Hunsche CPA Blog

What Smart Business Owners Do Right After Tax Season (That Most Don’t)

Tue, 14 Apr 2026 18:33:01 GMT

Tax season is over. Returns are filed. Deadlines are behind you.

For most business owners, this is where they mentally che ck out.

But the most successful business owners? This is exactly when they start making their next move.

Because the reality is simple: you don’t reduce taxes during tax season—you reduce them in the months after.

Why April Is Actually the Start of Tax Planning Season

If your CPA only talks to you between January and April, you’re operating in a reactive system.

That’s how you end up:

Surprised by your tax bill
Missing key deductions
Stuck in the wrong entity structure
Making decisions too late to matter

Smart business owners shift from filing to planning immediately after April 15th.

5 Moves Smart Business Owners Make Right Now

They review what just happened (not ignore it)

Most business owners file and move on. That’s a mistake.

Instead, smart owners ask:

Why did I owe (or overpay)?
Did my income increase more than expected?
Were there deductions I didn’t maximize?

This is where real insights live. If you don’t review it now, you repeat it next year.

They adjust estimated taxes immediately

Your tax return is a snapshot of the past. Estimated payments control your future.

If your income changed last year, your estimates are probably off.

That leads to:

Underpaying → penalties
Overpaying → unnecessary cash flow strain

Recalculating now gives you control instead of reacting later in the year.

They revisit their entity structure (LLC vs S-Corp)

After seeing a full year of numbers, this is the best time to evaluate structure.

We regularly see Fort Wayne business owners:

Staying LLC when an S-Corp would save thousands
Electing S-Corp too early and overcomplicating things

The right structure depends on profit levels, consistency of income, and whether payroll makes sense. This isn’t a set-it-and-forget-it decision.

They set up (or fix) an accountable plan

This is one of the most overlooked strategies for S-Corp owners in Indiana.

If you’re not using an accountable plan, you’re likely:

Missing legitimate deductions
Overpaying payroll taxes

An accountable plan allows your business to reimburse you for home office expenses, mileage, and business use of personal assets in a clean, IRS-backed way.

They clean up their books (before it hurts again)

Most business owners felt some level of pain this tax season:

Messy books
Last-minute scrambling
Unclear numbers

Smart owners fix that now by moving to monthly bookkeeping, getting real-time visibility, and using numbers to actually run the business.

Clean books don’t just make tax season easier—they make your business more profitable.

What Most Business Owners Do Instead

They wait until next January, hope for a better outcome, and stay reactive.

Then they repeat the same cycle.

The Real Difference: Proactive vs Reactive CPA Support

Most CPAs focus on compliance: file the return and move on.

Modern firms focus on advisory: make sure this doesn’t happen again and improve the outcome.

That means ongoing tax planning, mid-year adjustments, and forward-looking decisions. That’s where the real value is.

Don’t Wait Until Next Tax Season to Fix This

If this year felt stressful, expensive, or unpredictable, that’s not a tax problem—it’s a planning problem.

And April is your opportunity to fix it.

Work With a Fort Wayne CPA Who Plans Ahead—Not Just Files

At our firm, we don’t believe in reactive, outdated tax processes.

We work with Fort Wayne and Huntington business owners to reduce taxes proactively, build forward-looking strategies, and eliminate surprises.

If you want next year to look different, the work starts now.

Cost Segregation + S-Corp Strategy: Advanced Tax Planning for Small Business Owners in Fort Wayne & Huntington

Thu, 09 Apr 2026 13:15:02 GMT

If you’re a small business owner in Fort Wayne or Huntington and you also own real estate, you may be sitting on one of the most overlooked tax planning opportunities available.

Most business owners think about their:

Business income
Real estate investments

…as completely separate.

That’s where opportunities get missed.

When you combine cost segregation with a well-structured S-Corp strategy, you can create a more coordinated, forward-looking tax plan that goes far beyond basic compliance.

Why Most Small Business Owners Miss This Opportunity

Traditional tax preparation focuses on reporting what already happened.

But real tax planning happens when you start connecting the dots between:

How your business is structured
How your real estate is taxed
When income and deductions hit your return

Without that coordination, you end up:

Paying more in taxes than necessary
Missing timing opportunities
Making decisions in isolation

How Cost Segregation Fits Into the Bigger Picture

Cost segregation allows you to accelerate depreciation on your real estate.

Instead of spreading deductions over decades, you pull a large portion forward into earlier years.

That can create:

Significant paper losses
Reduced taxable income
Increased cash flow

But here’s the key question most people never ask:

Where do those losses actually go?

Can Cost Segregation Offset Business Income?

This is where strategy matters.

In many cases, real estate losses are considered passive , meaning:

They may not offset active business income

But there are situations where they can:

Short-Term Rental Strategy

If structured correctly, short-term rentals may allow losses to offset active income.

Real Estate Professional Status

If you qualify, you may be able to use those losses more broadly.

Proper Planning and Timing

Coordinating when income and deductions occur can significantly impact results.

This is where cost segregation becomes more than a tactic—it becomes part of a larger system.

Where the S-Corp Strategy Comes In

Your S-Corp isn’t just about saving on self-employment taxes.

When structured properly, it allows you to:

Control how income flows to you
Balance salary vs distributions
Align income with available deductions

When paired with cost segregation, this creates opportunities to:

Offset high-income years
Smooth out tax liability over time
Improve overall efficiency

Example: Coordinated Strategy in Action

Let’s say a Fort Wayne business owner:

Runs an S-Corp generating strong income
Purchases or owns investment real estate
Completes a cost segregation study

With proper planning, they may be able to:

Accelerate real estate deductions
Time income strategically
Reduce overall tax burden significantly

Without coordination, those same deductions might sit unused.

Layering in Additional Strategies

This is where modern advisory separates from outdated approaches.

A strong plan might also include:

Accountable Plans

Reimburse business expenses tax-free
Increase deductions without increasing taxable income

Entity Structuring

Ensuring real estate and operating businesses are aligned correctly

Retirement Planning

Using high-income years and deductions strategically

Individually, these strategies help.

Combined, they create leverage.

Common Mistakes Small Business Owners Make

Treating Everything Separately

Your business and real estate should not be planned in isolation.

Focusing Only on Compliance

Filing taxes is not the same as planning taxes.

Missing Timing Opportunities

When income and deductions hit matters just as much as how much.

Not Revisiting Strategy Annually

Your situation changes—your tax strategy should too.

The Bigger Shift: From Reactive to Proactive

Most Fort Wayne and Huntington business owners are operating in a reactive model:

File the return
Pay the tax
Move on

But the real opportunity is in being proactive:

Planning before year-end
Coordinating multiple strategies
Making decisions with intent

That’s where cost segregation and S-Corp strategy come together.

What This Means for You as a Business Owner

If you:

Own a business generating consistent income
Own (or are considering) real estate
Want to reduce taxes without playing audit-risk games

Then this type of coordinated planning is worth exploring.

Because the biggest opportunities aren’t in any single strategy—they’re in how they work together.

If you own commercial or rental property in Fort Wayne or Huntington, a cost segregation study could significantly reduce your tax bill—but only if it’s done strategically.

Let’s look at your situation before year-end and build a plan that actually moves the needle.

Is Cost Segregation Worth It for Huntington, Indiana Rental Property Owners?

Wed, 08 Apr 2026 13:15:00 GMT

If you own rental property in Huntington, Indiana, you’ve probably come across the idea of cost segregation—and wondered if it’s actually worth the cost and complexity.

The short answer: sometimes yes, sometimes no .

But when it does make sense, it can create significant upfront tax savings and improve your cash flow in a meaningful way.

The key is knowing when to use it—and when not to.

What Cost Segregation Actually Does (And Why It Matters)

Most rental properties are depreciated over 27.5 years .

That’s the default. And for many investors, it’s where the conversation ends.

Cost segregation takes a different approach.

It breaks your property into components and accelerates depreciation on certain assets:

Appliances, flooring, and fixtures (5–7 years)
Land improvements like driveways and sidewalks (15 years)

Instead of spreading deductions out over decades, you pull a large portion forward into earlier years.

For Huntington rental property owners, that means:

Lower taxable income now
More cash flow today
Greater flexibility in how you reinvest

The Real Question: Is It Worth It For You?

This is where most blog posts fall short.

They explain the strategy—but not the decision.

Here’s how we evaluate it with Huntington clients.

When Cost Segregation Usually Makes Sense

Cost segregation tends to be worth it when a few key factors line up:

1. Property Value Is High Enough

As a general rule, properties in the $300K–$500K+ range tend to see stronger returns relative to study cost.

2. You Have Meaningful Taxable Income

Accelerated depreciation only helps if you can actually use the deductions.

If your income is already low, the benefit may be limited.

3. You Plan to Hold the Property

This isn’t a short-term flip strategy. It works best when you plan to hold the property and benefit from the timing of deductions.

4. You’re in a High-Income Year

This is where cost segregation becomes especially powerful.

Pulling deductions into a high-income year can significantly reduce your overall tax burden.

Where Huntington Investors Get Tripped Up: Passive Loss Rules

This is the part most people miss—and it’s critical.

Rental real estate is typically considered passive activity , which means:

Losses may be limited
Deductions may not fully offset your income

So even if a cost segregation study creates large losses…
you might not be able to use them right away.

How to Unlock the Full Benefit

There are a few strategies that can change the equation:

Real Estate Professional Status

If you qualify, you may be able to use losses more freely against other income.

Short-Term Rental Strategy

Many Huntington investors are surprised to learn that short-term rentals can sometimes bypass passive loss limitations—if structured correctly.

Coordinated Tax Planning

This is where working with a proactive CPA matters.

Cost segregation should never be done in isolation. It needs to align with your full tax picture.

What Does a Cost Segregation Study Cost?

Most studies range from:

$5,000 to $15,000 , depending on the property

That’s often the biggest hesitation.

But the real question isn’t the cost—it’s the return on that cost .

We regularly see:

Tens of thousands in accelerated deductions
Significant first-year tax savings

When done right, the ROI can be substantial.

Common Mistakes Huntington Rental Owners Make

Treating It Like a One-Size-Fits-All Strategy

Not every property—or owner—benefits the same way.

Waiting Until Tax Season

By the time you’re filing, many planning opportunities are already gone.

Not Revisiting Older Properties

You can often apply cost segregation retroactively to properties you already own.

Focusing Only on Taxes (Not Strategy)

This is about cash flow, timing, and long-term planning—not just deductions.

The Bigger Picture: Timing Beats Total Savings

Cost segregation doesn’t necessarily reduce your total taxes over the life of the property.

What it does is shift when you pay them .

And that’s where the real value is.

Earlier deductions
Better cash flow
More capital to reinvest

For Huntington rental property owners who are actively growing, that timing difference can be a game changer.

Work With a Huntington, Indiana CPA Who Thinks Proactively

The difference between “interesting strategy” and “real results” comes down to execution.

Cost segregation works best when it’s part of a broader plan that includes:

Income timing
Entity structure
Long-term investment goals

That’s the level most investors never get—and where the biggest opportunities are.

If you own commercial or rental property in Fort Wayne or Huntington, a cost segregation study could significantly reduce your tax bill—but only if it’s done strategically.

Let’s look at your situation before year-end and build a plan that actually moves the needle.

Cost Segregation in Fort Wayne: How Real Estate Owners Can Unlock Massive Tax Savings in Year One

Tue, 07 Apr 2026 14:15:05 GMT

If you own commercial or rental property in Fort Wayne, there’s a good chance you’re leaving significant tax savings on the table.

Cost segregation is one of the most powerful — and underutilized — tax strategies available to real estate investors and business owners. When done correctly, it can dramatically reduce your tax bill in the first year of ownership.

Cost segregation changes that.

Done strategically, it can significantly reduce your tax bill in the first year you own or improve a property—and improve your cash flow at the exact time you need it most.

What Is Cost Segregation (Without the Tax Jargon)?

When you buy a building, the IRS typically requires you to depreciate it over:

27.5 years (residential rental property)
39 years (commercial property)

But here’s the problem: not everything inside that building actually lasts that long.

A cost segregation study breaks the property into components and reclassifies certain parts into shorter depreciation categories:

5-year property: appliances, carpeting, certain electrical
7-year property: furniture and fixtures
15-year property: parking lots, sidewalks, landscaping

Instead of waiting decades, you accelerate those deductions into earlier years—when they’re far more valuable.

Why This Matters for Fort Wayne Business Owners

Fort Wayne is full of growing businesses reinvesting in real estate—office buildings, warehouses, mixed-use spaces, and short-term rentals.

The common pattern we see:

Strong income years
Large tax bills
Limited proactive planning

Cost segregation flips that dynamic.

By accelerating depreciation, you can:

Reduce taxable income significantly
Free up cash for reinvestment
Offset high-income years strategically

This is especially valuable for business owners who are scaling or coming off a strong year.

How Bonus Depreciation Amplifies the Impact

Cost segregation on its own is powerful.

But when paired with bonus depreciation, it becomes a completely different level of strategy.

Bonus depreciation allows you to:

Deduct a large portion of those reclassified assets immediately
Take what would have been spread over years—and recognize it in year one

You’re not just saving taxes—you’re controlling when you pay them.

And timing matters.

A deduction today is often far more valuable than the same deduction spread over the next 10–20 years.

Real Example: Fort Wayne Property Owner

Let’s say you purchase a $200,000 commercial building in Fort Wayne. That's a small, older property, the larger and newer you buy, the more you can save.

A cost segregation study might identify:

20%–30% of the property as shorter-life assets

That creates:

$40,000–$60,000 in accelerated deductions

Depending on your tax bracket, that could translate into:

$10,000–$20,000+ in tax savings

That’s real cash—not a theoretical benefit.

And for many business owners, that cash gets redeployed into:

Hiring
Expansion
Equipment
Additional investments

Who Should Be Looking at Cost Segregation Right Now?

This isn’t just for massive real estate portfolios.

We typically see strong results for:

Fort Wayne business owners who own their building
Investors with short-term rentals (Airbnb/VRBO)
Anyone who purchased or renovated property in the last few years
High-income earners looking to offset a strong tax year

If your property is generally $300K+, it’s at least worth evaluating.

Common Mistakes We See (And Fix)

Most issues aren’t about the strategy—they’re about execution.

Waiting too long

Many owners don’t explore cost segregation until after filing. Timing matters more than people think.

Not coordinating with a CPA

A study without a strategy is just a report. The real value comes from how it fits into your broader tax plan.

Assuming it’s only for large properties

We regularly see meaningful benefits for mid-sized investments.

Missing the bigger picture

Cost segregation should be part of a broader advisory plan—not a one-off tactic.

This Isn’t Just a Tax Strategy—It’s a Cash Flow Strategy

At the end of the day, this comes down to one thing: control.

Control over your tax timing
Control over your cash flow
Control over how you reinvest in your business

That’s the difference between reactive compliance and proactive advisory.

And it’s where most Fort Wayne business owners are leaving money on the table.

If you own commercial or rental property in Fort Wayne or Huntington, a cost segregation study could significantly reduce your tax bill—but only if it’s done strategically.

Let’s look at your situation before year-end and build a plan that actually moves the needle.

Exit Planning for Indiana Business Owners: Why You Should Start 3 Years Before You Sell

Fri, 03 Apr 2026 13:15:02 GMT

Exit Planning for Indiana Business Owners

If you want to sell your business on your terms, planning needs to start long before the sale.

Why Last-Minute Planning Costs You

Waiting too long limits your ability to: - Reduce taxes - Improve profitability - Fix operational risks - Structure the deal strategically

A Practical 3-Year Exit Timeline

Year 3: Foundation

Clean up financials
Evaluate entity structure
Identify risks and gaps

Year 2: Optimization

Improve margins
Build systems and processes
Reduce owner dependency

Year 1: Execution

Finalize deal structure
Implement tax strategies
Prepare for due diligence

Build the Right Advisory Team

A successful exit requires coordination between: - CPA (tax and financial strategy) - Attorney (legal structure) - Broker (market positioning) - Financial advisor (post-sale planning)

Tax Planning Drives Everything

Tax strategy impacts: - Deal structure - Timing of sale - Net proceeds

Plan Early, Exit on Your Terms

The earlier you start, the more control you have.

Start your exit plan today—even if selling is years away.

How to Value Your Business Before Selling (Fort Wayne & Huntington Guide)

Thu, 02 Apr 2026 13:15:05 GMT

How to Value Your Business Before Selling

One of the first questions business owners ask is: “What is my business actually worth?”

The answer is more nuanced than most expect—and it’s not just based on revenue.

Common Business Valuation Methods

Income-Based (Most Common)

Typically based on Seller’s Discretionary Earnings (SDE) or EBITDA multiplied by an industry multiple.

Market-Based

Compares your business to recent sales of similar businesses in Indiana or the Midwest.

Asset-Based

Focuses on the value of underlying assets—more common for asset-heavy businesses.

What Actually Drives Value

Buyers aren’t just buying numbers—they’re buying predictability and scalability.

Key drivers include: - Consistent, growing profitability - Clean, accrual-based financials - Low owner dependence - Recurring or contracted revenue - Strong margins

How to Increase Value Before Selling

If you’re 1–3 years out, you have time to improve value:

Clean up and normalize financial statements
Remove personal expenses from books
Document systems and processes
Build a management layer
Improve customer diversification

Why Clean Financials Matter More Than You Think

Messy books don’t just slow deals—they reduce trust.

Buyers will either: - Lower their offer, or - Walk away entirely

Local Market Insights (Fort Wayne & Huntington)

We’re seeing strong demand for profitable small businesses in Northeast Indiana—but buyers are selective.

Well-prepared businesses command premium multiples.

Don’t Guess Your Value

Understanding your value is the first step—but improving it is where real opportunity lies.

Schedule a valuation and exit readiness consultation.

Selling Your Business in Fort Wayne? Here's How to Reduce Taxes Before You List

Tue, 31 Mar 2026 13:15:02 GMT

Selling Your Business in Fort Wayne? Reduce Taxes Before You List

If you’re thinking about selling your business in Fort Wayne or Huntington, Indiana, the biggest mistake you can make is waiting until you have a buyer.

By the time a deal is on the table, most of your tax strategy options are already gone. At that point, you’re reacting—not planning.

The owners who keep the most after a sale start planning 1–3 years in advance .

Why Timing Matters in a Business Sale

Selling a business is one of the largest financial events of your life. And it triggers multiple layers of tax:

Federal capital gains tax
Indiana state tax
Depreciation recapture on equipment and assets
Net Investment Income Tax (NIIT)

Without proactive planning, it’s not uncommon to lose 25–35% (or more) of your proceeds to taxes.

Common Tax Mistakes Fort Wayne Business Owners Make

We see the same issues repeatedly:

Waiting until a letter of intent (LOI) is signed to involve a CPA
Accepting deal structure without understanding tax impact
Not tracking basis or goodwill properly
Missing opportunities to shift income across tax years

These mistakes are avoidable—but only if planning happens early.

Smart Tax Strategies Before You Sell

1. Entity Structure Optimization

Your entity type (LLC, S-Corp, C-Corp) directly impacts how your sale is taxed. In some cases, restructuring years in advance can significantly reduce taxes.

2. Purchase Price Allocation Planning

Not all dollars are taxed the same. Allocation between goodwill, equipment, and other assets determines whether income is taxed at capital gains or ordinary rates.

3. Installment Sale Strategy

Spreading payments over multiple years can reduce your total tax burden and improve cash flow planning.

4. Retirement & Pre-Sale Contributions

Maximizing retirement contributions before the sale can reduce taxable income and increase long-term wealth.

5. Timing the Sale

Closing late vs early in the year—or splitting payments—can materially impact your tax liability.

Why You Need a Fort Wayne CPA Before Listing

Most brokers are focused on selling your business.

We focus on what you actually keep.

A proactive CPA helps you: - Model after-tax outcomes - Structure the deal before negotiations begin - Coordinate with your attorney and broker

Start Planning Before You Need To

If you’re even thinking about selling in the next few years, now is the time to start.

Schedule a consultation to build a proactive exit and tax strategy before your business hits the market.

Asset Sale vs Stock Sale in Indiana: What Business Owners Need to Know Before Selling

Mon, 30 Mar 2026 13:49:39 GMT

Asset Sale vs Stock Sale in Indiana: What You Need to Know

When selling your business, price gets the attention—but structure determines what you actually keep. If you sell for 8 figures but only keep 5, what did you really get paid?

What Is an Asset Sale?

In an asset sale, the buyer purchases individual components of your business: - Equipment - Inventory - Customer lists - Goodwill

This is the most common structure in small business transactions.

What Is a Stock Sale?

In a stock sale, the buyer purchases ownership shares of your company. The legal entity stays intact—just with a new owner.

Why Buyers Prefer Asset Sales

Buyers often push for asset deals because they: - Avoid inheriting unknown liabilities - Get a step-up in asset basis - Increase future depreciation deductions.

Why Sellers Prefer Stock Sales

From a seller’s perspective, stock sales often mean: - Simpler reporting - More favorable capital gains treatment - Avoiding double taxation (especially for C-Corps).

The Real Tax Impact

Here’s where things get serious.

In an asset sale, portions of the deal may be taxed at: - Ordinary income rates (higher) - Capital gains rates (lower)

In a stock sale, proceeds are typically taxed more favorably.

The difference can easily reach six figures depending on deal size.

Deal Structure Is Negotiated—Not Fixed

Many business owners assume the structure is non-negotiable.

It’s not.

With proper planning, you can: - Negotiate allocation - Offset unfavorable terms elsewhere in the deal - Model multiple scenarios before agreeing

Work With a CPA Who Understands Deal Strategy

This isn’t just tax preparation—it’s deal advisory.

We help Fort Wayne and Huntington business owners evaluate offers, structure deals, and understand after-tax outcomes before signing.

Before you agree to terms, schedule a consultation to evaluate your deal structure.

Fractional CFO vs CPA vs Bookkeeper: Who Does What?

Mon, 30 Mar 2026 13:19:58 GMT

Many business owners assume their CPA or bookkeeper is covering all financial needs—but each role serves a very different purpose.

Understanding these differences is critical to building a financial strategy that supports growth, profitability, and tax efficiency.

Bookkeeper: The Historian

Primary role: Recording and organizing financial transactions

Responsibilities: - Data entry and reconciliation - Accounts payable and receivable tracking - Maintaining accurate financial records

Focus: Historical accuracy

CPA: The Compliance Expert

Primary role: Tax compliance and reporting

Responsibilities: - Preparing and filing tax returns - Ensuring regulatory compliance - Providing limited tax planning (often seasonal)

Focus: Compliance and risk management

Fractional CFO: The Strategist

Primary role: Financial leadership and forward-looking strategy

Responsibilities: - Forecasting and financial modeling - Cash flow optimization - Profitability improvement - Proactive tax strategy coordination - Decision support for growth initiatives

Focus: Future performance and optimization

Why This Distinction Matters

Many businesses rely heavily on compliance-focused roles while missing strategic financial guidance.

