Mastering Payroll Accounting: A Guide for Business Owners

Understanding payroll accounting is crucial for maintaining financial integrity and ensuring compliance with legal and tax obligations. Payroll accounting involves tracking and recording all payroll-related transactions, including employee paychecks, taxes, deductions, and employer contributions. Accurate payroll accounting ensures timely and correct employee payments and maintains an organization’s financial health. Let’s dive into the key components of payroll accounting and how to avoid common pitfalls.

Setting Up the Chart of Accounts

Before you can begin recording payroll, setting up the appropriate accounts in the chart of accounts is essential. These typically include:

Expense accounts: For wages, employer-paid benefits, and the employer’s portion of taxes.
Liability accounts: For amounts deducted from employee paychecks and temporarily held before remittance.

Account Mapping

Once the chart of accounts is set up, the next crucial step is mapping the pay items to the correct accounts. This process ensures that each specific pay item is recorded accurately within the chart of accounts, whether you’re processing payroll within accounting software or entering payroll journal entries manually.

Gathering Essential Reports

To create accurate payroll journal entries, you’ll need to collect key documents:

Payroll Register: This comprehensive report details all payroll transactions during the pay period, including employee names, pay dates, and payment amounts. It may also include quarter-to-date and year-to-date totals.
Payroll Tax Liability Report: This report provides a breakdown of taxes owed by the business and taxes withheld from employee paychecks.
Deductions Register: This document outlines employee deductions from gross wages that must be paid to third parties, such as taxes, health insurance premiums, retirement account deferrals, child support, or garnishments.

Journal Entries

Payroll journal entries typically involve debiting gross wage expenses and crediting various liabilities. Remember, employer contributions and taxes should be recorded as both expenses and liabilities until paid.

Here is a simple example:

Payroll Table

Avoiding Common Payroll Accounting Errors

To maintain accurate records and ensure compliance, be vigilant about these common errors:

Over or underpayment of payroll taxes
Failing to record employer benefit contributions as expenses
Incorrectly applying benefit payments entirely to expense accounts
Misconfigured payroll account mapping in software systems

Conduct monthly reviews of the balance sheet to ensure liability accounts are zeroing out appropriately and payments are applied to the correct accounts. Perform quarterly reviews of payroll activities to identify and address potential issues promptly. Compare monthly payroll expenses and verify that tax expense accounts align with payroll reports.

Mastering payroll accounting is essential for a business’s financial health. By understanding the key components, avoiding common errors, and implementing best practices, you can ensure accurate financial reporting and compliance with tax obligations. At Yeo & Yeo, we’re committed to helping businesses navigate the complexities of payroll accounting. For personalized guidance on optimizing your payroll processes, contact our team.

The IRS announced a second Voluntary Disclosure Program for employers to resolve erroneous claims for credit or refund involving the COVID-19 Employee Retention Credit (ERC). The program is designed to help businesses with questionable claims to self-correct and repay the credits they received after filing erroneous ERC claims, many of which were driven by unscrupulous marketing promoters.

The first ERC Voluntary Disclosure Program was announced in late December 2023 and ended on March 22, 2024. Over 2,600 taxpayers applied to the first program to resolve their improper ERC claims and avoid civil penalties and unnecessary litigation.
The second ERC Voluntary Disclosure Program is limited to ERC claims filed for the 2021 tax period. It allows businesses to repay 85% of the credit amount they received, effectively offering a 15% discount on the repayment.

Procedures for the Second Voluntary Disclosure Program

To apply, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, and submit it through the IRS Document Upload Tool. Employers must provide the IRS with the names, addresses, telephone numbers and details about the services provided by any advisors or tax preparers who advised or assisted them with their claims.

Employers are expected to repay their full ERC claimed, minus the 15% reduction allowed through the Voluntary Disclosure Program.

Eligible employers must apply by 11:59 p.m. local time on November 22, 2024.

For more information, see the IRS’s Employee Retention Credit – Voluntary Disclosure Program or contact Yeo & Yeo.

Partnerships are often used for business and investment activities. So are multi-member LLCs that are treated as partnerships for tax purposes. A major reason is that these entities offer federal income tax advantages, the most important of which is pass-through taxation. They also must follow some special and sometimes complicated federal income tax rules.

Governing documents

A partnership is governed by a partnership agreement, which specifies the rights and obligations of the entity and its partners. Similarly, an LLC is governed by an operating agreement, which specifies the rights and obligations of the entity and its members. These governing documents should address certain tax-related issues. Here are some key points when creating partnership and LLC governing documents.

Partnership tax basics

The tax numbers of a partnership are allocated to the partners. The entity issues an annual Schedule K-1 to each partner to report his or her share of the partnership’s tax numbers for the year. The partnership itself doesn’t pay federal income tax. This arrangement is called pass-through taxation, because the tax numbers from the partnership’s operations are passed through to the partners who then take them into account on their own tax returns (Form 1040 for individual partners).

Partners can deduct partnership losses passed through to them, subject to various federal income tax limitations such as the passive loss rules.

Special tax allocations

Partnerships are allowed to make special tax allocations. This is an allocation of partnership loss, deduction, income or gain among the partners that’s disproportionate to the partners’ overall ownership interests. The best measure of a partner’s overall ownership interest is the partner’s stated interest in the entity’s distributions and capital, as specified in the partnership agreement. An example of a special tax allocation is when a 50% high-tax-bracket partner is allocated 80% of the partnership’s depreciation deductions while the 50% low-tax-bracket partner is allocated only 20% of the depreciation deductions.

Any special tax allocations should be set forth in the partnership agreement. However, to make valid special tax allocations, you must comply with complicated rules in IRS regulations.

Distributions to pay partnership-related tax bills

Partners must recognize taxable income for their allocations of partnership income and gains — whether those income and gains are distributed as cash to the partners or not. Therefore, a common partnership agreement provision is one that calls for the partnership to make cash distributions to help partners cover their partnership-related tax liabilities. Of course, those liabilities will vary, depending on the partners’ specific tax circumstances. The partnership agreement should specify the protocols that will be used to calculate distributions intended to help cover partnership-related tax bills.

For instance, the protocol for long-term capital gains might call for distributions equal to 15% or 20% of each partner’s allocation of the gains.

Such distributions may be paid out in early April of each year to help cover partners’ tax liabilities from their allocations of income and gains from the previous year.

Contact us for assistance

When putting together a partnership or LLC deal, tax issues should be addressed in the agreement. Contact us to be involved in the process.

