The One, Big, Beautiful Bill Act Business Tax Provisions

On July 4, President Trump signed into law the far-reaching legislation known as the One, Big, Beautiful Bill Act (OBBBA). With this legislation comes many extensions of many of the provisions of the Tax Cuts and Jobs Act (TCJA); legislation enacted during the first Trump administration. It also incorporates several of President Trump’s campaign pledges, although many on a temporary basis, and pulls back many clean-energy-related tax breaks.

Navigating the changes enacted with the OBBBA will be critical for businesses to take advantage of the new changes, and in some cases receive benefits before they sunset. Here’s a breakdown of some of the key changes affecting business taxpayers. Except where noted, these changes are effective for tax years beginning in 2025.

Key changes affecting businesses

• Makes permanent and expands the 20% qualified business income (QBI) deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships

• Resumes and makes permanent 100% bonus depreciation for the cost of qualified new and used assets, for property acquired after January 19, 2025

• Creates a 100% deduction for the cost of “qualified production property” for qualified property placed into service after July 4, 2025, and before 2031, encouraging domestic manufacturing and production of agricultural and chemical products

• Doubles both the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward

• Reinstates the addback for depreciation, amortization and depletion in the adjusted taxable income calculation for interest limitation under 163(j)

• Permanently allows the immediate deduction of current year 174 domestic research and experimentation expenses

• Allows for a 2025 deduction of previously capitalized and amortized 174 domestic research and experimentation expenses from tax years 2022-2024

• For business entities taxed as C-Corporations there is now a 1% of taxable income floor on charitable contributions. This makes the first 1% non-deductible, 2-10% deductible, and anything in excess carried forward

• Prohibits the IRS from issuing refunds for 2021 3rd and 4th quarter Employee Retention Tax Credit claims that were filed after January 31, 2024, and extends the statute of limitations for audit of all ERC claims for 6 years

• Early termination of certain EV, Fuel, and Residential energy credits. Key termination dates will be September 30, 2025, December 31, 2025, and June 30, 2026

•  EV purchase credits will expire for vehicles purchased after September 30, 2025

• Alternative fueling energy credits (i.e. EV charging credit) will expire on June 30, 2026

• Residential and commercial energy property credits will expire December 31, 2025 or June 30, 2026 depending on the credit

• Early phaseout and termination of certain clean energy tax incentives with modified rules for projects already underway or projects begun in 2025

• Permanently renews the Qualified Opportunity Zone program and extends the New Markets Tax Credit

• Makes permanent and modifies the employer credit for paid family and medical leave

• Expands the benefits of section 1202 qualified small business stock gain exclusion for stock issued after the date of enactment

Be Prepared

We’ve only briefly covered some of the most significant OBBBA provisions here. There are additional rules and limits that apply. Those business taxpayers and individuals owning business enterprises will have the opportunity to incorporate these new legislation changes into their 2025 tax planning. With 3rd quarter estimates due soon this could provide taxpayers an opportunity to reduce or potentially eliminate additional estimated tax payments for 2025.  Turn to us for help navigating the new law and its far-reaching implications to minimize your tax liability.

The One, Big, Beautiful Bill Act Individual Tax Provisions

On July 4, President Trump signed into law far-reaching legislation known as the One, Big, Beautiful Bill Act (OBBBA). With this legislation comes extension of many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA);  enacted during the first Trump administration. It also has created many new opportunities; many of which were campaigned on, and although available only for a limited time, individuals will have the chance to take advantage of these deductions.

 Here’s a breakdown of the key changes affecting individual taxpayers. Except where noted, these changes are effective for tax years beginning in 2025.

Key changes affecting individuals

• Makes permanent the  individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%

• Sets  the standard deduction for 2025 to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers, with annual inflation adjustments going forward

• Permanently increases the child tax credit to $2,200, with new annual inflation adjustments going forward

• Temporarily increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000 subject to income phaseouts, with a 1% increase each year through 2029, after which the $10,000 limit will return

• Permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers) but reinstates the deductibility of mortgage insurance premiums as deductible interest

• Permanently establishes business loss limitations, resetting limits in 2026 to be indexed for inflation, excess losses will continue to be treated as net operating losses in subsequent years

• Permanently eliminates the deduction for interest on home equity debt

• Permanently limits the personal casualty deduction for losses resulting from federally declared disasters and certain state-declared disasters

• Permanently eliminates miscellaneous itemized deductions except for unreimbursed educator expenses

• Permanently eliminates the moving expense deduction (with an exception for active members of the military and their families in certain circumstances)

• Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions to include elementary and secondary tuition expenses. In addition, the annual limitation of expenses eligible for payment has been increased to $20,000 per beneficiary

• Makes permanent the TCJA’s increased exemption and income phase-out thresholds for individual alternative minimum tax (AMT), exemption and income phase-out thresholds will be resetting in 2026 to begin indexing for inflation again in years after

• Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward

• For 2025–2028, creates an above-the-line deduction (meaning it’s available regardless of whether a taxpayer itemizes deductions) of up to $25,000 for tip income in certain industries, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain new American-made vehicles, with income-based phaseouts

• For 2025–2028, creates an additional above-the-line deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts

• Limits itemized deductions for taxpayers in the top 37% income bracket to 35% of the taxpayers adjusted gross income, beginning in 2026

• Establishes tax-favored “Trump Accounts,” which will provide eligible newborns with $1,000 in seed money if elected, beginning in 2026

• Makes the adoption tax credit partially refundable up to $5,000, with annual inflation adjustments (no carryforwards allowed)

• Restricts eligibility for the Affordable Care Act’s premium tax credits

• Early termination of certain EV, Fuel, and Residential energy credits. Key termination dates will be September 30, 2025, December 31, 2025 and June 30, 2026

•  EV purchase credits will expire for vehicles purchased after September 30, 2025

• Alternative fueling energy credits (i.e. EV charging credit) will expire on June 30, 2026

• Residential energy property credits will expire December 31, 2025 or June 30, 2026 depending on the credit

• Creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026

• Imposes a 0.5% floor on charitable contributions for itemizers, beginning in 2026

Be Prepared

We’ve only briefly covered some of the most significant OBBBA provisions here. There are additional rules and limits that apply. Everyone’s tax situation is unique and will cause each of these items to be applicable in various ways. Individuals will have the opportunity to incorporate these new legislation changes into their 2025 tax planning. With 3rd quarter estimates due soon this could provide taxpayers an opportunity to reduce or potentially eliminate additional estimated tax payments for 2025.  