A Fractional CFO bridges that gap by: - Turning financial data into actionable insights - Aligning tax strategy with business goals - Improving both profitability and cash flow

You don’t replace your CPA or bookkeeper—you enhance their impact by adding strategic oversight.

If you’re unsure whether your current financial team is meeting your needs, a role-gap assessment can help clarify what’s missing and where to focus next.

When Should You Hire a Fractional CFO? 7 Financial Warning Signs

Thu, 26 Mar 2026 13:30:08 GMT

If your revenue is growing but your cash flow isn’t, it’s a warning sign—not a coincidence.

Many business owners wait too long to bring in CFO-level strategy, often after problems become expensive. Recognizing the early signals can help you act before margins compress or cash becomes constrained.

1. You Don’t Fully Trust Your Financials

If reports are delayed, inconsistent, or unclear, you’re making decisions without reliable data.

2. Cash Flow Is Unpredictable

You may be profitable on paper but still struggle to meet obligations or plan ahead.

3. You’re Making Decisions Without Forecasts

Hiring, expansion, or pricing decisions without financial modeling increase risk and reduce visibility.

4. Tax Bills Are a Surprise Every Year

Reactive tax filing often leads to missed planning opportunities and unnecessary tax liability.

5. Margins Are Shrinking

If profitability is declining and the cause isn’t obvious, deeper financial analysis is needed.

6. You’ve Outgrown Your Bookkeeper or CPA

Bookkeepers and CPAs are essential—but typically focused on historical reporting and compliance, not forward-looking strategy.

7. You’re Planning a Major Business Move

Expansion, hiring, acquisitions, or exit planning require financial modeling and strategic oversight.

Key Takeaway

If you identify with two or more of these signs, it’s likely time for CFO-level support.

If you’re experiencing any of these warning signs, consider a CFO readiness assessment to determine your next financial step.

Why Most Restaurants Aren’t Actually “Losing Money”—They Just Can’t See It

Wed, 25 Mar 2026 13:45:01 GMT

We see this all the time with restaurant owners across Huntington and Northeast Indiana:

Sales are steady. The dining room is full. But cash is tight, margins feel thin, and there’s no clear answer why.

The issue usually isn’t effort—it’s visibility.

Most restaurants are operating off basic, compliance-driven financials :

A P&L that’s months behind
No breakdown by category or shift
No insight into labor efficiency or food cost trends

That’s where the combination of fractional CFO services + in-depth financial reporting becomes a game changer.

What Is a Fractional CFO (and Why Restaurants Need One)?

A fractional CFO is a part-time, strategic financial partner —not just someone who closes your books, but someone who helps you:

Understand what’s actually driving profit (or loss)
Make decisions before problems show up in cash flow
Build a financial system that supports growth—not just compliance

For restaurants, this matters more than most industries because margins are tight and small inefficiencies compound quickly.

The Missing Piece: In-Depth Restaurant Financial Statements

Most accounting systems categorize expenses correctly—but not strategically .

A restaurant-specific financial system should go deeper.

1. Prime Cost Visibility (Your #1 Profit Lever)

Instead of just “COGS” and “Labor,” we break out:

Food vs. alcohol cost percentages
Hourly vs. salaried labor
Overtime tracking
Labor as a % of sales by period

Why it matters:
If your prime costs (food + labor) aren’t consistently tracked and managed, profitability becomes guesswork.

2. Weekly (Not Monthly) Reporting

Waiting until month-end is too late in a restaurant.

A better system includes:

Weekly flash reports
Rolling 4-week trends
Real-time comparisons to targets

Result: You catch problems in days—not months.

3. Revenue Breakdown That Actually Tells a Story

Not all revenue is created equal.

We help restaurants analyze:

Dine-in vs. takeout vs. delivery
High-margin vs. low-margin menu items
Peak hours vs. slow periods

This is where pricing, staffing, and menu decisions become strategic—not reactive.

4. Cash Flow Forecasting (Not Just Looking Backward)

Profit on paper doesn’t equal cash in the bank.

A fractional CFO builds:

8–12 week rolling cash flow forecasts
Seasonality adjustments
Planned capital expenditures

So you know what’s coming—before it hits.

How This Combination Actually Increases Profit

When you combine fractional CFO guidance + better financial visibility , here’s what typically happens:

Food costs drop 2–5% through better tracking and purchasing decisions
Labor becomes predictable instead of reactive
Pricing decisions are based on data, not intuition
Cash flow stabilizes—even during slower seasons

For a restaurant doing $1M+ in annual revenue, these changes can easily translate into tens of thousands in improved profitability .

Why This Matters Right Now for Huntington and Fort Wayne Area Restaurants

Local restaurants are facing:

Rising food costs
Labor shortages and wage pressure
Increased competition and delivery platform fees

You can’t afford to operate on outdated, once-a-year tax planning.

This is where modern advisory comes in:

real-time insight, forward-looking strategy, and financial systems built for decision-making.

What This Looks Like in Practice

At our firm, we don’t just “do the books.”

We help restaurant owners:

Build restaurant-specific financial dashboards
Identify margin leaks quickly
Plan for tax strategy throughout the year
Make confident decisions backed by real numbers

No 30-year-old playbooks. Just modern financial clarity.

Ready to Actually Understand Your Numbers?

If you’re running a restaurant in Huntington or the surrounding area and feel like you’re working too hard for unclear results, it’s time for a different approach.

Let’s fix the visibility problem first—profit usually follows.

Schedule a consultation to see how fractional CFO services and better financial reporting can transform your restaurant’s profitability.

5 Hidden Profit Leaks a Fractional CFO Identifies in the First 90 Days

Tue, 24 Mar 2026 13:30:35 GMT

Most businesses aren’t losing money—they’re leaking it.

If you’ve recently explo red Fractional CFO services, the real value isn’t just better reporting—it’s uncovering hidden inefficiencies that quietly erode profit.

In the first 90 days, a strong CFO focuses on identifying and fixing these leaks to create immediate financial impact.

1. Pricing Misalignment

Many businesses underprice their products or services relative to the value delivered.

Even a 2–5% pricing adjustment—when supported by data—can significantly increase margins without requiring additional sales volume.

Tax/strategy tie-in : Higher margins improve taxable income planning flexibility and create opportunities to strategically time deductions.

2. Unprofitable Customers or Services

Not all revenue is good revenue.

A CFO analyzes contribution margins to identify customers, products, or services that consume disproportionate resources while delivering low or negative profit.

Action: Segment customers and offerings by profitability, not just revenue.

3. Cash Trapped in Accounts Receivable or Inventory

Profit doesn’t equal cash.

Slow collections or excess inventory can create artificial cash shortages even in profitable businesses.

Quick wins: - Tighten AR collection policies - Adjust billing terms - Reduce obsolete inventory

4. Overhead Creep

Expenses rarely spike—they accumulate.

Software subscriptions, redundant vendors, and inefficient labor allocation can quietly erode margins over time.

Action : Conduct a recurring expense audit at least annually.

5. Tax Inefficiencies

This is one of the highest-impact—and most overlooked—areas.

Common missed opportunities include: - Federal and state tax credits (e.g., R&D credit) - Improper expense categorization - Poor timing of income and deductions

Example: Businesses frequently uncover annual tax savings once these areas are reviewed.

Key Takeaway

A Fractional CFO doesn’t just track financials—they actively improve profitability, cash flow, and tax efficiency.

If you suspect profit leaks in your business, a structured financial review can quickly uncover high-impact opportunities.

Schedule a profit leak assessment to identify where your business is leaving money on the table.

Fractional CFO Services in Northeast Indiana: What They Really Do (And Why They’re Not Your Bookkeeper)

Thu, 19 Mar 2026 13:32:58 GMT

Modern Tax & Accounting. Real Advisory. No 30‑Year Old Playbooks.

Most small business owners in Northeast Indiana don’t wake up thinking, “I need a CFO.”

They think:

“Why is my cash always tight even though we’re profitable?”
“How much can I safely pay myself?”
“Are we actually growing—or just busier?”

That’s where a Fractional CFO comes in.

And no—this is not the same as bookkeeping.

What Is a Fractional CFO?

A Fractional CFO (Chief Financial Officer) is a senior financial advisor who works with your business on a part-time or project basis.

Instead of hiring a full-time executive, you get:

Strategic financial guidance
Forward-looking planning
Decision support tied to real numbers

This is not about recording what already happened.

It’s about helping you decide what to do next.

Fractional CFO vs Bookkeeper: What’s the Difference?

This is one of the biggest misconceptions we see.

Bookkeeper = Historical Accuracy

A bookkeeper focuses on:

Recording transactions
Categorizing expenses
Reconciling accounts
Keeping your financials clean and compliant

They answer: “What happened?”

Fractional CFO = Strategic Direction

A Fractional CFO focuses on:

Cash flow forecasting
Profitability analysis by product/service
Pricing strategy
Owner compensation planning
Budgeting and scenario modeling
Tax-aware financial decisions

They answer: “What should we do next?”

Why This Distinction Matters

If you’re relying only on bookkeeping, you’re driving your business by looking in the rearview mirror.

Accurate books are necessary—but they’re not enough to:

Improve margins
Stabilize cash flow
Plan for growth
Reduce tax exposure strategically

A Fractional CFO turns your numbers into decisions, not just reports.

What Does a Typical CFO Cost in Northeast Indiana?

Hiring a full-time CFO in the Fort Wayne / Northeast Indiana market typically looks like:

Base Salary: $140,000 – $220,000+
Bonuses & Incentives: $15,000 – $50,000+
Benefits & Overhead: 20–30% of salary

Total Annual Cost:

$180,000 – $300,000+

And that’s before considering onboarding time and long-term commitment.

Fractional CFO Cost Comparison

A Fractional CFO gives you access to that same level of thinking—without the full-time cost.

Typical pricing structures in Northeast Indiana:

Monthly Advisory Retainers: $4,000 – $7,500/month
Project-Based Work: $5,000 – $25,000 depending on scope

Annualized Range:

$24,000 – $90,000

You’re not paying for idle time—you’re paying for targeted, high-impact financial leadership.

When Does a Business Need a Fractional CFO?

You don’t need a CFO just because you hit a revenue number.

You need one when:

Cash flow is unpredictable
Profit doesn’t match effort
You’re making big decisions without clear financial visibility
Growth is creating complexity (not clarity)
You want proactive tax and compensation planning

What This Looks Like in Practice

At our firm, Fractional CFO services are integrated with proactive tax strategy—not siloed.

That means:

Your tax plan aligns with your cash flow plan
Your entity structure supports your compensation strategy
Your financial decisions are made with tax impact in mind before year-end

This is the difference between reactive compliance and real advisory .

The Bottom Line

Bookkeeping keeps your business organized.

A Fractional CFO helps you run it better.

If you’re making decisions without clear financial direction, you’re leaving money—and control—on the table.

Ready for Real Financial Clarity?

If you’re a business owner in Fort Wayne or Northeast Indiana and want proactive guidance—not just reports—we should talk.

Schedule a consultation today and see what a forward-looking financial strategy actually looks like.

S-Corp vs LLC in Indiana: What Small Business Owners Need to Know in 2026

Mon, 16 Mar 2026 17:39:11 GMT

Choosing the right business structure is one of the most important financial decisions a small business owner makes.

Yet many entrepreneurs in Indiana default to an LLC without understanding how the S-Corporation election could significantly reduce taxes .

The truth is that an LLC and an S-Corp are not actually competing entity types — they serve different purposes. Understanding how they work together can unlock meaningful tax savings for profitable businesses.

If you're starting or growing a business in Indiana, here’s what you need to know about LLC vs S-Corp structures in 2026 .

LLC vs S-Corp: What’s the Real Difference?

One of the most common misconceptions is that LLC and S-Corp are separate business entities .

In reality:

LLC is a legal structure created at the state level
S-Corp is a tax election made with the IRS

Most businesses operate as an LLC that elects to be taxed as an S-Corporation once the business becomes profitable enough to benefit from tax savings.

For Indiana small businesses, this structure often provides the best balance of flexibility, liability protection, and tax efficiency .

How LLCs Are Taxed in Indiana

By default, a single-member LLC is taxed as a sole proprietorship .

This means:

All profit flows directly to the owner’s personal tax return
The entire profit is subject to self-employment tax (15.3%)
The owner pays both the employer and employee portions of Social Security and Medicare

Example:

If an LLC generates $120,000 in profit , the owner may owe:

Federal income tax
Indiana state income tax
Self-employment tax on the entire $120,000

This is where the S-Corp election can create savings.

How the S-Corp Election Can Reduce Taxes

When an LLC elects S-Corporation tax treatment, the owner must pay themselves a reasonable salary through payroll.

However, profits above that salary are not subject to self-employment tax .

Example scenario:

Business profit: $120,000

Owner salary: $60,000

Tax treatment:

$60,000 salary → subject to payroll taxes
$60,000 distribution → not subject to self-employment tax

That difference can reduce payroll taxes by several thousand dollars per year .

This is why the S-Corp election often becomes advantageous once profits reach around $70,000–$100,000 .

When an LLC Is Usually the Better Choice

For many new businesses, staying taxed as a standard LLC makes sense initially.

Situations where an LLC is typically best:

Startup phase with low or inconsistent profits
Business income under ~$60k
Owner wants simple administration
No payroll requirements yet
Rental Real Estate business

In the early stages, simplicity often outweighs the potential tax benefits of an S-Corp.

When an S-Corp Election Starts to Make Sense

An S-Corporation election often becomes attractive when:

The business consistently earns $75k+ in profit
The owner wants to reduce self-employment taxes
Payroll can be reasonably justified
The business has stable cash flow

However, an S-Corp also introduces additional responsibilities:

Payroll processing
Corporate tax return (Form 1120-S)
Reasonable salary compliance
Additional bookkeeping requirements

This is why many businesses benefit from working with a proactive CPA before making the election .

Indiana Considerations for S-Corps

Indiana is generally favorable for S-Corporations compared to some other states.

Important factors include:

Indiana recognizes the federal S-Corp election
State income tax still applies to business profits
Owners may still owe county income taxes depending on location

While the state tax difference between LLC and S-Corp is usually minimal, the federal payroll tax savings often drive the decision .

The Most Common Mistake Business Owners Make

The biggest mistake we see is choosing a structure once and never revisiting it .

Your business structure should evolve as the business grows.

Many Indiana entrepreneurs:

Stay a sole-proprietor LLC long after S-Corp would save taxes
Elect S-Corp too early , adding unnecessary complexity

The right decision depends on:

Profit levels
Owner compensation strategy
Tax planning opportunities
Long-term growth plans

A Smarter Approach to Business Structure

The best structure for a business owner in Indiana isn’t determined by a generic rule — it comes from proactive tax planning .

At Hunsche CPA Group, we help business owners evaluate:

Whether an S-Corp election actually creates savings
How much owners should pay themselves in salary
Additional strategies like accountable plans and retirement planning
Long-term tax planning as the business grows

Modern accounting isn’t about filing returns after the fact — it’s about making strategic decisions before they impact your taxes .

Talk With a Fort Wayne CPA About Your Business Structure

If you're unsure whether your current entity structure is optimal, it's worth reviewing before another tax year passes.

A quick analysis can often identify opportunities to reduce taxes and improve how your business operates financially.

Schedule a consultation with Hunsche CPA Group to review your entity structure and tax strategy for the coming year.

 Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

CPA vs EA: Which Tax Professional Should Fort Wayne Business Owners Trust?

Thu, 12 Mar 2026 13:15:02 GMT

Why Choosing the Right Tax Advisor Matters for Fort Wayne Business Owners

For many Fort Wayne business owners, taxes are treated as a once-a-year task.

But in reality, taxes are one of the largest controllable expenses in your business.

Whether you own a construction company, medical practice, real estate portfolio, or service business in Northeast Indiana, the professional guiding your tax strategy can significantly impact:

how much tax you pay
how efficiently your business is structured
your long-term wealth strategy
your risk of IRS issues

Two of the most qualified professionals in the tax world are Certified Public Accountants (CPAs) and Enrolled Agents (EAs).

Understanding the difference can help Fort Wayne business owners make smarter decisions about who they trust with their financial future.

What Is a CPA?

A Certified Public Accountant (CPA) is a state-licensed accounting professional regulated by the Indiana Board of Accountancy.

To earn the CPA designation, professionals must:

Complete extensive accounting and tax education
Pass the rigorous Uniform CPA Exam
Meet professional experience requirements
Maintain ongoing continuing education

Many Fort Wayne CPAs work closely with local business owners to provide services beyond tax preparation, including:

proactive tax planning
business advisory services
entity structure consulting
cash flow and profitability analysis
exit and succession planning

For growth-focused businesses, a CPA often serves as a long-term strategic advisor , not just a tax preparer.

What Is an Enrolled Agent?

An Enrolled Agent (EA) is a federally licensed tax professional authorized directly by the U.S. Treasury and the IRS .

EAs specialize specifically in tax law and IRS representation .

They become licensed by either:

passing the IRS Special Enrollment Examination , or
gaining significant experience working within the IRS.

Because their focus is exclusively tax law, EAs often have deep expertise in areas like:

complex tax filings
IRS dispute resolution
tax compliance issues
multi-year tax problems

Both CPAs and EAs are fully authorized to represent Fort Wayne taxpayers before the IRS.

What CPAs and EAs Have in Common

Both credentials represent a much higher level of expertise than typical seasonal tax preparers.

Licensed CPAs and EAs must:

✔ Pass rigorous professional examinations
✔ Maintain continuing education
✔ Follow strict ethical standards
✔ Represent taxpayers before the IRS

Unfortunately, many business owners don’t realize that most tax preparers are not required to hold these credentials.

Anyone can technically prepare a tax return for compensation.

That’s why choosing a licensed professional is so important.

Why Many Fort Wayne Businesses Work With Firms That Have Both

Many modern advisory firms combine CPAs and Enrolled Agents on the same team.

This approach provides a powerful combination of expertise:

Strategic financial advisory from CPAs
Deep tax law expertise from EAs

For Fort Wayne business owners, this means getting guidance that covers both:

long-term financial strategy
detailed tax compliance and planning

When these disciplines work together, business owners gain access to proactive tax strategies that reduce risk and improve long-term outcomes.

The Bigger Question: Advisor or Tax Preparer?

For most business owners, the real question isn't CPA vs EA .

It's whether their tax professional acts as a proactive advisor or simply a tax preparer.

Too many business owners only hear from their tax professional between February and April.

That’s not tax strategy.

That’s compliance.

Serious businesses benefit most from professionals who:

review financial performance throughout the year
identify tax planning opportunities before year-end
advise on compensation and retirement strategies
help owners align tax planning with long-term wealth goals

Why Proactive Tax Planning Matters for Fort Wayne Businesses

Local businesses across Northeast Indiana face unique challenges:

rising labor costs
tight margins
economic uncertainty
increasing compliance complexity

Without proactive tax planning, business owners often miss opportunities like:

optimizing S-Corporation compensation
implementing accountable plans
maximizing retirement tax strategies
strategically timing income and deductions

These decisions must happen during the year — not when the tax return is already being filed.

The Bottom Line for Fort Wayne Business Owners

Credentials matter.

But strategy matters even more.

The best tax advisors combine:

advanced credentials ( CPA or EA )
deep understanding of business finances
proactive tax planning throughout the year

That’s how serious business owners turn taxes from a compliance burden into a strategic advantage.

Looking for a Fort Wayne CPA Who Focuses on Strategy?

At Hunsche CPA Group , we work with Fort Wayne business owners who want more than tax preparation.

Our focus is simple:

Modern Tax & Accounting. Real Advisory. No 30-Year-Old Playbooks.

If you're ready for proactive tax planning instead of reactive compliance, we’d love to talk.

 Schedule a consultation today and start building a smarter tax strategy for your business.

Why Serious Business Owners Should Only Work with Licensed Tax Professionals (CPA or EA)

Tue, 10 Mar 2026 13:15:02 GMT

The Hidden Risk of Uncredentialed Tax Preparers

If you're a serious business owner, your tax strategy should never be left to chance .

Yet every year thousands of businesses trust their financial future to unlicensed or minimally qualified tax preparers . Many of these preparers operate seasonally, lack advanced training, and disappear when problems arise. You can often spot them because they emphasize their background in everything except taxes with the intention of having you view them as your neighbor.

That’s a risk no serious business should take.

Working with a licensed and credentialed professional—such as a CPA (Certified Public Accountant) or EA (Enrolled Agent) —isn’t just about filing taxes. It’s about protecting your business, minimizing risk, and making smarter financial decisions.

At a minimum, your tax professional should be someone who is federally or state licensed, held to ethical standards, and required to maintain continuing education .

What Makes CPAs and EAs Different

Not all tax preparers are created equal.

Anyone can technically prepare a tax return for compensation, but CPAs and Enrolled Agents are held to much higher standards.

Certified Public Accountants (CPAs)

CPAs are licensed by state boards of accountancy and must:

Pass the rigorous Uniform CPA Exam
Complete extensive accounting and tax education
Meet strict experience requirements
Maintain ongoing continuing education

Most importantly, CPAs provide year-round advisory services , not just tax preparation.

They help business owners with:

Tax planning
Entity structure strategy
Cash flow and profitability analysis
Exit planning
Compliance risk management

Enrolled Agents (EAs)

Enrolled Agents are federally licensed tax specialists authorized directly by the U.S. Treasury and IRS.

To become an EA, professionals must:

Pass the IRS Special Enrollment Examination, or
Gain experience working within the IRS

EAs specialize deeply in tax law and are authorized to represent taxpayers before the IRS nationwide.

Why Credentials Matter for Business Owners

For individuals with simple W-2 income, a seasonal tax preparer might get the job done.

But business owners face a completely different level of complexity .

Issues like:

multi-entity structures
shareholder compensation planning
retirement strategies
accountable plans
payroll tax compliance
quarterly estimated tax planning

…require advanced expertise.

Without it, business owners often experience:

Overpaying taxes
Missed deductions
IRS penalties
Audit exposure
Cash flow surprises

A licensed professional doesn't just file returns—they actively plan to prevent these issues before they occur.

The Real Difference: Tax Preparation vs. Tax Strategy

Most tax preparers focus on last year's numbers.

Serious business owners need advisors focused on next year's outcomes .

That means working with professionals who:

Analyze financials throughout the year
Identify proactive tax strategies
Align tax planning with long-term business goals
Help owners build wealth outside the business

This is where licensed professionals—particularly advisory-focused CPA firms—deliver the greatest value.

The Cost of Choosing the Wrong Tax Preparer

A common mistake business owners make is choosing a preparer based solely on price.

But the cheapest return preparation often becomes the most expensive decision.

Poor tax planning can cost business owners:

tens of thousands in unnecessary taxes
missed retirement opportunities
entity structure mistakes
IRS notices and penalties

When the stakes involve your business, employees, and personal financial future, credentials matter . Would you hire your neighbor to write up your will, organize your business, or structure a legal document for your family if they are not a lawyer? Why would your taxes be different?