Workers’ compensation insurance can provide medical care and financial assistance to employees who are injured or incapacitated at work. However, this important benefit is also subject to fraud perpetrated by dishonest workers. The Coalition Against Insurance Fraud says that 16% of workers’ comp claims are fraudulent, adding up to $9 billion in annual losses. Such losses hurt businesses, insurers and states. But you can help reduce the possibility that a scheme will be perpetrated in your organization.

Common employee and employer schemes

Employees violate workers’ comp rules if they file claims for injuries they didn’t experience or injuries or illnesses they did experience, but not at work. Workers’ comp fraudsters also might exaggerate the severity of their injuries or illnesses, or falsely state that they can’t work in any capacity while receiving benefits. For example, an employee who breaks a finger with a hammer in his home workshop might file a workers’ comp claim that says he broke the finger on his company’s production line. Or he may claim that not just his finger, but his arm, too, is broken and that he can’t work at all until his breaks heal — even though these are lies.

Employers are responsible for contributing to workers’ compensation funds for all of their employees. And it’s important to acknowledge that some employers engage in workers’ comp fraud. They might, for instance, misclassify employees as independent contractors (for whom they don’t have to pay insurance) or understate the number of people on their payrolls. Or they might “forget” to buy workers’ comp insurance altogether. So, to protect employees and avoid serious legal trouble, make sure your business complies with all your state’s labor rules and requirements.

Prevention tips

As for preventing employee-perpetrated workers’ comp fraud, you should craft comprehensive policies and procedures. Your employees need to know what to do if there’s an accident. They also need to understand the difference between legitimate claims and fraud — and the ramifications of making false claims (such as termination or legal action).

Mitigating fraud threats starts before you hire workers. As part of the background check process, look for records that indicate prospective employees have committed workers’ comp fraud at previous jobs. Then, during new employee training, explain your process for validating the authenticity of claims and disclose that your insurance company may assign its own investigators to scrutinize them.

If employees file workers’ comp claims, trust that the paperwork is legitimate but verify the claims anyway. If possible, secure witness testimony from coworkers, customers and other witnesses, and gather any supporting evidence such as surveillance footage and timecards. Increasingly, workers’ comp fraudsters get caught in lies based on their social media posts. So if an employee says she must rest in bed for six weeks but you see recent photos on her Facebook page of her partying with friends, be sure to collect the evidence.

Exercise care

Fraudulent workers’ comp claims cost businesses, insurance companies and states billions of dollars every year. As with other types of fraud, preventing workers’ comp fraud, including questioning employee claims, can be complicated. For this reason, you should consider engaging an attorney who specializes in labor issues. Your legal counsel can help prevent the inadvertent violation of workers’ rights as you work to get to the bottom of suspicious claims. And contact us if you need help investigating potential occupational fraud.

Bookkeeping fundamentals are essential to accurate financial reporting. Using software solutions — such as QuickBooks®, NetSuite® or Xero™ — can simplify double-entry accounting. However, knowing how the process works can provide reassurance that your business is properly tracking its financial transactions.

Debit and credits

Assets are items of value that your business owns, such as accounts receivable, inventory and equipment. Liabilities are debts that your business owes, including accounts payable, credit lines and commercial loans. The difference is referred to as owner’s equity. Alternatively, this relationship can be expressed with the following equation:

Assets = Liabilities + Owner’s Equity

Bookkeepers use T-accounts to record transactions. Assets are on the left side of the T, and everything else goes on the right side. An increase in an asset is recorded as a “debit,” which simply means an increase in the left side of the equation. An increase in an item on the right side of the equation is called a “credit.” The reverse also holds true. That is, decreases in assets are reported as credits, and decreases in items on the right side are recorded as debits. When recording transactions, debits and credits must always balance.

Here’s where things get murkier: Revenue (sales to customers) and expenses flow into owner’s equity. When your business earns revenue, it’s reported as a credit, because it increases owner’s equity on the right side of the equation. The expenses your business incurs are recorded as debits.

Simple example

Here’s a hypothetical example to illustrate how debits and credits work. An appliance repair company fixes a washing machine for $500, and the customer pays with cash. This transaction would be recorded by debiting cash (an asset) for $500 and crediting the revenue account for $500.

Continuing with this example, let’s assume the repair person is a contractor (rather than an employee) who charges $100 for labor, and the customer already had replacement parts on hand. The expenses related to this job would be recorded as a $100 debit to the contractor fees expense account, and a $100 credit to accounts payable. When the repair company pays the contractor at the end of the week, the bookkeeper would debit accounts payable for $100 and credit cash for $100.

In the real world, recording transactions is often more complicated. For example, if the contractor had been an employee, accounting for direct labor costs would have required complex recordkeeping for payroll-related expenses. Likewise, if the repair required parts from the company’s warehouse, the journal entries for those expenses would have involved the inventory account.

Generating financial reports

Bookkeeping tracks financial transactions during the accounting period. At the end of the period, these records are used to generate a company’s financial statements.

The balance sheet looks like the equation presented above. Assets go on the left side, and liabilities and owner’s equity are reported on the right side. The balances for these items are carried forward to the next accounting period.

The income (or profit and loss) statement shows revenue and expenses. Instead of being carried forward to the following year, revenue and expense accounts flow through to owner’s equity and are reset to zero at the start of the next accounting period.

The statement of cash flows is another important report. It shows how much cash is going in and out of the company for operating, investing and financing activities. It’s based on changes in items reported on the balance sheet from one period to the next.

Double-check your double-entry accounting

Bookkeeping is a critical skill for most business owners to learn. While many transactions require straightforward accounting entries in your ledger, some require more work, especially if you use accrual accounting instead of cash-basis accounting.

Correcting bookkeeping errors and omissions can be time consuming and frustrating. Contact us for help getting your company’s bookkeeping on track. From selecting user-friendly accounting software and establishing a comprehensive chart of accounts to generating timely financial reports, we can help you get it right.

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

This year, our YYP service project supported Habitat for Humanity, with more than 40 of our professionals across our Yeo & Yeo companies and offices participating in build projects across our communities in July. Through the Yeo & Yeo Foundation and FUNdraising initiatives spearheaded by our YYPs that included a water balloon bonanza and March Madness, a total of $10,698 was also proudly donated to Habitat for Humanity.

Michael Wilson II, Manager and Yeo Young Professionals leader, shared his perspective: “When the YYP group brainstormed ideas for this year’s project, the common theme was that we wanted to do something specific for our local communities and make a lasting impact. Helping facilitate this project and bringing everyone together to give back was incredibly meaningful.”

The impact of these builds extends far beyond the construction site. As our team worked side by side with Habitat for Humanity staff and volunteers, we helped create safe, affordable housing for families who might otherwise struggle to achieve homeownership or maintain their existing homes.