Navigating the changes enacted with the OBBBA will be critical for individuals to take advantage of the new changes, and in some cases receive benefits before they sunset. Turn to us for help navigating the new law and its far-reaching implications to minimize your tax liability.

2 Options for Creating a Charitable Legacy: Lifetime Gifts and Charitable Bequests at Death

Incorporating charitable giving into your estate plan can be a thoughtful and strategic way to support causes you care about while also achieving estate planning objectives. Whether you’re driven by philanthropic goals, legacy planning or financial considerations, planned giving can be an effective tool if you’re seeking to make a lasting impact.

You generally have two options for making charitable donations: lifetime gifts or charitable bequests at death. Be aware that each approach has its pros and cons.

Lifetime gifts vs. charitable bequests

Lifetime gifts allow you to enjoy the fruits of your philanthropic efforts while you’re alive. Charitable bequests, on the other hand, can be a great way to create a legacy. The latter may also be preferable if you’re not comfortable parting with too much of your wealth during your lifetime.

From a tax perspective, charitable bequests may have certain advantages over lifetime gifts. When you leave money or property to a qualified charity in your will, your estate may be eligible for an unlimited estate tax charitable deduction.

Lifetime gifts, on the other hand, offer both income tax and estate tax benefits. Not only are you entitled to an immediate income tax deduction (subject to applicable limits), but the value of the money or property (plus any future appreciation) is removed from your taxable estate.

Of course, estate tax liability is an issue only if the value of your estate will exceed the federal gift and estate tax exemption. For 2025, the exemption amount is $13.99 million. With the passage of the One, Big, Beautiful Bill Act, beginning in 2026, the amount is permanently set at $15 million and will be adjusted annually for inflation.

Factor in the estate tax charitable deduction

If you wish to make charitable bequests in your will, and estate tax liability is a concern, careful planning is needed to avoid pitfalls that can jeopardize the estate tax charitable deduction. Generally, the gifted assets must be:

• Included in your gross estate,

• Transferred by you through your will, and

• Donated to a qualified charity.

If you give your executor or beneficiaries the discretion to distribute assets to charity, those gifts won’t qualify for the estate tax charitable deduction. However, beneficiaries may qualify for an income tax deduction.

The charitable bequest must be “ascertainable” at the time of your death; otherwise, the estate tax charitable deduction may be denied. Generally, that means a qualified charitable recipient must be specified in your will. Note: It may be possible to make a bequest to an unnamed charity depending on applicable state law.

The amount of the bequest must also be specified. That means your will must leave a certain dollar amount, a specific asset or a percentage of your estate to a charity. It’s also possible to leave the estate’s residue — that is, the amount left after all assets have been distributed to heirs and final expenses have been paid — to a charity.

A common pitfall in drafting charitable bequests is the failure to properly identify a qualified charitable recipient. Even if the bequest is correct at the time you draft your will, things can change over time. For example, a charity may change its name, merge with another organization, lose its tax-exempt status or cease to exist. For this reason, name one or more contingent charitable beneficiaries in the event the primary charitable beneficiary can’t accept the donation.

To ensure that charitable donations are effectively integrated into your estate plan, contact FMD. We can review your plan to determine that your intentions are clearly documented, tax-advantaged and legally sound. This not only protects your legacy but also maximizes the benefit to the organizations you care about.

How Can Your Business Set the Stage for Organic Sales Growth?

For businesses looking to reach the next level of success, there’s no bigger star than organic sales growth. Simply defined, this is achieving an increase in revenue through existing operations rather than from mergers, acquisitions or other external investments.

As you’ve likely noticed, coaxing this star into the spotlight isn’t easy. How can you set the stage for organic sales growth? Here are some fundamental ways.

It begins with customer service

Organic sales growth largely comes from getting more from your current customer base. Accomplishing this feat begins with premier customer service, which means more than just a smile and a handshake. Are your employees really hearing the issues and concerns raised? Do they not only solve problems, but also exceed customers’ expectations whenever possible?

The ability to conduct productive dialogues with customers is key to growing sales. Maintaining a positive, ongoing conversation starts with resolving any negative (or potentially negative) issues that arise as quickly as possible under strictly followed protocols. In addition, it includes simply checking in with customers regularly to see what they may need.

Marketing counts

Boosting sales of any kind, organic or otherwise, inevitably involves marketing. Do you often find yourself wondering why all your channels aren’t generating new leads at the same level? Most likely, it’s because your messaging on some of those channels is no longer connecting with customers and prospects.

On a regular basis, you might want to step back and reassess the nature and strengths of your company. Then use this assessment to revise your overall marketing strategy.

If you work directly with the buying public, you may want to cast as wide a net as possible. But if you sell to a specific industry or certain types of customers, you could organically grow sales by focusing on professional networking groups, social organizations or trade associations.

People matter

At the end of the day, organic sales growth is driven by a business’s people. Even the best idea can fail if employees aren’t fully prepared and committed to design, produce, market and sell your products or services. Of course, as you well know, employing talented, industrious staff requires much more than simply getting them to show up for work.

