Do Your Salespeople Come by Their Commissions Honestly?

Preventing financial losses from occupational fraud requires your company to remain vigilant. In a nutshell: Trust employees, but routinely verify they aren’t stealing. This includes salespeople who, if they’re unethical, could falsify sales commission records to illicitly line their own pockets. Because it’s sometimes impossible to spot crooks in your midst, be aware of potential sales commission fraud schemes and how best to detect and prevent them.

How some may cheat

Sales commission fraud can take several forms. For example, a retail employee bent on fraud may enter a nonexistent sale into a point of sale (POS) system to generate a commission. Or a dishonest sales associate might create a fraudulent contract that invents everything — including the customer.

Another risk is overstatement of sales. In such cases, workers alter internal sales reports or invoices or inflate sales captured via their company’s POS system. Or they might change their company’s commission records to reflect a higher pay rate. As for workers who don’t have access to such records, they might collude with someone who does (such as an accounting staffer) to alter rates.

Uncovering schemes in progress

Fortunately, you can use data from these types of fraud incidents to detect abuse. To uncover a scheme in progress:

Analyze commission expenses relative to company sales. After accounting for timing differences, the volume of commission payments should correlate to your business’s sales revenue.

Scrutinize individual commissions. Focus on outliers whose commission levels are significantly higher and ascertain the reasons for such differences. Consider setting benchmarks based on commission sales by employee type, location and seniority. This can enable you to detect fraud more easily.

Randomly sample sales. For sales associated with commissions, ensure you have documentation of the sales and commission payments. You might contact individual customers to verify sales transactions by framing your calls as customer satisfaction checks.

Monitor employee communications. Commission schemes sometimes involve collusion with other employees and customers, which usually leaves email, phone and text trails. But to prevent lawsuits, vet your intention to monitor worker communications with legal counsel.

Importance of internal controls

Detecting schemes already underway isn’t enough to prevent financial losses. You also need to adopt controls that discourage sales commission fraud. This starts with an ethical “tone at the top” and managers who set realistic sales goals that salespeople can meet without cheating.

Also, minimize opportunities to tamper with records by limiting access to files and scrutinizing unusual relationships between sales associates and accounting staffers. And if you don’t already have a confidential fraud reporting hotline open to employees, customers and vendors, put one in place.

We can help

Your business may not be equipped to routinely sift through sales data and spot potential fraud. Contact us for help. We can also assist you in implementing controls that make it harder for salespeople to falsify records.

Businesses in certain industries employ service workers who receive tips as a large part of their compensation. These businesses include restaurants, hotels and salons. Compliance with federal and state tax regulations is vital if your business has employees who receive tips.

Are tips becoming tax-free?

During the campaign, President Trump promised to end taxes on tips. While the proposal created buzz among employees and some business owners, no legislation eliminating taxes on tips has been passed. For now, employers should continue to follow the existing IRS rules until the law changes — if it does. Unless legal changes are enacted, the status quo remains in effect.

With that in mind, here are answers to questions about the current rules.

How are tips defined?

Tips are optional and can be cash or noncash. Cash tips are received directly from customers. They can also be electronically paid tips distributed to employees by employers and tips received from other employees in tip-sharing arrangements. Workers must generally report cash tips to their employers. Noncash tips are items of value other than cash. They can include tickets, passes or other items that employees receive from customers. Workers don’t have to report noncash tips to employers.

Four factors determine whether a payment qualifies as a tip for tax purposes:

The customer voluntarily makes a payment,
The customer has an unrestricted right to determine the amount,
The payment isn’t negotiated with, or dictated by, employer policy, and
The customer generally has a right to determine who receives the payment.

There are more relevant definitions. A direct tip occurs when an employee receives it directly from a customer (even as part of a tip pool). Directly tipped employees include wait staff, bartenders and hairstylists. An indirect tip occurs when an employee who normally doesn’t receive tips receives one. Indirectly tipped employees can include bussers, service bartenders, cooks and salon shampooers.

What records need to be kept?

Tipped workers must keep daily records of the cash tips they receive. To do so, they can use Form 4070A, Employee’s Daily Record of Tips. It’s found in IRS Publication 1244.

Workers should also keep records of the dates and values of noncash tips. The IRS doesn’t require workers to report noncash tips to employers, but they must report them on their tax returns.

How must employees report tips to employers?

Employees must report tips to employers by the 10th of the month after the month they were received. The IRS doesn’t require workers to use a particular form to report tips. However, a worker’s tip report generally should include the:

Employee’s name, address, Social Security number and signature,
Employer’s name and address,
Month or period covered, and
Total tips received during the period.

Note: If an employee’s monthly tips are less than $20, there’s no requirement to report them to his or her employer. However, they must be included as income on his or her tax return.

Are there other employer requirements?

Yes. Send each employee a Form W-2 that includes reported tips. In addition, employers must:

Keep employees’ tip reports.
Withhold taxes, including income taxes and the employee’s share of Social Security and Medicare taxes, based on employees’ wages and reported tip income.
Pay the employer share of Social Security and Medicare taxes based on the total wages paid to tipped employees as well as reported tip income.
Report this information to the IRS on Form 941, Employer’s Quarterly Federal Tax Return.
Deposit withheld taxes in accordance with federal tax deposit requirements.

In addition, “large” food or beverage establishments must file another annual report. Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, discloses receipts and tips.

What’s the tip tax credit?

Suppose you’re an employer with tipped workers providing food and beverages. In that case, you may qualify for a valuable federal tax credit involving the Social Security and Medicare taxes you pay on employees’ tip income.

How should employers proceed?

Running a business with tipped employees involves more than just providing good service. It requires careful adherence to wage and hour laws, thorough recordkeeping, accurate reporting and an awareness of changing requirements. While President Trump’s pledge to end taxes on tips hasn’t yet materialized into law, stay alert for potential changes. In the meantime, continue meeting all current requirements to ensure compliance. Contact us for guidance about your situation.

Financial forecasting provides a roadmap to guide your organization on the path to success. Forecasts support strategic planning by helping you allocate resources efficiently, manage risks effectively and optimize capital investments. However, today’s dynamic marketplace is uncharted territory, so you can’t rely solely on historical data. Reliable forecasts also consider external market trends and professional insights. Here are some tips to strengthen your forecasting models and help you avoid common pitfalls.

Determine the optimal approach

What’s the right forecasting method for your situation? The answer depends on several critical factors, including:

Forecast length. Short-term forecasts (that cover a year or less) often rely more heavily on historical data. These plans focus primarily on the organization’s immediate needs. Long-term forecasts require more qualitative inputs to account for uncertainties, such as market disruptions, economic shifts, and changing regulations and consumer behaviors. These plans are essential to support strategic decisions and attract funding from investors and lenders. The longer your forecast period is, the more likely internal and external conditions will change. So short-term forecasts tend to be more accurate than long-term plans. Long-term forecasts may need to be updated as market conditions evolve.

