced life insurance benefits.

Employees also benefit from access to Boon Health, which provides personalized coaching to support professional development, personal growth, and overall well-being. To further promote work-life balance, Yeo & Yeo offers a flexible work environment and hybrid work options, along with initiatives such as half-day summer Fridays that encourage a healthy integration of work and personal life.

“Our people are at the heart of everything we do, and we remain committed to providing benefits and resources that help them thrive both at work and at home,” said Dave Youngstrom, President & CEO of Yeo & Yeo. “The enhancements we introduced this year reflect our ongoing investment in employee well-being, and this recognition affirms the dedication of our HR team and leaders who continue to support our employees in meaningful ways.”

Winners of the Best and Brightest in Wellness award are chosen through a rigorous evaluation process that measures the effectiveness of wellness initiatives, employee engagement, and a company’s commitment to supporting physical, mental, and emotional health. Yeo & Yeo and the other winning companies will be honored at the Michigan’s Best and Brightest in Wellness awards celebration on October 30.

Among its numerous tax provisions, the One Big Beautiful Bill Act (OBBBA) reinstated immediate deductions for research and experimental (R&E) expenditures under Internal Revenue Code Section 174, beginning in 2025. The IRS has recently issued transitional guidance (Revenue Procedure 2025-28) on how this change will be implemented.

The guidance addresses several critical issues. Here’s what businesses of all sizes need to know.

The reinstatement

R&E expenditures generally refer to research and development costs in the experimental or laboratory sense. They include costs related to activities intended to discover information that would eliminate uncertainty about the development or improvement of a product.

Since 2022, the Tax Cuts and Jobs Act (TCJA) has required businesses to amortize domestic R&E costs over five years, with foreign costs amortized over 15 years. The OBBBA permanently reinstates the pre-TCJA treatment of domestic R&E costs, allowing their deduction for expenses incurred or paid in tax years beginning after 2024.

The OBBBA also permits small businesses that satisfy a gross receipts test to claim the R&E deduction retroactively to 2022. (For 2025, average annual gross receipts for the previous three years must be $31 million or less.) And any business that incurred domestic R&E expenses in 2022 through 2024 may elect to accelerate the remaining deductions for those expenditures over either a one- or two-year period.

The immediate deduction of qualified R&E expenses isn’t mandatory. Depending on a variety of factors, in some situations, claiming it may not be advisable. Taxpayers generally can instead elect to capitalize and amortize such expenses paid in a tax year after 2024 over at least 60 months. The election must be made by the due date, with extensions, of the original tax return for the first tax year to which the election applies. For 2025, a taxpayer that makes an accounting method change to capitalize and amortize R&E expenses will be deemed to have made the election.

Retroactive deductions for small businesses

As noted, eligible small businesses can elect to treat the changes to Sec. 174 as if they took effect for tax years beginning after 2021, rather than after 2024. How to do this depends in part on whether the taxpayer has already filed a 2024 tax return.

If the taxpayer filed a 2024 return before August 28, 2025, an automatic extension to supersede that return to include the new guidance is available. However, the taxpayer must file that replacement return by the extended deadline (typically September 15 or October 15). Alternatively, the taxpayer can file an amended 2024 return, following one of the two options discussed below.

If the taxpayer didn’t file a 2024 return by August 28, the taxpayer can file by the applicable extended deadline and either:

Elect to expense eligible R&E expenses under the new guidance, which would also require filing amended returns for 2022 and 2023, or
Do an automatic method of accounting change and a “true-up” adjustment on the 2024 return for the 2022 and 2023 R&E expenses.

Elections must be made by the earlier of July 6, 2026, or the applicable deadline for filing a claim for a credit or refund for the tax year (generally, three years from filing the return).

Accelerated deductions for all businesses

Businesses with unamortized domestic R&E expenses under the TCJA can elect to fully recover those remaining expenses on their 2025 income tax returns or over their 2025 and 2026 returns.