What Business Owners Should Look for in a Tax Professional

Before hiring someone to handle your business taxes, ask a few critical questions:

Are you a CPA or Enrolled Agent?
Do you provide year-round tax planning or just tax preparation?
How do you help business owners reduce taxes proactively?
Do you work primarily with business owners or individuals?
Do you have a secure website and portal to exchange information?
Do you have cyber insurance in case our information is ever hacked?
What systems do you use to monitor tax strategy throughout the year?

If the answers revolve only around filing returns in March and April, it’s time to look elsewhere.

The Bottom Line

Your tax professional should be more than someone who files paperwork.

They should be a strategic advisor who helps you anticipate problems, optimize tax decisions, and build long-term financial stability.

That level of service starts with the right credentials.

Ready to Work With a Real Advisor?

If you’re a business owner who wants proactive tax strategy—not reactive tax preparation—our team can help.

At Hunsche CPA Group, we work with growth-minded business owners to implement modern tax planning strategies and avoid the costly mistakes that come from outdated approaches.

Schedule a consultation today and see what proactive tax advisory actually looks like.

Looking for the Best CPA in Fort Wayne?

Thu, 05 Mar 2026 14:15:00 GMT

Here’s What Business Owners Should Expect

Search “CPA in Fort Wayne” and you’ll get a long list.

But most listings look the same:

Tax preparation
Bookkeeping
Payroll services

The real question isn’t who can file your return. It’s who can help you build a better financial future.

If you’re considering switching accountants in Northeast Indiana, here’s what the best CPA relationship should actually include.

1. Year-Round Strategy — Not Just April Deadlines

The best CPA firms in Fort Wayne don’t disappear after tax season.

They schedule:

Quarterly planning sessions
Estimated tax reviews
Mid-year strategy adjustments
Cash flow check-ins

Business owners shouldn’t be surprised in April.

2. Real Tax Planning — Customized to Your Business

Every business in Northeast Indiana is different.

Construction contractors.
Restaurants.
Real estate investors.
Professional service firms.

Your tax plan should reflect your industry, revenue structure, and long-term goals.

If your CPA applies the same template to every client, that’s not strategic planning.

3. Entity Optimization and Compensation Planning

One of the most overlooked advisory gaps in Fort Wayne is S-Corp optimization.

Are you:

Paying yourself the right salary?
Leaving money on the table?
Missing retirement opportunities?

A modern CPA reviews this regularly — not once at formation.

4. Clear Communication and Technology That Works

Modern accounting means:

Secure portals
Efficient workflows
Clear reporting
Responsive communication

If your CPA is still relying on outdated processes, your experience will reflect it.

5. Forward-Looking Conversations

The best CPA for a Fort Wayne business owner asks:

What are your 3-year goals?
Are you planning to sell?
Are you expanding into other Indiana markets?
Are you building retirement wealth intentionally?

If those conversations aren’t happening, advisory isn’t happening.

Why Many Northeast Indiana Business Owners Are Switching CPAs

We see it regularly:

Growing businesses outpace compliance-only firms
Tax bills surprise owners
Advisory conversations never happen
Technology lags behind expectations
Emails go unanswered

Fort Wayne’s business landscape is evolving.

Your CPA should evolve with it.

What to Ask Before Hiring a New CPA in Fort Wayne

Before making a change, ask:

How often do we meet for planning?
Do you review entity structure regularly?
How do you proactively reduce tax exposure?
What does your advisory process look like?
What industries do you specialize in locally?
Can you give me a quote up front for services?

The answers will tell you everything.

If You’re Going to Switch, Switch Strategically

Changing CPAs is less disruptive than most owners think.

The bigger risk is waiting another year while opportunities pass by.

If you’re searching for the best CPA in Fort Wayne or Northeast Indiana, the answer isn’t who files fastest.

It’s who plans furthest ahead.

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

If you're ready for a proactive relationship instead of a reactive one, schedule a consultation and let’s build a strategy that supports where your business is actually going.

When Is It Time to Change CPA's

Tue, 03 Mar 2026 14:15:00 GMT

A Guide for Fort Wayne & Northeast Indiana Business Owners

Most business owners in Fort Wayne don’t wake up one day planning to change accountants.

It usually starts with a feeling.

You only hear from your CPA in March/April.
You’re not sure if you’re overpaying in taxes.
You’ve grown — but your strategy hasn’t.

If you’re running a business in Northeast Indiana, the right CPA should be helping you think forward — not just file forms.

Here’s how to know if it’s time to make a change.

1. You Only Hear From Your CPA During Tax Season

If your accountant disappears from April through December, that’s compliance — not advisory.

Fort Wayne business owners dealing with growth, hiring, cash flow swings, or expansion into surrounding areas like Auburn, Columbia City, or Huntington need year-round strategy conversations.

Modern CPA firms provide:

Quarterly tax planning
Cash flow forecasting
Entity reviews
Proactive strategy meetings

If your CPA only talks to you when documents are due, that’s a red flag.

2. There’s No Tax Planning — Only Tax Filing

Filing your tax return is the bare minimum.

Strategic tax planning should include:

S-Corp compensation reviews
Retirement strategy optimization
Accountable plan implementation
Equipment purchase timing
Estimated payment calibration

If you’re surprised by your tax bill every April, planning likely isn’t happening.

In Northeast Indiana’s growing small business community, reactive accounting costs owners real money.

3. Your Business Has Grown — But Your CPA Hasn’t Evolved

Fort Wayne’s business environment is expanding — construction, professional services, manufacturing, real estate investment.

But if your CPA still operates the same way they did 20 years ago, your strategy may be stuck too.

Ask yourself:

Are they discussing long-term exit strategy?
Are they helping optimize your entity structure?
Are they modeling future scenarios?
Have they given you any new advice in the past 10 years?

Growth requires advisory, not outdated playbooks.

4. You Feel Like a Transaction, Not a Relationship

Do you:

Struggle to get responses?
Get routed to staff who don’t know your situation?
Feel rushed during meetings?

Your CPA should understand your business goals — not just your QuickBooks file.

5. You’re Not Sure What You’re Paying For

If your invoice shows “tax prep services” with no clear advisory value attached, you may be paying compliance prices for compliance service. Worse, if you get a bill for multiple years at a time, with little to no detail, how are they able to help your business when they can't even stay on top of their own?

Modern advisory firms in Fort Wayne structure engagements around planning, not paperwork.

6. You’ve Never Reviewed Your Entity Structure

Many Northeast Indiana business owners formed an LLC years ago and never revisited it.

But:

Income levels change
Profitability shifts
Risk exposure evolves

If your CPA hasn’t reviewed your structure in the last 2–3 years, that’s a missed opportunity.

7. You Don’t Have a Proactive Plan for the Next 3–5 Years

This is the biggest indicator.

A strong CPA relationship includes:

Exit strategy conversations
Retirement planning coordination
Multi-year tax modeling
Business succession strategy

If you’re guessing your way forward, it may be time to upgrade your advisory team.

What Switching CPAs Looks Like in Fort Wayne

Changing CPAs doesn’t have to be complicated. In fact, often times it only requires a signature from you and we do all the work.

A professional transition includes:

Secure document transfer
Prior return review
Planning gap analysis
Strategy reset before next tax year

The real risk isn’t switching. It’s staying in a reactive relationship for another 3–5 years.

Modern Tax & Accounting in Fort Wayne

Business owners across Fort Wayne and Northeast Indiana deserve more than annual compliance.

They deserve:

Proactive planning
Real advisory
Strategy conversations before problems happen

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

If you’re questioning whether your current CPA is helping you move forward — that’s usually your answer.

Schedule a consultation today and see what proactive advisory should actually look like.

If Your CPA Only Talks to You in March and April, You Don’t Have an Advisor

Thu, 26 Feb 2026 14:15:02 GMT

Many small business owners say, “I have a CPA.”

But when you look closer, what they really have is someone who prepares a tax return once a year.

That’s not advisory. That’s compliance.

And while compliance is necessary, it’s not enough if you’re serious about growing, protecting, and optimizing your business.

The Compliance-Only Trap

The traditional accounting model hasn’t changed in decades:

Drop off documents.
Wait.
Review the return.
Pay what you owe.
Repeat next year.

It’s transactional. It’s reactive. And it’s built around deadlines — not decisions.

For W-2 employees with simple returns, that might be fine.

For entrepreneurs? It leaves too much on the table.

Why Reactive Accounting Creates Bigger Problems

When tax conversations only happen in March or April, here’s what usually happens:

1. Surprise Tax Bills

You find out what you owe after the year is over — when nothing can be adjusted.

2. Missed Entity Opportunities

No one revisits whether your LLC, S Corp, or partnership structure still makes sense as income grows.

3. No Compensation Strategy

Are you paying yourself correctly? Too much? Too little? No one is modeling it during the year.

4. Estimated Payments Based on Last Year

Instead of real-time projections based on current performance.

5. Retirement & Benefit Gaps

No proactive planning around retirement contributions, accountable plans, or fringe benefit optimization.

None of these are filing problems.

They’re strategy gaps.

What CPA Advisory Services Should Actually Look Like

Advisory isn’t about more meetings.
It’s about better conversations — at the right time.

A modern CPA advisory relationship should include:

Q1: Profit & Tax Projection Reset

After year-end closes, you recalibrate based on current trajectory.

Mid-Year: Adjustments & Planning

Is revenue ahead of projections? Behind? Do estimated payments need adjustment?

Q3/Q4: Strategic Moves

Retirement contributions
Income timing decisions
Capital purchases
Compensation adjustments

Year-End: Intentional Execution

Not scrambling — executing a plan you’ve already modeled.

That’s proactive accounting.

That’s what reduces stress, improves cash flow, and prevents avoidable mistakes.

The Real Difference: Questions Asked

If your CPA relationship is advisory-focused, you’ll hear questions like:

“Where is profit trending this quarter?”
“What are your growth plans over the next 12–24 months?”
“Are we optimizing your entity structure?”
“How are you managing cash flow alongside tax obligations?”
“What does your retirement strategy look like?”

If those conversations aren’t happening until after December 31, you’re operating without forward guidance.

Why This Matters More as You Grow

The bigger your revenue gets, the more expensive reactive accounting becomes.

Higher income = larger potential planning opportunities.
Bigger swings in profit = higher risk of underpayment penalties.
More employees = more compliance exposure.
More complexity = more room for preventable mistakes.

Growth without advisory oversight increases risk.

Growth with advisory creates control.

Modern Accounting Is Year-Round

Small business owners don’t need someone to simply document what happened.

They need someone who helps them:

Anticipate tax impact before decisions are made
Model scenarios before committing
Align compensation with long-term goals
Integrate tax strategy with retirement and cash flow

That’s what CPA advisory services for small business should look like today.

Not a once-a-year signature meeting.

But a strategic partnership.

Ready for a Different Conversation?

If your current relationship revolves around filing deadlines instead of forward planning, it may be time to rethink what you expect from your CPA.

Schedule a consultation and let’s talk about building a proactive strategy that supports your growth — not just your compliance.

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

A Tax Return Is a Rearview Mirror — Small Businesses Need a Windshield

Tue, 24 Feb 2026 14:15:03 GMT

Most small business owners think they need help with taxes.

What they actually need is a strategy.

There’s a big difference.

A tax return tells you what already happened.

Real advisory helps you decide what happens next.

If your CPA only shows up to “do the return,” you’re looking in the rearview mirror. And in today’s business environment, that’s not enough.

Tax Preparation Reports the Past

A tax return is historical reporting.

It documents:

What you earned
What you spent
What you owe
What you should have done differently

By the time you’re signing your return, the year is over. The decisions are locked in. The opportunities are mostly gone.

That’s not strategy. That’s documentation.

And for growing businesses, reactive compliance creates unnecessary stress, surprise tax bills, and missed opportunities.

The Hidden Cost of “Finding Out in April”

We see this all the time with new clients.

They come to us after filing and say:

“I didn't know I'd owe that much.”
“No one told me about S corp elections.”
“Should I have set up a retirement plan?”
“Is there a better way to reimburse myself?”

Those aren’t tax preparation problems.

Those are planning problems.

Without proactive small business tax planning, you may miss:

Entity structure optimization
Reasonable compensation strategy
Accountable plans for tax-efficient reimbursements
Retirement contribution strategies
Timing opportunities for income and deductions
Estimated tax adjustments before penalties hit

When these conversations only happen at filing time, they’re too late to matter.

A Windshield Approach to Tax Strategy

Advisory flips the model.

Instead of asking, “What happened?”

We ask, “ What’s coming next — and how do we prepare for it ?”

Forward-looking tax planning includes:

Quarterly Income & Tax Projections

We estimate where your profit is heading and adjust before year-end surprises.

Entity & Compensation Review

Is your structure still the most efficient for your current income level?

Cash Flow & Estimated Tax Modeling

So you know what’s owed before it’s due — not after.

Retirement & Benefit Planning

Strategic contributions that reduce taxes and build long-term wealth.

Year-End Timing Strategy

Intentionally accelerating or deferring income and expenses — before December 31.

That’s the difference between compliance and proactive tax strategy.

Why This Matters More Now

Tax law changes. Profit fluctuates. Businesses evolve.

But many small business owners are still operating under a 30-year-old compliance model:

Drop off documents.
Wait.
Sign.
Pay.
Repeat.

That model might work for someone with a W-2 job.

It doesn’t work for entrepreneurs.

As a business owner, your tax return should be the outcome of a plan — not a surprise at the end of the year.

What Real Advisory Looks Like

If you want to know whether you’re getting advisory or just preparation, ask yourself:

Do I know my projected tax liability before Q4?
Has anyone reviewed whether my entity structure still makes sense?
Do I have a clear retirement and compensation strategy?
Are my estimated payments calculated strategically — or just based on last year?
Do I have conversations about cash flow, not just compliance?

If those discussions aren’t happening during the year, your tax return is driving the strategy.

And that’s backward.

Modern Tax & Accounting Requires Forward Thinking

At our firm, we believe small business tax planning should be proactive, practical, and forward-looking.

Because business owners don’t need historians.

They need advisors.

The goal isn’t just filing accurately.

It’s reducing risk, improving cash flow, and making intentional decisions before deadlines force your hand.

That’s how you eliminate surprises.
That’s how you scale responsibly.
That’s how you stop letting April dictate your financial strategy.

Ready to Move From Rearview Mirror to Windshield?

If you’re tired of reactive tax bills and once-a-year conversations, it may be time for a different approach.

Schedule a consultation and let’s talk about building a forward-looking tax strategy that supports your growth — not just your compliance.

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

The Real Reason Business Owners Get Surprise Tax Bills (And How to Prevent Them)

Thu, 19 Feb 2026 14:15:02 GMT

Sur prise tax bills aren’t random.

They’re almost always the result of missing planning systems.

If you’ve ever owed far more than expected in April, here’s what likely happened.

1. No Quarterly Modeling

Many business owners pay estimates based on last year’s numbers.

But businesses change.

Revenue grows.

Margins shift.

Owner compensation changes.

If you’re not projecting income quarterly, your tax payments are based on outdated information.

2. Distributions Without Tax Allocation

Taking distributions without reserving for taxes is one of the most common cash flow mistakes we see.

Profit does not equal cash available to spend.

A proactive plan allocates taxes before distributions go out.

3. S-Corp Salary Imbalance

If your salary is too low, you may face compliance risk.

If it’s too high, you may be overpaying payroll taxes.

Both impact your overall liability.

This should be reviewed regularly — not guessed at .

4. No Year-End Planning Window

By March, it’s too late.

The real planning window is October through December — when income timing, retirement contributions, and expense acceleration can still be adjusted.

Compliance vs Advisory

Compliance files the return.

Advisory models outcomes before the year closes.

If you’re tired of being surprised by your own tax bill, the solution isn’t hoping next year is better.

It’s building a system that anticipates the outcome.

Modern Tax & Accounting.

Real Advisory.
No 30-Year Old Playbooks.

If you want predictable, proactive tax planning instead of April anxiety, schedule a consultation.

Stop Guessing: How to Calculate and Use Your Effective Tax Rate as a Business Owner

Tue, 17 Feb 2026 14:15:04 GMT

If you’re a business owner and you don’t know your effective tax rate, you’re making financial decisions without a key data point.

Not your marginal bracket.

Not what you “think” you pay.

Your actual effective tax rate — the percentage of your total income that goes to federal and state taxes.

And for most business owners, it’s either misunderstood or never calculated intentionally.

What Is an Effective Tax Rate?

Your effective tax rate is:

Total tax paid ÷ Total taxable income

It reflects what you truly pay across all brackets, not just the highest one you fall into

Many owners assume:

“If I’m in the 32% bracket, I’m paying 32% on everything.”

That’s not how it works.

But here’s the bigger issue: most owners don’t calculate their effective rate at all — they just react to the number their CPA gives them in March.

That’s compliance. Not strategy.

Why Your Effective Tax Rate Actually Matters

Your effective rate influences:

How much you should distribute from the business
Whether your S-Corp salary is optimized
How much to set aside for quarterly payments
How aggressive retirement contributions should be
Whether an entity change makes sense

Without knowing this number in advance, you’re operating on guesswork.

And guesswork leads to:

Surprise tax bills
Cash flow strain
Missed planning opportunities

The Real Problem: Most Planning Happens After Year-End

By the time your return is prepared, the year is closed.

Income has already been earned.

Expenses have already been recorded.

Distributions have already been taken.

There’s very little left to optimize.

Proactive advisory means calculating and modeling your effective tax rate before the year ends — and adjusting accordingly.

What Proactive Tax Planning Looks Like

Instead of asking, “How much do I owe?” in March, proactive planning asks:

Can we shift income timing?
Should we accelerate expenses?
Is your compensation structured correctly?
Are we maximizing retirement strategy?
Does your entity structure still make sense?

This is how you move from reactive to strategic.

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

If your current tax process consists of filing the return and hoping for the best, you’re leaving too much to chance.

Business owners deserve clarity — not surprises.

If you want to understand and control your effective tax rate before decisions are final, it’s time for a different approach.

Schedule a consultation and let’s build a proactive strategy.

How Many Americans Actually Understand How Taxes Work? (And Why That Matters More Than You Think)

Thu, 12 Feb 2026 14:15:01 GMT

Most Americans File Taxes Every Year — But Don’t Fully Understand Them

Taxes are a universal experience — but confidence in understanding them is surprisingly low .

According to a survey of more than 1,000 Americans , only one in four feel confident about filing their taxes . Nearly 20% say they feel overwhelmed or completely lost when it comes to tax preparation.

Meanwhile, broader national polling shows that a vast majority of Americans think the federal tax code needs reform , and 65% believe it’s unfair — signaling widespread dissatisfaction and confusion about how the system actually works.

That confusion isn’t just an April problem. It’s a year-round planning gap that impacts financial decisions, retirement choices, and long-term wealth outcomes.

The Real Cost: What the Average American Pays in Taxes Over a Lifetime

Let’s zoom out.

The average American household will pay hundreds of thousands — often over $500,000 — in taxes over their lifetime when you combine:

Federal income taxes
State income taxes
Social Security and Medicare taxes
Property taxes
Sales taxes

For higher earners and business owners, that number can easily exceed $1 million to $3 million+ over a working lifetime.

Read that again.

Most Americans will send half a million to several million dollars to the government over their lifetime…

Yet many don’t feel confident explaining how their tax system actually works.

If you were making a $1–3 million financial decision, would you want to understand the rules?

Exactly.

The Problem Isn’t Intelligence. It’s Education.

The tax code is complex — but it’s not unknowable.

What’s missing isn’t capability.

It’s structured, practical education that connects:

Income decisions
Business structure
Retirement strategy
Entity governance
Accountable plans
Cash flow planning
Long-term tax positioning

Most people are taught how to file taxes.

Very few are taught how to plan taxes.

And filing and planning are not the same thing.

Why Reactive Tax Filing Is Costing Business Owners

For small business owners especially, reactive tax filing leads to:

Overpaying self-employment taxes
Missing entity optimization opportunities
Poor retirement contribution strategy
Inconsistent estimated payments
Cash flow stress in Q4
Governance and compliance gaps

And the worst part?

By the time most people find out, the year is already closed.

That’s the old model.

We don’t operate that way.

Introducing Our Tax & Planning Bootcamp Series

Our Tax & Planning Bootcamp Series was designed for one reason:

To give business owners and professionals the clarity and tools they were never taught — so they can make proactive decisions year-round.

This isn’t surface-level tax talk.

We cover:

1️⃣ How Tax Brackets Really Work

No myths. No “moving into the next bracket panic.” Just clarity.

2️⃣ Tax Deductions versus Tax Credits

What is the difference and how do they impact you?

3️⃣ Retirement Planning as a Tax Strategy

Solo 401(k)s, SEP IRAs, defined benefit plans — and how they impact your lifetime tax burden.

4️⃣ Record Retention and Receipt Requirements

What are the basic requirements of you as a taxpayer to ensure you can pass an audit?

5️⃣ Cash Flow Planning for Q4

How to avoid surprise tax bills and reactive scrambling.

6️⃣ Long-Term Tax Mapping

Because taxes aren’t annual events. They’re lifetime decisions.

Knowledge Changes Behavior. Behavior Changes Outcomes.

When clients understand:

How marginal rates work
How income timing affects taxes
How deductions interact with entity structure
How retirement contributions shift lifetime tax burden

They stop reacting.

They start planning.

That’s when real advisory begins.

Modern Tax & Accounting. Real Advisory. No 30-Year Old Playbooks.

Our firm isn’t built on once-a-year compliance.

We’re built on:

✔ Proactive strategy
✔ Education before filing
✔ Lifetime planning — not just April deadlines
✔ Data-driven tax modeling
✔ Clear communication without jargon

If the average American will pay over half a million dollars in taxes over their lifetime…

Doesn’t it make sense to understand the system?

Ready to Stop Guessing and Start Planning?

If you’re a business owner or high-earning professional who wants clarity, strategy, and a forward-looking plan — not just a tax return — our Bootcamp is where that transformation starts.

Schedule a consultation and let’s build a proactive tax strategy that works long before filing season.

Accountable Plans: A Simple Strategy That Puts More Money Back in Your Poacket

Tue, 10 Feb 2026 14:15:04 GMT

Many business owners are paying more in taxes than they should — not because of bad bookkeeping, but because they’re missing one of the simplest, most effective planning tools available: an accountable plan .

An accountable plan isn’t a loophole or a gray‑area strategy. It’s a long‑standing IRS‑approved framework that allows your business to reimburse you (the owner) for legitimate business expenses tax‑free . When implemented correctly, it can directly improve cash flow, reduce payroll taxes, and create cleaner, more defensible financials.

Yet surprisingly, many profitable small businesses still don’t have one.

Let’s break down what an accountable plan is, how it works, and why it can have a real impact on business owners — especially those operating S corporations or closely held entities.

What Is an Accountable Plan?