Stability of demand. Industries with consistent sales patterns may be able to use straightforward historical data analysis. However, those with seasonal and cyclical fluctuations might need to incorporate techniques like time-series decomposition to adjust for peaks and downturns. Companies experiencing unpredictable demand might consider using advanced forecasting software that integrates real-time sales data and external variables to enhance accuracy.

Availability of historical data. Techniques such as exponential smoothing require at least three years of data to generate reliable projections. For businesses launching new products or entering new markets, qualitative forecasting methods that incorporate expert opinions and market research may be more effective.

Business offerings. Companies with a wide range of products and services may prefer simplified forecasting models. Conversely, those with a focused product line can achieve greater accuracy with more complex statistical models.

Relying on just one forecasting model can be problematic. What happens if the forecast model gets things wrong? It may be more prudent to use a combination of approaches tailored to individual products and locations. Considering the results from multiple forecasting approaches can lead to better outcomes, especially when managing inventory levels.

Implement advanced forecasting techniques

Businesses seeking greater forecasting accuracy can implement advanced techniques, such as:

Time-series analysis, which breaks historical data into trend, seasonal and cyclical components to better understand patterns,
Regression models that identify relationships between financial variables to improve prediction accuracy,
Scenario planning that prepares best-case, worst-case and expected forecasts,
Sensitivity analysis that determines which forecasting assumptions have the greatest impact on expected financial outcomes, and
Rolling forecasts that are continuously updated based on current data to provide greater flexibility and adaptability.

Increasingly, businesses are leveraging artificial intelligence and machine learning to enhance forecasting precision. These technologies analyze large datasets quickly, identify trends and adjust predictions dynamically based on real-time changes. By integrating AI-driven forecasting tools, businesses can optimize their decision-making and gain a competitive edge.

Seek outside guidance

Financial statements are often the starting point for forecasts. Our accounting and auditing team can help ensure your historical data is accurate and then guide you through the process of developing reliable, market-driven forecasts based on your current needs. From developing realistic assumptions and reliable models to tracking forecast accuracy and updating for market shifts, we’ve got you covered. Contact us for more information.

Your estate plan is the perfect place to make charitable gifts if you’re a charitably inclined individual. One vehicle to consider using is a donor-advised fund (DAF).

What’s the main attraction? Among other benefits, a DAF allows you to set aside funds for charitable giving while you’re alive, and you (or your heirs) can direct donations over time. Plus, in your estate plan, you can designate your DAF as a beneficiary to receive assets upon your death, ensuring continued charitable giving in your name.

Setting up a DAF

A DAF generally requires an initial contribution of at least $5,000. It’s typically managed by a financial institution or an independent sponsoring organization, which, in return, charges an administrative fee based on a percentage of the account balance.

You have the option of funding a DAF through estate assets. And you can name a DAF as a beneficiary of IRA or 401(k) plan accounts, life insurance policies or through a bequest in your will or trust.

You instruct the DAF on how to distribute contributions to the charities of your choice. While deciding which charities to support, your contributions are invested and potentially grow within the account. Then, the charitable organizations you choose are vetted to ensure they’re qualified to accept DAF funds. Finally, the checks are cut and distributed to the charities.

DAF benefits

A DAF has several benefits. For starters, using a DAF is relatively easy. With all the administrative work and logistics handled for you, you simply make contributions to the fund. It may be possible to transfer securities directly from your bank account.

The contributions you make to the DAF generally are tax deductible. Therefore, if you itemize deductions on your tax return instead of taking the standard deduction, the gifts can offset your current income tax liability. Contributions can be deducted in the tax year you make them, rather than waiting until the fund distributes them.

For monetary contributions, you can write off the full amount, up to 60% of your adjusted gross income (AGI) in 2025. Any excess is carried over for five years. For a gift of appreciated property, the donation is equal to the property’s fair market value if you’ve owned the asset for longer than one year, up to 30% of AGI. Any excess is carried over for five years. Otherwise, the deduction for property is limited to your adjusted basis (often your initial cost).

If you prefer, distributions can be made to charities anonymously. Alternatively, you can name the fund after your family. In either event, the DAF may be created through your will, providing a lasting legacy.

DAF drawbacks

DAFs have their drawbacks as well. Despite some misconceptions, you don’t control how the charities use the money after it’s disbursed from the DAF.

Also, you can’t personally benefit from your DAF. For instance, you can’t direct that the money should be used to buy tickets to a local fundraiser you want to support if the cost of the tickets isn’t fully tax deductible. Lastly, detractors have complained about the administrative fees.

Leave a lasting legacy

Using a DAF in your estate plan can help maximize charitable giving, minimize taxes and create a lasting legacy aligned with your philanthropic goals. It provides flexibility and allows heirs to continue supporting charitable causes in your name. Contact us with questions regarding a DAF.

Yeo & Yeo is pleased to announce that Michael Rolka, CPA, CGFM, will lead the firm’s Government Services Group, which provides accounting, audit, and consulting solutions for governmental entities across Michigan.

Rolka succeeds Jamie Rivette, CPA, CGFM, who has led the group for ten years, establishing Yeo & Yeo as a leader in serving governmental entities. In her role as Assurance Service Line Leader, Rivette will continue to serve clients, provide mentorship, and drive growth for the firm.

“Mike is a trusted leader in the government sector and is constantly helping our clients and team stay ahead of changing regulations,” said Rivette. “He is committed to helping clients throughout the audit process and offering valuable insights along the way. With his leadership, our team will continue to be empowered to go above and beyond for our clients.”

Rolka is a Principal specializing in audits of governmental entities. He began his career in Yeo & Yeo’s Saginaw office and later transferred to the Troy office to support and help expand the firm’s audit and assurance services in Southeast Michigan. He holds a Bachelor of Professional Accountancy from Saginaw Valley State University and the Certified Government Financial Manager designation, demonstrating his depth of knowledge in governmental accounting, auditing, financial reporting, internal controls, and budgeting.

In addition to his professional qualifications, Rolka is a board member for the Michigan Government Finance Officers Association (MGFOA) and a member of its Accounting Standards Committee. He has presented at various government conferences, including the Michigan Association of Certified Public Accountants’ Governmental Winter Conference. He is also an active member of the American Institute of Certified Public Accountants and the Michigan Association of Certified Public Accountants. In the community, Rolka serves on the Clinton River Watershed Council Finance Committee.

“I take great pride in helping government clients navigate audits, ensure regulatory compliance, and strengthen trust with stakeholders and citizens,” Rolka said. “As leader, I look forward to expanding our team’s expertise and services while building on the strong foundation Jamie has established.”