The business interest deduction generally is limited to 30% of the taxpayer’s adjusted taxable income (ATI). (Taxpayers that meet the same annual gross receipts test discussed earlier are exempt from the limitation.) Under the OBBBA, beginning in 2025, ATI for purposes of the interest deduction is calculated without deductions for depreciation, amortization or depletion. So amortization deductions are “added back,” potentially increasing the ATI and the allowable business interest deduction. If R&E expenses aren’t treated as an amortization deduction, they could reduce the allowable business interest deduction.

The interplay with the research credit

The Sec. 41 research tax credit is also available for certain research-related expenses, and you can’t claim both the credit and the deduction for the same expense. A tax deduction reduces the amount of income that’s taxed, while a tax credit reduces the actual tax you owe dollar-for-dollar, providing much more tax savings than a deduction of an equal amount. But the types of expenses that qualify for the credit are narrower than those that qualify for the deduction.

The OBBBA changes a TCJA provision so that the amount deducted or charged to a capital account for research expenses is reduced by the full amount of the research credit, as opposed to being subject to a more complex calculation that had been in effect under the TCJA. The amount that’s capitalized is reduced by the amount of the credit claimed. For example, suppose the allowed credit is $20,000. The capitalized amount for the year would be reduced by $20,000.

The OBBBA continues, however, to allow taxpayers to elect to take a reduced research credit, rather than reducing their R&E deduction. The OBBBA also allows certain small businesses (generally determined by the gross receipts test mentioned above) to make late elections to reduce their research credit — or to revoke prior elections to reduce the credit. The late elections generally are available for tax years for which the original return was filed before September 15, 2025, and must be made by the earlier of July 6, 2026, or the deadline for filing a claim for a credit or refund for the tax year, on an amended return or an administrative adjustment request (AAR).

Reduced uncertainty

The IRS guidance also provides automatic IRS consent to applications to change accounting methods for domestic R&E expenses under the TCJA, the OBBBA, the small business retroactive method and the recovery of unamortized method — reducing uncertainty. We can help address any questions you have about the tax treatment of R&E expenses.

Billing “incident to” a physician can increase reimbursements — but it comes with complex rules that, if misunderstood, can lead to claim denials, audits, or even false claim exposure. In this 14-minute on-demand session, Denise Garrett, Billing Manager at Yeo & Yeo Medical Billing & Consulting, breaks down what you need to know to stay compliant and protect your practice.

What You’ll Learn:

What “incident to” billing is — and where it applies
Supervision and documentation requirements you must meet
The risks of improper billing and how to avoid them
Key steps for implementing safe, compliant workflows

Why Watch:

With audits becoming more common, it’s not a question of if your practice will be audited — but when. Watch this session to ensure you’re billing “incident to” the right way, keeping your revenue secure while staying compliant.

Watch the Webinar

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.

Access the Toolkit

Nobody’s perfect, and neither is any workplace. Every employer will likely field occasional employee complaints about inappropriate behavior or concerns about something that doesn’t seem quite right.

When a complaint or concern arises, think of it as an opportunity to test your organization’s employment policies and procedures. Handling it well can strengthen your work environment and employer brand. Handling it poorly may undermine employees’ trust and even result in financial exposure.

Deciding whether to investigate

When an employee raises an issue, employers must first evaluate whether it warrants a formal investigation under organizational policy or the law. Train supervisors, managers and human resources (HR) staff to do so and never ignore a complaint or concern.

Various federal laws require employers to immediately investigate complaints of discrimination or harassment. These include:

Title VII of the Civil Rights Act,
The Americans With Disabilities Act, and
The Age Discrimination in Employment Act.

Some concerns may have relatively simple explanations and can be resolved with a conversation. Others might signal fraud. When investigating potential fraud, work with your attorney and an outside forensic accountant. Take care when interviewing personnel and gathering evidence to protect the chain of custody and ensure findings are legally admissible.