First, you must train employees well. This means they need to know how to do their jobs and how to help grow organic sales. You might ask: Does every worker really contribute to revenue gains? In a sense, yes, because everyone from entry-level staff to executives in corner offices drives sales.

Second, beyond receiving proper training, employees must be cared for and inspired through valued benefits and a positive work environment. Happy workers are more productive and more likely to preach the excellence of your company’s products or services to friends and family. Organic sales may occur as a result.

Star of the show

It’s the star of the show for a reason. Organic sales growth is generally considered more sustainable than inorganic revenue gains and a strong indicator of a healthy, competitive business. It also avoids the integration and compliance risks of mergers and acquisitions, not to mention the complications and dangers of acquiring outside financing. FMD can help you identify your company’s optimal strategies for achieving organic sales growth.

The One, Big, Beautiful Bill Act Extends Many Business-Friendly Tax Provisions

The One, Big, Beautiful Bill Act (OBBBA) includes numerous provisions affecting the tax liability of U.S. businesses. For many businesses, the favorable provisions outweigh the unfavorable, but both kinds are likely to impact your tax planning. Here are several provisions included in the new law that may influence your business’s tax liability.

Qualified business income (QBI) deduction

The Tax Cuts and Jobs Act (TCJA) created the Section 199A deduction for QBI for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships. The deduction had been slated to expire after 2025, putting many business owners at risk of higher taxes.

The OBBBA makes the QBI deduction permanent. It also expands the deduction limit phase-in ranges for specified services, trades or businesses, and other entities subject to the wage and investment limitation. For these businesses, the deduction is reduced when taxable income falls within the phase-in range and is eliminated when taxable income exceeds the range. The new law expands the phase-in thresholds from $50,000 to $75,000 for individual filers and from $100,000 to $150,000 for joint filers.

The OBBBA also adds an inflation-adjusted minimum QBI deduction of $400, beginning in 2025. It’s available for taxpayers with at least $1,000 of QBI from one or more active businesses in which they materially participate.

Accelerated bonus depreciation

The OBBBA makes permanent 100% first-year bonus depreciation for the cost of qualified new and used assets acquired and placed into service after January 19, 2025. Under the TCJA, the deduction was limited to 40% for 2025, 20% in 2026 and 0% in 2027.

The new law also introduces a 100% deduction for the cost of “qualified production property” (generally, nonresidential real property used in manufacturing) placed into service after July 4, 2025, and before 2031. In addition, the OBBBA increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with each amount adjusted annually for inflation.

Together, the depreciation changes are expected to encourage capital investments, especially by manufacturing, construction, agriculture and real estate businesses. And the permanent 100% bonus depreciation may alleviate the pressure on companies that didn’t want to delay purchases due to a smaller deduction.

Research and experimentation expense deduction

Beginning in 2022, the TCJA required businesses to amortize Sec. 174 research and experimentation (R&E) costs over five years if incurred in the United States or 15 years if incurred outside the country. With the mandatory mid-year convention, deductions were spread out over six years. The OBBBA permanently allows the deduction of domestic R&E expenses in the year incurred, starting with the 2025 tax year.

The OBBBA also allows “small businesses” (those with average annual gross receipts of $31 million or less) to claim the deduction retroactively to 2022. Any business that incurred domestic R&E expenses in 2022 through 2024 can elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.

Clean energy tax incentives

The OBBBA eliminates many of the Inflation Reduction Act’s clean energy tax incentives for businesses, including the:

• Qualified commercial clean vehicle credit,

• Alternative fuel vehicle refueling property credit, and

• Sec. 179D deduction for energy-efficient commercial buildings.

The law accelerates the phaseouts of some incentives and moves up the project deadlines for others. The expiration dates vary. For example, the commercial clean vehicle credit can’t be claimed for a vehicle acquired after September 30, 2025, instead of December 31, 2032. But the alternative fuel vehicle refueling property credit doesn’t expire until after June 30, 2026.

Qualified Opportunity Zones

The TCJA established the Quality Opportunity Zone (QOZ) program to encourage investment in distressed areas. The program generally allows taxpayers to defer, reduce or exclude unrealized capital gains reinvested in qualified opportunity funds (QOFs) that invest in designated distressed communities. The OBBBA creates a permanent QOZ policy that builds off the original program.

It retains the existing benefits and also provides for investors to receive incremental reductions in gain starting on their investment’s first anniversary. In the seventh year, taxpayers must realize their initial gains, reduced by any step-up in basis, the amount of which depends on how long the investment is held. The first round of QOFs available under the permanent policy will begin on January 1, 2027.

The OBBBA also introduces a new type of QOF for rural areas. Investments in such funds will receive triple the step-up in basis.

International taxes

The TCJA added several international tax provisions to the tax code, including deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). It also established the base erosion and anti-abuse tax (BEAT) on U.S. corporations that 1) have average annual gross receipts greater than or equal to $500 million for the prior three tax years, and 2) have made deductible payments to related non-U.S. parties at or above 3% of all deductible payments.

The OBBBA makes permanent the FDII and GILTI deductions and adjusts the effective tax rates for FDII and GILTI to 14%. It also makes permanent the minimum BEAT, increasing the tax rate to 10.5%. These changes take effect beginning in 2026.

Employer tax provisions

The new law makes permanent the exclusion from gross income (for employees) and from wages for employment tax purposes (for employers) for employer payments of student loans. It also provides that the maximum annual exclusion of $5,250 be adjusted annually for inflation after 2026.

In addition, the OBBBA permanently raises the maximum employer-provided child care credit from 25% to 40% of qualified expenses, up to $500,000 per year. (For eligible small businesses, these amounts are 50% and up to $600,000, respectively.) The maximum dollar amount will be adjusted annually for inflation after 2026.