The Saginaw team worked together to paint a house and garage, helping to spruce up a home in a local neighborhood.

“Being a part of this initiative gave me a sense of purpose and the opportunity to make a tangible difference in the lives of others. It reminded us of the impact we can have when we come together for a greater good.” – Adam Seitz, Software Consultant (Yeo & Yeo Technology)

“Community involvement has always been a personal goal of mine, and this project provided a great opportunity to give back and connect with others.” – Christina Stoutenburg, Collections Representative (Yeo & Yeo Medical Billing & Consulting)

Saginaw YYP Service Project

The Flint team took on framing and building walls and trusses for a new home. This hands-on experience gave the team insight into how much effort goes into building a house.

“The best part of the project, besides using power tools, was engaging with the Habitat staff and learning about the housing program. Homeownership is a significant milestone that is out of reach for many, and that’s where Habitat plays a crucial role in making it possible.” – Holly Blood, Senior Accountant (Flint office)

FLINT - YYP Service Project

The Auburn Hills and Ann Arbor teams focused on cleaning a home’s exterior, including washing the siding, mowing the lawn, and taking care of the flower beds.

“Participating in the building project was really an opportunity to care for the people around me. No one in the community should feel left out or hopeless regardless of what they are going through.” – Gage Gorenchan, Staff Accountant (Ann Arbor office)

AA AH - YYP Service Project

The Kalamazoo team is planning a build project later this year in collaboration with the Battle Creek Habitat for Humanity.

Yeo & Yeo’s dedication to giving back is more than a tradition—it is a defining part of our company’s culture and identity. Established in 2018, the Yeo & Yeo Foundation is an employee-run organization dedicated to supporting charitable causes throughout Michigan. Since its inception, the Foundation has allocated funds to support the YYP service project, benefiting organizations such as the American Cancer Society and Special Olympics Michigan. The spirit of giving back remains central to our mission, reinforcing the belief that every act of kindness helps build a stronger, more connected community.

It’s been a running joke for years that employees often look at their pay stubs and wonder, “What the heck is FUTA?” If your organization has been up and running for a while, you’re no doubt familiar with this payroll tax obligation — so familiar that you may not expend much thought on what it is or why it exists.

But whether in the context of explaining FUTA to curious staff members or managing your organization’s liability, it’s important to keep certain fundamental facts in mind.

Funding mechanism

First things first, FUTA stands for the Federal Unemployment Tax Act. Under this law, the FUTA tax was created to fund a program that helps individual states pay unemployment benefits for eligible individuals who have been terminated from their jobs without “just cause” — but not those who have voluntarily quit.

On the federal level, the program funds benefits to employees who have been terminated or laid off through no fault of their own, including because of illness or disability. Currently, benefits may be paid out for up to 26 weeks or until former employees find new jobs or become self-sufficient. Traditionally, extensions have been allowed under special circumstances, such as during the pandemic.

Employers that pay wages of $1,500 or more in any calendar quarter of the preceding or current tax year must pay FUTA annually. While FUTA is administered and collected by the IRS, state unemployment tax is a separate obligation paid to the applicable state authority.

Each state operates under its own unemployment tax laws to determine the amounts that should go toward state unemployment insurance. Eligibility for unemployment benefits also generally differs by state. Thus, along with managing their FUTA obligations, employers need to keep tabs on their respective state unemployment tax rules.

Claiming the credit

FUTA tax rates and thresholds have remained the same for decades. In 2024, FUTA is applied at a 6% rate to the first $7,000 of wages an employee earns. Therefore, the maximum tax is $420 per employee (6% of $7,000). If, for example, an organization employs 50 workers, the FUTA tax would max out at $21,000 (50 × $420).

However, perhaps the most important FUTA fundamental of all is most employers qualify for a credit of up to 5.4% — so long as they pay into their state unemployment insurance fund. In other words, the effective tax rate for employers in most states is only 0.6%. This can make a substantial difference in the amount of FUTA owed.

Returning to the previous example, if an employer has 50 employees earning $7,000 or more for the year, the beginning FUTA tax liability is $21,000. But assuming the 5.4% credit is available, the employer’s rate is reduced to 0.6% or $42 per worker. In this case, the employer’s total FUTA liability is only $2,100 (50 × $42), or $18,900 less ($21,000 – $2,100) than it would owe without the credit.

Note: States are allowed to take federal Unemployment Trust Fund loans from the federal government if they lack funds to pay unemployment benefits. If your state fails to repay a federal unemployment loan within two years, your organization’s credit is reduced by 0.3% each year until the state’s loan is repaid. Therefore, employers in “credit reduction” states must pay more FUTA. According to the U.S. Department of Labor, as of January 1, 2024, California, Connecticut and New York were subject to credit reduction.

Addressing your challenges

Once you’ve explained FUTA to an employee, a common follow-up question is, “OK, now what’s FICA?” But that’s a subject for another article. We can help you develop strategies to address your organization’s distinctive payroll tax challenges.

On the one hand, you want your estate plan to achieve certain “technical” objectives. These may include minimizing gift and estate taxes, and protecting your assets from creditors’ claims or frivolous lawsuits.

On the other hand, you also want your plan to achieve “aspirational” goals. These may include preparing your children or grandchildren to manage wealth responsibly, promoting shared family values or encouraging charitable giving. One trust to consider including in your estate plan is a family advancement sustainability trust (FAST).

FAST funding options

If you’re interested in the goals described above, it’s a good idea to establish a FAST during your lifetime. Doing so helps ensure that the trust achieves your objectives and allows you to educate your advisors and family members on the trust’s purpose and guiding principles.

A FAST generally requires little funding when created, with the bulk of the funding provided on your death. Although funding can come from the estate, a better approach is to fund a FAST with life insurance or a properly structured irrevocable life insurance trust (ILIT). Using life insurance allows you to achieve the FAST’s objectives without depleting the assets otherwise available for the benefit of your family.

4 decision-making entities

Typically, FASTs are created in states that 1) allow perpetual, or “dynasty,” trusts that benefit many generations to come, and 2) have directed trust statutes, which make it possible to appoint an advisor or committee to direct the trustee regarding certain matters. A directed trust statute makes it possible for both family members and trusted advisors with specialized skills to participate in governance and management of the trust.

