Prepare a successor to lead your family business
If you’re thinking about retiring from your family business, plan now to mentor a successor. Rotating your candidate through key functions — including sales, marketing, finance and HR — provides firsthand insight into how decisions affect customers, employees, cash flow and profitability. It will also help this future leader earn employees’ respect instead of appearing to have been handed the job because of family connections. Effective successor training should minimize friction among relatives and employees and give everyone greater confidence in future leadership. We can help with your succession plan.
Restricted stock deserves attention before year end
If restricted stock is part of your compensation, considering the potential tax consequences well before Dec. 31 is a good idea. You may have decisions to make if: 1) you’ve recently received an award or are expecting one soon, 2) your restricted shares have vested in 2026 or will vest before the end of the year, or 3) you’ve sold shares this year or are considering a sale. The timing of these events and certain decisions you make — such as the Sec. 83(b) election — can affect both the amount and type of taxable income you must report. They also may provide planning opportunities that will affect your 2026 and future taxes. Contact us for assistance.
5 tax-smart ways to take cash out of your C corporation
Paying dividends isn’t the only way to take cash out of your C corporation. Corporate distributions are generally taxable to you to the extent of your company’s “earnings and profits,” and your company can’t deduct them.
To avoid dividend treatment, consider having your business repay bona fide loans you’ve made to it or taking out properly structured loans from it. You might also increase your compensation (as long as it’s still “reasonable”) or qualifying tax-free fringe benefits — or lease or sell assets to your business.
Before proceeding, evaluate the tax implications for you and your corporation. Contact us to review the applicable rules and determine what’s right for your situation.
Maintaining customer relationships after an acquisition
When a business is acquired, its customers don’t always transfer their loyalty to the buyer. Among other things, customers may worry about future pricing, quality and service. So if your business is anticipating an acquisition, plan how you’ll protect new customer relationships. Prioritize them based on factors such as their associated revenue, growth potential and strategic importance. Then communicate what will change and how those changes will benefit customers. To support continuity, offer retention incentives to the acquired company’s key employees. Contact us for help crunching customer numbers and identifying risks.
Repair or improvement: Does the distinction matter under current tax law?
As you review your business’s 2026 expenditures, pay close attention to work performed on buildings and equipment.
You can generally deduct ordinary repairs and maintenance expenses, but you must capitalize property improvements, including betterments, restorations and adaptations. Safe harbors may allow current deductions for some costs. Certain capitalized improvements may also qualify for a full first-year deduction through bonus depreciation or Sec. 179. Proper classification may affect recordkeeping, potential recapture and state tax deductions.
Contact us to help classify your 2026 expenditures and discuss potential tax-planning moves before year end.
Remote work can complicate your state taxes
If you work remotely and split your time between two states during the year, it can create state tax issues. A state with an income tax generally can tax all income of its residents and income earned within its borders by nonresidents. Residency rules vary but may consider your domicile, days spent in the state and whether you maintain a home there. Your domicile is generally your true, fixed, permanent home — the place you intend to return to. Some states may treat you as a resident for income tax purposes if you maintain a home and spend a specified number of days there. Contact us to review your situation and help determine whether you may have tax obligations in more than one state.
Which products really drive your business’s profits?
Robust sales don’t always translate into strong profits. A popular product could produce disappointing returns when you account for discounts, shipping, returns and support costs. At the same time, a lower-volume product could quietly generate an attractive profit margin. Product-level analysis can show where you’re generating the most profit. No single measurement will provide all the answers, but gross margin and contribution margin are critical. You should also evaluate product profitability by sales channel and customer segment. Contact us for help developing a practical approach to turning product data into profitable decisions.
Tax planning for real estate investors
Many individuals invest in real estate to help diversify their portfolio, create an income stream for themselves from rental income and build net worth over time. Income and losses from investment real estate are considered passive by definition — unless you’re a real estate professional. Even then, you generally must “materially participate” in a rental activity for it to be treated as nonpassive. Why is this important? Passive income may be subject to the 3.8% net investment income tax on top of any income tax otherwise due, and passive losses are deductible only against passive income, with the excess carried forward. Contact us to discuss tax planning for your investment real estate.
Which fringe benefits are tax-free to employees?
To attract and retain skilled workers, your small business needs to offer more than competitive pay. Your benefits package matters, too.
Tax-free fringe benefits may be especially valuable to employees. Examples include many types of insurance (health, disability, long-term care and life), assistance plans (dependent care, adoption and educational) and transportation benefits, subject to certain limits. The One Big Beautiful Bill Act also changed some fringe-benefit tax rules for 2026 and beyond.
Open enrollment is right around the corner for many businesses. As you review your 2027 benefits package, contact us for help evaluating your current offerings and fine-tuning them as needed.
Give executive fraud risk your full attention
Occupational fraud perpetrated by owners and senior executives can be particularly costly for businesses because these individuals usually have greater authority to override internal controls. To reduce fraud risk, familiarize yourself with the three sides of the “fraud triangle”: pressure, opportunity and rationalization. These factors generally enable fraud. Also establish strong controls and policies that prevent owners and executives from overriding them. And offer an anonymous tipline or web portal so that workers can report suspicions without fear of retribution. Contact us for help assessing controls and investigating incidents.