The OBBBA also makes permanent the employer credit for paid family and medical leave (FML) after 2025. Employers will also be allowed to claim the credit for a portion of premiums for paid FML insurance.

Employee Retention Tax Credit

If you filed an Employee Retention Tax Credit claim after January 31, 2024, you may not see your expected refund. The OBBBA bars the IRS from issuing refunds for certain claims submitted after that date. It also gives the IRS at least six years from the date of filing to challenge these claims.

Miscellaneous provisions

The OBBBA increases the limit on the business interest deduction by excluding depreciation, amortization and depletion from the computation of adjusted taxable income (ATI), starting in 2025. The deduction is generally limited to 30% of ATI for the year.

The new law also makes permanent the excess business loss limit, which was set to expire in 2029. And it permanently extends the New Markets Tax Credit, which was scheduled to expire in 2026.

What’s next?

Since the OBBBA is simply extending or making relatively modest modifications to existing tax law, it probably won’t result in the years-long onslaught of new regulations and IRS guidance that followed the TCJA’s enactment. But we’ll keep you informed about any new developments.

The One, Big, Beautiful Bill Act Provides Certainty for Estate Planning

Ever since the Tax Cuts and Jobs Act (TCJA) was signed into law in 2017, estate planners have had to take into account a looming date: January 1, 2026. While the TCJA effectively doubled the unified federal gift and estate tax exemption to $10 million (adjusted annually for inflation), it also required the amount to revert to its pre-TCJA level after 2025, unless Congress extended it. This caused uncertainty for wealthy individuals whose estates may be exposed to gift and estate taxes if the higher exemption amount were to expire.

The One, Big, Beautiful Bill Act, recently signed into law, provides a great deal of certainty for affluent families. Beginning in 2026, it permanently increases the federal gift and estate tax exemption amount to $15 million ($30 million for married couples). The amount will continue to be adjusted annually for inflation. If your estate exceeds, or is expected to exceed, the exemption amount, consider implementing planning techniques today that can help you reduce or avoid gift and estate taxes down the road.

What if you’re not currently ready to give significant amounts of wealth to the next generation? Perhaps you want to hold on to your assets in case your circumstances change in the future.

Fortunately, there are techniques you can use to take advantage of the higher exemption amount while retaining some flexibility to access your wealth should a need arise. Here are two ways to build flexibility into your estate plan.

1. SLATs

If you’re married, a spousal lifetime access trust (SLAT) can be an effective tool for removing wealth from your estate while retaining access to it. A SLAT is an irrevocable trust, established for the benefit of your children or other heirs, which permits the trustee to make distributions to your spouse if needed, indirectly benefiting you as well.

So long as you don’t serve as trustee, the assets will be excluded from your estate and, if the trust is designed properly, from your spouse’s estate as well. For this technique to work, you must fund the trust with your separate property, not marital or community property.

Keep in mind that if your spouse dies, you’ll lose the safety net provided by a SLAT. To reduce that risk, many couples create two SLATs and name each other as beneficiaries. If you employ this strategy, be sure to plan the arrangement carefully to avoid running afoul of the “reciprocal trust doctrine.”

Under the doctrine, the IRS may argue that the two trusts are interrelated and leave the spouses in essentially the same economic position they would’ve been in had they named themselves as life beneficiaries of their own trusts. If that’s the case, the arrangement may be unwound and the tax benefits erased.

2. SPATs

A special power of appointment trust (SPAT) is an irrevocable trust in which you grant a special power of appointment to a spouse or trusted friend. This person has the power to direct the trustee to make distributions to you.

Not only are the trust assets removed from your estate (and shielded from gift taxes by the current exemption), but so long as you are neither a trustee nor a beneficiary, the assets will enjoy protection against creditors’ claims.

Hold on to your assets

These strategies are just two that you can include in your estate plan to take advantage of the newly permanent exemption amount while maintaining control of your assets. Contact FMD for more details.

Businesses can Strengthen Their Financial Positions with Careful AP Management

Running a successful business calls for constantly balancing the revenue you have coming in with the money you must pay out to remain operational and grow. Regarding that second part, careful accounts payable (AP) management is critical to strengthening your company’s financial position.

Proper AP management enables you to maintain strong relationships with vendors, suppliers and other key providers. It also helps ensure you avoid costly mistakes, prevent fraud and maintain a steady cash flow. Underperforming at AP management may hamper your ability to obtain the materials or services you need to operate, damage your business’s reputation, and trigger financial penalties or other losses.

3 building blocks

No matter the size or type of company, most businesses’ AP management rests upon three fundamental building blocks. The first is documentation. You’ve got to accurately track how much your company owes and to whom.

Every invoice must be matched with a purchase order and proof of receipt. Mistakes can be costly in ways that aren’t always obvious. For example, overpaying or double paying invoices drains cash flow unnecessarily, and these amounts can be difficult to recover. Implementing, maintaining and continuously improving a top-notch AP management system helps ensure you know exactly what you owe and when payments are due.

The second building block is control of approvals. Before any invoice is paid, an authorized party in your business — whether it’s you or a trusted manager or other employee — should confirm it’s legitimate and matches the items ordered or services provided. This simple step is crucial to preventing payments for goods or services you never received, as well as to stopping fraud.

The third building block is the timing of payments. Many new business owners want to pay invoices as soon as they arrive. However, doing so can consume liquidity and leave you in a difficult cash flow situation. Of course, waiting too long to pay can strain relationships with creditors, trigger late fees and force your company into suboptimal payment terms down the line. Striking the right balance is key.