An accountable plan is a formal reimbursement arrangement between a business and its employees (including owner‑employees). Under IRS rules, reimbursements are not treated as taxable income if three conditions are met:

Business connection – Expenses must be ordinary and necessary for the business
Substantiation – Expenses are documented with receipts and records
Return of excess – Any excess reimbursement is returned to the business

When these requirements are met, reimbursements:

Are deductible to the business
Are not taxable wages to the employee
Are not subject to payroll taxes

That combination is where the real planning value lives.

Why Accountable Plans Matter for Business Owners

For many owners, especially S corporation shareholders, personal funds are often used to pay for business‑related costs — home office expenses, cell phones, internet, mileage, continuing education, and more.

Without an accountable plan, those expenses often end up:

Not reimbursed at all
Deducted incorrectly on personal returns (or not at all)
Or run through payroll, increasing taxable wages unnecessarily

An accountable plan fixes that.

Direct Benefits to the Owner

When implemented properly, an accountable plan can:

Increase tax‑free cash flow to the owner
Reduce W‑2 wages and payroll taxes (for S corp owners)
Create a clean, auditable trail of expense reimbursements
Shift expenses from personal to business — where they belong

This isn’t about aggressive tax avoidance. It’s about aligning reality with how the tax code already works.

Common Expenses Reimbursed Through an Accountable Plan

An accountable plan doesn’t create new deductions — it simply allows existing, legitimate business expenses to be reimbursed correctly.

Common examples include:

Home office expenses (rent, utilities, insurance, repairs)
Cell phone and internet used for business
Mileage and vehicle expenses
Professional education and subscriptions
Business meals (subject to current deductibility rules)
Supplies and small equipment

The key is documentation and consistency . The plan must be formal, and reimbursements must follow it.

Accountable Plans and S Corporations: A Missed Opportunity

S corporation owners are one of the groups that benefit most — and miss this most often.

Why? Because unreimbursed expenses cannot be deducted on personal returns the way they once could. Without an accountable plan, owners often absorb these costs personally with no tax benefit.

An accountable plan allows the S corp to:

Reimburse the owner tax‑free
Deduct the expense at the entity level
Avoid increasing W‑2 wages

That’s a planning win — not a compliance trick.

Why “Just Running It Through the Business” Isn’t Enough

A common misconception is that casually paying or reimbursing expenses without a formal plan is sufficient.

It isn’t.

Without written documentation and consistent procedures:

Reimbursements can be reclassified as wages in an audit
Payroll taxes and penalties can apply retroactively
The strategy becomes reactive instead of defensible

A properly designed accountable plan creates structure, clarity, and protection — not just deductions.

Implementation Matters More Than the Idea

Accountable plans fail when they’re:

Downloaded from the internet and forgotten
Not integrated into payroll or bookkeeping
Inconsistent with how expenses are actually reimbursed

A well‑designed plan should:

Be customized to the business and entity type
Align with payroll and accounting systems
Be reviewed periodically as the business grows

This is where proactive advisory makes the difference.

Is an Accountable Plan Right for You?

Not every business needs one — but many profitable small businesses should at least evaluate it.

If you:

Operate an S corporation
Regularly pay business expenses personally
Want to reduce taxes without increasing risk
Care about clean financials and audit defensibility

An accountable plan is often a smart next step.

The Bottom Line

Accountable plans are one of those strategies that feel almost too simple — until you see the numbers.

They don’t rely on outdated tactics or aggressive positions. They rely on doing things the right way, on purpose, and in advance .

That’s modern tax planning.

Ready to See If This Makes Sense for Your Business?

At Hunsche CPA Group , we help business owners implement accountable plans as part of a broader, forward‑looking tax strategy — not as a one‑off document that sits in a drawer.

If you’re curious how an accountable plan could impact your cash flow and tax picture, let’s talk.

Schedule a consultation today and start planning ahead — not catching up.

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Mixing Personal and Business Finances? A CPA Explains the Hidden Costs

Thu, 29 Jan 2026 06:08:01 GMT

One of the most common bookkeeping issues we see isn’t complicated, technical, or industry-specific.

It’s mixing personal and business finances.

For many business owners—especially in the early stages—it feels harmless. One bank account. One credit card. Everything flowing in and out together. It’s convenient, and at first glance, it seems efficient.

But over time, this simple habit quietly creates a range of problems that are far more expensive and time-consuming to fix later.

Why Mixed Finances Create Bigger Problems Than You Think

When personal and business transactions run through the same accounts, financial reporting becomes distorted. Expenses that shouldn’t be there get mixed in. Income gets misclassified. Transfers become unclear.

As a result, it becomes harder to answer basic but critical questions:

Is the business actually profitable?
Where is cash really being spent?
Can this business support growth, hiring, or investment?

Without clean data, business performance is harder to measure—and decision-making suffers.

The Downstream Effects Show Up Later

This issue often doesn’t cause immediate pain, which is why it’s so common. Instead, it tends to surface months or even years later, usually at the worst possible time.

We typically see it show up as:

Inaccurate or unreliable financial statements
Higher accounting and tax preparation costs due to cleanup work
Missed deductions because expenses can’t be clearly substantiated
Increased audit risk from unclear or unsupported transactions

At that point, what could have been prevented with a simple setup becomes a manual, time-intensive process of sorting through transactions after the fact.

Why Separation Isn’t About “Being Formal”

Some business owners assume separating finances is only necessary once they’re “big enough” or more established.

In reality, separating personal and business finances isn’t about being formal—it’s about being intentional.

Clean separation creates clean data. Clean data supports:

Better financial insight
More confident tax positions
Lower professional fees
Less stress when deadlines arrive

It also makes your business easier to scale. Lenders, investors, and advisors rely on accurate financial information. When the numbers are clean, conversations are simpler and options expand.

Easy to Prevent. Expensive to Fix.

Mixing personal and business finances is one of those problems that’s easy to prevent—and unnecessarily expensive to fix later.

A separate bank account. A dedicated credit card. Clear boundaries from day one.

Those small steps can save significant time, money, and frustration down the road.

If you’re unsure whether your current setup is helping or hurting you, now is the right time to take a closer look. A proactive review can uncover issues early—before they turn into costly cleanup work. Contact us today to get your business down the right path.

The Importance of Keeping Accurate and Up-to-Date Books: Planning and General Review

Tue, 27 Jan 2026 06:04:39 GMT

As a business owner, you juggle many responsibilities, but one of the most critical is maintaining accurate and up-to-date financial records. Good bookkeeping is more than just a compliance requirement—it’s the foundation for sound business planning, informed decision-making, and long-term success.

Why Accurate Books Matter for Planning

Accurate books provide a clear picture of your business’s financial health. With reliable records, you can monitor income, expenses, assets, and liabilities, which is essential for budgeting, forecasting, and identifying trends or issues that need attention. Well-maintained records allow you to make informed decisions about when to invest in capital improvements, how to cut unnecessary expenses, and where to focus your growth efforts. Incomplete or inaccurate records, on the other hand, can lead to poor decisions and missed opportunities, making it difficult to evaluate or improve your financial performance.

The Role of Bookkeeping in General Review and Compliance

Accurate and up-to-date books are also essential for compliance and general review. Proper records substantiate your tax returns, support deductions and exemptions, and facilitate efficient audits. If your records are incomplete or inaccurate, auditors may estimate your tax liability, which can lead to unfavorable outcomes. Inadequate records can also result in penalties, additional assessments, and disputes with tax authorities. Beyond compliance, accurate books provide a reliable foundation for evaluating financial performance and making informed business decisions.

Best Practices for Maintaining Accurate Books

To ensure your books are always accurate and up-to-date, consider these best practices:

Use a simple, consistent, and reliable recordkeeping system tailored to your business’s needs.
Record all transactions regularly to avoid backlog and errors.
Centralize your records for easy access and safekeeping.
Retain receipts and documentation for all business expenses.
Use a dedicated business bank account and never mix business and personal funds.
Control petty cash with vouchers and careful tracking.
Review your accounts monthly to catch errors early and maintain a clear financial picture.
Retain records for at least three to six years to comply with audit requirements.
Implement internal controls, especially over cash receipts and disbursements, to safeguard assets and ensure accuracy.

Conclusion

Keeping accurate and up-to-date books is not just about meeting regulatory requirements—it’s about empowering your business to thrive. With reliable records, you can plan confidently, respond to challenges proactively, and position your business for sustainable growth.

If you have questions about setting up or improving your bookkeeping system, our team at Hunsche CPA Group is here to help.

What is a Fractional CFO-and Do You Need One?

Wed, 21 Jan 2026 16:29:25 GMT

As business owners, you’re expected to make critical decisions every day—about hiring, pricing, growth, cash flow, and taxes. But too often, those decisions are made without clear, forward-looking financial insight.

That’s where our fractional CFO services come in.

At our firm, we provide CFO-level financial leadership on a flexible, cost-effective basis—helping growing businesses move beyond compliance and into true financial strategy.

What Is a Fractional CFO?

A fractional CFO provides the same strategic guidance as a full-time Chief Financial Officer, but on a part-time or as-needed basis. This allows business owners to access high-level financial expertise without the cost or commitment of hiring a full-time executive.

Unlike traditional accounting services that focus on what already happened, our fractional CFO services focus on what’s next —and how to plan for it.

Why Work with a CPA Firm for Fractional CFO Services?

Not all fractional CFOs are CPAs—and that distinction matters.

Because we already understand your books, your tax situation, and your business structure, our fractional CFO services are fully integrated with your accounting and tax strategy.

That means:

Financial decisions are made with tax consequences in mind
Tax planning is aligned with long-term business goals
Advisory insights are based on accurate, reliable financial data
You work with one trusted team , not disconnected advisors

This integrated approach allows us to deliver deeper insight and more practical guidance than standalone CFO or consulting services.

What Our Fractional CFO Services Include

Our fractional CFO services are tailored to your business, but commonly include:

Cash flow forecasting and management
Helping you anticipate cash needs, avoid surprises, and plan confidently.
Budgeting and financial modeling
Building budgets and projections that support growth, hiring, and expansion.
Profitability and pricing analysis
Identifying what truly drives profit—and what may be holding you back.
Key performance indicators (KPIs) and reporting
Turning your financial data into clear, decision-ready dashboards.
Strategic advisory support
Guidance on hiring, capital investments, business structure, and scaling.
Tax-aware financial planning
Ensuring financial strategies support proactive, not reactive, tax planning.

How Fractional CFO Services Enhance Tax Planning

When tax planning is done in isolation, opportunities are often missed. Our fractional CFO services allow us to take a year-round, forward-looking approach to taxes by connecting strategy and compliance.

This means we can:

Anticipate taxable income before year-end
Align entity structure and compensation planning with cash flow
Evaluate growth decisions through both a financial and tax lens
Reduce surprises—and create intentional outcomes

Instead of asking, “What happened last year?” we help answer, “What should we do now to improve results and minimize taxes?”

Who We Serve Best

Our fractional CFO services are ideal for:

Growing small and mid-sized businesses
Owners who feel “too close” to the numbers
Businesses with strong revenue but unclear profitability
Companies preparing for growth, financing, or major decisions
Owners who want proactive advice—not just historical reports

If you’re making decisions based on intuition rather than clear financial insight, a fractional CFO can provide clarity, confidence, and direction.

From Compliance to Advisory—A Better Way Forward

At our firm, we believe accounting should be more than compliance. By combining fractional CFO services, tax planning, and advisory support , we help business owners understand their numbers, plan proactively, and make better decisions.

Our goal is simple:
to help you build a stronger, more profitable, and more tax-efficient business.

If you’re ready to move beyond basic accounting and start using your financial data strategically, our fractional CFO services may be the next step.

How to Deduct your Qualified Tipped Wages

Mon, 19 Jan 2026 16:26:40 GMT

With the new “No Tax on Tips” provision, many taxpayers are asking an important question: What tips actually qualify? The IRS has released FAQs and guidance to help clarify eligibility, but once you determine your tips do qualify , the next question becomes:

How do you actually remove them from your taxable income?

A New Form (and a Not-So-Simple Return)

Back in 2017, the Tax Cuts and Jobs Act (TCJA) promised a simplified, “postcard-sized” tax return designed to save time and reduce complexity. Fast forward to 2025 , and that postcard has grown back into a two-page Form 1040 , plus up to nine additional schedules , depending on your situation.

One of those new forms is Schedule 1-A .

What Is Schedule 1-A?

Schedule 1-A is used to report deductions for several new categories of income.

These include:

Qualified Tip Income
Qualified Overtime
Qualified Car Loan Interest
Enhanced Deduction for Seniors

For tipped employees, this is where the qualified tip income deduction is calculated.

Important: You are responsible for ensuring that:

Your tips are qualified , and
Those tips were included in your gross income to begin with.

In the food service industry especially, many employees underreport tip income. If tips were not originally reported as income, you cannot later claim a deduction for them.

How the Tip Deduction Flows to Your Tax Return

After completing Schedule 1-A :

Line 13 calculates your qualified tip deduction
That amount flows to Page 2 of Schedule 1-A
Then transfers to Form 1040, Page 2, Line 13b

This deduction reduces your taxable income , not your wages reported by your employer.

Key Things to Keep in Mind

Before assuming you’ll see a tax savings, consider the following:

State taxes may still apply.
This deduction does not automatically carry over to your state return . For example, Indiana does not allow this deduction , meaning tip income is still taxable at the state level.
Not all tips qualify.
You must verify that your tips meet IRS requirements to be deductible.
Withholding may not change automatically.
This is a deduction from income, not an exclusion from wages. If you do not update your Form W-4 to account for estimated tip income, your employer will continue withholding federal income tax on those tips throughout the year.
Social Security and Medicare taxes still apply.
This is a deduction from Income, it does not impact the Social Security or Medicare taxes that you pay each year.

Need Help Navigating the Changes?

The new rules and forms add complexity—and mistakes can be costly. If you have questions about qualified tip income , Schedule 1-A , or how these changes affect your tax return, we’re here to help.

How the New Form W-4 Improves Payroll Tax Withholding Accuracy

Sat, 17 Jan 2026 16:23:34 GMT

Accurate tax withholding is one of the most overlooked yet impactful components of payroll compliance and employee financial wellness. With the updated 2026 Form W-4 , employers and payroll professionals have an improved mechanism to align paycheck tax withholding with a taxpayer’s true federal income tax liability — reducing the risk of large refunds or unexpected tax bills.

1. A Shift from Allowances to Real Inputs

For decades, employees used withholding allowances to tell employers how much federal income tax to withhold from wages. These allowances were abstract numbers tied loosely to personal and dependency situations. However:

The redesigned W-4 eliminated allowances entirely and instead asks for specific financial inputs — filing status, dependents, other income, deductions, and additional withholding.

This shift was intentional. By replacing the allowance system with dollar-based inputs that mirror how tax is actually calculated, payroll systems can now compute withholding amounts that more closely reflect an employee’s real tax situation — making withholdings more precise.

2. Five Clear Steps That Mirror the Tax Calculation

The current W-4 is structured in a way that mirrors the federal tax formula:

Personal information and filing status
Multiple jobs or working spouse adjustments
Claiming dependents and certain tax credits
Other income, deductions and extra withholding
Signature and submission

Unlike the old form, each step has a direct impact on withholding calculations — making it easier to project tax liability and avoid over- or under-withholding.

3. Built-In Tools for Precision

One of the biggest advances tied to the new W-4 process is the emphasis on using the IRS Tax Withholding Estimator as part of completing the form.

This online tool:

Helps employees model their tax scenarios
Calculates recommended withholding amounts based on real income, credits, and deductions
Can be used alongside the W-4 entries to dial in withholding accuracy

The IRS itself highlights this tool as part of the updated Form W-4 process, noting that it can lead to better accuracy than guessing or relying on rough estimates alone.

4. Better Handling of Complex Situations

The redesigned W-4 makes withholding more accurate in situations that historically caused withholding errors:

Multiple Jobs or Working Spouses

Step 2 of the W-4 specifically addresses multiple job situations — one of the biggest sources of under-withholding. Employees can either use the estimator, a worksheet, or a checkbox to adjust withholding so that the combined income from multiple jobs is properly accounted for.

Dependents and Credits

Step 3 allows employees to claim credits like the Child Tax Credit directly on the W-4, rather than through allowances — which translates to withholding that’s more aligned with actual tax benefits.

Other Income & Deductions

Step 4 lets employees add non-wage income (e.g., investment or 1099 income), itemized deductions, or a specific extra withholding amount — all of which refine the withholding calculation.

5. Annual Updates and Payroll Integration

The IRS updates the W-4 and related withholding tables yearly. In 2026, the revised withholding tables for the Multiple Jobs Worksheet and updated tax tables help payroll systems calculate withholding using current tax parameters, not outdated figures.

For payroll teams and CPAs, this means:

Payroll software needs to be current with the latest W-4 and withholding tables
Employee W-4 information feeds directly into more accurate withholding calculation
Annual reviews of employee withholding are more important than ever — especially after life changes like marriage, birth of a child, new job, or side income

6. What This Means for You

The new W-4 represents:

Greater transparency and predictability in how withholding is calculated
Fewer surprises at tax time — both unexpected tax bills and oversized refunds
A smoother payroll process that is backed by a standardized, IRS-endorsed method for calculating withholding based on actual tax circumstances

Encouraging employees to regularly review and update their W-4 — especially after significant life events — ensures payroll withholding stays aligned with their evolving tax picture.

Conclusion

The current Form W-4 isn’t just a compliance document — it’s a strategic tool. By moving away from allowances and toward a structured, input-based system that mirrors the tax calculation, the IRS has enabled employees to achieve more accurate tax withholding across diverse employee situations.

This means an opportunity to:

Educate clients on optimizing their withholding
Integrate withholding accuracy into broader tax planning services
Help employers streamline payroll compliance and reduce end-of-year tax issues

With the ongoing emphasis on precision and transparency, the new W-4 truly helps align payroll withholding with a taxpayer’s real liability — benefiting employers, employees, and tax professionals alike.

Understanding 1099 Filing Requirements: A Guide for Small Businesses

Wed, 07 Jan 2026 16:19:34 GMT

As tax season approaches, businesses must pay close attention to IRS information reporting requirements — particularly when it comes to Form 1099 . These forms report various types of income paid to non-employees and service providers, and failing to file them correctly and on time can result in costly penalties. At Hunsche CPA Group we help clients navigate 1099 requirements with confidence and accuracy.

What Is a 1099 Form?

A 1099 is an IRS information return used to report income paid that is not reported on a W-2. The most common form is 1099-NEC , which reports nonemployee compensation (e.g., payments to independent contractors). Other versions include 1099-MISC, 1099-INT (interest), 1099-DIV (dividends), and more.

Who Must File a 1099?

You must file a 1099 if, during the tax year, you made payments to vendors or individuals in the following situations:

Independent contractors and freelancers : $600 or more in nonemployee compensation (Form 1099-NEC).
Rent or lease payments : $600 or more (Form 1099-MISC).
Prizes, awards, or other income payments : $600 or more.
Attorneys and medical service providers : Payments of $600 or more in the course of business.

Key distinction: 1099s are required for business payments — not personal transactions.

Important Deadlines

Understanding and meeting IRS deadlines is critical:

Form 1099-NEC :
Furnish to recipients by January 31
File with the IRS by January 31
Other 1099 Forms (e.g., 1099-MISC) :
Furnish to recipients by January 31
File with the IRS (paper or electronic) by February 28 (paper) or March 31 (electronic)

Deadlines do not always align, so it's important to plan ahead.

How Many Forms Must You File?

If you issue 250 or more information returns, the IRS requires electronic filing . Even if you have fewer than 250 forms, e-filing is strongly recommended — it’s faster, more efficient, and often more secure.

IRS Penalties: Don’t Let Mistakes Cost You

Failing to file accurate and timely 1099s can trigger penalties that quickly add up. Here’s a breakdown of the key penalty categories for 2025 (subject to IRS adjustment each year):

1. Late Filing Penalties

The penalty depends on how late the correct form is filed with the IRS:

Filed within 30 days after the due date : $60 per form
Filed more than 30 days late but by August 1 : $120 per form
Filed after August 1 or not at all : $310 per form

These amounts per form can escalate quickly for businesses with many contractors. It is worth noting that the IRS issues penalties per form, which they consider as one form going to the recipient and one form going to the IRS. This means for every payee these fines are double as there are two forms per payee.

2. Failure to File

If you simply do not file the required 1099s, the IRS treats it as a failure to file — penalties start at the highest tier: $310 per form .

3. Intentional Disregard

If the IRS determines that a business intentionally disregarded the filing requirement, there is no maximum penalty — at minimum, $630 per information return, and often more.

4. Failure to Furnish to Recipient

Penalties can also apply if you fail to give the recipient their copy of the 1099 on time:

Same penalty amounts as late filing: $60 to $310 per recipient.

Tips to Avoid Penalties

Here are practical steps to stay compliant:

Collect W-9 forms early — before paying a vendor or contractor
Track payments throughout the year
Use accounting software that supports 1099 reporting
Consider e-filing to reduce errors and delays
Work with a CPA or tax professional

Wrap-Up: Compliance Pays

Accurate 1099 reporting protects your business from penalties and helps maintain strong relationships with contractors and vendors. The time to prepare is well before January 31 , so you’re never rushed or at risk of costly errors. There is no penalty for issuing a 1099 when not required, so when in doubt, prepare the forms.

Many small businesses face the decision of hiring quality help when the recipient does not want to give their SSN for tax purposes. This often leads to the vendor costing the business much more than just their fees. Our best practices encourage business owners to consider that if someone does not want to give you their reporting information, they are probably too expensive in the long run to hire.

If you have questions about 1099 filing requirements, deadlines, or strategies to stay compliant, contact Hunsche CPA Group — we’re here to help.

The Mailbox Rule Hasn’t Changed — But Relying on the Mail Is Riskier Than Ever

Mon, 05 Jan 2026 16:15:12 GMT

For decades, taxpayers and busin esses have relied on a simple principle: if it’s mailed on time, it’s treated as filed or paid on time. That assumption is now far less reliable — not because the law changed, but because how the U.S. Postal Service applies postmarks has changed .

This distinction matters, especially for tax filings and payments.

What Changed: USPS Postmark Practices

Beginning in late 2025, the U.S. Postal Service formally clarified a long-running operational practice:

most mail is now postmarked at the first automated processing facility, not at the time or place where it is dropped off.

In practical terms, this means:

A return or payment deposited in a mailbox on April 15 may not receive a postmark until April 16 or later
The postmark date may no longer reflect the actual date you mailed the item
Delays are more likely during peak filing periods, weekends, or in rural areas

The key point: the postmark is no longer a reliable proxy for “date mailed.”

What Did Not Change: The Law

It’s important to separate postal operations from legal rules .

Federal Tax Law

Under Internal Revenue Code § 7502 (“timely mailing treated as timely filing”), the IRS generally treats a return or payment as timely if the U.S. postmark is dated on or before the due date .

That statute has not been amended.