Yeo & Yeo is pleased to announce the promotion of four professionals to manager. Congratulations to Daniel Gruzd II, Nicholas McFadden, Steve Soules, and Joey Winterstein on this significant achievement.

Daniel Gruzd II, CPA, works in the firm’s Tax & Consulting Service Line. With over a decade of accounting experience, he is a trusted advisor specializing in tax planning and business consulting, with a focus on the manufacturing, construction, and retail industries. Daniel graduated from the Dale Carnegie leadership course in 2024 and is dedicated to professional development. He holds a Master of Business Administration in Accounting from Northwood University. Based in the Saginaw office, Daniel continues to make a meaningful impact by helping businesses thrive.

Nicholas McFadden, CPA, brings a depth of knowledge to the Tax & Consulting Service Line, specializing in strategic tax planning, multi-state taxation, corporate restructuring, and tax compliance. His diverse experience spans the construction, retail, manufacturing, transportation, and professional services industries. Holding a Master of Science in Taxation from Eastern Michigan University, Nicholas’ proactive approach and technical knowledge are valued assets to the Ann Arbor office and his clients.

Steve Soules, CPA, E.A., serves nonprofit and for-profit organizations and specializes in tax preparation, compilations, and reviews. A member of the Tax & Consulting Service Line, Steve holds the Enrolled Agent credential, the highest designation awarded by the IRS to tax professionals. Outside the office, he gives back to the community as a volunteer for Barry County United Way, the Epilepsy Foundation of Michigan, and the IRS Volunteer Income Tax Assistance (VITA) program. He is a graduate of Davenport University, where he earned a Master of Business Administration in Accounting, and he recently completed the Dale Carnegie leadership course. He is based in the Kalamazoo office.

Joey Winterstein, CPA, has been a key contributor to the Assurance Service Line since joining Yeo & Yeo in 2019. He specializes in audits of school districts, nonprofit organizations, and healthcare organizations. Joey is a member of the firm’s Education Services Group and is passionate about sharing his knowledge with clients and the community. He is a member of the Michigan School Business Officials and has presented on auditing topics at the Michigan Association of Certified Public Accountants’ Governmental Accounting & Auditing Conference. In the community, he serves as Treasurer of the Saginaw Valley Zoological Society (Saginaw Children’s Zoo). He holds a Bachelor of Business Administration in Accounting from Northwood University and is based in the firm’s Saginaw office.

“As we continue to grow, we are excited to see many individuals step into leadership roles,” said Yeo & Yeo President & CEO Dave Youngstrom. “Daniel, Nicholas, Steve, and Joey have demonstrated dedication, hard work, and commitment to the core values that define our firm, and we look forward to their continued success.”

A variety of tax-related limits that affect businesses are indexed annually based on inflation. Many have increased for 2025, but with inflation cooling, the increases aren’t as great as they have been in the last few years. Here are some amounts that may affect you and your business.

2025 deductions as compared with 2024

Section 179 expensing:
- Limit: $1.25 million (up from $1.22 million)
- Phaseout: $3.13 million (up from $3.05 million)
- Sec. 179 expensing limit for certain heavy vehicles: $31,300 (up from $30,500)
Standard mileage rate for business driving: 70 cents per mile (up from 67 cents)
Income-based phaseouts for certain limits on the Sec. 199A qualified business income deduction begin at:
- Married filing jointly: $394,600 (up from $383,900)
- Other filers: $197,300 (up from $191,950)

Retirement plans in 2025 vs. 2024

Employee contributions to 401(k) plans: $23,500 (up from $23,000)
Catch-up contributions to 401(k) plans: $7,500 (unchanged)
Catch-up contributions to 401(k) plans for those age 60, 61, 62 or 63: $11,250 (not available in 2024)
Employee contributions to SIMPLEs: $16,500 (up from $16,000)
Catch-up contributions to SIMPLEs: $3,500 (unchanged)
Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63: $5,250 (not available in 2024)
Combined employer/employee contributions to defined contribution plans (not including catch-ups): $70,000 (up from $69,000)
Maximum compensation used to determine contributions: $350,000 (up from $345,000)
Annual benefit for defined benefit plans: $280,000 (up from $275,000)
Compensation defining a highly compensated employee: $160,000 (up from $155,000)
Compensation defining a “key” employee: $230,000 (up from $220,000)

Social Security tax

Cap on amount of employees’ earnings subject to Social Security tax for 2025: $176,100 (up from $168,600 in 2024).

Other employee benefits this year vs. last year

Qualified transportation fringe-benefits employee income exclusion: $325 per month (up from $315)
Health Savings Account contribution limit:
- Individual coverage: $4,300 (up from $4,150)
- Family coverage: $8,550 (up from $8,300)
- Catch-up contribution: $1,000 (unchanged)
Flexible Spending Account contributions:
- Health care: $3,300 (up from $3,200)
- Health care FSA rollover limit (if plan permits): $660 (up from $640)
- Dependent care: $5,000 (unchanged)

Potential upcoming tax changes

These are only some of the tax limits and deductions that may affect your business, and additional rules may apply. But there’s more to keep in mind. With President Trump back in the White House and the Republicans controlling Congress, several tax policy changes have been proposed and could potentially be enacted in 2025. For example, Trump has proposed lowering the corporate tax rate (currently 21%) and eliminating taxes on overtime pay, tips, and Social Security benefits. These and other potential changes could have wide-ranging impacts on businesses and individuals. It’s important to stay informed. Consult with us if you have questions about your situation.

An inheritor’s trust is a specialized estate planning tool designed to protect and manage assets you pass to a beneficiary. One of its primary advantages is asset protection. It allows your beneficiary to receive his or her inheritance in trust rather than as an outright gift or bequest. Thus, the assets are kept out of his or her own taxable estate.

Creditor protection

Having assets pass directly to a trust not only protects the assets from being included the beneficiary’s taxable estate but also shields them from other creditor claims, such as those arising from a lawsuit or a divorce. The inheritance is protected because the trust, rather than your beneficiary, legally owns the inheritance, and because the beneficiary doesn’t fund the trust.

To ensure complete asset protection, the beneficiary must establish an inheritor’s trust before receiving the inheritance. The trust is drafted so that your beneficiary is the investment trustee, giving him or her power over the trust’s investments.

Your beneficiary then selects an unrelated person — someone he or she knows well and trusts — as the distribution trustee. The distribution trustee will have complete discretion over the distribution of principal and income, which ensures that the trust provides creditor protection.

The trust should be designed with the flexibility to remove and change the distribution trustee at any time and make other modifications when necessary, such as when tax laws change. Bear in mind that the unfettered power to remove and replace trustees may jeopardize the creditor protection aspect of the trust. That could result in the inclusion of the trust property in the beneficiary’s taxable estate.