Best practices

For small to midsize companies, adhering to just a few best practices can stabilize AP management and set you on a path toward refining your approach over time. Begin by centralizing your AP processes with a secure, consistent system for receiving, recording and approving invoices.

Digitizing your AP records should make them easier to track and reduce the chances that an important invoice or document gets lost. Moreover, the right technology can help you analyze your payables to spot troubling trends or seize opportunities.

AP software enables you to track key metrics over time. One example is days payable outstanding (DPO). It measures how many days it takes your business, on average, to pay creditors. Generally, the formula goes:

DPO = (average AP / cost of goods sold) × 365 days

By regularly monitoring and benchmarking these and other relevant metrics, you can pinpoint optimal timing of payments, better manage cash flow and build your cash reserves.

It’s also worth reiterating the importance of clear, comprehensive and strictly enforced payment approval policies. Carefully vet who within your business has the power to approve invoices. Some companies require more than one person to approve bills exceeding a certain dollar amount.

To help prevent fraud, segregate or rotate duties related to receiving, recording and approving invoices. Regularly reconcile your AP ledger with supporting documentation, such as vendor statements, to catch signs of wrongdoing or errors.

Improve, strengthen, optimize

Many business owners avoid or underemphasize AP management because, let’s face it, no one likes paying the bills. However, allowing this area of your company to languish can lead to any number of financial misfortunes. FMD can review your AP processes and identify ways to improve data capture and efficiency, strengthen internal controls, and optimize payment timing to benefit cash flow.

President Trump Signs His One, Big, Beautiful Bill Act into Law

On July 4, President Trump signed into law the far-reaching legislation known as the One, Big, Beautiful Bill Act (OBBBA). As promised, the tax portion of the 870-page bill extends many of the provisions of the Tax Cuts and Jobs Act (TCJA), the sweeping tax legislation enacted during the first Trump administration. It also incorporates several of President Trump’s campaign pledges, although many on a temporary basis, and pulls back many clean-energy-related tax breaks.

While the OBBBA makes permanent numerous tax breaks, it also eliminates several others, including some that had been scheduled to resume after 2025. Here’s a rundown of some of the key changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning in 2025.

Key changes affecting individuals

• Makes permanent the TCJA’s individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%

• Makes permanent the near doubling of the standard deduction. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers, with annual inflation adjustments going forward

• Makes permanent the elimination of personal exemptions

• Permanently increases the child tax credit to $2,200, with annual inflation adjustments going forward

• Temporarily increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000, with a 1% increase each year through 2029, after which the $10,000 limit will return

• Permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers) but includes mortgage insurance premiums as deductible interest

• Permanently eliminates the deduction for interest on home equity debt

• Permanently limits the personal casualty deduction for losses resulting from federally declared disasters and certain state declared disasters

• Permanently eliminates miscellaneous itemized deductions except for unreimbursed educator expenses

• Permanently eliminates the moving expense deduction (with an exception for members of the military and their families in certain circumstances)

• Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions

• Makes permanent the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts

• Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward

• For 2025–2028, creates an above-the-line deduction (meaning it’s available regardless of whether a taxpayer itemizes deductions) of up to $25,000 for tip income in certain industries, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain American-made vehicles, with income-based phaseouts

• For 2025–2028, creates a bonus deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts

• Limits itemized deductions for taxpayers in the top 37% income bracket, beginning in 2026

• Establishes tax-favored “Trump Accounts,” which will provide eligible newborns with $1,000 in seed money, beginning in 2026

• Makes the adoption tax credit partially refundable up to $5,000, with annual inflation adjustments (no carryforwards allowed)

• Eliminates several clean energy tax credits, generally after 2025, including the clean vehicle, energy-efficient home improvement and residential clean energy credits

• Permanently eliminates the qualified bicycle commuting reimbursement exclusion

• Restricts eligibility for the Affordable Care Act’s premium tax credits

• Creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026

• Imposes a 0.5% floor on charitable contributions for itemizers, beginning in 2026

Key changes affecting businesses

• Makes permanent and expands the 20% qualified business income (QBI) deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships

• Makes permanent 100% bonus depreciation for the cost of qualified new and used assets, for property acquired after January 19, 2025

• Creates a 100% deduction for the cost of “qualified production property” for qualified property placed into service after July 4, 2025, and before 2031

• Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward

• Increases the cap on the business interest deduction by excluding depreciation, amortization and depletion from the calculation of “adjusted taxable income”

• Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses)

• Makes permanent the excess business loss limit

• Prohibits the IRS from issuing refunds for certain Employee Retention Tax Credit claims that were filed after January 31, 2024

• Eliminates clean energy tax incentives, including the qualified commercial clean vehicle credit, the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings

• Permanently renews and enhances the Qualified Opportunity Zone program

• Permanently extends the New Markets Tax Credit

• Permanently increases the maximum employer-provided child care credit to $500,000 ($600,000 for small businesses), with annual inflation adjustments

• Makes permanent and modifies the employer credit for paid family and medical leave

• Makes permanent the exclusion for employer payments of student loans, with annual inflation adjustments to the maximum exclusion beginning in 2027

• Makes permanent the foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deductions and the minimum base erosion and anti-abuse tax (BEAT)

• Expands the qualified small business stock gain exclusion for stock issued after the date of enactment

Buckle up

We’ve only briefly covered some of the most significant OBBBA provisions here. There are additional rules and limits that apply. Note, too, that the OBBBA will require a multitude of new implementing regulations. Turn to us for help navigating the new law and its far-reaching implications to minimize your tax liability.

The U.S. Senate Passes its Version of President Trump’s Tax Bill

The U.S. Senate passed its version of The One, Big, Beautiful Bill (OBBB) by a vote of 51 to 50 on July 1. (Vice President J.D. Vance provided the tiebreaking vote.) At its core, the massive bill is similar to the bill passed by the U.S. House of Representatives last May. It includes extensions of many provisions of the Tax Cuts and Jobs Act (TCJA) currently set to expire on December 31.