However, because postmarks may now be applied days after mailing, taxpayers face a real risk:
something mailed on time may receive a late postmark and be treated as late by the IRS.

While alternative proof of mailing (such as Certified Mail receipts) may help in disputes, they are not always accepted automatically and can create unnecessary controversy.

State Law

State rules vary significantly:

Some states closely follow the federal postmark standard
Others require actual receipt by the due date
Some states accept private carrier documentation; others do not

As a result, mailing a state tax payment or return close to the deadline has always been risky — and is now even more so.

The Common-Law “Mailbox Rule” (Why It Doesn’t Save You)

You may hear references to the “mailbox rule” in contract law, which generally treats an acceptance as effective when mailed.

That rule:

Applies to private contracts , not tax filings
Does not override statutory filing requirements
Does not control IRS or state revenue agency deadlines

In short, it offers no protection for tax compliance.

Best Practice Going Forward: Pay and File Electronically

Given these changes, our recommendation is straightforward:

If a deadline matters, do not rely on the mail.

Electronic filing and payment methods provide:

Immediate confirmation
A clear, indisputable timestamp
Elimination of postmark ambiguity
Faster processing and fewer notices

For federal taxes, this includes IRS Direct Pay, EFTPS, and authorized e-file providers.
For states, most revenue agencies offer similar electronic options.

If You Must Mail

When electronic submission is not possible:

Mail early — several days before the deadline
Request a hand-applied postmark at the post office counter
Use Certified or Registered Mail and retain documentation
Avoid mailbox drops on the due date

Even then, mailing should be viewed as a fallback, not a preferred method.

Bottom Line

The mailbox rule itself didn’t change — but the assumptions people relied on did .

For taxpayers, businesses, and fiduciaries, the safest course is clear:
electronic filing and payment are no longer just convenient; they are the most defensible option.

If you have questions about electronic payment options or upcoming deadlines, our team is happy to help you plan ahead.

Trump Savings Accounts Explained: Rules, Benefits & Limits

Tue, 30 Dec 2025 16:10:53 GMT

The 2025 One Big Beautiful Bill Act (OBBBA) introduced a new type of savings vehicle known as the Trump Savings Account . Wh ile these accounts are limited in scope, they include a few unique features that parents and business owners should understand before contributing.

Below, we break down how Trump Savings Accounts work , their benefits, limitations, and whether they make sense as part of your overall tax and financial plan.

What Is a Trump Savings Account?

A Trump Savings Account is a new, government-created savings account designed for children. In practice, it functions similarly to a non-deductible IRA for a minor , but with stricter rules.

Key characteristics include:

Contributions are not tax-deductible for parents or family members
Funds must be invested in a limited range of low-cost investments , primarily index funds and bonds
Brokerage fees are capped, meaning little to no active management
No withdrawals are allowed before age 18 , with no current exceptions

Unlike traditional IRAs, earned income is not required , making these accounts available even for newborns and young children.

Government $1,000 Contribution for Children Born 2025–2028

One of the most notable features of the Trump Savings Account is a government-funded contribution .

For children:

Born between 2025 and 2028
With a valid Social Security number

the federal government will deposit $1,000 into a Trump Savings Account if the parents elect this option when filing their tax return.

This contribution:

Is not taxable income to the parents
Is not taxable income to the child
Grows tax-deferred until withdrawal

Are Trump Savings Account Contributions Tax Deductible?

No. Contributions made by parents or family members provide no immediate tax benefit .

From a tax planning perspective:

There is no deduction
No tax credit
No reduction in taxable income

While this may limit their appeal, contributions are also not treated as income to the child , avoiding kiddie tax concerns.

Employers are able to contribute to employees child's accounts, and receive a tax deduction. These contributions are added towards the annual contribution limit.

Trump Savings Account Withdrawal Rules

One of the most important limitations to understand is lack of access .

Funds cannot be withdrawn before age 18
There are no hardship exceptions
Unlike IRAs or CDs, no penalty option exists for early access

Once money is deposited, it is effectively locked in until the child reaches adulthood. This makes Trump Savings Accounts inappropriate for funds you may need sooner.

Investment Limitations

Trump Savings Accounts are expected to offer:

A very narrow selection of investments
Primarily broad market index funds and bonds
Little flexibility or customization

Because brokerage fees are capped by law, financial institutions have limited incentive to actively manage these accounts.

What Happens at Age 18?

When the child turns 18, the Trump Savings Account effectively becomes a non-deductible IRA .

Withdrawals are pro-rated between:

After-tax contributions (tax-free)
Government subsidy (taxable)
Investment earnings (taxable)

Unless an exception applies, the taxable portion may also be subject to early withdrawal penalties. Given that withdrawals are nearly two decades away for current newborns, these rules are likely to change over time .

Example:

If a family contributes $5,000 per year for 10 years and the account earns $24,000 over 18 years, the account could total approximately $75,000 :

$50,000 contributions
$1,000 government contribution
$24,000 earnings

In this scenario, roughly two-thirds of withdrawals would be tax-free , with the remaining portion taxable as income.

Are Trump Savings Accounts Better Than Roth IRAs or 529 Plans?

For most families, no .

Consider:

Approximately 40% of Americans do not contribute to their own retirement
Only about 14% maximize retirement contributions
Most taxpayers benefit more from Roth IRAs, traditional IRAs, or employer retirement plans

Business owners may already have better options, such as paying children for legitimate work and funding Roth IRAs , which provide more flexibility and tax advantages.

Will Trump Savings Accounts Make Children Wealthy?

Despite headlines, Trump Savings Accounts are unlikely to create widespread wealth .

For most families:

Personal retirement savings should come first
High-interest debt should be addressed before investing
Emergency savings should be established

Trump Savings Accounts are best viewed as a supplement , not a primary strategy.

The Bottom Line: Should You Use a Trump Savings Account?

Our general recommendation:

Claim the $1,000 government contribution for eligible children born between 2025 and 2028
Allow that contribution to grow long-term
At an assumed 7% annual return , $1,000 could grow to approximately $3,380 by age 18

Beyond the government contribution, additional funding typically only makes sense after you have:

Maximized your own retirement contributions
Paid down high-interest debt
Built sufficient cash reserves

As with any tax strategy, Trump Savings Accounts should be evaluated in the context of your full financial picture.

Important 2026 Tax Changes: What You Need to Know About Meal Deductions

Mon, 29 Dec 2025 16:03:24 GMT

As we approach the 2026 tax year, a significant shift in the tax treatment of meal expenses is on the horizon — and it could have a real impact on many businesses’ bottom lines. Changes to Internal Revenue Code Section 274, enacted as part of recent tax legislation, will eliminate certain meal deductions that employers have long relied on. Here’s what business owners need to know to prepare. PwC+1

What’s Changing in 2026?

Starting on January 1, 2026 , the IRS will disallow deductions for most meals that employers provide to their employees for the employer’s convenience or through company-operated cafeterias. These deductions — previously allowed at a 50% rate in many cases — will go to 0% , meaning there will be no federal tax deduction for these expenses unless a specific exception applies. PwC+1

This change stems from a delayed provision in the Tax Cuts and Jobs Act that was originally scheduled to sunset and was preserved in recent legislation. Many companies that regularly offer free lunches, snacks, or operate an on-site cafeteria will want to review how this affects their tax planning and benefit programs. PwC

Examples of Affected Meal Deductions

The types of deductions impacted include:

On-site meals provided for the convenience of the employer (e.g., meals during late shifts or to ensure staff availability). UHY
Company cafeteria or dining facilities , including subsidized meals and snacks such as coffee or break-room treats. KLC CPA
De minimis Fringe Meals (small employer-provided snacks previously excluded as taxable income) may also lose their deductible status. KLC CPA

Under the new rules, these items will no longer produce a business deduction for expenses paid after December 31, 2025. PwC

What Still Remains Deductible

Not all meal deductions are disappearing. Key categories that remain deductible — often at 50% or 100% — include:

Business Meals with Clients or Customers

Meals with clients, prospects, or business associates can continue to be 50% deductible , provided:

Business is discussed,
You or an employee are present at the meal, and
The expense is ordinary and reasonable. UHY

Travel-Related Meals

Meals incurred while employees are traveling away from home on business still fall under the 50% deduction rule when properly documented. UHY

Fully Deductible Meals

Some meals retain 100% deductibility , including:

Meals treated as compensation (included as taxable wages). UHY
Employee social or recreational events like holiday parties or company picnics. UHY
Meals provided to the public for promotional purposes or meals sold to employees at fair market value (e.g., a cafeteria open to customers). UHY

Planning Tips for 2026

These changes may feel subtle, but for businesses that regularly provide meals as part of employee benefits or internal culture, the tax cost can add up quickly. Here are some actions to consider:

New Overtime Tax Break for 2025: What Workers Need to Know Under the OBBBA

Thu, 18 Dec 2025 15:59:57 GMT

The On e Big Beautiful Bill Act (OBBBA), enacted in 2025, introduces a significant new federal tax benefit for working Americans: a deduction for qualified overtime compensation . This change applies beginning with the 2025 tax year and could meaningfully reduce taxable income for eligible employees who earn overtime pay.

What Is the Overtime Tax Deduction?

Under the OBBBA, eligible taxpayers may deduct a portion of their overtime earnings directly on Form 1040 , even if they take the standard deduction. This change is structured as an adjustment to income , meaning it reduces Taxable Income rather than itemized deductions and is reported on Schedule 1A.

The deduction applies only to “qualified overtime compensation” , which is defined as the overtime premium required under the Fair Labor Standards Act (FLSA) . In most cases, this is the additional half-rate paid on time-and-a-half wages — not the employee’s full overtime paycheck.

In other words:

Your regular hourly pay is still taxable , and
Only the premium portion attributable to overtime may qualify for the deduction.

It is important to understand if you are paid double time or anything over time-and-a-half, you only get to deduct the half-time amount , not the double time.

How Much Can You Deduct?

For the 2025 tax year, the maximum deduction is capped at:

$12,500 for single filers
$25,000 for married couples filing jointly

The IRS has confirmed that this deduction is temporary , currently scheduled to apply for tax years 2025 through 2028 , unless extended by Congress.

Who Qualifies for the Deduction?

You may qualify if:

You earned overtime compensation subject to the FLSA
You are a non-exempt employee under federal wage and hour rules
Your overtime premium can be reasonably determined from payroll records

BDO has noted that for the 2025 filing season , employers are not yet required to separately report overtime premiums on Form W-2. As a result, taxpayers may need to rely on year-end pay stubs or employer payroll summaries to support the deduction. For the 2026 tax year there will be a new code and reporting on the employees W2 to reflect the premium portion of overtime.

Income Limits and Phase-Outs

The overtime deduction is subject to income-based phase-outs.

Based on current guidance:

The phase-out begins at $150,000 of modified AGI for single filers
$300,000 of modified AGI for married filing jointly

Once income exceeds the upper threshold, the deduction may be reduced or eliminated entirely.

Why This Matters for Your 2025 Tax Return

Because this deduction reduces taxable income, it can have additional tax planning benefits , including:

Potentially increasing eligibility for other tax credits and deductions
Lowering overall taxable income without itemizing
Creating planning opportunities for households with variable overtime earnings

However, proper documentation and calculation will be critical, especially during the first year of implementation.

Final Thoughts

The OBBBA overtime deduction is a meaningful new benefit for workers, but it also introduces complexity. IRS reporting rules are still evolving, and incorrect calculations could lead to missed deductions or compliance issues. This article is designed to provide general guidance and individual circumstances may vary, consult with a tax professional for your situation to determine what applies.

Need Help Navigating the New Overtime Rules?

At Hunsche CPA Group , we help clients understand new tax laws and apply them correctly. If you earn overtime or want to plan ahead for the 2025 tax year, contact us today to see how this new deduction may impact your return.

Understanding Indiana’s PTET: What It Is and How It Impacts Business Owners

Mon, 15 Dec 2025 15:56:34 GMT

Over the past several years, business owners have faced a changing tax landscape at both the federal and state levels. One of the most important developments has been the introduction of the Pass-Through Entity Tax (PTET) . Indiana adopted its own version of the PTET to help certain business owners reduce their overall tax burden.

As CPAs, we’re frequently asked: What exactly is the Indiana PTET, and should my business elect it? Let’s break it down.

What Is the Indiana PTET?

The Indiana Pass-Through Entity Tax (PTET) is an optional state-level tax election available to certain pass-through entities.

These include:

S corporations
Partnerships
Limited Liability Companies (LLCs) taxed as partnerships or S corporations

Instead of income being taxed only at the individual owner level, the PTET allows the entity itself to pay Indiana income tax on behalf of its owners.

Why does this matter? Because the PTET was designed as a workaround to the federal $10,000 cap on state and local tax (SALT) deductions ($40,000 as of 2025 tax year) for individuals.

Why the PTET Exists: The SALT Deduction Workaround

Under current federal law, individuals can only deduct up to $10,000 ($40,000 as of 2025) of state and local taxes on their personal returns. This cap has had a significant impact on business owners who pay substantial state income taxes.

The PTET shifts the tax payment from the individual to the business entity. Since business taxes are generally deductible without the SALT limitation , the entity-level tax paid under the PTET can often be deducted in full at the federal level—resulting in potential tax savings.

How the Indiana PTET Works

Here’s a simplified overview:

The entity elects into the PTET on its Indiana return.
Indiana income tax is calculated and paid at the entity level (currently at Indiana’s individual income tax rate).
Owners receive a credit on their Indiana personal tax returns for their share of PTET paid.
The income is still reported to owners, but the state tax burden has effectively shifted .

From a federal perspective, the entity-level tax payment is generally deductible as an ordinary and necessary business expense. It is important to recognize this tax only covers the Indiana STATE Income tax. Taxpayers will still personally pay the County tax.

Potential Benefits for Business Owners

From a CPA’s perspective, the Indiana PTET can offer meaningful advantages.

1. Federal Tax Savings

For many owners, especially those above the SALT cap, the PTET can restore deductions that would otherwise be lost.

2. Cash Flow Efficiency

Rather than each owner making separate estimated tax payments, the entity handles the tax centrally.

3. Planning Flexibility

The PTET opens the door to more proactive tax planning, particularly for profitable pass-through businesses.

Important Considerations Before Electing PTET

While the PTET can be beneficial, it is not a one-size-fits-all solution .

Business owners should consider:

Ownership structure – Multi-state owners or tiered entities may face added complexity.
Estimated tax coordination – Individual estimated payments may need adjustment.
Administrative burden – Elections must be made annually and reported correctly.
Changing tax laws – The federal SALT cap is currently scheduled to expire after 2025, which could affect the long-term value of PTET elections.

In some cases, the PTET may provide minimal benefit—or even create complications—if not implemented thoughtfully.

A CPA Firm’s Role in PTET Decisions

At a CPA firm level, our role is not just to file the election, but to evaluate whether it makes sense in the context of your overall tax picture.

That includes:

Modeling federal and state tax outcomes
Coordinating entity and individual filings
Ensuring compliance with Indiana requirements
Reviewing the election annually as laws and income levels change

The PTET can be a powerful planning tool, but only when used strategically.

Why Understanding Your Taxes Is More Important Than Ever

Thu, 11 Dec 2025 15:51:09 GMT

When most people hear the word taxes, they think of forms, deadlines, and numbers that never quite seem to add up. But understanding your taxes is about far more than filing a return once a year—it’s about taking control of your financial life. Whether you’re an individual taxpayer, a business owner, or someone planning for retirement, tax awareness can make a meaningful difference in your financial outcomes.

In today’s constantly changing economic landscape, staying informed isn’t just helpful—it’s essential.

1. Taxes Influence Every Major Financial Decision

Buying a home, starting a business, investing for the future—each of these decisions comes with tax implications. Many people don’t realize how strategic tax planning can reduce their liability and open doors to financial opportunities.

For example:

Choosing the right business structure (LLC, S-Corp, etc.) can dramatically affect your tax obligations.
Selling investments without understanding capital-gains rules can lead to unwelcome surprises.
Claiming certain credits or deductions may be the difference between owing and receiving a refund.

Understanding these concepts empowers you to make smarter choices all year—not just at tax time.

2. Knowledge Helps You Keep More of What You Earn

The tax code includes dozens of deductions, credits, and incentives designed to help individuals and businesses thrive. But many taxpayers miss out simply because they aren’t aware they exist.

A few commonly overlooked opportunities include:

Home-office deductions for remote workers
Retirement plan contributions for small-business owners
Education credits for students or parents
Energy-efficiency incentives

With proper guidance, you can ensure you’re taking advantage of what’s available to you—legally and strategically.

3. Tax Mistakes Can Be Costly

Unintentional errors can lead to penalties, delays, or audits. These issues are often avoidable with clear understanding and planning.

Common mistakes include:

Misreporting income
Forgetting to claim estimated payments
Incorrectly categorizing expenses
Missing filing deadlines

A foundational understanding of tax rules—and a relationship with qualified tax professionals—helps prevent these missteps and protects your financial health.

4. Tax Planning Builds Long-Term Stability

Tax preparation focuses on filing last year’s return. Tax planning , however, looks ahead.

It allows you to:

Project future tax liabilities
Adjust income and expenses strategically
Plan for retirement with tax efficiency
Build a roadmap for financial growth

When you understand your taxes, you’re better equipped to create a stable financial strategy that supports both short-term goals and long-term aspirations.

5. A Trusted CPA Can Make All the Difference

Even with a solid understanding of your taxes, navigating the tax code alone can feel overwhelming.

Working with a CPA gives you:

Expert analysis tailored to your unique situation
Guidance on new tax laws and how they affect you
Strategies to minimize liability and maximize savings
Peace of mind knowing your taxes are handled correctly

Think of a CPA not just as a tax preparer, but as a long-term financial partner.

New Rules for Tipped Wages: What Employers & Employees Need to Know

Mon, 08 Dec 2025 15:47:43 GMT

If your business involves tipped employees—servers, bartenders, valet attendants, d elivery drivers, hair and nail technicians, and similar service-sector roles—the landscape for how tips are taxed (and how you report them) has just changed in meaningful ways. Here’s a breakdown of the new rules, what’s required, what’s still uncertain, and how your firm can help you prepare.

What’s New: Deduction Opportunity for “Qualified Tips”

The federal law commonly dubbed the One Big Beautiful Bill Act (OBBBA), signed July 4 2025, introduces a new tax-deduction benefit for certain tipped workers:

Workers in certain “tipped occupations” may deduct up to $25,000 of “qualified tips” for tax years 2025 through 2028 (assuming they meet income thresholds). Kiplinger+2Peters and Chandler, P.C. CPA+2
The deduction begins phasing out once a taxpayer’s modified adjusted gross income (MAGI) exceeds $150,000 (or $300,000 for married filing jointly). Jackson Lewis+2Kiplinger+2
A key definition: “qualified tips” are those paid voluntarily by the customer in cash or cash‐equivalent (checks, debit/credit cards, gift cards, mobile payments) and received in an occupation where tipping is “customary and regular.” IRS+1
Important nuance: Automatic service charges (for example, a mandatory 18% added gratuity for large parties) typically do not qualify, because they’re not voluntary tips. Peters and Chandler, P.C. CPA+1

What This Means for Employers

For employers in industries that employ tipped workers, these new rules carry implications for payroll, reporting, and internal processes:

Tracking and reporting : Even though the IRS has announced relief for 2025 (see below), ultimately employers will need to capture and report separately the amounts of qualified tips and the tipped‐occupation codes for employees.
Payroll system readiness : Many existing payroll/point-of-sale systems do not currently separate out “qualified tips” vs other tips, or tag tipped‐occupations. Employers should assess their systems and consider upgrades/adjustments. Thomson Reuters Tax+1
Employee communications : Employers may want to provide guidance to tipped employees about which tips qualify, how to document them, and how the deduction may affect their tax filings. Clear communication can mitigate confusion.
Compensation strategy : Some commentary suggests businesses might evaluate tip‐pooling arrangements, service charge structure, and tipping policies in light of how “qualified tips” are defined—though any changes should be made cautiously and with legal/labor-compliance review. Jackson Lewis
What does not change yet : The rules governing FICA/Medicare withholding, tip‐credit for minimum wage purposes under the Fair Labor Standards Act (FLSA), and standard tip‐reporting thresholds remain unchanged. laborandemploymentlawinsights.com+1

Employer Relief & What’s Still Unsettled

While the law introduces these significant changes, there’s still uncertainty—so here are the caveats:

For the 2025 tax year , the IRS issued Notice 2025-62 giving employers relief —employers will not be penalized if they don’t separately report qualified tips or qualified overtime on Forms W-2/1099 now. The real separate‐reporting obligations are pushed into 2026 and beyond.
Many details remain pending : the IRS and Treasury have issued proposed regulations but final rules (including occupation codes, safe-harbors for documentation, and form changes) are still forthcoming. Professional organizations (e.g., American Institute of Certified Public Accountants) are urging clearer guidance. Journal of Accountancy+1
Despite the new deduction for employees, employers remain responsible for accurate payroll and tip‐reporting under existing law. The recent relief is narrow and temporary.
State tax treatment may differ: The deductions are federal law; state or local tax rules may not conform. Employers and employees should review applicable state guidance.

Key Takeaways for Employees in Tipped Occupations

From the vantage of tipped workers or employees in roles that regularly receive tips, here are the headline points:

If you work in a job where tipping is “customary and regular” (many roles in food/beverage, hospitality, personal services, delivery, guest services) you may be eligible for the new deduction. Peters and Chandler, P.C. CPA+1
“Qualified tips” must meet the definition: voluntary, received in cash or equivalent, not service‐charge forced by the employer. Tip‐sharing/pooling arrangements may qualify if properly reported. Peters and Chandler, P.C. CPA+1
Your employer should be tracking tip income (and will likely need to supply information about your tipped occupation) so you can claim the deduction. You should keep good records of tipped income and tip‐shares.
The deduction phases out for higher income earners (above $150K individual/$300K joint). If you’re near those thresholds, evaluate whether the benefit applies. Kiplinger+1
Because forms haven’t yet been updated for 2025 in many cases, you may need to provide additional documentation (pay stubs, employer statements, tip logs) to support your deduction. Professional tax advice is highly recommended. Journal of Accountancy

Action Plan – What Your Business Should Do Now

Here is a simple checklist your firm can help your clients with (and you may wish to provide as a downloadable hand-out):

Assess your workforce : Identify all employees who regularly receive tips and determine if their roles fall into the “customary and regular tipping” category.
Review payroll/point-of-sale systems : Check whether your current systems can separate “qualified tips” from other tips, and tag employees by tipped-occupation. If not, begin planning upgrades or manual work‐arounds.
Implement internal reporting/tracking : For 2025, even though separate reporting isn’t required by penalty, consider voluntarily tracking qualified tips/quailfied overtime amounts and maintaining supporting documentation for employees and for your records.
Update employee communication : Educate tipped employees about the new deduction, what qualifies, why they should keep records, and what information you (the employer) will provide (e.g., occupation code, tip totals).
Consult on compensation/tipping policy : If your business uses mandatory service charges, automatic gratuities, or tip-pool arrangements, review whether these affect qualification for the deduction. Review with counsel.
Stay current on guidance : Because regulation details are still pending, commit to monitoring IRS/Treasury updates, payroll‐reporting changes (Forms W-2/1099), and state tax implications.
Engage your tax advisor : Because employees will need to claim the deduction, and employers will need to support that, ensure you (and your employees) are working with qualified tax professionals familiar with the OBBBA provisions.