A common governance structure for a FAST includes four decision-making entities:

An administrative trustee — often a corporate trustee — that deals with administrative matters but doesn’t handle investment or distribution decisions,
An investment committee — consisting of family members and an independent, professional investment advisor — to manage investment of the trust’s assets,
A distribution committee — consisting of family members and an outside advisor — which helps ensure that trust funds are spent in a manner that benefits the family and promotes the trust’s objectives, and
A trust protector committee — typically composed of one or more trusted advisors — which stands in the shoes of the grantor after his or her death and makes decisions on matters such as appointment or removal of trustees or committee members and amendment of the trust document for tax planning or other purposes.

Bridging the leadership gap

In some families, it’s not unusual for the death of the older generation to create a leadership gap. A FAST can help fill this gap by establishing a leadership structure and providing resources to fund educational and personal development activities for younger family members. Contact your estate planning advisor for additional details.

Let’s say you own real estate that has been held for more than one year and is sold for a taxable gain. Perhaps this gain comes from indirect ownership of real estate via a pass-through entity such as an LLC, partnership or S corporation. You may expect to pay Uncle Sam the standard 15% or 20% federal income tax rate that usually applies to long-term capital gains from assets held for more than one year.

However, some real estate gains can be taxed at higher rates due to depreciation deductions. Here’s a rundown of the federal income tax issues that might be involved in real estate gains.

Vacant land

The current maximum federal long-term capital gain tax rate for a sale of vacant land is 20%. The 20% rate only hits those with high incomes. Specifically, if you’re a single filer in 2024, the 20% rate kicks in when your taxable income, including any land sale gain and any other long-term capital gains, exceeds $518,900. For a married joint-filing couple, the 20% rate kicks in when taxable income exceeds $583,750. For a head of household, the 20% rate kicks when your taxable income exceeds $551,350. If your income is below the applicable threshold, you won’t owe more than 15% federal tax on a land sale gain. However, you may also owe the 3.8% net investment income tax (NIIT) on some or all of the gain.

Gains from depreciation

Gain attributable to real estate depreciation calculated using the applicable straight-line method is called unrecaptured Section 1250 gain. This category of gain generally is taxed at a flat 25% federal rate, unless the gain would be taxed at a lower rate if it was simply included in your taxable income with no special treatment. You may also owe the 3.8% NIIT on some or all of the unrecaptured Section 1250 gain.

Gains from depreciable qualified improvement property

Qualified improvement property (QIP) generally means any improvement to an interior portion of a nonresidential building that’s placed in service after the date the building is placed in service. However, QIP does not include expenditures for the enlargement of the building, elevators, escalators or the building’s internal structural framework.

You can claim first-year Section 179 deductions or first-year bonus depreciation for QIP. When you sell QIP for which first-year Section 179 deductions have been claimed, gain up to the amount of the Section 179 deductions will be high-taxed Section 1245 ordinary income recapture. In other words, the gain will be taxed at your regular rate rather than at lower long-term gain rates. You may also owe the 3.8% NIIT on some or all of the Section 1245 recapture gain.

What if you sell QIP for which first-year bonus depreciation has been claimed? In this case, gain up to the excess of the bonus depreciation deduction over depreciation calculated using the applicable straight-line method will be high-taxed Section 1250 ordinary income recapture. Once again, the gain will be taxed at your regular rate rather than at lower long-term gain rates, and you may also owe the 3.8% NIIT on some or all of the recapture gain.

Tax planning point: If you opt for straight-line depreciation for real property, including QIP (in other words, you don’t claim first-year Section 179 or first-year bonus depreciation deductions), there won’t be any Section 1245 ordinary income recapture. There also won’t be any Section 1250 ordinary income recapture. Instead, you’ll only have unrecaptured Section 1250 gain from the depreciation, and that gain will be taxed at a federal rate of no more than 25%. However, you may also owe the 3.8% NIIT on all or part of the gain.

Plenty to consider

As you can see, the federal income tax rules for gains from sales of real estate may be more complicated than you thought. Different tax rates can apply to different categories of gain. And you may also owe the 3.8% NIIT and possibly state income tax, too. We will handle the details when we prepare your tax return. Contact us with questions about your situation.

Many businesses have established employee assistance programs (EAPs) to help their workforces deal with the mental health, substance abuse and financial challenges that have become so widely recognized in modern society.

EAPs are voluntary and confidential work-based intervention programs designed to help employees and their dependents deal with issues that may be affecting their mental health and job performance. These may include workplace stress, grief, depression, marriage/family problems, psychological disorders, financial troubles, and alcohol and drug dependency.

Whether your company is considering an EAP or already offers one, among the most important factors to keep in mind is compliance.

Start with ERISA

Several different federal laws may come into play with EAPs. A good place to start when studying your compliance risks is the Employee Retirement Income Security Act (ERISA). The law’s provisions address critical compliance matters such as creating a plan document and Summary Plan Description, performing fiduciary duties, following claims procedures, and filing IRS Form 5500, “Annual Return/Report of Employee Benefit Plan.”

Although most people associate ERISA with qualified health care and retirement plans, the law can be applicable to EAPs depending on how a particular program is structured and what benefits it provides. Generally, a fringe benefit is considered an ERISA welfare benefit plan if it’s a plan, fund or program established or maintained by an employer to provide ERISA-listed benefits, which include medical services.

The category of ERISA-listed benefits most likely to be provided by an EAP is medical care or benefits. Mental health counseling — whether for substance abuse, stress or other issues — is considered medical care. Accordingly, an EAP providing mental health counseling will probably be subject to ERISA. On the other hand, an EAP that provides only referrals and general information, and isn’t staffed by trained counselors, likely isn’t an ERISA plan.

Bear in mind that EAPs that primarily use referrals could still be considered to provide medical benefits if the individuals handling initial phone consultations and making the referrals are trained in an applicable field, such as psychology or social work. If an EAP provides any benefit subject to ERISA, then the entire program must comply with the law — even if it also provides non-ERISA benefits.

Check up on other laws

EAPs considered to be group health plans are also typically subject to the Consolidated Omnibus Budget Reconciliation Act (commonly known as “COBRA”) and certain other group health plan mandates, including mental health parity.

Also, keep in mind that EAPs that receive medical information from participants — even if the programs only make referrals and don’t provide medical care — must comply with privacy and security rules under the Health Insurance Portability and Accountability Act (HIPAA).

In addition, EAPs providing medical care or treatment could trigger certain provisions of the Affordable Care Act (ACA). EAPs meeting specified criteria, however, can be defined as an “excepted benefit” not subject to HIPAA portability or certain ACA requirements.

Cover all bases

Given the rising awareness and acceptance of mental health care alone, EAPs could become as common as health insurance and retirement plans in many companies’ employee benefit packages.

Whether you’re thinking about one or already have an EAP up and running, it’s a good idea to consult an attorney regarding your company’s compliance risks. Meanwhile, please contact us for help identifying and tracking the costs involved, as well as understanding the tax impact.