Both the House and Senate bills include some new and enhanced tax breaks. For example, they contain President Trump’s pledge to exempt tips and overtime from income tax for eligible taxpayers.

Trump also made a campaign promise to eliminate tax on Social Security benefits. That isn’t included in either version of the bill. However, the Senate bill temporarily provides a $6,000 deduction for those age 65 and older for 2025 through 2028 for those with modified adjusted gross income of under $75,000 ($150,000 for married joint filers). The House bill expands the standard deduction for seniors but caps it at $4,000.

In addition, the Senate’s version of the bill introduces other significant changes, including in the state and local tax (SALT) deduction cap and the Child Tax Credit (CTC).

SALT deduction cap

A major sticking point in both branches of Congress is the SALT deduction cap. It’s currently set at $10,000 by the Tax Cuts and Jobs Act. Lawmakers in high-tax states such as California and New York have long sought to increase (or even repeal) the cap.

The House’s version of the bill proposes to permanently increase the cap to $40,000 for those making under $500,000. The Senate-passed bill also calls for increasing the cap to $40,000 for 2025, with an annual 1% increase through 2029. In 2030, the cap would revert to $10,000. It also calls for phasing out the deduction for individuals who earn more than $500,000 in 2025 and then annually increasing the income amount by 1% through 2029.

Child Tax Credit (CTC)

Under current law, the $2,000 per child CTC is set to drop to $1,000 after 2025. The income phaseout thresholds will also be significantly lower. And the requirement to provide the child’s Social Security number (SSN) will be eliminated.

The House’s version of the OBBB would make the CTC permanent, raise it to $2,500 per child for tax years 2025 through 2028 and retain the higher income phaseout thresholds. It would also preserve the requirement to provide a child’s SSN and expand it to require an SSN for the taxpayer (generally the parent) claiming the credit. After 2028, the CTC would return to $2,000 and be adjusted annually for inflation.

The Senate’s version of the bill would also make the CTC permanent, but would increase it to $2,200, subject to annual inflation increases. It would require SSNs for both the parent claiming the credit and the child.

Next steps

These are just a few of the provisions in the massive tax and spending bill. The proposed legislation is currently back with the House of Representatives for further debate and a vote. President Trump has set a deadline to sign the bill into law by July 4, but it’s currently uncertain if the House can pass the bill in time. Stay tuned.

When Moving Out of State, Review Your Estate Plan

There are numerous factors to consider when you decide to pull up roots and relocate to another state. Your estate plan likely isn’t top of mind, but it’s wise to review and update it when you move across state lines. Let’s take a closer look at a few areas you should consider as you reexamine your estate plan.

Will’s language

Before you begin, know that you won’t have to throw out your existing plan and start from scratch. However, you may need to amend or replace certain documents to ensure they comply with your new state’s laws and continue to meet your estate planning objectives.

Begin by having your estate planning advisor review the text of your will. So long as it was properly drafted according to your previous state’s requirements, it generally will be accepted as valid in most other states.

Nevertheless, it’s important to review your will’s terms to ensure they continue to reflect your wishes. For example, if you’re married and you move from a noncommunity property state to a community property state (or vice versa), your new state’s laws may change the way certain property is owned.

Health care powers of attorney and advance directives

Many estate plans include advance medical directives or health care powers of attorney. Advance directives (often referred to as living wills) communicate your wishes regarding medical care (including life-prolonging procedures) in the event you become incapacitated. Health care powers of attorney appoint a trusted agent or proxy to act on your behalf. Often, the two are combined into a single document. Given the stakes involved, it’s critical to ensure that these documents will be accepted and followed by health care providers in your new state.

Although some states’ laws expressly authorize out-of-state advance directives and powers of attorney, others are silent on the issue, creating uncertainty over whether they’ll be accepted. Regardless of the law in your new state, it’s a good idea to prepare and execute new ones. Most states have their own forms for these documents, with state-specific provisions and terminology. Health care providers in your new state will be familiar with these forms and may be more likely to accept them than out-of-state forms.

Financial powers of attorney

Like wills, out-of-state financial powers of attorney will be accepted as valid in most states. Still, to avoid questions and delays, it’s advisable to execute powers of attorney using your new state’s forms, since banks and other financial service providers will be familiar with them.

Review your plan regardless of your location

When moving out-of-state, reviewing your estate plan can help safeguard your intentions and ensure your loved ones are protected. And even if you’re not moving to a new state, you should review your estate plan regularly to ensure it continues to meet your needs. Contact FMD with questions.

Safe Harbor 401(k)s Offer Businesses a Simpler Route to a Retirement Plan

When many small to midsize businesses are ready to sponsor a qualified retirement plan, they encounter a common obstacle: complex administrative requirements. As a business owner, you no doubt already have a lot on your plate. Do you really want to deal with, say, IRS-mandated testing that could cause considerable hassles and expense?

Well, you may not have to. If that’s the only thing holding you back, consider a safe harbor 401(k) plan. These plans are designed to simplify administration and allow highly compensated employees to contribute the maximum allowable amounts. Of course, you still must read the fine print.

Simple trade-off

Under IRS regulations, traditional 401(k) plans are subject to annual nondiscrimination testing. It includes two specific tests:

1. The actual deferral percentage (ADP) test, and

2. The actual contribution percentage (ACP) test.

Essentially, they ensure that a company’s plan doesn’t favor highly compensated employees over the rest of the staff. If a plan fails the testing, its sponsor may have to return some contributions to highly compensated employees or make additional contributions to other participants to correct the imbalance. In either case, the end result is administrative headaches, unhappy highly compensated employees and unexpected costs for the business.