Why This Matters for Your Business

Employee morale and recruitment : For businesses with tipped workers, the benefit of increased take-home pay for employees may be a competitive recruiting/retention tool. As one commentary notes, this “could significantly improve employee take-home pay … boosting morale and potentially easing staffing shortages.” aco.cpa+1
Tax and reporting preparedness : Because the mechanics of tracking and reporting are new and evolving, early preparation gives you an advantage—reducing the risk of error, restatement, or employee confusion.
Business value and compliance : Having clean processes around tip-reporting, salary/overtime tracking, and documentation enhances your business’s compliance posture, audit readiness, and potentially long-term valuation.
Risk of missing opportunity : While the deduction is temporary (through tax year 2028), missing tracking or mis-classification could mean you (or your employees) lose out on savings.

Final Thoughts

The world of tipped wages just got more complex—but also more opportunity-rich for both employees and employers. For CPAs, payroll professionals, business owners, and tipped workers alike, the key is understanding the rules, preparing systems and documentation, and communicating clearly with employees.

At Hunsche CPA Group, we’re ready to help you navigate these changes—from identifying which roles qualify, reviewing your payroll and reporting systems, educating employees, and integrating the new deduction into your tax-planning strategy. Contact us to schedule a consultation and ensure your business is set up for the 2025 tax year and beyond.

New Business Startup Checklist: CPA Guidance on Taxes, Accounting, LLCs, and Financial Planning

Fri, 21 Nov 2025 15:41:59 GMT

If you’re planning to start a new business, having a solid financial strategy early on can dramatically increase your chances of long-term success. As a CPA firm that supports startups and small businesses, we’ve created this guide to help entrepreneurs understand the key steps to launch confidently and avoid common financial mistakes.

1. What’s the Best Business Structure for a New Company?

Choosing the right legal entity is one of the first and most important decisions for new business owners. The structure you choose impacts taxes, liability, and how your business can grow.

Common options include:

• Sole Proprietorship

Simple setup, but you are personally liable for business debts.

• Partnership

Works for multi-owner businesses, though partners share liability unless formed as an LLP.

• LLC (Limited Liability Company)

A flexible option that provides liability protection and allows for pass-through taxation.

• S Corporation or C Corporation

Better for businesses planning to scale or attract investors; more complex but may offer tax benefits.

If you’re unsure which structure is best, we can help compare tax outcomes and long-term financial impact.

2. How to Build a Realistic Startup Budget

Many new businesses fail because their financial planning was too optimistic.

Your initial budget and forecast should include:

Startup and setup costs
Operating expenses for 12–18 months
Cash flow projections
Estimated tax payments
A break-even analysis

Forecasting with conservative assumptions ensures your business stays prepared for slower months.

3. Separate Personal and Business Finances Immediately

Open a business bank account right away.

Also:

Use a dedicated business credit card
Track expenses in real time
Keep clean records for taxes, loans, and compliance

Good financial separation also protects your liability status if you form an LLC or corporation.

4. Understand Your Tax Requirements Before You Launch

New business owners often underestimate how many tax responsibilities they have.

Depending on your business type and location, you may need to manage:

Quarterly estimated taxes
State and federal income taxes
Employment taxes
Sales tax registration and reporting
Industry-specific local taxes

We can help you avoid penalties and identify deductions that reduce your overall tax burden.

5. Set Up Reliable Bookkeeping and Accounting Systems

Accurate, up-to-date financial records make every part of running a business easier.

Consider:

Cloud accounting software like QuickBooks Online or Xero
Automated expense tracking
Monthly or quarterly financial reviews with a CPA
A plan for payroll (especially if hiring employees soon)

Clean books = better decisions and easier tax seasons.

6. What Business Insurance Do Startups Need?

Protecting your business from day one reduces financial risk.

Common policies include:

General liability insurance
Professional liability or E&O insurance
Workers’ compensation
Cyber liability protection
Property or equipment coverage

Insurance needs vary by industry, but skipping coverage can be an expensive mistake.

7. Build a Team of Advisors Who Understand Small Businesses

Successful entrepreneurs rarely do everything alone.

Consider building your advisory team early:

CPA: for tax planning, financial strategy, and compliance
Attorney: for contracts and legal protections
Insurance agent: to reduce risk
Banker or lending advisor: for future financing

Strong advisors help you avoid costly mistakes and scale more efficiently.

8. Plan Your Growth Strategy From Day One

Even if you’re starting small, planning ahead helps you stay organized as revenue increases.

Think about:

Hiring plans
Tax planning for future profit levels
Retirement and compensation strategy
Scaling your systems and software
Potential new revenue streams or markets

A CPA can help build a growth-focused financial roadmap.

FAQs

What financial steps should I take before starting a business?

Choose an entity, create a budget, set up bookkeeping, open business accounts, and understand your tax obligations.

Should I start my business as an LLC?

LLCs work well for many small businesses because they provide liability protection and tax flexibility, but the best choice depends on your goals.

Do new businesses need a CPA?

A CPA helps with tax planning, compliance, bookkeeping systems, and financial strategy—areas that can make or break a new business.

Final Thoughts

Starting a business is a major milestone, and the financial decisions you make today will shape your success tomorrow. Our firm specializes in helping new businesses set up the right structure, manage taxes, and build a long-term financial plan that supports growth.

If you’re launching a new business and want guidance tailored to your industry and goals, we’re here to help.

How the OBBBA Transforms Depreciation Planning for Real-Estate Investors & Owners

Fri, 14 Nov 2025 15:32:19 GMT

For real-estate owners, developers, and investors, the recently enacted One Big Beautiful Bill Act (OBBBA) brings meaningful cha nges to depreciation and expensing rules. These changes offer significant opportunities — but also require careful planning and coordination. As your tax advisors, Hunsche CPA Group is here to walk you through the key reforms, how they apply to real-estate holdings, and what you should be doing today to maximize benefits while avoiding missteps.

What changed: Depreciation & Expensing under OBBBA

Below are the major shifts under OBBBA that affect depreciation and related tax planning for real estate.

1. Permanent 100% Bonus Depreciation for Qualified Property

Under prior law (the Tax Cuts and Jobs Act or TCJA), bonus depreciation — the ability to immediately expense a large portion (or all) of eligible assets — was scheduled to phase down after 2022 and expire by 2027. JD Supra+2National Law Review+2

OBBBA changes that: for property placed in service after January 19, 2025 , taxpayers now can apply 100% bonus depreciation — permanently, unless changed by future legislation. Grant Thornton+2RSM US+2

In practical terms for real-estate owners, this means that many eligible assets — equipment, furniture/fixtures, land improvements, interior improvements (under certain definitions) — can be written off fully in year one rather than depreciated over multiple years.

2. Expanded §179 Expensing Limits

OBBBA increased the limits under §179 (which allows immediate expensing of certain business property) to support larger immediate deductions. For example, the deduction ceiling is raised and phase-out thresholds increased. Whiteman Osterman & Hanna LLP+1

For real-estate contexts, the caveat remains: §179 generally applies when the property is used in an active trade or business (e.g., a hotel, short-term rental business, or other active real-estate business) — rather than passive long-term rental activity. Schelin Uldricks & Co.+1

3. New Full Expensing Election for Qualified Production Real Property (QPP)

One of the more specialized changes: OBBBA introduces a new elective 100% expensing rule under § 168(n) for “qualified production property” (QPP) — which may include certain non-residential real property used in manufacturing/production activities. RSM US+1

Key requirements:

The property must be non-residential real property used in a qualified production activity. Grant Thornton

Construction (or substantial beginning) must begin after Jan. 19, 2025 and before Dec. 31, 2028 (and placed in service by Dec. 31, 2030) for eligibility. RSM US+1

Original use must begin with the taxpayer; leased property generally does not qualify. KBKG+1

For real-estate developers constructing owner-occupied industrial/manufacturing space, this creates a new path to immediate full write-off of building cost — a game-changer in certain scenarios.

4. Intersection with Other Provisions: Interest Deduction, QBI, State Conformity

The depreciation/expensing changes don’t exist in isolation. For example:

The deduction for business interest under §163(j) returns to an EBITDA-based limitation (beneficial for owners with large non-cash deductions like depreciation) for tax years beginning after Dec. 31, 2024. National Law Review+1

The 20% Qualified Business Income (QBI) deduction (§199A) is made permanent and remains relevant for real-estate businesses operating via pass-through entities. CLA Connect

Many states do not conform to federal bonus depreciation or §179 enhancements — so real-estate owners must check state tax treatment. CPA Pilot+1

Why this matters for real-estate owners & investors

Here are some of the tangible benefits and planning considerations:

Accelerated tax-deduction timing. With full write-off possibilities in year one, owners of eligible assets can significantly reduce taxable income in the acquisition/renovation year, freeing up cash flow.

Improved ROI and reinvestment flexibility. By reducing tax drag upfront, property owners can redeploy capital more quickly into acquisitions, improvements, or new development.

Enhanced cost-segregation opportunities. For properties with many components (e.g., HVAC, interior improvements, land improvements), cost-segregation studies become even more valuable — because identifying shorter-life assets that qualify for 100% bonus depreciation amplifies the benefit.

Active vs passive real-estate distinctions matter. For owners of passive long-term rentals, the ability to leverage expensing or bonus depreciation may be more limited compared with those structured as an active trade or business.

Planning for large capital outlays make sense. If you were considering a major renovation, redevelopment or assets purchase in 2025+, the timing could be especially beneficial given the restored full expensing.

Tax timing and entity structure implications. Because the benefits impact taxable income and due to the interaction with interest limits, NOL rules, passive activity rules, entity choice (LLC, partnership, REIT structure) should be revisited under the new law.

Example scenario

Here’s a simplified illustration:

A client purchases a commercial property and plans a major interior retrofit (e.g., HVAC, lighting, flooring) in 2025. Under prior law, many of those interior improvements might be depreciated over 39 years (or shorter lives via segregation). Under OBBBA:

The client commissions a cost-segregation study, identifies $400,000 of property components with recovery periods of 15 or 20 years or less (e.g., HVAC, lighting, certain interior systems).

Because these components are property with recovery periods ≤ 20 years and placed in service in 2025, 100% bonus depreciation can apply (under the “qualified property” rules) — allowing immediate expensing of the $400,000 instead of depreciating over many years.

The client’s taxable income in 2025 is dramatically reduced, improving cash flow, enabling reinvestment, and increasing return on investment for the retrofit.

Simultaneously, the firm checks state tax treatment, confirms that in the client’s state full bonus depreciation is allowed federally but limited or decoupled at the state level, and advises additional state strategies as needed.

Caveats and things to watch

Written binding contract dates and placed-in-service dates matter. Some property tied to contracts entered before January 20, 2025 might fall under the old phase-down schedule. RSM US+1

Mixed‐use buildings or portions of property that are not used in qualifying activities (especially for QPP) may lose the accelerated benefit — documentation, allocation and careful structuring are key.

For traditional passive residential rental real estate, some of the more aggressive expensing opportunities (e.g., §179) may not apply unless the owner is materially participating or meets the active trade/business test.

State tax conformity is uneven: even if federal law allows full expensing, state treatment may differ — and may create state-federal timing mismatches or adjustment items.

While OBBBA sets many provisions permanently, future legislation or IRS/regulatory guidance could fine-tune definitions, eligibility or interaction rules — monitoring remains important.

Large upfront deductions may generate net operating losses (NOLs) or deferred tax assets — understanding the client’s full tax profile, including other income, entity losses, passive activity and carryforward limitations, is essential.

Conclusion

The OBBBA marks a landmark shift in depreciation and expensing rules that real-estate investors and owners should not ignore. For many clients, the opportunity to accelerate deductions, improve cash flow, and expand investment flexibility is real and timely — but capturing those benefits requires thoughtful planning, accurate documentation and coordination with your CPA and tax advisors. At Hunsche CPA Group, we’re ready to help you assess your portfolio, model the impact of these changes, and structure your next moves to make the most of this new landscape.

Restaurant Accounting Expert: Why Your Restaurant Needs a CPA Who Specializes in the Food Service Industry

Tue, 11 Nov 2025 15:23:09 GMT

Running a restaurant is one of the toughest and most rewarding businesses out there. Between managing inventory, controlling food and labor costs, handling tip reporting, and navigating complex tax rules, restaurant owners face a financial landscape unlike any other.

That’s why working with a CPA who specializes in restaurants isn’t a luxury — it’s a competitive advantage.

As a restaurant accounting expert , we help restaurant owners streamline operations, stay compliant, and increase profitability through specialized bookkeeping, tax planning, and advisory services designed specifically for the food and beverage industry.

Why Restaurants Need a Specialist CPA

Most general accountants don’t understand the nuances of restaurant operations. From cash flow swings to tip reporting to food cost analysis, restaurants have unique financial rhythms.

A restaurant CPA understands how:

POS systems feed into accounting data

Food and beverage cost percentages affect margins

Labor and scheduling decisions impact profitability

Tip reporting and payroll compliance can make or break audits

When your accountant knows the restaurant business inside and out, your numbers start working for you — not against you.

Expert Restaurant Bookkeeping and Accounting Systems

Modern restaurants need real-time financial data — not outdated monthly reports. We help clients integrate their POS, inventory, and payroll systems into cloud-based accounting tools like QuickBooks Online, customized for the restaurant industry.

With proper setup, restaurant owners can:

Track daily sales, food cost, and labor ratios

Analyze menu profitability by item or daypart

Manage cash flow and supplier payments proactively

Detect waste or theft early through smart reporting

This isn’t just bookkeeping — it’s restaurant financial intelligence .

Restaurant Tax Strategies That Save You Money

The restaurant industry is full of tax opportunities — and pitfalls. A general CPA might miss them, but a restaurant tax specialist knows where to look.

We help clients take advantage of:

FICA Tip Credit

Depreciation on kitchen equipment and leasehold improvements

Employee Retention and Work Opportunity Tax Credits

Meal and entertainment deduction rules

Sales and use tax compliance for food and alcohol

These tax strategies are proven to reduce liabilities, boost cash flow, and keep your restaurant audit-ready year-round.

Payroll and Tip Reporting Compliance — Done Right

Restaurant payroll is complex. Between tipped employees, multiple pay rates, and shift differentials, one mistake can lead to penalties.

We help restaurants:

Automate tip tracking and reporting

Ensure accurate payroll tax withholdings

Comply with federal and state labor laws

Avoid common payroll audit triggers

The result? Less stress, fewer errors, and more time to focus on running your restaurant.

Financial Coaching for Restaurant Growth

Beyond taxes and bookkeeping, We act as a strategic financial advisor to my restaurant clients. Together, we develop clear financial goals, monitor KPIs, and plan for growth.

Whether you’re opening a new concept, expanding to multiple locations, or building a franchise model, we provide:

Break-even and cost analysis

Budgeting and cash flow forecasting

Profit margin optimization

Loan and investor readiness support

With expert financial guidance, your restaurant can grow confidently and sustainably.

Work with a CPA Who Truly Understands Restaurants

If your accountant doesn’t understand food cost percentages, tip credits, or daily POS reports — it’s time to work with one who does.

As a restaurant CPA and accounting specialist , we help restaurant owners simplify their finances, stay compliant, and grow profitably.

Let’s Talk About Your Restaurant

Schedule a free Restaurant Financial Strategy Session today to discover how specialized accounting and tax planning can help your restaurant thrive.

Why Timely Feedback from Your Accountant Matters More Than You Think

Wed, 29 Oct 2025 15:19:53 GMT

Running a busi ness is no small feat — we get it. Between managing operations, payroll, and keeping customers happy, your financials might not always be at the top of your to-do list. But here’s the thing: staying in touch with your accountant throughout the year isn’t just about keeping the books clean — it’s about keeping your business healthy and growing.

At Hunsche CPA Group , we believe the best accounting relationships are built on communication — not once-a-year check-ins. Here’s why timely feedback makes all the difference.

1. Accounting Isn’t Just About Looking Back — It’s About Looking Ahead

If you only talk to your accountant at tax time, you’re missing out on valuable insights that can help shape your financial future. When you keep us in the loop, we can:

Flag cash flow issues before they become problems.

Help you plan for taxes — instead of reacting to them.

Spot opportunities to improve profitability or efficiency.

Think of it this way: you wouldn’t steer your business while only looking in the rearview mirror. Timely feedback gives you a clear view of the road ahead.

2. Less Stress, Fewer Surprises

Nobody likes last-minute tax surprises or scrambling to find receipts in March. Regular check-ins help keep everything organized and reduce the year-end rush.

You’ll always know where you stand.

We’ll catch small issues early — before they grow into bigger ones.

You’ll stay ahead of important deadlines with confidence.

At Hunsche CPA Group , we love helping clients avoid the “tax-time panic.” Staying in touch throughout the year keeps things smooth and stress-free.

3. Better Feedback = Smarter Decisions

Timely feedback isn’t just about fixing errors — it’s about finding insights. When we’re reviewing your numbers regularly, we can help you:

Compare your performance to industry benchmarks.

Understand your margins and pricing in real time.

Make data-driven decisions that move your business forward.

Your accountant shouldn’t just crunch numbers — they should help you understand what those numbers mean .

4. You Get the Most Out of the Relationship

When we know what’s happening in your business, we can give you better, more personalized advice. Whether you’re planning to expand, hire, or invest, real-time communication helps us help you.

At Hunsche CPA Group, our goal is simple: to be more than your accountant — we want to be your financial partner.

Let’s Stay in Touch

Good accounting is about more than just compliance — it’s about collaboration. The more feedback you share (and the sooner you share it), the more we can help you save money, avoid stress, and make smarter financial choices.

So don’t wait for tax season — reach out anytime. Let’s talk, strategize, and make sure your numbers are working for you, not against you.

Hunsche CPA Group — proactive accounting, personal connection.

How to Choose the Right CPA for Your Business: Questions & Insights

Mon, 27 Oct 2025 15:17:17 GMT

When it comes to selecting a certifie d public accountant (CPA) for your business, you’re choosing much more than someone to file tax returns. You’re selecting a partner who may impact strategy, cash flow, compliance and growth. Getting the right match matters.

Here’s a guide to help you interview, evaluate and decide — with key questions and practical advice.

Why this decision matters

Hiring the wrong CPA can cost more than fees: missed deductions, tax surprises, poor cash-flow forecasting, lack of strategic insight. Conversely, the right CPA becomes a trusted advisor, helping you structure your business, plan taxes, monitor cash flow, stay compliant and grow. As one article puts it:

“A good CPA does more than crunch numbers. They become a trusted advisor, helping you plan for taxes, stay compliant with regulations, and make smarter financial decisions year-round.” cpaoutsourcingservices.com
So before you commit, take the time to ask the right questions.

Key Questions to Ask When Hiring a CPA

Below are important questions — along with what you’re looking to learn from the answer, and warning signs to watch.

1. Are you a licensed CPA, and do you have a clean disciplinary record?

What to ask: “Are you licensed and in good standing with the state board of accountancy? Have you had any disciplinary actions?”

Why it matters: Only licensed CPAs are held to certain ethical and professional standards. proadvisorcpa.com+1

Red flag: They hedge the question or you can’t easily verify their license status.

2. Do you specialize in businesses like mine (industry, size, structure)?

What to ask: “Have you worked with companies in my industry (e.g., service, manufacturing, eCommerce)? What challenges are typical in that industry?”

Why it matters: Industry-specific experience means the CPA is more likely to understand your tax issues, regulatory environment, margins, cash flow cycles. Benjamin T Koeller CPA, PLLC+1

Red flag: The CPA has only done personal returns or unrelated business types and cannot articulate your industry’s issues.

3. What services do you offer beyond compliance (tax filing)?

What to ask: “What services do you provide: bookkeeping review, tax planning, cash flow forecasting, entity structure advice, financial reporting?”

Why it matters: If the CPA only does annual tax returns, you’re missing out on possible value. You want someone who supports your business year-round. Insogna CPA+1

Red flag: Their service description is vague or limited to “we’ll prepare your return.”

4. Who will actually handle my account and how will communication work?

What to ask: “Who will be my main point of contact? How available are you? What is your response time? Will I be working with you or someone else at your firm?”

Why it matters: Good communication is key. As one source says: “How do I contact you … what’s your policy on returning phone calls?” Benjamin T Koeller CPA, PLLC

Red flag: “Call our main number and we’ll assign someone” with unclear responsibilities or long response delays.

5. How do you charge for your services? What is included?

What to ask: “What is your fee structure — hourly, flat fee, retainer? What’s included and what will cost extra? Can you provide an estimate?”

Why it matters: Fees should be transparent. Hidden costs, unclear inclusions, or a mystery pricing model are risks. Accounting Insights

Red flag: They cannot give you a ballpark or keep adding “extra work” fees without prior notice. Equally alarming should be ridiculously low fees, if a firm is charging hundreds less than anyone else, odds are there is a reason.

6. How proactive is your tax planning and business strategy support?

What to ask: “Do you meet outside tax-season? Will you review my entity structure, cash flow, strategic opportunities? What is your approach to long-term tax/business planning?”

Why it matters: As business owner you benefit from a CPA who actively helps you plan, not just react. Insogna CPA+1

Red flag: They say “we’ll talk again during tax season” with little other strategic engagement.

7. What technologies, tools and systems do you use?

What to ask: “What bookkeeping, tax software and client-portal tools do you use? How do you exchange documents? How secure is the data?”

Why it matters: Modern, efficient, secure systems save time, reduce errors and make collaboration easier — especially if you’re remote. Hiline

Red flag: The firm is still paper-only or can’t explain how they secure client data.

8. What happens if there’s an audit or major issue?

What to ask: “If I’m audited, will you represent me? What’s your fee for that? What support do you provide in risk-review and prevention?”

Why it matters: Audit risks exist — you want a CPA who stands behind their work and has your back. ADP

Red flag: They “may” help but aren’t clear on the process or cost if it happens.

9. How will you help me grow and adapt as my business changes?

What to ask: “As I expand, enter new states, change business structure or launch new products, how will you support me? What additional services do you offer for growth phases?”

Why it matters: Your business isn’t static — you’ll need a CPA who can scale with you and advise accordingly.

Red flag: They only talk about “doing your tax return each year” and not about business future or growth.

10. Who will I be working with and how accessible are they?

What to ask: “Will I have a dedicated contact, or contacts, within the firm for questions as they come up?"

Why it matters: You need to know who to call with questions and ideally 1-2 people who can always be involved with you specifically. If they have so many employees, who is really looking out for you? Also, if it's a single contact, what happens when they get sick, go on vacation, leave?