A tax law change in 2019 essentially ended “stretch IRAs” by requiring most beneficiaries of inherited IRAs (other than a spouse) to withdraw all of the funds within 10 years. Since then, there’s been confusion surrounding inherited IRAs and the so called “10-year rule” for required minimum distributions (RMDs).

That is, until now. The IRS has issued final regulations relevant to taxpayers who are subject to the “10-year rule” for RMDs from inherited IRAs or defined contribution plans, such as 401(k) plans. In a nutshell, the final regs largely adopt proposed regs issued in 2022.

2022 proposed regs sowed confusion

Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, signed into law in 2019, most heirs other than surviving spouses must withdraw the entire balance of an inherited IRA or defined contribution plan within 10 years of the original account owner’s death. In February 2022, the IRS issued proposed regs that came with an unwelcome surprise for many affected heirs. Under the proposed regs, if the account owner dies on or after the required beginning date (RBD), designated beneficiaries must take their taxable RMDs in Year 1 through Year 9 after that death (based on their life expectancies), receiving the balance in the 10th year.

In other words, beneficiaries aren’t permitted to wait until the end of 10 years to take a lump-sum distribution. This annual RMD requirement gives beneficiaries much less tax planning flexibility and, depending on their situations, could push them into higher tax brackets during those years.

The IRS soon began to receive feedback from confused taxpayers who had recently inherited IRAs or defined contribution plans and were unclear about when they were required to start taking RMDs on the accounts. The uncertainty put both beneficiaries and defined contribution plans at risk. The reason? Beneficiaries could have been assessed a tax penalty on the amounts that should have been distributed but weren’t. And the plans could have been disqualified for failure to make RMDs.

In response, only six months after the proposed regs were published, the IRS waived enforcement against taxpayers subject to the 10-year rule who missed 2021 and 2022 RMDs if the plan participant died in 2020 on or after the RBD. The tax agency also excused missed 2022 RMDs if the participant died in 2021 on or after the RBD.

The waiver guidance indicated that the IRS would issue final regs that would apply no earlier than 2023. But then 2023 rolled around — and the IRS extended the waiver relief to excuse 2023 missed RMDs if the participant died in 2020, 2021 or 2022 on or after the RBD.

In April 2024, the IRS again extended the relief, this time for RMDs in 2024 from an IRA or defined contribution plan when the owner passed away between 2020 and 2023, on or after the RBD. If certain requirements are met, beneficiaries won’t be assessed a penalty on missed RMDs for these years, and plans won’t be disqualified based solely on such missed RMDs.

2024 final regs provide clarification

The final regs require certain beneficiaries to take annual RMDs in the 10 years following the account owner’s death. The regs take effect in 2025. If the deceased hadn’t begun taking his or her RMDs though, the 10-year rule is somewhat different. While the account has to be fully emptied under the same timeline, no annual distributions are required. That gives beneficiaries more opportunity for tax planning.

Here’s an example: Ken inherited an IRA in 2021 from his father, who had begun to take RMDs. Under the IRS-issued waivers, Ken needn’t take RMDs for 2022 through 2024. However, under the final regs, he must take annual RMDs for 2025 through 2030, with the account fully distributed by the end of 2031.

Had Ken’s father not started taking RMDs, Ken would have had the flexibility to not take distributions in 2025 through 2030. So long as the account was fully liquidated by the end of 2031, Ken would be in compliance with the rules.

Contact us with questions

If you’ve inherited an IRA or defined contribution plan in 2020 or later, it’s understandable if you have questions about the RMD rules. Please don’t hesitate to reach out. We’d be please to explain the IRS’s regulations and suggest strategies that might save you taxes and avoid penalties.

If your organization sponsors a health care plan for its employees, you’re probably focused on ensuring it’s robust enough to satisfy participants and impress job candidates — all while trying to control the costs involved.

Totally understandable. But don’t lose sight of your obligations under the Health Insurance Portability and Accountability Act (HIPAA). Among the law’s primary requirements is for plan sponsors to formally notify all persons from whom medical information is collected, whether directly or indirectly, of their rights to privacy.

How often should you update?

Generally, plan sponsors fulfill their notification obligation by distributing a “Notice of Privacy Practices,” which is sometimes alternatively referred to as a “Notice of Information Practices.” But a question that often arises is: How often should you update this document?

The good news is you don’t need to update a notice according to an annual deadline or the like. However, the most current notice must accurately describe:

Your plan’s uses and disclosures of protected health information (PHI),
Participants’ HIPAA rights, and
The plan’s legal duties with respect to PHI.

Thus, you must promptly revise the notice whenever there’s a “material” change to any of the information or privacy practices stated therein. Except when required by law, material changes to a plan can’t be implemented until they’re reflected in the notice.

HIPAA regulations don’t define when a change is material. Historically, many employers have looked to the preamble to the 2000 HIPAA Privacy Rule. In it, the U.S. Department of Health and Human Services (HHS) encouraged covered entities to refer to other notice laws to understand the concept of materiality. One example given was how material changes are typically defined for Summary Plan Descriptions under the Employee Retirement Income Security Act. Also, HHS considered changes made by the 2013 HIPAA Omnibus Rule, a significant update to the law, to be material and required updated notices at that time.

Evaluate amendments to the HIPAA rules carefully when they occur to determine whether they’re material and require changes to your plan and notice. Revisions to plan operations, such as new procedures for giving someone access to PHI in a designated record, could require an updated notice as well.

How soon must you distribute?

Let’s say there’s a material change to your plan and notice. You might wonder, as many employers have, how soon must you issue an update?

HIPAA rules establish deadlines by which your plan must distribute updated notices that incorporate material changes. The requirements vary depending on whether your plan maintains a website.

If your plan has a website, you can — and, in fact, must — satisfy the requirement to distribute an updated notice by posting it on the plan website by the effective date of the material change. You need to then provide a hard copy of the updated notice, or information about the material change and how to obtain the revised notice, in the plan’s next annual mailing to participants.

If your plan doesn’t have its own dedicated website, you must furnish the revised notice — or information about the material change and how to obtain the revised notice — to participants within 60 days after the revision.

Note: Mailing a hard copy is always required unless a participant has consented to receiving electronic notices only.

Manageable risk

Suffice to say, there’s no such thing as sponsoring a health care plan in today’s employment environment without incurring HIPAA compliance risks. Fortunately, these risks are manageable with clearly worded policies and rigorously followed procedures. Contact us for help identifying and managing the costs, as well as the tax impact, associated with your organization’s fringe benefits.