Safe harbor 401(k)s offer an elegant solution to the conundrum, albeit with caveats of their own. Under one of these plans, the employer-sponsor agrees to make mandatory contributions to participants’ accounts. In exchange, the IRS agrees to waive the annual requirement to perform the ADP and ACP tests.

With nondiscrimination testing off the table, you no longer need to worry about failing either test. And highly compensated employees can max out their contributions. Under IRS rules, these generally include anyone who owns more than 5% of the company during the current or previous plan year or who makes more than $160,000 in 2025 (an amount annually indexed for inflation).

Important caveats

Regarding the caveats we mentioned, the primary one to keep in mind is that you must make compliant contributions to each participant’s account. Generally, you may choose between:

• A nonelective contribution of at least 3% of each eligible participant’s compensation, or

• A qualifying matching contribution, such as 100% of the first 3% of compensation deferred under the plan plus 50% of the next 2% deferred.

There’s also the matter of timing. Let’s say you want to set up and launch a safe harbor 401(k) plan this year. If so, you’ll need to complete all the requisite paperwork and deliver notice to employees by October 1, 2025, and contributions must begin no later than November 1, 2025.

Providing proper notice is critical. You must follow specific IRS rules to adequately inform employees of their rights and accurately describe your required employer contributions.

Potential pitfalls

Perhaps you’ve already spotted the major pitfall of safe harbor 401(k)s. That is, you must commit to making qualifying employer contributions. And once you do, you generally can’t reduce or suspend them without triggering additional IRS requirements or risking plan disqualification. There are exceptions, but qualifying for them is complex and requires careful planning.

In addition, your contributions are immediately 100% vested, and participants own their accounts. That means once you transfer the funds, they belong to participants — even if they leave their jobs.

Bottom line

The bottom line is safe harbor 401(k) plans can be risky for businesses that experience notable cash flow fluctuations throughout the year. However, if you’re able to manage the mandatory contributions, one of these plans may serve as a relatively simple vehicle for amassing retirement funds for you and your employees. FMD can help you evaluate whether a safe harbor 401(k) would suit your company.

4 Reasons Why Avoiding Probate is a Smart Estate Planning Move

When planning your estate, one of the smartest strategies you can adopt is to minimize or avoid probate. Probate is a legal procedure in which a court establishes the validity of your will, determines the value of your estate, resolves creditors’ claims, provides for the payment of taxes and other debts, and transfers assets to your heirs.

While it may sound straightforward, probate can come with several drawbacks that make it worthwhile to avoid when possible. Here are four reasons why.

1. Probate can be time-consuming

Probate proceedings often take months — and sometimes over a year — to resolve. During this period, your beneficiaries may not have access to much-needed funds or property.

The timeline can be extended even further if disputes arise among heirs or if the estate includes complex assets. Avoiding probate allows your loved ones to receive their inheritances much more quickly.

2. Probate can be expensive

Court costs, executor’s and attorneys’ fees, appraisals, and other administrative expenses can consume a portion of your estate — sometimes 5% or more of its total value. By using probate-avoidance tools, for example, a living trust, more of your assets can go directly to your heirs instead of being eaten up by fees.

Indeed, for larger, more complicated estates, a living trust (also commonly called a “revocable” trust) generally is the most effective tool for avoiding probate. A living trust involves some setup costs, but it allows you to manage the disposition of all your wealth in one document while retaining control and reserving the right to modify your plan.

To avoid probate, it’s critical to transfer title to all your assets, now and in the future, to the trust. Assets outside the trust at your death will be subject to probate — unless you’ve otherwise titled them in such a way as to avoid it (or, in the case of life insurance, annuities and retirement plans, you’ve properly designated beneficiaries).

3. Probate is a public process

Bear in mind that anything filed in probate court becomes part of the public record. This means that anyone can discover the details of your estate, including the nature and value of your assets and who has inherited them. Avoiding probate can protect your family’s privacy and shield sensitive information from public view.

4. Probate may result in family disputes

Probate can sometimes create or exacerbate conflict among heirs. Disputes over asset distribution or the validity of a will can lead to lengthy and expensive litigation. Clear estate planning can prevent misunderstandings and ensure your wishes are carried out smoothly.

Not your estate plan’s sole focus

Dealing with the death of a loved one is hard enough without the added burden of navigating the legal complexities of probate. When you structure your estate to bypass the probate process, you ease the administrative burden on your family and give them peace of mind during a difficult time.

However, avoiding probate is just one part of a complete estate plan. Your estate planning advisor can help you develop a strategy that minimizes probate while reducing taxes and achieving your other goals.

Stop Procrastinating and Get to Work on Your Estate Plan

For many people, creating an estate plan falls into the category of important but not urgent. As a result, it can get postponed indefinitely. If you find yourself in this situation, understanding the reasons behind this procrastination can help you recognize and overcome the barriers that are preventing you from taking the first steps toward creating an estate plan.

Multiple reasons for procrastination

A primary reason people delay estate planning is emotional discomfort. Thinking about your death or a disability or becoming incapacitated is unpleasant. Simply put, it can be difficult to confront your mortality or make difficult decisions about who should inherit your assets or serve as guardian of your minor children.

Another reason for delay is that estate planning can seem daunting, especially when people assume it involves complicated legal jargon, multiple professionals and a mountain of paperwork. For those with blended families, business interests or complex financial situations, the process may feel even more overwhelming. Without clear guidance, many people don’t know where to start, so they don’t start at all.

There’s also the mistaken belief that estate planning is only necessary for the wealthy or elderly. Younger individuals or those with modest assets may think they don’t need a plan yet. Additionally, procrastination bias — the tendency to prioritize immediate concerns over future needs — often pushes estate planning to the bottom of the to-do list.