Other types of concerns may arise as well — for example, safety violations under the Occupational Safety and Health Act or payroll problems under the Fair Labor Standards Act (or similar state laws). Even if not legally required, an investigation may be necessary if your organization’s employee handbook or posted HR policies commit you to follow up in a prescribed manner.

Laying the groundwork

Should you decide to pursue an investigation, plan it carefully. Start by determining whether it will be internal or external. One of your staffers may be qualified to lead an internal investigation — but only so long as the individual is well trained and unbiased. For more complex and serious issues, engaging an external investigator is generally recommended.

Also, clarify the investigation’s scope. Identify which policies or laws are applicable to the allegations. In addition, pinpoint what types of evidence you’ll likely need.

Collecting information

Most workplace investigations center on face-to-face interviews. Your investigator will probably want to start with the employee who made the complaint or raised the concern and then move on to the accused (in the case of a complaint), witnesses and other persons of interest. Train anyone in your organization who’ll participate in internal investigations to ask open-ended questions, actively listen and maintain strict confidentiality.

Whether internal or external, investigators should obtain other types of evidence as they’re available. Electronic communications between pertinent parties, security footage and financial records can prove invaluable to substantiating interview findings.

Ultimately, ask each investigator to write a formal report that summarizes the investigative process and objectively presents the findings. Use the report to determine whether the allegations are substantiated, to decide on appropriate action and to serve as legal documentation.

Reaching a decision

Based on the investigator’s report and further discussion, qualified members of leadership should decide how to proceed. Don’t hesitate to consult legal counsel as well.

Unlike a criminal court, your organization needn’t prove beyond a reasonable doubt that wrongdoing occurred. If it’s reasonably likely that an employee misbehaved or grossly underperformed, your organization can still take proportionate action. However, if you decide to terminate the individual, you’ll need a sound rationale and well-documented evidence to minimize legal risks.

Communicate your decision carefully to the parties involved. Generally, complainants aren’t entitled to know exactly how employers handle a substantiated allegation. But organizations may choose to provide more information.

Above all, demonstrate that you’ve protected everyone’s privacy while actively addressing the complaint or concern. If your response involves disciplinary consequences or performance improvement measures, be sure they’re consistent with your stated policies and proportional to the specifics of the case.

Protecting your organization

The stakes of workplace investigations are high. Employers who fail to handle them properly face serious risks, such as higher turnover, reputational harm, and increased insurance and legal costs.

Work with your attorney to continuously improve your organization’s employment policies and procedures. Meanwhile, if you need assistance investigating potential misconduct or improving internal controls and financial documentation, our team can help you build processes that protect your organization and withstand scrutiny.

The more things change, the more they stay the same. This age-old saying applies to many things, and one of them is fraud perpetrated against businesses by their employees.

In fact, occupational fraud cost organizations about 5% of their revenue on average last year, according to the Association of Certified Fraud Examiners’ Occupational Fraud 2024: A Report to the Nations. Let’s review its three basic categories.

Misappropriating assets

The first category is asset misappropriation. It comprises theft or misuse of any business asset, but related schemes often involve cash. These types of scams are the most common type of occupational fraud, though they’re typically less costly than crimes committed under the other two categories.

One classic example is the “ghost” employee ploy, where a staff member with payroll access channels funds to a nonexistent worker. Naturally, those funds end up in the real employee’s pocket.

There are plenty of others. Asset misappropriation has long involved check tampering, whereby an employee steals, forges or alters company checks to reap ill-gotten financial rewards. Now that midsize and larger businesses rely more on electronic transactions, these companies are relatively less susceptible to check schemes. However, many small companies are still at risk.

If you run a cash-intensive business, be on the lookout for dishonest workers skimming funds before they’re recorded. And if your company maintains inventory or supplies, safeguard these carefully to avoid theft.

Engaging in corrupt activities

The second category of occupational fraud is corruption. Dishonest employees in positions of influence may commit crimes for personal gain and the company’s loss. These types of schemes are rarely simple and may go on for months — or even years — without anyone noticing.