Yeo & Yeo is proud to announce that Bill Stec has received the Most Valuable Professional Award from Corp! Magazine. This award recognizes individuals who have made significant contributions to their businesses, communities, and the state of Michigan.

In speaking on his recognition, Stec said, “This award is a meaningful acknowledgment of the efforts we’ve put into making Yeo & Yeo a nurturing environment for professionals. I am honored and excited to keep pushing forward, inspiring the next generation, and strengthening our network with academic institutions and their students.”

Bill Stec is the Manager of Recruitment & Campus Relations at Yeo & Yeo. He develops and executes strategic talent management initiatives to recruit the best candidates, engage and retain current employees, and drive a high-performance culture across all Yeo & Yeo offices. With over seven years of experience in college career services, he understands the challenges of navigating career choices and employment opportunities.

Bill’s passion for recruiting and talent development is unmatched. He has played a pivotal role in enhancing Yeo & Yeo’s recruiting strategies, making the firm a desirable destination for top talent. His innovative approaches and genuine enthusiasm for finding and nurturing potential have led to a more dynamic and skilled team. Bill understands that the foundation of a successful organization lies in its people, and he tirelessly works to ensure Yeo & Yeo attracts and retains the best.

Bill is committed to supporting the next generation of professionals. He travels throughout the state to present on professional development topics, including dining etiquette, interview/dress skills, and human resource topics. He is the past President of the Michigan Career Educator & Employer Alliance and just completed a term as Vice President of Employers for the organization. He is actively involved in Saginaw, Bay City, and Midland’s Chambers of Commerce. Bill is also a member of the National Association of Colleges and Employers and the Valley Society for Human Resource Management.

“Bill’s achievement reflects his exceptional networking capabilities and innovative thinking,” said Yeo & Yeo President & CEO Dave Youngstrom. “His efforts to attract talent, including traveling statewide to participate in career fairs and share his expertise, have set a high standard within our firm. Bill’s contributions have been vital to our success, and we are proud to recognize his dedication and the positive influence he brings to Yeo & Yeo.”

Corp! Magazine presented the MVP awards on August 15 at Epitec in Southfield, Michigan.

Proactive working capital management is essential to successful business operations. However, on average, businesses aren’t managing their working capital as efficiently as they have in the past, according to a new study by The Hackett Group, a digital transformation and AI strategy consulting firm.

The study found that all elements of the cash conversion cycle (CCC) deteriorated by an average of 1.3 days (or 4%) from 2022 to 2023. The sectors reporting the biggest CCC deterioration include marine shipping, biotechnology, oil and gas, and food and staples retail. Here’s why working capital management is so important, and how your business can avoid the trend revealed in the study.

Why working capital matters

Working capital equals the difference between current assets and current liabilities. Organizations need a certain amount of working capital to run their operations smoothly. However, excessive amounts can hinder growth and performance. The optimal amount of working capital depends on the nature of your company’s operations and its industry.

Working capital management is often evaluated by measuring the CCC, which is a function of three turnover ratios:

Days in accounts receivable outstanding,
Days in inventory outstanding, and
Days in accounts payable outstanding.

A positive CCC indicates the number of days a company must borrow or tie up capital while awaiting payments from customers. A negative CCC represents the number of days a company has received cash from customers before it must pay its suppliers. Cash businesses might have a low or negative CCC, while most conventional businesses have a positive CCC.

Ways to shorten your CCC

Here are three ways to reduce the amount your business has tied up in working capital:

1. Collect receivables faster. Possible solutions for converting accounts receivable into cash faster include: tightening credit policies, offering early bird discounts, issuing collection-based sales compensation and using in-house collection personnel. Companies also can evaluate administrative processes — including invoice preparation, dispute resolution and deposits — to eliminate inefficiencies in the collection cycle.

2. Reduce inventory levels. The inventory account carries many hidden costs, including storage, obsolescence, insurance and security. Consider using computerized inventory systems to help predict demand, enable data sharing up and down the supply chain, and more quickly reveal variability from theft.

It’s important to note that, in an inflationary economy, rising product and raw material prices may bloat inventory balances. Plus, higher labor and energy costs can affect the value of work-in-progress and finished goods inventories for companies that build or manufacture goods for sale. So rising inventory might not necessarily equate to having more units on hand.

3. Postpone payables. By deferring vendor payments when possible, your company can increase cash on hand. But be careful: Delaying payments for too long can compromise a company’s credit standing or result in forgone early bird discounts. Many organizations have already pushed their suppliers to extend their payment terms, so there may be limits on using this strategy further.

Make working capital a priority

Some businesses are so focused on the income statement, including revenue and profits, that they lose sight of the strategic significance of the balance sheet — especially working capital accounts. We can benchmark your company’s CCC over time and against competitors. If necessary, we also can help implement strategies to improve your performance without exposing you to unnecessary risk.

The Office of Management and Budget (OMB) has issued substantial revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as the Uniform Guidance. These changes, effective October 1, 2024, aim to streamline processes, clarify requirements, and enhance the management of federal funds. As this date approaches, organizations must prepare to implement these changes effectively.

Key Revisions in the 2024 Uniform Guidance

1. Increased Audit Thresholds: The threshold for requiring a single audit has been raised from $750,000 to $1 million in federal expenditures, reducing the administrative burden for smaller entities.

2. Equipment and Cost Rates Adjustments:

The capitalization threshold for equipment has increased from $5,000 to $10,000.
The de minimis indirect cost rate has increased from 10% to 15% over modified total direct costs, providing more flexibility in financial planning.

3. Enhanced Cybersecurity Measures: New requirements for cybersecurity internal controls have been introduced, allowing organizations to tailor their security strategies without mandating a specific framework.

4. Simplified Notices of Funding Opportunities (NOFOs): Federal agencies are directed to make NOFOs more concise and accessible, using plain language to ensure broader reach and understanding, particularly for underserved communities.

5. Community Engagement and Evaluation: The revisions encourage recipients to allocate funds for community engagement and evaluation activities, emphasizing the importance of understanding and achieving program goals.

6. Mandatory Disclosures: Recipients must promptly disclose any credible evidence of violations related to federal criminal law or the False Claims Act, aligning with existing federal acquisition standards.

7. Increased Flexibility for Tribes: Tribal governments can now use their internal procurement standards, providing more autonomy in managing federal funds.