Because it’s your beneficiary, and not you, who sets up the trust, he or she will incur the bulk of the fees, which will vary depending on the trust. In addition, he or she may have to pay annual trustee fees. Your cost, however, should be minimal — only the legal fees to amend your will or living trust to redirect your bequest to the inheritor’s trust.

Wealth preservation

Another benefit of an inheritor’s trust is that it can help ensure that inherited assets remain within the family lineage. By keeping assets in the trust rather than transferring them outright to beneficiaries, the trust can prevent the depletion of wealth due to mismanagement, overspending or other poor financial decisions.

The trust’s grantor can include specific provisions or restrictions. These may include setting limits on distributions or requiring certain milestones (like completing education) before beneficiaries can access funds.

Follow the law

Your beneficiary should consult an attorney to draft the trust in accordance with federal and state law. This will help avoid potential IRS audits or court challenges — and maximize the asset protection benefits of the trust. Contact us for more information regarding an inheritor’s trust.

Yeo & Yeo is pleased to announce the promotion of Daniel Beard, CPA, to Senior Manager. Beard is a member of the firm’s Assurance Service Line and specializes in audits of government entities, nonprofit organizations, and for-profit companies.

In speaking of his promotion, Beard said, “I am excited to take this next step in my career and embrace more leadership opportunities. I enjoy working with our clients and building collaborative relationships where I can understand their needs and create tailored solutions.”

Beard holds a Master of Science in Accounting and has been with Yeo & Yeo since 2014. As part of the Government Services Group, he helps state and local government entities navigate challenges and become more agile and efficient. He is an active member of the Michigan Government Finance Officers Association, the American Institute of Certified Public Accountants, and the Michigan Association of Certified Public Accountants. Beyond his professional commitments, Beard is a graduate of Leadership A2Y and proudly serves as a Certified Tourism Ambassador in Washtenaw County. He is based in the firm’s Ann Arbor office, where he continues to make a positive impact on both clients and the community.

“Daniel has consistently demonstrated exceptional skill and dedication,” said Jamie Rivette, Principal and Assurance Service Line Leader. “He consistently goes above and beyond for clients, helping them through every stage of the audit process and beyond. I look forward to seeing how he will continue to support our team, drive positive change, and build meaningful relationships with our clients.”

Deepfakes — digital forgeries produced by artificial intelligence (AI) — have blurred the line between reality and illusion. On the upside, AI-generated deepfakes have revolutionized special effects in motion pictures and made certain education and health care industry processes more effective. Yet there are also plenty of risks associated with deepfakes.

Current threats

Deepfakes purporting to represent public officials can disseminate disinformation and generate fake news stories. And if fraud perpetrators use deepfake images of a company’s owner or senior executives, they can more easily perpetrate phishing schemes and steal sensitive data.

The threat extends beyond visible manipulation to audio. Deepfakes can mimic a specific individual’s voice to commit theft. For example, a so-called “business partner” might leave a voicemail instructing someone in your accounting department to wire funds to an overseas account.

Detection challenges

AI-based detection technology solutions can help reveal deepfakes by identifying unusual facial movements, unnatural body postures and lighting inconsistencies. Yet this technology is still in its infancy and far from perfect.

Alternative solutions, such as watermarking, show promise. However, watermarking technology is relatively easy to bypass and has yet to gain widespread acceptance. A small but growing body of law regulates the use of deepfakes. But the laws do little to prevent their creation. They generally punish creators when (and if) they’re caught using deepfakes to commit illegal acts.

Key warning signs

Recognizing the red flags of deepfake content is vital. You and your employees should be wary of video or audio exhibiting:

Unnatural eye movements. Deepfake creators find it particularly challenging to replicate natural blinking patterns, eye movements and eye gazes. Inconsistencies in eye-related movements could be suspicious.

Unrealistic faces. Mismatched skin tones, questionable lighting and blurred edges are potential signs of a deepfake. So, too, are stiff or exaggerated facial expressions.

Lip-sync and audio issues. Lip movement lagging its soundtrack is a common problem that’s difficult for deepfake creators to overcome. A deepfake may not be able to capture an individual’s tone or emotion and its soundtrack may contain abrupt or unnatural pauses.

Corrupted backgrounds. Warped objects near the edges of a person’s face or inconsistent backgrounds that bleed into the foreground are possible signs of a deepfake.

Unbelievable content. Deepfake videos can be entertaining, but they’re also frequently sensational and out of character for the individuals supposedly being depicted.

Questionable sourcing. Many deepfakes are from non-credible sources and circulated via untrustworthy platforms. Any content that goes viral, meaning people share it with their social networks, should be treated with caution.

Corroborate files first

Until technology makes it easier to uncover deepfakes, exercising a healthy skepticism is the best way to avoid being conned. Before you treat a video or audio file as legitimate, corroborate it with multiple sources. And if employees receive an unusual request via voicemail or video from a supposed manager, they should verify it by phone or by talking to the individual in person.

With the 2025 tax filing season underway, be aware that the deadline is coming up fast for businesses to submit certain information returns to the federal government and furnish them to workers. By January 31, 2025, employers must file these forms and furnish them to recipients:

Form W-2, Wage and Tax Statement. Form W-2 shows the wages paid and taxes withheld for the year for each employee. It must be furnished to employees and filed with the Social Security Administration (SSA). The IRS notes that “because employees’ Social Security and Medicare benefits are computed based on information on Form W-2, it’s very important to prepare Form W-2 correctly and timely.”

Form W-3, Transmittal of Wage and Tax Statements. Anyone required to file Form W-2 must also file Form W-3 to transmit Copy A of Form W-2 to the SSA. The totals for amounts reported on related employment tax forms (Form 941, Form 943, Form 944 or Schedule H for the year) should agree with the amounts reported on Form W-3.

Failing to timely file or include the correct information on either the information return or statement may result in penalties.

Freelancers and independent contractors

The January 31 deadline also applies to Form 1099-NEC, Nonemployee Compensation. This form is furnished to recipients and filed with the IRS to report nonemployee compensation to independent contractors.

If the following four conditions are met, payers must generally complete Form 1099-NEC to report payments as nonemployee compensation:

You made a payment to someone who isn’t your employee,
You made a payment for services in the course of your trade or business,
You made a payment to an individual, partnership, estate, or, in some cases, a corporation, and
You made a payment of at least $600 to a recipient during the year.

Note: When the IRS requires you to “furnish” a statement to a recipient, it can be done in person, electronically or by first-class mail to the recipient’s last known address. If forms are mailed, they must be postmarked by January 31.

Your business may also have to furnish a Form 1099-MISC to each person to whom you made certain payments for rent, medical expenses, prizes and awards, attorney’s services, and more. The deadline for furnishing Forms 1099-MISC to recipients is January 31 but the deadline for submitting them to the IRS depends on the method of filing. If they’re being filed on paper, the deadline is February 28. If filing them electronically, the deadline is March 31.