For instance, a corrupt staffer may work with a vendor rep to inflate prices on the vendor’s goods and services. The two then split the difference when the business pays the bill. Collusion like this can hurt your company’s financial performance and business reputation. Leadership teams that fail to prevent such schemes risk losing the confidence and support of lenders and investors.

Don’t ignore the possibility of kickback schemes either. Here, a person of influence in the company uses a vendor or other provider, not because they’re the best choice, but because the employee involved gets a personal benefit. Examples might include cash, a valuable gift or free services.

Falsifying financial statements

The third category is financial statement fraud. In these schemes, perpetrators falsify financial statements to either hide poor performance or commit outright theft. On the upside, this category is generally the least prevalent of the three. The downside? It’s often the costliest — with such crimes costing companies many hundreds of thousands of dollars on average.

One example to watch out for is inflated revenue. A manager, perhaps angling for a promotion or fearful of termination, records sales that never actually occurred to make the business appear more profitable. On a similar tack, a dishonest employee may hide or delay recording legitimate expenses or debts to make financial results look stronger.

Fraudulent manipulation of financial statements can be particularly dangerous. These crimes are often sophisticated, hard to detect and damaging to a company’s reputation at the highest levels.

Common thread

As you can see, occupational fraud can take many forms. But the common thread is the financial and reputational damage to affected businesses. And the threat level is often higher for smaller companies because they may have fewer resources to fight back. Let us help you spot vulnerabilities in your operations, strengthen internal controls, and devise tailored fraud prevention and detection strategies.

We want to make you aware of an important change from the IRS that may affect how you receive your tax refund.

Effective September 30, 2025, the IRS will no longer issue paper checks for tax refunds. This change is part of Executive Order 14247, which mandates that all federal payments and collections be processed electronically. This includes IRS refunds, tax payments, and other disbursements.

What This Means for You

Refunds will only be issued via direct deposit, prepaid debit cards, mobile payment app, or other approved electronic methods.
Paper checks will be discontinued, except in limited cases such as:
- Individuals without access to banking services
- Emergency or hardship situations
Tax payments should be made electronically if possible, although we believe the IRS will continue to accept payments via check for the time being.

Action Required

To ensure timely receipt of your refund:

Provide your bank account information when filing your tax return.
Update your IRS online account with current banking details if needed: https://www.irs.gov/payments

Why This Change is Happening

The move to electronic payments is designed to:

Reduce fraud and theft associated with paper checks
Speed up refund delivery
Lower processing costs for the federal government

Need Help?

Our team is here to assist you with updating your payment preferences and ensuring a smooth transition. Please contact your Yeo & Yeo tax professional for assistance.

Yeo & Yeo, a leading Michigan accounting and advisory firm, is pleased to announce that Michael Wilson II, CPA, has received the Rising Star Award from the Michigan Association of Certified Public Accountants (MICPA). The Rising Star Award honors the accomplishments and contributions of up-and-coming CPAs who add value to their firm or company through strategic and innovative initiatives, leadership competencies, and commitment to the profession.

Wilson joined Yeo & Yeo in 2020 and was recently promoted to manager. He serves in the firm’s Tax & Consulting Service Line and is a key leader within the firm’s Cannabis Services Group. He specializes in business advisory services, consulting, and tax planning and preparation with an emphasis on the cannabis industry. In addition to serving clients, he supports the firm’s annual two-day Summer Leadership Program, which helps attract and inspire the next generation of accounting professionals.

Reflecting on what the Rising Star Award means to him, Wilson shared, “To me, this award represents more than just professional achievement—it’s about making a difference in the lives of those around me. Whether advising a client, mentoring a peer, or organizing a community project, I want to lead with empathy, build trust, and leave a positive impact.”

Wilson’s passion for service shines through both his leadership at Yeo & Yeo and his volunteer efforts in the community. He serves on the Yeo & Yeo Foundation Board and has led several firm-wide service initiatives, including the current 2025 project benefiting the Greater Michigan Chapter of the Alzheimer’s Association. He is an active member of the Saginaw County Chamber of Commerce’s Young Professionals Network Steering Committee and volunteers with Rescue Ministries of Mid-Michigan.