Red flag: They can't give you a name or process of how new clients are brought on and who to call.

How to Decide: Fit & Feel

Once you’ve asked these questions, reflect:

Did the CPA listen and understand your business?

Did they answer in plain English (not just accounting-jargon)?

Did you feel comfortable, trusted their process, and believe they proactively care?

Was their approach aligned with your business goals (growth, stability, compliance)?

Was the fee structure clear and acceptable?

A long-term CPA relationship is just that — long term. The right fit eases your mind, supports decisions and becomes a strategic advantage.

Final Thoughts

Selecting the right CPA is one of the most important decisions you make for your business. Done well, you gain much more than tax returns — you gain a partner who helps you navigate risk, seize opportunity, manage cash flow and grow. If you rush or settle for a minimal fit, you may miss out on meaningful value.

If you’re ready to interview CPAs, use the above questions as your guide. If you already have a CPA but think the fit isn’t right, consider revisiting the conversation or exploring better alignment.

How Business Owners Can Grow Their Companies with CPA Services

Mon, 20 Oct 2025 15:12:23 GMT

Running a business takes more than determination — it requires clear insight into your financial position and a plan for sustainable growth. That’s where HCG comes in. A good CPA firm is more than a tax preparer; it’s a strategic partner that helps you make better decisions, manage risk, and uncover opportunities for expansion.

1. Turning Financial Data Into Business Strategy

Your CPA doesn’t just organize your books — they interpret your financial information to help you make smarter business decisions. Regular financial reviews can highlight which products, services, or clients are most profitable and where costs can be trimmed.

By analyzing performance metrics such as cash flow, gross margin, and return on investment, a CPA can help you identify growth levers and prioritize investments that drive long-term success. Businesses that use financial analysis to guide decision-making are far more likely to experience sustained growth than those that operate reactively.

2. Building Stronger Cash Flow and Profitability

Cash flow is the lifeblood of every business. A CPA can help you forecast and manage it effectively — ensuring you have the capital to seize opportunities or weather downturns.

According to a widely-cited U.S. Bank study by Jessie Hagen , approximately 82% of business failures are due to poor cash-flow management or a lack of understanding of cash flow . While the exact study is often referenced rather than directly published, it underscores a crucial truth: businesses that monitor and manage cash flow proactively are far more likely to succeed.

With professional CPA guidance, you can track incoming and outgoing funds, plan for tax obligations, and avoid liquidity crises that stunt growth.

3. Proactive Tax Planning That Frees Up Capital

Tax planning isn’t just about minimizing liability — it’s about freeing resources for reinvestment . A CPA can help you structure your business, manage deductions, and take advantage of federal and state credits (such as R&D or energy incentives) to improve cash flow.

By engaging in ongoing tax planning rather than waiting until filing season, businesses can reinvest savings into marketing, technology, or expansion — all key growth drivers.

4. Better Access to Financing and Investment

When you need funding to expand, accurate and professional financial statements are essential. Lenders and investors rely on credible numbers. A CPA-prepared financial package signals that your business is well-managed and trustworthy.

The Small Business Administration notes that businesses with well-organized financial records are far more likely to secure loans and attract investors , underscoring the role of professional accounting in accessing capital.

5. Improved Decision-Making Through Regular Meetings

Regular meetings with your CPA are not administrative check-ins — they’re growth strategy sessions. Reviewing financial performance quarterly or monthly allows you to make timely adjustments rather than waiting until year-end.

Consistent collaboration helps you:

Spot inefficiencies before they impact profitability

Adjust pricing and cost structures quickly

Evaluate new market opportunities

Set realistic, data-driven goals

The result? A more agile, informed, and resilient business.

6. Risk Management That Protects Growth

Growth is only sustainable when it’s protected. CPAs help identify and mitigate financial and compliance risks before they become costly problems. From ensuring payroll compliance to structuring insurance and internal controls, their expertise provides peace of mind — allowing you to focus on innovation and expansion.

Final Thoughts

Your CPA can be one of the most valuable members of your business team. By engaging them proactively — not just at tax time — you gain a strategic ally who helps you plan, measure, and sustain growth.

At Hunsche CPA Group, we believe every business owner deserves to make financial decisions with confidence. Whether you’re planning to expand, strengthen cash flow, or prepare for the future, our team is here to help you turn your financial data into a roadmap for success.

Passive vs. Active Income: What Business Owners Need to Know

Fri, 17 Oct 2025 15:09:45 GMT

When it c omes to managing your money, understanding the difference between active and passive income is essential. For small business owners, investors, and entrepreneurs, this distinction can influence how you earn, plan, and pay taxes. A knowledgeable CPA can help you balance both to maximize profits and minimize tax liabilities.

What Is Active Income?

Active income is money earned through direct participation in your business or job.

Examples include:

Wages, salaries, or self-employment income

Income from your business if you’re actively managing it

Commissions or professional service fees

Active income requires ongoing effort — your time and work directly produce the earnings. It’s typically subject to self-employment and income taxes , which can add up without careful planning.

What Is Passive Income?

Passive income is earned from investments or ventures that don’t require your day-to-day involvement.

Common examples include:

Rental property income

Dividends, interest, or royalties

Income from a business you own but don’t actively manage

Passive income can create steady cash flow with less effort and often receives different tax treatment than active income — a key advantage when planning for long-term financial independence.

Active vs. Passive Income: Why It Matters for Taxes

The IRS classifies active and passive income differently, which affects how your income is taxed and what deductions you can claim.

Key differences include:

Tax treatment: Active income is taxed as ordinary income; passive income may qualify for lower rates.

Loss limitations: Passive losses generally can only offset passive income, not active earnings.

Retirement and planning strategies: Understanding these categories helps you structure your business and investments more efficiently.

That’s where having a CPA involved makes a major difference — ensuring your income is categorized properly and your tax strategy optimized.

How a CPA Helps You Build Both Types of Income

A CPA doesn’t just prepare your taxes — they help you design a financial strategy. Here’s how:

Identify opportunities for passive income growth through investments or real estate.

Structure your business to reduce tax liability on active income.

Ensure compliance with IRS passive activity rules .

Develop a plan for sustainable wealth through a balance of active and passive earnings.

The Bottom Line

Active income builds your business. Passive income builds your future.
With expert guidance from a CPA , you can balance both — keeping your taxes low, your records clean, and your financial goals within reach.

Why Every Business Owner Needs a CPA Involved in Their Bookkeeping

Tue, 14 Oct 2025 15:02:36 GMT

Bookkeepin g is the foundation of every successful business — but when it’s not handled correctly, it can quickly become one of the biggest risks. Many business owners try to manage their books on their own or delegate them to non-CPAs, only to discover costly errors later. Involving a Certified Public Accountant (CPA) from the start ensures accuracy, compliance, and strategic financial insight.

1. Accuracy That Protects Your Business

A CPA brings expertise in accounting standards, tax law, and financial reporting. This ensures your books are not just “balanced” but also compliant and audit-ready. Mistakes in bookkeeping can lead to incorrect tax filings, missed deductions, or even penalties — issues a CPA can help you avoid entirely.

2. Smarter Financial Decision-Making

Bookkeeping isn’t just about tracking numbers — it’s about understanding what those numbers mean. A CPA can interpret your financial data to help you identify trends, improve cash flow, and make informed business decisions that drive growth.

3. Proactive Tax Planning

Unlike a typical bookkeeper, a CPA understands how day-to-day transactions affect your tax position. They can identify opportunities for deductions and credits throughout the year, not just at tax time — helping you keep more of what you earn.

4. Long-Term Peace of Mind

With a CPA overseeing your books, you gain confidence that your financials are accurate, compliant, and strategically aligned with your business goals. That peace of mind lets you focus on what you do best — running and growing your business.

Bottom Line:

Good bookkeeping keeps your business running. Great bookkeeping — guided by a CPA — helps it thrive. If you’re ready to strengthen your financial foundation, it’s time to partner with a CPA who understands your business and your goals.

Why Smart Tax Planning Is the Secret Advantage for Business Owners

Fri, 10 Oct 2025 15:00:38 GMT

Most business owners think about taxes once a year — usually when it’s too late to make meaningful changes. But the truth is, effective tax planning isn’t a once-a-year task. It’s a year-round strategy that helps you make smarter decisions, reduce tax liability, and keep more of what you earn.

If you want your business to thrive, understanding how proactive tax planning works could be one of the most valuable investments you ever make.

What Is Tax Planning (and Why It Matters)?

Tax planning is the process of analyzing your financial situation and making strategic decisions to minimize taxes before they’re due.

It’s not about finding loopholes or cutting corners — it’s about using the existing tax code to your advantage.

For business owners, that might include:

Choosing the right entity structure (LLC, S-Corp, etc.)

Timing income and expenses strategically

Leveraging deductions and credits

Managing payroll and retirement contributions

Planning for major investments or asset purchases

When done right, tax planning ensures that every business move is made with taxes in mind — not as an afterthought.

The Cost of Reactive Tax Management

Too often, business owners only meet with their CPA at tax time. By then, your year is already over — and your options are limited.

That’s the difference between tax preparation and tax planning :

Tax Preparation = reporting what already happened.

Tax Planning = shaping what happens next.

By waiting until filing season, you may end up missing opportunities to legally lower your tax bill, improve cash flow, or adjust your strategy before year-end.

The HCG Approach: Proactive Tax Planning Year-Round

At HCG , we believe that successful tax outcomes start months before the return is ever filed. That’s why our CPA advisory services are built around year-round communication and planning — not one annual meeting.

Here’s what that looks like:

Mid-Year Review: We analyze your income, expenses, and business performance to identify savings opportunities and adjust strategy early.

Year-End Strategy Session: We fine-tune your tax position, review any major changes, and ensure you’re maximizing deductions before December 31.

Post-Tax Analysis: Once your return is filed, we break down your tax results and create a roadmap for the next year’s goals.

This proactive approach helps you understand why you’re paying what you’re paying — and how to plan smarter moving forward.

Key Benefits of Proactive Tax Planning for Business Owners

Working with an experienced CPA tax advisor gives you more than just a lower tax bill. You’ll gain:

What are CPA Advisory Services - and Why Business Owners Need Them Now

Thu, 09 Oct 2025 14:52:05 GMT

What CPA Advisory Services Are Not

When you hear the term “advisory,” it’s easy to think of financial advising — things like investments, retirement accounts, or stocks and bonds.

That’s not what CPA advisory services are about.

Instead, CPA advisory services focus on tax strategy, business planning, and proactive financial guidance . It’s about understanding your business and personal tax position — and using that knowledge to plan ahead.

The Real Meaning of CPA Advisory Services

In traditional accounting, most CPAs only meet with clients once a year — when it’s time to file the tax return. For decades, the profession treated tax preparation as the product, while the advice (the real value) was given away for free.

But the truth is simple:

A tax return is just the end result of a year of planning.

So why focus on the end when the real opportunity lies in the journey?

Advisory means putting value on our knowledge, analysis, and strategic planning — and sharing that insight with you all year long.

HCG’s Proactive Approach to Tax and Business Advisory

At HCG , we’re redefining what it means to work with a CPA. Instead of being reactive, we help business owners plan ahead with ongoing advisory support .

Every client receives:

Is it time to change how you pay yourself?

Thu, 02 Oct 2025 14:50:01 GMT

As a business owner, one area we often overlook is our own salary . Many of us simply “set it and forget it,” grateful that we don’t have to clock in and out every day — especially with all the other responsibilities competing for our attention.

With the passage of the OBBBA , overtime wages may now qualify for a federal tax exemption . While this is a welcome opportunity, there are several key rules and limitations to be aware of.

Overtime Exemption Reporting

When the tax break applies: Overtime wages won’t reduce your taxes in the paycheck you receive today. Instead, your total qualifying overtime will be reported on your year-end W-2 . You can then deduct this amount from your taxable income.

Annual cap: The deduction is limited to $12,500 per worker per year . Married couples filing jointly may deduct up to $25,000 combined.

Employer requirements: Employers must pay at least time-and-a-half (or more) for overtime hours. If salaried employees regularly work 50+ hours a week with no increase in pay, they cannot deduct the “extra” hours since no overtime premium is being paid

IRS Publication on Overtime Wages

Department of Labor Overtime Rules

Overtime Exemption Calculation

There has been some confusion about what’s actually exempt. It’s not the entire overtime wage that qualifies — only the additional overtime premium .

Example 1: An employee earning $20/hour regular pay who works overtime at time-and-a-half ($30/hour) can deduct only the $10 premium , not the full $30 wage.

Example 2: If paid double time ($40/hour), only the extra $20/hour above the regular wage is deductible.

Employers should ensure that their payroll provider tracks this correctly.

Overtime Exemption Limits

Like most tax laws, there are additional restrictions:

Income phaseout: If your Modified Adjusted Gross Income (MAGI) exceeds $150,000 (single filers) or $300,000 (married filing jointly), your deduction will begin to phase out. For every $1,000 over the limit, you lose $100 of the deduction.

State rules vary: For example, in Indiana , this federal exemption does not currently apply, meaning you’ll still pay full state income tax on all overtime wages.

W-2 employees only: Independent contractors are not eligible. However, if they operate as an S-corporation or other entity and pay themselves wages, they may qualify through that structure.

Why Plan Ahead?

Proactive tax planning can help you maximize the benefit of this new exemption. Waiting until January means you’ve missed opportunities to reduce your tax burden for 2025. But planning today sets you up for success in 2026 and beyond.

If you have questions about how this law impacts your business or employees, we’re here to help.

Contact us today to discuss how we can help you take full advantage of the overtime exemption.

We Are Growing Again!

Sat, 05 Oct 2024 14:43:32 GMT

Effective October 1, 2023 we are excited to announce another location for our firm! We are taking over the practice of LuAnn Gaisford, CPA in Warsaw, Indiana and can not wait to get to meet her clients and new clients in the area. Warsaw is a great community and our brief experience so far has been nothing short of spectacular. The people we have met in the community are welcoming and friendly and we are confident that we can continue to high standards that LuAnn established for her clients as we continue her tradition of customer service and great value.

Our offices are located at 929 E Center Street, just east of downtown Warsaw at at the intersection of E Center St and N Scott.

With this addition we will be growing to just under 20 total employees and now have the capacity to take on any and all clients to help meet their payroll, tax and accounting needs. Our combined firm will be the largest in the Warsaw area and will make us one of the largest in the Fort Wayne market with only a handful of firms larger. We look forward to the new opportunities that await us. If you are interested in meeting to see if we are a good fit for your organization, don't hesitate to reach out to either of our offices or shoot us an email today!

Beneficial Ownership Information Reporting

Thu, 13 Jun 2024 14:46:25 GMT

***This post is for information only and should not be considered advice or guidance in any way****

The Beneficial Ownership Information (BOI) Reporting requirement is new for 2024 but still something that many business owners and professionals do not fully understand. In 2021 the Corporate Transparency Act (CTA) was passed with the intended goal of providing more information to the government to catch money laundering and illegal acts. The solution, in part, is the BOI filing that requires what amounts to all small businesses to report who owns a company, or controls the actions, directly or indirectly.

For any business created prior to 1/1/2024 you have all of calendar year 2024 to file your initial BOI report (if required).

For those entities created after 12/31/2023, but prior to 1/1/2025 the government gives you 90 days to complete this same report.

In 2025 this changes to 30 days.

What is the BOI and who needs to be reported?

In simple terms, the BOI reports to the government who the business owners are, as well as those who have significant influence over the business. An example of this may be a former owner who has sway over the operations of an entity, but holds no formal ownership. They would be considered a Beneficial Owner, potentially.

There is also an indirect ownership condition, which might include the spouse or family members of a direct owner. For example, with an LLC if there are 10 owners at 10% each, but all are related, the LLC would report each owner having 100% total direct/indirect ownership.

This also raises the question of who needs to be reported on the BOI.

This starts to turn into a slippery slope of reporting, and the Government has instituted penalties that can be assessed at $591 for each day that a violation continues. Others start at $10,000 and any person who, without authorization, knowingly discloses or uses BOI may also be fined up to $250,000, or face prison time of up to 5 years, or both.

Do I have to file?

As of today, the requirement is still in place. On March 1, 2024 the Department of Justice filed an appeal to overturn the ruling in National Small Business United v Yellen which found the BOI requirement to be unconstitutional. If upheld, the entire BOI filing will be thrown out, potentially. This brings in questions for those businesses who did file, and paid someone to file for them, of if they are owed any refunds. Can you go after those third parties who told you that you had to file now?

Then we have the scammers who are sending out documents requesting BOI information to file on your behalf that make it look like it's an actual IRS form.

As a general rule, we strongly urge all businesses to only use firms they personally know and deal with regarding the BOI to help avoid fraud.

How do I file?

The government has setup a website at https://fincen.gov/boi to collect all filings. When our firm reached out to inquire how someone would file if they did not have internet access, or did not have a photo ID due to religious reasons, we were told by the fine support staff at fincen.gov to file online through their site. Clearly, they didn't read the question.

This does however bring up the issue of certain members of religious groups who do not have photo ID's, or others who do not have them. The Amish community for example, have limited or no internet access, and many do not have photo ID's, but do own businesses. This reporting requirement is difficult for them to execute as a result.

I have a business started in 2024, what do I do?

Our suggestion is to contact your lawyer that you used to setup your organization and work through them.

If you filed everything through an online company, then reach out to a lawyer and have them help you (and review what was filed).

If your Accountant is filing this for you, make sure you have an engagement letter that clarifies their role and yours. Do they address that you are responsible for all information, or do they take responsibility? That is who would potentially owe a penalty, if due.

In summary, we do not see a downside to any businesses waiting to file this report, assuming they qualify for the 2024 deadline. We also do not see an upside to filing this report now, especially if it means hiring a third-party to do the report for you. The requirements and wording are somewhat vague and bring more questions than answers to the point if you make an error and do not report someone the penalties are enough to drive most businesses, out of business.

For those who have hired a third-party, we strongly encourage those companies to inquire about refunds if this is ruled unconstitutional.

The penalties in place even reach professionals such as CPA's for simply NOT informing their clients of this requirement. Many states have not ruled if assisting with this filing is considered practicing law, which raises a whole other set of issues.

All in all, our firm is attempting to educate business owners about where to find answers, what options are out there, and what the basic requirement is. Past that, the government has created what we believe to be a reporting requirement that is setup to see businesses fail to properly report and have exposure to financial penalties that have the potential to put them out of business.

Indiana PTE Tax Bill

Wed, 01 Mar 2023 14:42:06 GMT

On February 22, 2023 Governor Holcomb signed into law Senate Bill 2, a bill that saw Indiana join 29 other states in enacting a Pass-Through Entity (PTE) Tax. The idea behind this bill, and other PTE bills, is to shift the tax burdeon off of the individual owners who are limited at deducting $10,000 in State and Local Taxes (SALT) on their Federal Schedule A over to the business entity. The SALT limit was a result of the 2017 Tax Cuts and Jobs Act (TCJA).

The TCJA increased the standard deduction from $12,000 to $24,000 for married couples. In addition to this increase, the GOP controlled congress also capped the SALT deduction at $10,000. They did this under the reasoning that liberal states had higher state taxes, and thus were getting an unfair tax deduction compared to their more conservative states with lower taxes. We wish we could say we were joking, but that is actually where the state of our federal politicians has sunk to.

Almost immediately after the TCJA was passed in 2018, Connecticut enacted the first PTE bill that allowed all Partnerships and S Corporations to elect to pay the state income tax that was generated by them. This allowed a business owner to claim a federal income tax expense on their business for the state income taxes paid on their business income. Prior to this the state income taxes paid would be subject to the SALT limit, and paid at the owner level.

So in 2017 if a business made $100,000 in profits, and a state had a 5% income tax, the business owner would have had a tax bill of $5,000 just off the business income. If that same business owner had real estate taxes and withholding taxes from their W-2 wages of $6,000 in total, the business owner would only get to deduct $10,000 in taxes, even though they had paid $11,000 in total.

With this new PTE tax change, the business owner can now deduct $5,000 at the business level, and $6,000 on their Schedule A. The business owner would then also get a credit on their state tax return for the $5,000 payment that the business made, keeping them in the same tax situation as before for state income taxes.

From 2018 until 2023, 29 states passed legislation allowing PTE's to pay tax in the same manner (8 states have no state income tax). The State of Indiana, in 2023, finally passed legislation to allow business owners this same deduction that the 29 other states had since passed. This is what SB-2 is, it also allows for business owners to receive credit on their state tax return if they paid income taxes to other states through their business.

As a brief example, if that same business owner operated in Indiana with a net profit of $100,000 they would incur a state tax of 3.23%, or $3,230. Prior to SB-2 the business owner would then owe $3,230 of income taxes with their individual tax return.

Under SB-2, the business would write a check for $3,230 to the Indiana Dept of Revenue for income taxes and the business owner will get a tax credit for $3,230 because they will still be taxed on that $100,000 at the state level. So the same tax is being paid, only the business pays it now instead of the individual business owner. By having the business pay the tax, we would then make their federal business taxable income $96,770 instead of $100,000. Assuming the business owner is in the 22% tax bracket, that $3,230 payment would equal a federal tax savings of $711. The higher your business net profits, or the higher your federal tax bracket, the greater the savings.

This presents a great array of tax planning ideas that previously were not at our disposal. Should a husband and wife rental LLC currently being filed as a Schedule E elect to be taxed as a 1065 Partnership? With SB-2 in play, they can now shift the tax burden to the partnership and reduce their federal taxes. The offset is they will have to pay for a 1065 return to be prepared.

The issue currently facing Hoosier business owners and tax preparers is that no one in the legislature (or lobbyist groups) who pushed for this to be retroactive to 1/1/2022, appears to have consulted the Department of Revenue to help create a form for this tax to actually be paid. And if they did ask, they didn't make sure the form would be ready. As a result, this election can not be made prior to March 31, 2023 .

The current due date for PTE's is March 15, 2023 . This presents a problem.

PTE's will be forced to extend their filing, which is a simple enough process, but one that should not have been required had the bills author (Senator Scott Baldwin) bothered to consult with practicing CPA's, or listened to the concerns of the Indiana CPA Society who opposed the retroactive date for this very reason. However, groups like the Indiana Chamber, who have zero tax background, pushed for the retroactive date because they don't have to deal with the mess that results. Luckily, the Department of Revenue has stated they will not charge late payment penalties or interest on any payments related to this tax through August 31, 2024. This begs the question, if the bill allows for payments a full 16 months after the initial date, why did they pass it in February for the previous year? Why couldn't they get this done in say October? Or even December?

This then presents the biggest issue for preparers, specifically smaller firms. How do you process your business income tax returns that you typically have from January-April 15th to complete and now have April 1 - April 15 to complete with the new changes, while also getting done all the other work you have in that time? The answer for most will be to extend your tax season, yet again, to account for the ideocracy that is our elected officials attempting to help.