Act fast

If you have questions about filing Form W-2, Form 1099-NEC or any tax forms, contact us. We can assist you in complying with all the rules.

Running a small business often requires periodic cash infusions, and knowing how to secure the right funding can determine whether your business succeeds or struggles. Let’s explore the three primary types of funding available to small businesses: debt, equity and hybrid financing.

Debt: Borrowing to grow

Debt financing involves borrowing money and repaying it with interest over time. This category includes traditional bank loans, such as term loans, lines of credit and Small Business Administration loans.

One key advantage of debt financing is that you maintain ownership of your business. However, loan payments can strain cash flow, and lenders often require collateral. If you fail to make payments, creditors can claim ownership of the collateral and, in some cases, sue your business or the owner(s) personally for repayment.

Debt financing works best for businesses with steady revenue streams to ensure timely payments. By retaining ownership, you preserve control over decision-making, but it’s critical to evaluate whether your cash flow can sustain regular loan payments.

Equity: Trading ownership for capital

Equity financing involves selling part of your business to investors in exchange for funding. Common sources include:

Angel investors,
Venture capital firms, and
Crowdfunding platforms.

Unlike debt, equity financing doesn’t require repayment. But you relinquish some ownership and possibly a portion of future profits.

This approach may benefit start-ups or high-growth companies that can’t qualify for traditional loans due to a lack of profitability or solid credit history. While equity investors can provide valuable expertise and connections, you’ll need to weigh the trade-off of shared decision-making and reduced control over your business.

Hybrid financing: Combining debt and equity

Hybrid financing blends elements of debt and equity. Examples include convertible notes (debt that can convert into equity under specific conditions) and revenue-based financing (where repayment is tied to a percentage of your future revenue). These options are often more flexible, aligning payment terms with business performance.

Hybrid financing is ideal for business owners seeking customized funding solutions. It allows you to leverage the benefits of debt and equity. However, the terms can be complex and require careful negotiation.

Financial statements matter

Accurate financial statements are essential to securing funding. Lenders and investors will require a detailed financial package that includes the following three reports:

Income statements to highlight revenue, costs and profits,
Balance sheets to summarize assets and liabilities, and
Statements of cash flows to show how money moves through your business.

In addition, lenders or investors may ask for supporting reports, such as accounts receivable aging, breakdowns of major expense categories, and information about owners and key employees. These documents provide insight into your business’s financial health and operations, helping potential funders assess the risks and potential rewards of their investment.

Most lenders and investors require at least two to three years of historical financial data and projections for the next two to three years. These reports should tell a clear, compelling story about your business’s financial stability and growth potential.

What’s right for your business?

Selecting the right financing option depends on your business model, growth stage, long-term goals and risk tolerance. As your business’s needs evolve, it may use a combination of debt, equity and hybrid financing. We can help you maintain accurate financial records and understand the pros and cons of each option. Contact us to help you make informed decisions to fund your business’s growth.

Qualified employer-sponsored retirement plans have become a fundamental fringe benefit for many employers today. However, if your organization sponsors one, you know how complex administration and compliance can be. It’s not uncommon for plan sponsors (such as employers) or administrators to make mistakes.

In 2002, the U.S. Department of Labor (DOL) introduced the Voluntary Fiduciary Correction Program (VFCP). It allows plan sponsors and administrators to voluntarily correct violations of the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code committed under qualified plans, including 401(k)s and pensions. On January 14, the DOL’s Employee Benefits Security Administration (EBSA), which runs the VFCP, announced an important update.

Program mechanics

Historically, the VFCP has enabled plan sponsors and administrators to correct eligible transactions within 19 categories. Examples include:

Participant loans that fail to comply with plan provisions for amount, duration or level amortization,
Purchase or sale of assets from or to parties in interest,
Sale and leaseback of property to sponsoring employers,
Purchase or sale of assets from or to nonparties in interest at more or less than fair market value,
Payment of duplicate, excessive or unnecessary compensation, and
Improper payment of expenses by the plan.

To correct these violations, the program requires applicants to follow a series of steps. First, plan sponsors or administrators must identify ERISA violations and determine whether they fall within VFCP-covered transactions. Second, sponsors or administrators need to obtain a qualified valuation of plan assets.

Third, applicants must calculate and restore any losses or profits with interest, if applicable, and distribute any supplemental benefits to participants. They also need to pay all expenses incurred for correcting erroneous transactions, such as appraisal costs and fees for recalculating participants’ balances.

Finally, plan sponsors or administrators must file an application with the appropriate EBSA regional office that includes documentation showing evidence of the corrective action taken. If plan corrections satisfy the VFCP’s terms, the EBSA will issue a “no action” letter. This essentially means that the agency accepts the correction and won’t impose any further sanctions.

Self-correct tool

This year’s update to the VFCP introduces what the EBSA calls the “Self-Correction Component” (SCC). It’s essentially a tool that allows plan sponsors or administrators to fix certain transactions without going through the traditional VFCP application process. Instead, self-correctors can submit an SCC Notice through the EBSA’s web tool and provide the required information.

Only two types of transactions are currently eligible for the SCC. They are:

Delinquent participant contributions and loan repayments to pension plans, and
Qualifying inadvertent participant loan failures.

An EBSA fact sheet provides further details about each type of transaction. On the fact sheet, the agency also notes that it has made several other improvements to the VFCP. For example, additional correction options will soon be available for prohibited loan transactions and prohibited purchase and sale transactions involving plans. As of this writing, the effective date for all the EBSA’s 2025 VFCP revisions — including the SCC — is March 17, 2025.

Complexity and challenges

The forthcoming addition of the SCC represents an important, if incremental, improvement to the VFCP. It also highlights the complexity of offering a qualified retirement plan and the challenges of complying with ERISA and the Internal Revenue Code. Contact us for help identifying and assessing the costs, risks and potential upsides of any fringe benefits you’re administering or considering.

From the moment they launch their companies, business owners are urged to use key performance indicators (KPIs) to monitor performance. And for good reason: When you drive a car, you’ve got to keep an eye on the gauges to keep from going too fast and know when it’s time to service the vehicle. The same logic applies to running a business.

As you may have noticed, however, there are many KPIs to choose from. Perhaps you’ve tried tracking some for a while and others after that, only to become overwhelmed by too much information. Sometimes it helps to back up and review the general concept of KPIs so you can revisit which ones are likely best for your business.