Preparing for the Effective Date

To ensure a smooth transition to the new requirements, organizations should consider the following steps:

Review and Revise Policies: Update internal policies and procedures to align with the new thresholds for audits, equipment, and indirect costs. Ensure that procurement policies reflect the updated standards.
Train Staff: Conduct training sessions for staff involved in grant management to familiarize them with the new requirements and ensure compliance.
Update Financial Systems: Adjust financial and accounting systems to accommodate changes in cost categories and thresholds, ensuring accurate tracking and reporting.
Engage with Stakeholders: Communicate with federal agencies and other stakeholders to understand implementation plans and any additional requirements specific to your organization’s funding sources.
Monitor Developments: As the effective date approaches, stay informed about any further guidance or clarifications issued by OMB or relevant federal agencies.

By taking these proactive steps, organizations can effectively navigate the revised Uniform Guidance, ensuring compliance and maximizing the impact of federal funds. The changes represent an opportunity to streamline operations and enhance the focus on delivering results for the communities served.

Contact your Yeo & Yeo advisor to discuss how these changes may impact your organization and to ensure you are fully prepared for the upcoming revisions.

If your organization is tax-exempt, you may be subject to annually filing a License to Solicit with the State of Michigan. Michigan law requires organizations to register with the Department of Attorney General if they solicit and receive charitable contributions in Michigan. Most charities that solicit contributions in Michigan are required to file one.

Keep in mind, soliciting can be in the form of mail, telephone calls, special events, newspapers, television, the internet, or just receiving contributions without doing much of anything.

The following are organizations that are exempt from the charitable solicitation registration requirements:

Organizations that received less than $25,000 in 12 months and pay no individuals for fundraising services of any kind
Solicitations that are exclusively for the benefit of a named individual, so long as the individual is specified in the solicitation and no one is compensated for fundraising services
Churches and religious organizations
Governmental entities
Michigan educational institutions
Veterans’ organizations that are chartered by the U. S. Congress
Licensed Michigan hospitals and their foundations and auxiliaries
Private foundations that receive contributions only from the members, directors, incorporators, or members of the families of those individuals
Organizations that are licensed by the Michigan Department of Human Services to serve children and families, such as day care facilities
Organizations whose sole source of funding is another charitable organization that is registered to solicit, so long as its registration is current

If your organization does not fall under one of these exemptions, then a solicitation form is required. If the organization has never registered before, then an Initial Solicitation Form, with attachments, must be filed. There is no fee to register. For faster processing, the Charitable Trust Section accepts registrations by email or e-filing. If your organization has already filed an initial form, then an annual Renewal Solicitation Form should be filed.

The License to Solicit with the State of Michigan expires seven months after the end of the fiscal year, and the form is due 30 days before that expiration. Therefore, if your organization has a calendar year-end, that means the renewal is due July 1, and the previous license expires July 31. The organization may request an extension for filing if they do not feel they can meet the required deadline. There is no official form for the extension, either a simple letter can be submitted to the State requesting an extension or an extension can be premptively requested when filing the prior year’s license.

Keep in mind that the financial information included in the form will also determine if you are required to have audited or reviewed financial statements. If contributions, plus net fundraising and gaming activity, less governmental grants, is between $300,000 and $550,000, then reviewed financial statements are required. If over $550,000, then audited financial statements are required.

If you are uncertain of your organization’s current license status or expiration date, visit the charities section of the State of the Michigan website and look up any registered charity.

In the best of all possible worlds, every employee is engaged, productive and compliant with organizational policies. Back here on Planet Earth, most employers must occasionally take disciplinary action against employees.

When this situation arises at your organization, it’s important to bear in mind that you could be on precarious ground. Although you have every right to enforce legally sound employment policies, haphazardly or inconsistently applied discipline can leave you vulnerable to costly lawsuits and hurt your employer brand.

Put it in writing

Proper documentation is among the best ways to help protect yourself and ensure that your disciplinary actions have the desired effect — positive change. You’ve got to put the problem and solution in writing. Here are some best practices to consider:

Define expectations. Many workplace disciplinary issues arise from miscommunications about what employers expect from employees and what employees come to believe they can or should do.

For example, let’s say you have an employee who’s chronically late. Simply telling the person, “Get to work on time,” isn’t ideal. State in the documentation the specific time the employee should be on-site or online and ready to work.

Setting expectations can be trickier for more complex disciplinary issues. In these cases, supervisors may want to meet with human resources staff and others to review the job description of the employee in question and develop clearer instructions on how to proceed.

Describe problems in detail. Vague or confusing descriptions of what prompted disciplinary actions can only exacerbate already contentious situations.

For instance, writing “constantly rude in meetings,” may describe the problem in general but provides no specifics about what’s actually going on. Documentation should include pertinent details about bad behavior such as:

The date(s) and specific location(s) it occurred,
The actions that constitute inappropriate behaviors, and
How those actions violate organizational policy.

Of course, not all disciplinary actions are prompted by bad behavior. Sometimes you need to give guidance to employees who aren’t misbehaving but, rather, falling short of expectations.

In these cases, specificity is also critical. Phrases such as “poor effort” or “lack of productivity” generally aren’t helpful. Instead, express in detail what they’re failing to do and how their shortcomings conflict with their job descriptions and other stated directives.

Give employees a voice. Many employers view disciplinary actions as a one-way street. They inform troubled employees of infractions or shortcomings and mandate corrective measures. Yet doing so tends to create a confrontational and punitive atmosphere that may leave both parties unhappy.

As part of your documentation process, ask troubled employees for their sides of the story. In some cases, how they respond may not materially change the situation in question. However, giving them the opportunity to explain can reveal critical details that may soften your view. It may also reveal needed changes to your policies, procedures, working environment and/or technology.

Create comprehensive action plans. The final section of every employee disciplinary action document should answer the simple question, “What next?” Lay out both the specific actions troubled employees should take and the timeline over which those actions should occur. Set deadlines and be sure supervisors are trained to follow up.

Last, be sure action plans state the consequences of failing to comply. These may include adverse employment actions, such as termination or demotion, so don’t hesitate to consult an attorney to ensure you’re on solid legal footing.

Do your homework

Employees’ misbehavior and lack of productivity can have a serious impact on employers’ financial stability. A well-thought-out documentation process for disciplinary actions can help discourage lawsuits, protect you in court, and convey to staff that you take these matters seriously and have done your homework.

A difficult aspect of planning your estate is taking into account your family members’ needs after your death. Indeed, after you’re gone, events may transpire that you hadn’t anticipated or couldn’t have reasonably foreseen.

While there’s no way to predict the future, you can supplement your estate plan with a trust provision that provides a designated beneficiary a power of appointment over some or all of the trust’s property. This trusted person will have the discretion to change distributions from the trust or even add or subtract beneficiaries.