As a business owner, you now most likely have to delay filing as well. While we can calculate the amounts due (or refunds owed), you wait. The fact that we can't finalize them and move on is extremely frustrating and why Indiana business owners and practitioners need to contact their representatives to tell them this was horrible timing. It is important to emphasize that your local politicians have no idea how this impacts you unless you contact them.

In Indiana, we also have Personal Property Taxes, which are filed right after income taxes. Typically this is an easy process, and one that the state has allowed us to start to add in with the income taxes when they changed the value date to January 1 instead of March 1. However, in an effort to show they can in fact do more ridiculous timing changes, there is currently House Bill 1430 being discussed which would virtually eliminate the PPT filing. While we are all in favor of this, to be in 2023 and making a tax law change for the 2023 tax filing that has already started, is once again a sign of ignorance.

PPP Loans - Changes

Mon, 15 Feb 2021 17:41:42 GMT

The most talked about program from the CARES Act was the PPP Loan program. Designed to provide instant cash inflows to struggling businesses to help cover the cost of payroll and other operating expenses. The first round was distributed so fast it ran out of money in only a few days, the second round last a few weeks, and in December a third round was released which fortunately is still funded.

We will run over a brief overview of this program and consider to have two parts. Part one is the CARES Act disbursements (1 and 2) and the second part is the CAA disbursements (part 3).

Part 1

To qualify for the PPP originally you needed to have wages in 2019. You took your monthly average, multiplied that by 2.5 and that was your loan, in a simple manner of speaking. You then had 8 weeks to pay that loan out in the form of wages, rent, and utilities, which was then changed to 24 weeks.

Assuming you were able to pay it all out, the loan would be forgiven and nothing was owed back to the SBA. The IRS then came out and released a statement that the forgiven loan would essentially become taxable as you would not be allowed to deduct the expenses paid with the loan proceeds.

There was no requirement to prove you had to receive the funds, it was simply a matter of applying. The catch with the PPP Loan was that you could not also take the Employee Retention Credit, and, if you received an EIDL advance, that advance would reduce how much of the loan was forgiven. In short, you shouldn't receive free money from both the PPP loan and EIDL. The CAA eliminated this part.

Part 2

In December 2020 the CAA released a second formal disbursement to help struggling businesses in the form an additional PPP loan. This time around however Congress added the wrinkle that not only did you have to be in business, you had to show a 25% drop in Gross Receipts either in total for 2020 v 2019, or in a single quarter. For most businesses, this was Q2, and they qualified, so they took a second round.

What did the CAA change?

The CAA had some massive changes to the PPP loan program. The first was that businesses could now qualify for, and receive the Employee Retention Credit if they also received a PPP loan. They simply had to identify what wages were used for the PPP Loan and what wages were used for the ERC. The second was that any business who did not take the initial Round 1 PPP Loan, could now apply for Round 1, use the funds, then apply for the CAA round 2. This means a business could receive the same PPP Loan twice in the space of a few months. Third, for a business to qualify for Round 2, they had to show a need in the form of a drop in Gross Receipts of 25% or more. To show this, the business would simply show their Gross Receipts (Profit and Loss statement income line for example) and show a Quarterly comparison of 2019 to 2020 or annual comparison. If there was a drop of 25% or more, they qualified. Lastly, to qualify for Round 2 you had to pay out wages for the period that covered February 15th 2020. If you paid wages on a monthly basis, for example, and paid out for the month of February, you qualified.

Change for Farmers

In the first round PPP Loan Farmers were left out in the cold, so to speak. They based PPP funding off Net Income, which most farmers simply didn't have. As a result, they did not get loans. With the CAA changes, farmers could now qualify based off GROSS RECEIPTS, instead of Net Income. Using the same average monthly receipts multiplied by 2.5 farmers were limited to $100K in gross receipts, for a max PPP Loan of $20,833. All they had to show was a Sch F with Gross Receipts, an application, and a bank account showing they existed February 15, 2020. This is a major help for small farmers and is often overlooked.

Schedule C Filers

Another area often overlooked is with Sch C businesses. If they had net income they qualify for the first round. If they can show a drop in revenue they qualify for round 2. Many small businesses assumed they don't qualify because they were not full time, or because maybe their spouse worked full time, or any number of reasons, but if they have a Sch C, they most likely qualify and it is worth talking with a banker about.

PPP Loan - Sch C Filer UPDATE

Mon, 15 Feb 2021 14:36:36 GMT

This week the SBA announced another significant change to the PPP Loan Program for Schedule C filers in that the loans would be based off their GROSS RECEIPTS instead of Net Income. This is a massive change. The loan amount that a sole proprietor, independent contractor, or other Schedule C filer now qualifies for could be drastically higher than previously reported.

Take a small photography business who had total revenue of $50,000 and total expenses of $35,000 for the year. This would have given them a Net Taxable Income of $15,000, or a monthly annual average of $1,250, allowing them to apply for a PPP Loan of $3,125. With this change that same business, using the same tax year now qualifies for a PPP Loan of $10,416.65 ($50,000 divided by 12 multiplied by 2.5). With the rules in place that this money is not subject to tax, and was never subject to taxes for a Sch C filer small businesses have been handed an incredible lifeline. If They had already applied for a PPP Loan, unfortunately they may not apply for a loan for the difference, and the rules still apply that the second disbursement must show a drop in Gross Revenue to qualify, but the appeal is still huge.

With the SBA currently putting in place a March 31st deadline for applications time is running out to apply. The other catch with this program is your first loan must be forgiven before the second loan can be received, and if you applied recently, you must wait 8 weeks after the first disbursement before you apply for the second.

Questions on all this and how it can impact you? Call or email us today!

Employee Retention Credit - Part 2

Tue, 26 Jan 2021 17:30:04 GMT

If you haven't read Part 1 of our ERC breakdown, be sure to go there first as that handles how many of the calculations are handled.

The CAA broke down the changes to the ERC into two major areas. A change in WHO qualified to claim the credit in 2020 and a change in HOW the credit was calculated in 2021. While the Partially Suspended operations test will allow a large number of businesses to qualify, the 2021 calculation is even more beneficial to struggling business owners.

2021 Changes

Qualifying Wages:

Two big changes are in place starting January 1st. Qualified wages are now set at $10,000 per employee PER QUARTER instead of annually. Additionally, bonuses are now able to be included. In 2020 employees had to meet certain criteria to qualify on bonus payments, but in 2021 this has been removed.

Credit Rate Percentage:

The 2021 credit rate is moved up to 70% from 50%. As a result, when combined with the wage change, a business can now receive up to $7,000 per employee per quarter instead of $5,000 in total for the year per employee.

Gross Receipts Test:

The decline in Gross Receipts to qualify for the credit has been changed from 50% of the comparative quarter to a 20% decline. This is a massive change. Now, if a taxpayer can show their Gross Receipts are 80% of the same quarter in 2019, they qualify for the credit for the entire quarter. There is also an alternative comparison we address below. For those businesses who were not around in 2019 they would use the 2020 calendar year quarter.

Date Extension:

The CARES Act ended the ERC on 12/31/2020, the CAA has extended this to June 30th, 2021. Allowing for fiscal Q1 and Q2 2021 to have the ERC calculation.

Employee Count:

In 2021 the number of FTE's is increased from 100 to 500 for those businesses to claim this credit. Drastically increasing the number of employers who may now qualify to take this credit.

Quarter Comparison:

One of though more confusing parts is how to calculate the Gross Receipts test with how Congress wrote the CAA. In Q1 2021 taxpayers compare Gross Receipts to Q1 2019, not 2020 to see if they meet the decline in GR tests. They may elect to instead compare the previous quarter, this means you can compare Q4 2020 to Q4 2019 and use that decline (if you can show 2020 is 80% or less) and claim the credit in Q1 2021. This is a great planning point as we know today what our Q4 Gross Receipts were. If we know that number is 80% or less, we now the taxpayer qualifies for the credit for Q1 2021.

Advance Claiming of Credit:

The most obvious way to help a business right away with this credit is to withhold the 941 payment. There will be some calculations here to ensure the payment is below the total credit, but for some businesses this could be a considerable cash flow savings. The other change added from the CAA is that taxpayer may elect to receive the credit in advance. The business is limited to 70% of the average quarterly wages paid in 2019, but this is still a useful tool. The advance may be collected using form 7200.

Tax Planning Ideas

With these changes there is an opportunity for taxpayers to actively plan to maximize the credit in Q1 2021. First, as noted, anyone who can pass the Q4 Gross Receipts test will qualify for the credit in Q1 2021. This means for any businesses with employees who may receive a bonus throughout the year it is now in the businesses interest to pay that bonus in Q1, assuming the employee would not normally reach the $10,000 wage and health care mark. Be sure to consider the increase in Unemployment taxes that will go along with this when planning.

As with 2020, any taxpayer who receives a PPP loan distribution in 2021 must identify which wages are being applied to the PPP loan forgiveness and which are being used for the ERC. The same dollars may not be used for both. It is important that you have solid records to support both claims or you risk being denied on both.

Example 1

A small restaurant with 75 FTE's received a PPP loan on May 1, 2020. Due to executive orders from the Governor of Indiana their dining room was closed as of March 1st. Per the CARES Act, the ERC is able to be claimed beginning March 12th. As a result, all wages paid from March 12th through April 30th are eligible to be included in the qualified wages calculation regardless of Gross Receipts as the business was partially or completely suspended. Even if the restaurant had carryout available, or outside dining, they are considered to be partially suspended since their dining room is closed.

As of today, January 28, 2021, Allen County restaurants are still restricted in their dining capacity. As such, they are still partially suspended and qualify for the ERC from March 12th until December 31, 2020. This requires the business to do a summary of wages, by employee, for that period. To specifically identify what wages are for the PPP loan forgiveness and what qualify for the ERC. With restaurants traditionally having low wages per employee, this means most will have non-management workers qualify the entire year. If a restaurant has $100,000 in wages to non-management over that period, after accounting for the PPP loan, they now stand to receive a credit of $50,000 or more, depending on individual wages.

This scenario becomes more complex if the loan forgiveness is already submitted, but the flexibility is something that every business should examine.

A professional services firm with less than 100 FTE's experienced a significant decline in Gross Receipts in Q2 resulting in a 55% drop compared to 2019. This qualifies the firm for Q2 to begin claiming the ERC. In Q3 Gross Receipts increase, but they are still only 70% of Q3 2019. Since they have not reached 80% or more, the wages paid in Q3 qualify as well. In Q4 Gross Receipts hit 81% of the same quarter in 2019. The wages paid in Q4 also qualify as wages qualify to the END of the first quarter in which Gross Receipts reach 80% or more.

Now, using that same scenario, let us instead imagine Q4 2020 Gross Receipts were 78% of 2019. We know that Q4 wages qualify, but we also know that Q1 2021 wages qualify no matter what because the credit stops at the end of the quarter that exceeds 80%, and we also have the ability to look at Q4 to qualify for Q1 2021.

A retail business never had gross receipts fall below 50% in 2020 and was never shut down by government order. We know they do not qualify for the ERC in 2020. In February 2021 the Allen County Health Commissioner closes down all retail shows from February 15th until March 1st to combat a surge in COVID cases. The retail business now qualifies for wages paid from Feb 15th up to March 1st. In an effort to help their employees the retail businesses pays a bonus of $3,000 to each of the 10 employees on February 18th. This is the only payroll issued during the closed period. The business is now entitled to a credit on form 941 for the amount of $21,000.

Using the same scenario, we will add that the business received a second round PPP loan on February 1st for $70,000. Section 206(c) of the CAA states specifically that priority on wages goes to the ERC rather than the PPP unless the taxpayer specifically elects otherwise. As such, assuming they have enough wages during the covered PPP period, the taxpayer may elect to qualify the $30,000 in wages paid on February 18th as ERC wages, and wages after that period as PPP wages. While there is no formal election for this, a written statement and detailed record of wages paid and how they are used will satisfy the requirements and protect the employer.

Conclusion

The ERC was a mostly ignored credit when it first came out due to the 50% decline requirement and elimination for those who took out a PPP loan. With the changes put in place by the CAA there is a real potential for businesses to use this credit to supplement their business during COVID and help ensure their doors stay open. With the uncertainty surrounding COVID and the future it would not be surprising to see Congress extend this yet again through all of 2021, but as of now, the ERC ends with Q2 2021.

There are many scenarios where a business may qualify under the partial suspension ranging from suppliers being suspended while the end user stays open but is impacted. Contact us today and we can discuss how your business may qualify and if we can help you.

Employee Retention Credit - Part 1

Tue, 26 Jan 2021 17:25:41 GMT

When the CARES Act was passed in early 2020 there were 3 major vehicles used to get money to businesses. The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) received the most attention and provided almost instant cash flow to businesses. The third was the Employee Retention Credit (ERC), designed to help employers keep employees on staff and reduce or eliminate the payroll tax payments due.

The ERC was simple in theory, if an employer had a significant drop (50% or more) in Gross Receipts or was completely or partially shut down due to Government order, they could receive a credit of 50% of wages paid to employees with a max wage of $10,000 per employee for the year. In other words, if your business was hit by COVID, you could qualify for the government to give you up to $5,000 per employee to keep them on your payroll. If you took a PPP loan however, you did not qualify.

With the passing of the Consolidated Appropriations Act in December 2020 , this credit had some significant changes put in place, but it was broken down into changes for 2020 and changes for 2021. Rather than explain the differences, let's take a look at what the rules are now for the ERC.

PPP Loan Proceeds, how does this impact the ERC :

If you took out a PPP loan you may now also qualify for the ERC. The caveat is that you can not use the same wages for both. For example, a business took out a PPP Loan for $15,000 and had 3 employees that were each paid $6,000 in gross wages for the year. If they were each paid evenly, the first $5,000 per employee would go towards the PPP loan forgiveness, and the remaining $1,000 per employee would be eligible for the ERC. That's a simplified example, but gets us on the right foot to start.

Qualified Wages are wages paid from March 12 through December 31, 2020. Let's look at a scenario where an employer received a PPP loan on April 30th. This could lead to an employer having qualified wages in Q1 for March 1 through March 31, then Q2 for April 1 through April 29th. The wages for April 30th until the PPP loan was paid off may then be applied to the PPP loan, and if the employer still qualifies, the credit could resume again after the PPP loan is fully satisfied. This of course leads to many more questions, but shows how many options are out there and how quickly this credit can become complicated.

Employee Count - Full Time Employees (FTE):

If a business had more than 100 FTE's in 2019 the only wages that qualify for the ERC in 2020 are wages paid to an employee to NOT provide services. Meaning, the business paid an employee to stay home and not work. If the business had 100 or less FTE's in 2019 then all wages paid in 2020 qualify, up to the $10,000 maximum.

Qualifying for the Credit:

A business must meet 1 of 2 tests to qualify for the credit:

Gross Receipts from the Trade or Business declined by 50% for the quarter compared to the same quarter in 2019. To test this simply prepare a Profit and Loss on your tax basis of accounting and compare all 4 quarters. If you see a 50% drop from Q2 2019 to Q2 2020, you qualify starting Q2, and continue to qualify until the end of the first quarter in which Gross Receipts exceed 80% of the comparative quarter.
That last bit tricks up some people. Let's take a business who had $100K in Gross Receipts in Q2 2019 and $45K in Q2 2020. That $55K drop is greater than 50%, so Q2 has them qualified under the Gross Receipts Test. If Q3 2019 Gross Receipts were $100K and Q3 2020 Gross Receipts were $70K, they are now at 70%, and thus, qualify in Q3 because they have not exceeded 80%. For Q4 2019 they had $100K in Gross Receipts and $81K in Q4 2020. They once again qualify in Q4, but that would signal the end of their qualified wage period, unless Q1 2021 dropped back down. We will get into this in Part 2. Since Q4 is now above 80% of 2019 Gross Receipts, the qualified wages can be used until the end of Q4.
The business must have been Fully or Partially suspended due to Government authority limiting their business operations. This can not be voluntary, it must be government ordered, but the range for partial suspension is quite liberal with the new changes.

Qualified Wages:

This is a little complicated, but we can walk through the the process to determine what qualifies. First, you need to determine if test 1 or 2 is met and if they had 100 or less FTE's. Assuming they are under and met one of the tests, you then look at the quarter in which it was met and what are the wages paid.

Once you have those figures in hand, you are then limited to taking $10,000 in wages per employee for the entire year. One important note is that the CAA does not state it is the first $10,000 in wages, rather it is simply $10,000 in wages (and qualified Health Care costs). This is important for anyone who has a PPP loan and needs to identify what wages are applied to the PPP loan and what wages are for the Retention Credit. If a business had an employee laid off, but they were still paying their health care costs, those health care costs are considered Qualified Wages for the credit as well.

Complete or Partial Shutdown due to Government Order :

Simply put, the government had to close your business, or partially suspend it. An example of this would be a restaurant who had to close, or reduce their inside seating capacity due to government order. In Allen County Indiana we are still under this restriction, so even if you offer carryout and delivery, and ignoring Gross Receipts completely, since your dining room is partially suspended, you qualify. By contrast, if you elect to reduce occupancy on your own you do not qualify. For example, a CPA firm may restrict their offices to 2 clients at a time, while this is a restriction, it is an elective restriction unless it is so ordered by a government authority.

If a business meets this criteria, they must identify the specific dates in which they qualify. Those wages paid during that period are then qualified wages. As a result it is possible you could have qualified wages for a portion of a quarter, but not the entire quarter. By comparison, the Gross Receipts test is for the entire quarter.

Qualified Health Care Costs:

If an employer pays health care coverage for an employee, those payments are also considered Qualified Wages for purposes of the ERC. As mentioned earlier, if an employer laid off employees for wages but continued to pay their health care costs, those costs are now eligible for the ERC.

PPP Loan Forgiveness Wages and the ERC together:

The major change from the CAA was that businesses who took out a PPP loan may now qualify for the ERC. Congress made sure however to put in place criteria that eliminate a business from being able to claim the credit and forgive the loan on the same dollars paid in wages. So, what's the order, and how do you qualify?

Section 2301(g)(1) of the CARES Act states that a taxpayer (business) can elect to NOT include certain wages and allocable health care costs in the computation of the ERC. This means the business can elect what wages are applied to the PPP loan forgiveness and what wages go to the ERC. Further more, section 206(c) of the Taxpayer Certainty and Disaster Relief Act states payroll costs can not be claimed for both, and the priority goes to the ERC over the PPP loan forgiveness.

In English, that means wages would go to the ERC first, unless the business wants to apply the wages towards the PPP loan forgiveness first. Why does this matter? For many businesses in Indiana they were partially or fully suspended from March 12th through May 3rd. If a business received a PPP loan on April 12th, for example, they would have to identify if those wages paid from April 12th to May 3rd are to be used for the ERC over the PPP Loan Forgiveness or vice versa to eliminate any confusion. The reason being, if they do not meet the Gross Receipts test, it is possible they will not qualify for the partial suspension when Indiana reached Stage 2. This is a very important step that can not be overlooked. Unfortunately, most taxpayers have already submitted their PPP Loan Forgiveness and must not decide if they want to wait for the IRS and Congress to determine how to handle that forgiveness, or if they want to justify their own argument and hope to win in the event of an Audit.

Calculating the actual Credit:

Once you determine the eligible wages for 2020, the business may receive a credit of 50% of wages paid up to $10,000 in wages/health care costs.

Here is an example: Credit Calculation

As you can see, there is a requirement to track total wages per employee for 2020 and keep the running total. Once that employee reaches $10,000 in wages or health care costs, they no longer qualify for the ERC. In the same wage scenario, if the employer was using the partial suspension only the wages paid during the days in which the government order was in place would qualify for the credit. Another scenario to consider is if Q3 was not qualified and Q2 and Q4 were qualified. That would then eliminate the Q3 credit for Joe and Jane, but allow for the full $4,500 paid to Jane to qualify in Q4 for the credit, Joe's Q4 would remain the same as he is still under the $10,000 in total wages.

It is very important to note that if the business received a PPP loan they MUST identify what wages are being used for loan forgiveness and what wages are being used for the ERC. They may not use the same dollar for both. Using our example above, let us assume the business received a $4,000 PPP Loan, and they were partially suspended for all of Q2, reopened Q3 and Q4, then received the loan on April 1. The only qualifying quarter would be Q2, the same quarter the PPP Loan was received. If the taxpayer elected the 24 week payroll period, the could specifically identify the Q2 wages for the ERC and receive a $4,000 credit. Then, starting in Q3 they could identify the first $4,000 in wages paid to apply to the PPP loan forgiveness. Or, better yet, they could identify $2,400 in wages (60% of the 4,000) and use Rent, Utilities and other qualified expenses for the loan forgiveness, in the event they had another partial or complete shut down ordered by the government in Q3. As you can see, the calculations here begin to become complex and varied rather quickly.

How to take the credit if a business already applied to have their PPP Loan forgiven:

Unfortunately this is where we are in a bit of a grey area (Charcoal, to quote Irwin M Fletcher for you 80's movie buffs). There is no official guidance as of today on this. From our experience we are finding that almost every business used payroll only to apply for forgiveness, and had more than enough wages to satisfy the loan. For example, if a company received a $500,000 PPP loan and then had $1,000,000 in wages over the 28 week period, many simply sent in their wages to show the loan satisfied in full and did not remit any other expenses. To take a conservative approach on this, that would mean $500,000 in wages were used for the PPP loan because no rent, utilities, or other expense as included in the paperwork. However, that also means there is $500,000 left to apply potentially to the ERC. A more aggressive approach would be to say that since only 60% was required for the loan forgiveness, $300,000 in wages ($500,000 loan x 60%) were used and the remaining $200,000 was forgiven by Qualified Expenses (assuming they exist), leaving $700,000 in wages available for the ERC.

This is where documentation on the taxpayers part will identify what exact dollar wage was applied to which. We are of the opinion that if you already submitted your loan forgiveness, you have to follow what you sent in. If you have not yet submitted the form, we highly encourage you to use the 60% of wages and substantiate the rest of the forgiveness with qualified expenses so you can eliminate any questions. This is a discussion between you and your CPA and will vary by individual.

How to Apply for the Credit:

Since this credit is taken on form 941 (or 944), it ideally would have been calculated each quarter. Since the CAA amended this act in December that means the business owner can either file amended form 941X and wait for a check, or they can election to catchup in the quarter in which the credit became law (i.e. Q4). The CAA allows for businesses to file their Q4 941 form with the full 2020 qualified wages all in Q4 rather than amending each quarter. There are some issues with this approach as Congress worded the bill to potentially not allow it, but yet also allow it. Since we are dealing with elected officials who don't understand tax law it is no surprise that they once again managed to cross their i's and dot their T's rather than the other way around. It is our stance that you can file a Q4 941 with the full credit for 2020, but that of course means you had to wait until the last minute to file your Q4 941 form, and need to go through all the steps above.

What happens in 2021?

There are some huge opportunities for 2021 with the changes that were put in place. Check out our next post for how this credit significantly changes January 1, 2021 and how to plan for it.