Financial metrics

One way to make choosing KPIs easier is to separate them into two broad categories: financial and nonfinancial. Starting with the former, you can subdivide financial metrics into smaller buckets based on strategic objectives. Examples include:

Growth. Like most business owners, you’re probably looking to grow your company over time. However, if not carefully planned for and tightly controlled, growth can land a company in hot water or even put it out of business. So, to manage growth, you may want to monitor basic KPIs such as:

Debt to equity: total debt / shareholders’ equity, and
Debt to tangible net worth: total debt / net worth – intangible assets.

Cash flow management. Maintaining or, better yet, strengthening cash flow is certainly a good aspiration for any company. Poor cash flow — not slow sales or lagging profits — often leads businesses into crises. To help keep the dollars moving, you may want to keep a close eye on:

Current ratio: current assets / current liabilities, and
Days sales outstanding: accounts receivable / credit sales × number of days.

Inventory optimization. If your company maintains inventory, you’ll no doubt want to set annual, semiannual or quarterly objectives for how to best move items on and off your shelves. Many businesses waste money by allowing slow-moving inventory to sit idle for too long. To optimize inventory management, consider KPIs such as:

Inventory turnover: cost of goods sold / average inventory, and
Average days to sell inventory: average inventory / cost of goods sold × number of days in period.

Nonfinancial metrics

Not every KPI you track needs to relate to dollars and cents. Companies often use nonfinancial KPIs to set goals, track progress and determine incentives in areas such as customer service, sales, marketing and production. Here are two examples:

Let’s say you decide to set a goal to resolve customer complaints faster. To determine where you stand, you could calculate average resolution time. This KPI is usually expressed as total time to resolve all complaints divided by number of complaints resolved. In many industries, a common benchmark is 24 to 48 hours.
Perhaps you want to increase the number of sales leads you close. In this case, the KPI could be sales close rate, which is typically calculated by dividing number of closed deals by number of sales leads. Benchmarks for this metric vary by industry, but somewhere around 20% is generally considered good.

Nonfinancial KPIs enable you to do more than just say, “Let’s provide better customer service!” or “Let’s close more sales!” They allow you to assign specific data points to business activities, so you can objectively determine whether you’re getting better at them.

Scalable measurements

The sheer number of KPIs — both financial and nonfinancial — will probably only grow. The good news is, you’ve got time. Choose a handful that make the most sense for your company and track them over a substantial period. Then, make adjustments based on the level of insight they provide.

You can also scale up how many metrics you track as your business grows or scale them down if you’re pumping the brakes. Our firm can help you identify the optimal KPIs for your company right now and integrate new ones in the months or years ahead.

The nationwide price of gas is slightly higher than it was a year ago and the 2025 optional standard mileage rate used to calculate the deductible cost of operating an automobile for business has also gone up. The IRS recently announced that the 2025 cents-per-mile rate for the business use of a car, van, pickup or panel truck is 70 cents. In 2024, the business cents-per-mile rate was 67 cents per mile. This rate applies to gasoline and diesel-powered vehicles as well as electric and hybrid-electric vehicles.

The process of calculating rates

The 3-cent increase from the 2024 rate goes along with the recent price of gas. On January 17, 2025, the national average price of a gallon of regular gas was $3.11, compared with $3.08 a year earlier, according to AAA Fuel Prices. However, the standard mileage rate is calculated based on all the costs involved in driving a vehicle — not just the price of gas.

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

Standard rate or real expenses

Businesses can generally deduct the actual expenses attributable to business use of a vehicle. These include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that don’t apply to other types of business assets.

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

Using the cents-per-mile rate is also popular with businesses that reimburse employees for business use of their personal vehicles. These reimbursements can help attract and retain employees who drive their personal vehicles a great deal for business purposes. Why? Under current law, employees can’t deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns.

If you do use the cents-per-mile rate, keep in mind that you must comply with various rules. If you don’t comply, the reimbursements could be considered taxable wages to the employees.

When you can’t use the standard rate

There are some cases when you can’t use the cents-per-mile rate. It partly depends on how you’ve claimed deductions for the same vehicle in the past. In other situations, it depends on if the vehicle is new to your business this year or whether you want to take advantage of certain first-year depreciation tax breaks on it.

As you can see, there are many factors to consider in deciding whether to use the standard mileage rate to deduct vehicle expenses. We can help if you have questions about tracking and claiming such expenses in 2025 — or claiming 2024 expenses on your 2024 income tax return.

Financial statements provide insights into a company’s historical performance. But the parties to a merger or acquisition are also interested in assessing the acquisition target’s potential to generate cash flow in the future. That’s where an independent quality of earnings (QOE) report comes into play.

Looking to the future

QOE reports look beyond the quantitative information provided in the financial statements. While these reports may be customized to meet the needs of the party requesting them, they typically analyze the individual components of earnings (that is, revenue and expenses) on a monthly basis.

The goals are twofold. First, QOE reports help buyers and sellers assess whether earnings are sustainable. Second, they may identify potential risks and opportunities, both internal and external, that could affect the ability of the company to operate as a going concern. Examples of issues that a QOE report might uncover include:

Inadequate accounting policies and procedures,
Customer and supplier concentration risks,
Transactions with undisclosed related parties,
Inaccurate period-end adjustments,
Unusual revenue or expense items,
Insufficient loss reserves, and
Overly optimistic prospective financial statements.

QOE analyses can be performed on financial statements that have been prepared in-house, as well as those that have been compiled, reviewed or audited by a CPA firm.

Adjusting EBITDA

The starting point for assessing earnings quality is usually earnings before interest, taxes, depreciation and amortization (EBITDA) for the trailing 12 months. However, EBITDA may need to be adjusted for elements such as:

Nonrecurring items, including a loss from a natural disaster or a gain from an asset sale,
Above- or below-market owners’ compensation,
Discretionary expenses, and
Differences in accounting methods used by the company compared to industry peers.

Benchmarking results

QOE reports typically include detailed ratio and trend analysis to identify unusual activity. Additional procedures can help determine whether changes are positive or negative.

For example, an increase in accounts receivable could result from revenue growth (a positive indicator) or a buildup of uncollectible accounts (a negative indicator). If it’s the former, the gross margin on incremental revenue may be analyzed to determine whether the new business is profitable or whether the revenue growth results from aggressive price cuts.

We can help

Consider obtaining a QOE report from an objective financial professional. It can help the parties focus on financial matters during M&A discussions and add credibility to management’s historical and prospective financial statements. Contact us for more information.

To help you meet important 2025 deadlines, we’re providing this summary of due dates for various tax-related forms, payments and other actions. Please review the calendar and let us know if you have any questions about the deadlines or would like assistance meeting them.

January 31

Businesses: Provide Form 1098, Form 1099-MISC (except for those with a February 18 deadline), Form 1099-NEC and Form W-2G to recipients.

Employers: Provide 2024 Form W-2 to employees.

Employers: Report Social Security and Medicare taxes and income tax withholding for fourth quarter 2024 (Form 941) if all associated taxes due weren’t deposited on time and in full.