Adding flexibility

Assuming the holder of your power of appointment fulfills the duties properly, he or she can make informed decisions when all the facts are known. This can create more flexibility within your estate plan.

Typically, the trust will designate a surviving spouse or an adult child as the holder of the power of appointment. After you die, the holder has authority to make changes consistent with the language contained in the power of appointment clause. This may include the ability to revise beneficiaries. For instance, if you give your spouse this power, he or she can later decide if your grandchildren are capable of managing property on their own or if the property should be transferred to a trust managed by a professional trustee.

Detailing types of powers

If you take this approach, there are two types of powers of appointment:

“General” power of appointment. This allows the holder of the power to appoint the property for the benefit of anyone, including him- or herself, his or her estate or the estate’s creditors. The property is usually included in a trust but may be given to the holder outright. Also, this power of appointment can be transferred to another person.
“Limited” or “special” power of appointment. Here, the person holding the power of appointment can give the property to a select group of people who’ve specifically been identified by the deceased. For example, it might provide that a surviving spouse can give property to surviving children, as he or she chooses, but not to anyone else. Thus, this power is more restrictive than a general power of appointment.

Whether you should use a general or limited power of appointment depends on your circumstances and expectations.

Understanding the tax impact

The resulting tax impact may also affect the decision to use a general or limited power of appointment. The rules are complicated, but property subject to a general power of appointment is typically included in the taxable estate of the designated holder of the power. However, property included in the deceased’s estate receives a step-up in basis to fair market value on the date of death. Therefore, your heirs can sell property that was covered by a general power of appointment with little or no income tax consequences.

In contrast, property covered by a limited power isn’t included in the holder’s estate. However, the new heirs inherit the property with a carryover basis and no step-up in basis. So, if the heirs sell appreciated property, they face a potentially high capital gains tax.

Your final decision requires an in-depth analysis of your tax and financial situation by your estate tax advisor. Contact us with any questions.

Yeo & Yeo, a leading Michigan-based accounting and advisory firm, has been recognized by INSIDE Public Accounting (IPA) as a Top 200 Firm in the U.S. for the sixteenth consecutive year. In the 2024 IPA ranking of more than 600 participating firms based on net revenue, Yeo & Yeo ranked 120. This recognition underscores Yeo & Yeo’s commitment to strategic growth, agility, and helping clients thrive.

“We would not be where we are today without the trust and partnership of our clients,” said President & CEO Dave Youngstrom. “We are continually adapting, implementing new technologies, and working to bring meaningful solutions to our clients every day.”

The firm’s forward-thinking approach is exemplified by its strategic planning and commitment to adapting to change. Yeo & Yeo’s dedicated Technology and Innovations Team regularly evaluates technology tools, ensuring access to secure, compliant, and efficient software applications for its employees and clients. Moreover, the firm has strategic goal champions focused on client experience, diversity, training, recruiting, and more. This dedication has led to continued growth for all of Yeo & Yeo’s companies: Yeo & Yeo CPAs & Advisors, Yeo & Yeo Technology, Yeo & Yeo Medical Billing & Consulting, and Yeo & Yeo Wealth Management

“The driving force behind our success is the talent, passion, and dedication of our team,” said Youngstrom. “Their expertise and teamwork have allowed us to build strong, lasting relationships with our clients. I am truly thankful for their dedication and the confidence our clients have in us.”

With a team of more than 225 professionals and over 15 specialized industry teams and sub-teams, the firm offers a comprehensive suite of services, including audit, tax, business consulting, medical billing, and technology solutions. As an independent member of the BDO Alliance USA, Yeo & Yeo leverages the resources of other Alliance members to expand its capabilities and address clients’ unique challenges and opportunities.

“We have extensive experience and capabilities, but our true mission is to create success stories for our clients,” added Youngstrom. “We are purpose-driven, helping our clients see what is possible and achieve their goals.”

About INSIDE Public Accounting

INSIDE Public Accounting (IPA) is a leader in practice management resources for the public accounting profession. IPA offers a monthly practice management publication and four national practice management benchmarking reports every year. IPA has helped firms across North America grow and thrive since 1987.

View the list of top-ranked IPA firms.

Yeo & Yeo is pleased to announce the promotion of four professionals to manager.

Brandon Brom, CPA, serves in the firm’s Tax & Consulting Service Line and is a member of Yeo & Yeo’s Cannabis Services Group. He specializes in tax planning and preparation for the real estate, nonprofit, and cannabis industries. Brandon is a member of the firm’s Yeo Young Professionals and is actively involved in the Auburn Hills Chamber of Commerce and Troy Chamber of Commerce. He holds a Master of Accountancy from Adrian College. Brandon is based in the firm’s Auburn Hills office.

Shawn Davis, CPA, serves in the Tax & Consulting Service Line. He is a member of the Trust & Estate Services Group, the Death Care Services Group, and the State and Local Tax Services Group. Shawn specializes in tax planning and preparation services for individuals, partnerships, and corporations, as well as multistate income and sales tax nexus analysis. He holds a Bachelor of Business Administration in accounting and management from Northwood University. In the community, he serves as a board member of the Bay City Noon Rotary Club. He is based in the firm’s Saginaw office.

Meg Warner, CPA, serves in the Assurance Service Line. She is a member of the firm’s Government Services Group and specializes in audits for governmental entities, school districts, and nonprofits. She is a member of the Michigan Association of Certified Public Accountants’ Governmental Accounting & Auditing Professional Panel and the Gratiot Area Chamber of Commerce Young Professionals Network. In 2023, she received the Women to Watch – Emerging Leader award from the Michigan Association of Certified Public Accountants. In the community, Meg serves on the Gratiot County Community Foundation’s grant committee and is board secretary of the Yeo & Yeo Foundation. She is a volunteer leader for Central Michigan Youth for Christ and was recognized by the organization with the “Whatever It Takes” award for going above and beyond in service. Meg is based in the firm’s Alma office.

Michael Wilson II, CPA, serves in the Tax & Consulting Service Line. He specializes in business advisory services, consulting, and tax planning and preparation with an emphasis on the cannabis industry. As a member of the Cannabis Services Group, he assists clients with cannabis advisory services, including license application consulting, entity selection, and finding access to capital assistance. He is a member of the Saginaw County Young Professionals Network and president of the firm’s Yeo Young Professionals group. Michael is based in the firm’s Saginaw office.

“These promotions are well-deserved and highlight the incredible talent of our team,” said Yeo & Yeo President & CEO Dave Youngstrom. “Brandon, Shawn, Meg, and Michael have consistently gone above and beyond, demonstrating a profound ability to lead and innovate. I have no doubt that they will continue to excel and inspire those around them.”