“Michael brings energy to everything he does—whether helping a teammate understand the ‘why’ behind their work or stepping up to lead a firm initiative that gives back to the community,” said Alex Wilson, CPA, principal. “He leads by example and always lifts up those around him.”

“Michael is a strategic thinker who inspires others to succeed,” added Chris Sheridan, CPA, CVA, principal. “He’s innovative, service-driven, and absolutely deserving of this recognition from the MICPA.”

Honorees will be recognized at the MICPA Celebrate Awards on November 12, 2025, at the Colony Club in Detroit.

Does your business receive large amounts of cash or cash equivalents? If so, you’re generally required to report these transactions to the IRS — and not just on your tax return. Here are some answers to questions you may have.

What are the requirements?

Although many cash transactions are legitimate, the IRS explains that the information reported on Form 8300 “can help stop those who evade taxes, profit from the drug trade, engage in terrorist financing and conduct other criminal activities. The government can often trace money from these illegal activities through the payments reported on Form 8300 and other cash reporting forms.”

Each person who, in the course of operating a trade or business, receives more than $10,000 in cash in one transaction (or two or more related transactions), must file Form 8300. Who is a “person”? It can be an individual, company, corporation, partnership, association, trust or estate. What are considered “related transactions”? Any transactions between the same payer and recipient conducted in a 24-hour period. Transactions can also be considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions.

In order to complete Form 8300, you’ll need personal information about the person making the cash payment, including a Social Security or taxpayer identification number.

The IRS reminds businesses that they can “batch file” their reports, which is especially helpful to those required to file many forms.

Note: Under a rule that went into effect on January 1, 2024, businesses must now file Forms 8300 electronically if they’re otherwise required to e-file certain other information returns electronically, such as W-2s and 1099s. You also must e-file if you’re required to file at least 10 information returns other than Form 8300 during a calendar year.

What’s the definition of cash and cash equivalents?

For Form 8300 reporting purposes, cash includes U.S. currency and coins, as well as foreign money. It may also include cash equivalents such as cashier’s checks (sometimes called bank checks), bank drafts, traveler’s checks and money orders.

Money orders and cashier’s checks under $10,000, when used in combination with other forms of cash for a single transaction that exceeds $10,000, are defined as cash for Form 8300 reporting purposes.

What about digital assets such as cryptocurrency? Despite a 2021 law that would treat certain digital asset receipts like “cash,” the IRS announced in 2024 that you don’t have to report digital asset receipts on Form 8300 until regulations are issued. IRS Announcement 2024-4 remains the latest official word.

Note: Under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier’s checks, treasurer’s checks and/or bank checks, bank drafts, traveler’s checks and money orders with a face value of more than $10,000 by filing currency transaction reports.

What type of penalties can be imposed for noncompliance?

If a business doesn’t file Forms 8300 on time, there can be a civil penalty of $310 for each missed form, up to an annual cap. The penalties are higher if the IRS finds the failure to file is intentional, and there can be criminal penalties as well.

In one recent case, an Arizona car dealer failed to file the required number of Forms 8300. While the dealer did file 116 forms for the year in question, the IRS determined that the business should have filed an additional 266 forms.

The tax agency assessed penalties of $118,140. The dealer argued that it had reasonable cause for not filing all the forms because the software it was using wasn’t functioning properly. However, the U.S. Tax Court ruled that the dealer wasn’t using the software correctly and didn’t take steps to foster compliance. (TC Memo 2025-38)

Stay on top of the requirements

Compliance with Form 8300 requirements can help your business avoid steep penalties and trouble with the IRS. Recordkeeping is critical. You should keep a copy of each Form 8300 for five years from the date you file it, according to the IRS. “Confirmation receipts don’t meet the recordkeeping requirement,” the tax agency adds.