Employers: File a 2024 return for federal unemployment taxes (Form 940) and pay tax due if all associated taxes due weren’t deposited on time and in full.

Employers: File 2024 Form W-2 (Copy A) and transmittal Form W-3 with the Social Security Administration.

Individuals: File a 2024 income tax return (Form 1040 or Form 1040-SR) and pay any tax due to avoid penalties for underpaying the January 15 installment of estimated taxes.

February 10

Employers: Report Social Security and Medicare taxes and income tax withholding for fourth quarter 2024 (Form 941) if all associated taxes due were deposited on time and in full.

Employers: File a 2024 return for federal unemployment taxes (Form 940) if all associated taxes due were deposited on time and in full.

Individuals: Report January tip income of $20 or more to employers (Form 4070).

February 18

Businesses: Provide Form 1099-B, 1099-S and certain Forms 1099-MISC (those in which payments in Box 8 or Box 10 are being reported) to recipients.

Employers: Deposit Social Security, Medicare and withheld income taxes for January if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for January if the monthly deposit rule applies.

Individuals: File a new Form W-4 to continue exemption for another year if you claimed exemption from federal income tax withholding in 2024.

February 28

Businesses: File Form 1098, Form 1099 (other than those with a January 31 deadline), Form W-2G and transmittal Form 1096 for interest, dividends and miscellaneous payments made during 2024. (Electronic filers can defer filing to April 1.)

March 10

Individuals: Report February tip income of $20 or more to employers (Form 4070).

March 17

Calendar-year partnerships: File a 2024 income tax return (Form 1065 or Form 1065-B) and provide each partner with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1 — or request an automatic six-month extension (Form 7004).

Calendar-year S corporations: File a 2024 income tax return (Form 1120-S) and provide each shareholder with a copy of Schedule K-1 (Form 1120-S) or a substitute Schedule K-1 — or file for an automatic six-month extension (Form 7004). Pay any tax due.

Employers: Deposit Social Security, Medicare and withheld income taxes for February if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for February if the monthly deposit rule applies.

April 1

Employers: Electronically file 2024 Form 1097, Form 1098, Form 1099 (other than those with an earlier deadline) and Form W-2G.

April 10

Individuals: Report March tip income of $20 or more to employers (Form 4070).

April 15

Calendar-year corporations: File a 2024 income tax return (Form 1120) or file for an automatic six-month extension (Form 7004). Pay any tax due.

Calendar-year corporations: Pay the first installment of 2025 estimated income taxes and complete Form 1120-W for the corporation’s records.

Calendar-year trusts and estates: File a 2024 income tax return (Form 1041) or file for an automatic five-and-a-half-month extension (six-month extension for bankruptcy estates) (Form 7004). Pay any tax due.

Employers: Deposit Social Security, Medicare and withheld income taxes for March if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for March if the monthly deposit rule applies.

Household employers: File Schedule H, if wages paid equal $2,700 or more in 2024 and Form 1040 isn’t required to be filed. For those filing Form 1040, Schedule H is to be submitted with the return and is thus extended to the due date of the return.

Individuals: File a 2024 income tax return (Form 1040 or Form 1040-SR) or file for an automatic six-month extension (Form 4868). (Taxpayers who live outside the United States and Puerto Rico or serve in the military outside these two locations are allowed an automatic two-month extension without requesting one.) Pay any tax due.

Individuals: Pay the first installment of 2025 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding.

Individuals: Make 2024 contributions to a traditional IRA or Roth IRA (even if a 2024 income tax return extension is filed).

Individuals: Make 2024 contributions to a SEP or certain other retirement plans (unless a 2024 income tax return extension is filed).

Individuals: File a 2024 gift tax return (Form 709), if applicable, or file for an automatic six-month extension (Form 8892). Pay any gift tax due. File for an automatic six-month extension (Form 4868) to extend both Form 1040 and Form 709 if no gift tax is due.

April 30

Employers: Report Social Security and Medicare taxes and income tax withholding for first quarter 2025 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

May 12

Employers: Report Social Security and Medicare taxes and income tax withholding for first quarter 2025 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report April tip income of $20 or more to employers (Form 4070).

May 15

Calendar-year exempt organizations: File a 2024 information return (Form 990, Form 990-EZ or Form 990-PF) or file for an automatic six-month extension (Form 8868). Pay any tax due.

Calendar-year small exempt organizations (with gross receipts normally of $50,000 or less): File a 2024 e-Postcard (Form 990-N) if not filing Form 990 or Form 990-EZ.

Employers: Deposit Social Security, Medicare and withheld income taxes for April if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for April if the monthly deposit rule applies.

June 10

Individuals: Report May tip income of $20 or more to employers (Form 4070).

June 16

Calendar-year corporations: Pay the second installment of 2025 estimated income taxes and complete Form 1120-W for the corporation’s records.

Employers: Deposit Social Security, Medicare and withheld income taxes for May if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for May if the monthly deposit rule applies.

Individuals: File a 2024 individual income tax return (Form 1040 or Form 1040-SR) or file for a four-month extension (Form 4868) if you live outside the United States and Puerto Rico or you serve in the military outside those two locations. Pay any tax, interest and penalties due.

Individuals: Pay the second installment of 2025 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding.

July 10

Individuals: Report June tip income of $20 or more to employers (Form 4070).

July 15

Employers: Deposit Social Security, Medicare and withheld income taxes for June if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for June if the monthly deposit rule applies.

July 31

Employers: Report Social Security and Medicare taxes and income tax withholding for second quarter 2025 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

Employers: File a 2024 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension.

August 11

Employers: Report Social Security and Medicare taxes and income tax withholding for second quarter 2025 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report July tip income of $20 or more to employers (Form 4070).

August 15

Employers: Deposit Social Security, Medicare and withheld income taxes for July if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for July if the monthly deposit rule applies.

September 10

Individuals: Report August tip income of $20 or more to employers (Form 4070).

September 15

Calendar-year corporations: Pay the third installment of 2025 estimated income taxes and complete Form 1120-W for the corporation’s records.

Calendar-year partnerships: File a 2024 income tax return (Form 1065 or Form 1065-B) and provide each partner with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1 if an automatic six-month extension was filed.

Calendar-year S corporations: File a 2024 income tax return (Form 1120-S) and provide each shareholder with a copy of Schedule K-1 (Form 1120-S) or a substitute Schedule K-1 if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year S corporations: Make contributions for 2024 to certain employer-sponsored retirement plans if an automatic six-month extension was filed.

Employers: Deposit Social Security, Medicare and withheld income taxes for August if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for August if the monthly deposit rule applies.

Individuals: Pay the third installment of 2025 estimated taxes (Form 1040-ES), if not paying income tax through withholding or not paying sufficient income tax through withholding.

September 30

Calendar-year trusts and estates: File a 2024 income tax return (Form 1041) if an automatic five-and-a-half-month extension was filed. Pay any tax, interest and penalties due.

October 10

Individuals: Report September tip income of $20 or more to employers (Form 4070).

October 15

Calendar-year bankruptcy estates: File a 2024 income tax return (Form 1041) if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year C corporations: File a 2024 income tax return (Form 1120) if an automatic six-month extension was filed and pay any tax, interest and penalties due.

Calendar-year C corporations: Make contributions for 2024 to certain employer-sponsored retirement plans if an automatic six-month extension was filed.

Employers: Deposit Social Security, Medicare and withheld income taxes for September if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for September if the monthly deposit rule applies.

Individuals: File a 2024 income tax return (Form 1040 or Form 1040-SR) if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States and Puerto Rico). Pay any tax, interest and penalties due.

Individuals: Make contributions for 2024 to certain existing retirement plans or establish and contribute to a SEP for 2024 if an automatic six-month extension was filed.

Individuals: File a 2024 gift tax return (Form 709), if applicable, and pay any tax, interest and penalties due if an automatic six-month extension was filed.

October 31

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) and pay any tax due if all associated taxes due weren’t deposited on time and in full.

November 10

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) if all associated taxes due were deposited on time and in full.

Individuals: Report October tip income of $20 or more to employers (Form 4070).

November 17

Calendar-year exempt organizations: File a 2024 information return (Form 990, Form 990-EZ or Form 990-PF) if a six-month extension was filed. Pay any tax, interest and penalties due.

Employers: Deposit Social Security, Medicare and withheld income taxes for October if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for October if the monthly deposit rule applies.

December 10

Individuals: Report November tip income of $20 or more to employers (Form 4070).

December 15

Calendar-year corporations: Pay the fourth installment of 2025 estimated income taxes and complete Form 1120-W for the corporation’s records.

Employers: Deposit Social Security, Medicare and withheld income taxes for November if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for November if the monthly deposit rule applies.

Yeo & Yeo is pleased to welcome Nicole Demand, CPA, to the firm as a Manager. She is an experienced auditor who will specialize in serving nonprofit organizations as a member of the firm’s Assurance Service Line.

“We are excited to welcome Nicole to the firm,” says Jamie Rivette, Principal and Assurance Service Line Leader. “We are confident that she will bring valuable insights and leadership to our engagements, and we look forward to the positive impact she will have on our clients and the firm.”

Demand brings more than five years of experience in public accounting, serving construction, manufacturing, nonprofit, and higher education clients. She holds a Bachelor of Professional Accountancy from Saginaw Valley State University, and is a member of the American Institute of Certified Public Accountants and the Michigan Association of Certified Public Accountants. In the community, she serves on the Investment Committee for the Saginaw Community Foundation and is a member of the Saginaw County Young Professionals Network. Demand is based in the firm’s Saginaw office.

“Joining Yeo & Yeo is an exciting opportunity to work with a team that values excellence and client relationships as much as I do. I’m proud to be part of such a respected firm,” Demand said.

Yeo & Yeo is pleased to welcome Matt Black to the firm as a Senior Business Valuation Manager. Black will join the firm’s Valuation, Forensics, and Litigation Support Services Group, which helps clients face complex transactions with knowledge, experience, and confidence.

“Matt has a proven track record of helping businesses navigate valuations, mergers, and acquisitions,” says Principal and Tax & Consulting Service Line Leader David Jewell. “His insights will undoubtedly enhance the support we provide to our clients.”

Black brings more than 15 years of experience in financial forecasting, capital allocation, and corporate development. His previous roles include serving as a Senior Manager at KPMG, one of the four largest accounting firms in the nation. As a member of the Tax & Consulting Service Line, Black will specialize in business valuation, litigation support services, consulting, and mergers and acquisitions for privately owned businesses.

Black is a member of the American Society of Appraisers and holds a Bachelor of Arts in Finance from Michigan State University. In the community, he volunteers for Special Olympics Michigan and previously served on the organization’s board. He is also actively involved in Make-a-Wish Michigan.

“I am excited to join Yeo & Yeo and collaborate with such a talented team,” said Black. “I look forward to helping clients uncover opportunities and navigate the complexities of growth and change.”

It’s not uncommon for people who live in states with high income taxes to relocate to states with more favorable tax climates. Did you know that you can use a similar strategy for certain trusts? Indeed, if a trust is subject to high state income tax, you may be able to change its residence — or “situs” — to a state with low or no income taxes.

How different trust types are taxed

The taxation of a trust depends on the trust type. Revocable trusts and irrevocable “grantor” trusts — those over which the grantor retains enough control to be considered the owner for tax purposes — aren’t taxed at the trust level. Instead, trust income is included on the grantor’s tax return and taxed at the grantor’s personal income tax rate.

Irrevocable, nongrantor trusts generally are subject to federal and state tax at the trust level on any undistributed ordinary income or capital gains, often at higher rates than personal income taxes. Income distributed to beneficiaries is deductible by the trust and taxable to beneficiaries.

Therefore, relocating a trust may offer a tax advantage if the trust:

Is an irrevocable, nongrantor trust,
Accumulates (rather than distributes) substantial amounts of ordinary income or capital gains, and
Can be moved to a state with low or no taxes on accumulated trust income.

There may be other advantages to moving a trust. For example, the laws in some states allow you or the trustee to obtain greater protection against creditor claims, reduce the trust’s administrative expenses, or create a “dynasty” trust that lasts for decades or even centuries.

Determining if the trust is movable

For an irrevocable trust, the ability to change its situs depends on several factors, including the language of the trust document (does it authorize a change in situs?) and the laws of the current and destination states. In determining a trust’s state of “residence” for tax purposes, states generally consider one or more of the following factors:

The trust creator’s state of residence or domicile,
The state in which the trust is administered (for example, the state where the trustees reside or where the trust’s records are maintained), and
The state or states in which the trust’s beneficiaries reside.

Some states apply a formula based on these factors to tax a portion of the trust’s income. Also, some states tax all income derived from sources within their borders — such as businesses, real estate or other assets located in the state — even if a trust in another state owns those assets.

Depending on state law and the language of the trust document, moving a trust may involve appointing a replacement trustee in the new state and moving the trust’s assets and records to that state. In some cases, it may be necessary to amend the trust document or to transfer the trust’s assets to a new trust in the destination state. A situs change may also require the consent of the trust’s beneficiaries or court approval.

For tax purposes, a final return should be filed in the current jurisdiction. The return should explain the reasons why the trust is no longer taxable in that state. Before taking action, discuss with us the pros and cons of moving your trust. We can help you determine whether it’s worth your while.