Reasons to motivate yourself

Not having an estate plan in place, especially the basics of a will and health care directives, can have dire tax consequences in the event of an unexpected death or incapacitation. Without a will, your assets will be divided according to state law, regardless of your wishes. This can cause family disputes and lead to legal actions. It can also result in tax liabilities that could have been easily avoided.

There are a few relatively simple documents that can comprise an estate plan. For example, a living will can spell out instructions for end-of-life decisions. A power of attorney can appoint someone to handle your affairs if you’re incapacitated. And a living trust can be used to transfer assets without going through probate.

The bottom line

Procrastinating on estate planning carries real risks — not just for you, but also for your loved ones. Without a proper plan, state laws will determine how your assets will be distributed, often in ways that may not align with your wishes. Contact FMD for help taking the first steps toward forming your estate plan.

Run a More Agile Company with Cross-Training

Agility is key in today’s economy, where uncertainty reigns and businesses must be ready for anything. Highly skilled employees play a huge role in your ability to run an agile company. One way to put them on optimal footing is cross-training.

Multiple advantages

Simply defined, cross-training is teaching employees to understand and perform responsibilities and tasks outside the scope of their primary job duties. It has many advantages, including:

Reducing the impact of absences. The potential reasons for any employee missing work are seemingly countless. A staff member may become sick or disabled, have a baby, take a vacation, get called to active military duty, receive a jury summons, retire, suddenly resign or be terminated. Having someone else on staff ready to jump in and handle key duties can keep your company operating relatively smoothly.

Boosting productivity. If the workload in one area of the business temporarily becomes especially heavy, you can shift staff to ease the situation. Let’s say that, pleasantly enough, your company sees a sudden upswing in sales. Cross-training could enable you to move someone in marketing to accounting to help review invoices.

Gaining fresh perspectives. Putting a new set of eyes on any business process or procedure never hurts. Employees who fill in for colleagues on a short-term basis may catch something wrong or develop an idea that improves operations.

Going back to our previous example, say that the marketing staff member temporarily working in accounting notices that your company’s invoices look outdated and contain confusing wording. As a result, you ask for that person’s input and undertake a wider initiative to redesign your invoices. Ultimately, collections improve because customers can more easily read their bills.

Strengthening internal controls. Cross-training is also an essential internal control. This is particularly true in your accounting department but may apply to information technology, production and other areas as well. Ensuring one person’s job is periodically performed by someone else can prevent fraud. In fact, when coupled with mandatory vacations, cross-training is a major deterrent because potential fraudsters know that co-workers will be doing their jobs and could catch their crimes.

Career development

When “selling” cross-training to your staff, emphasize how it’s good for them, too. Learning new things broadens employees’ skill sets and experience levels. Help them understand this by explaining whether each staff member’s cross-training is “vertical” or “horizontal.”

If the task learned is vertical, it requires more responsibility or skill than that employee’s normal duties. Thus, vertical cross-training encourages employees to feel more valuable to the business. (And you know what? They are!)

If the task calls for the same level of responsibility or skill as an employee’s routine duties, it’s considered horizontal. This type of cross-training widens employees’ understanding of their departments or the company. Plus, horizontal cross-training builds camaraderie and is often a welcome change of pace.

Risks to consider

Although generally a good business practice, cross-training has some risks you should consider. First, not everyone is a prime candidate for it. If possible, pick employees who show an interest in working outside their stated roles and are open to change.

Important: You may want to require cross-training as an internal control for some positions. This is usually a good idea for jobs involving financial management, sensitive data or high-value customers.

Second, be cognizant of employees’ workloads and stress levels. Relying too much on cross-training can lead to burnout and lower morale. Also, decide whether and how cross-training should affect compensation. Some companies use incentives or profit sharing to build buy-in.

Slowly and carefully

If your business has yet to try cross-training, starting slowly is typically best. Discuss the concept with your leadership team and identify which positions are well suited for it. Then design a formal strategy for picking the employees involved, carrying out the training and monitoring the results. FMD can help you identify all the costs associated with developing and managing staff performance.

An Employee Stock Ownership Plan can be a Versatile Business Exit and Estate Planning Tool

As a closely held business owner, a substantial amount of your wealth likely is tied to the business. Of course, you want to retain as much of that wealth as possible to pass on to your family after you exit the business. If your business is structured as a corporation, the answer may be an employee stock ownership plan (ESOP). It can enhance tax efficiency, support business succession goals and help preserve wealth for future generations.

An ESOP in action

An ESOP is a qualified retirement plan that invests primarily in your company’s stock. ESOPs must comply with the same rules and regulations as other qualified plans, and they’re subject to similar contribution limits and other requirements.

One requirement that’s unique to ESOPs is the need to have the stock valued annually by an independent appraiser. Also, by definition, ESOPs are available only to corporations. Both C corporations and S corporations are eligible.

In a typical ESOP arrangement, the company makes tax-deductible cash contributions to the plan, which uses those funds to acquire some or all of the current owners’ stock. Alternatively, with a “leveraged” ESOP, the plan borrows the money needed to buy the stock and the company makes tax-deductible contributions to cover the loan payments.

As with other qualified plans, ESOP participants enjoy tax-deferred earnings. They pay no tax until they receive benefits, in the form of cash or stock, when they retire or leave the company. Participants who receive closely held stock have a “put option” to sell it back to the company at fair market value during a limited time window.

ESOP benefits

ESOPs offer many benefits for owners, companies and employees alike. Benefits for owners include:

Liquidity and diversification. An ESOP creates a market for your stock. By selling some or all of your stock to the plan, you can achieve greater liquidity and diversification, enhancing your financial security and estate planning flexibility. Acquiring a wider variety of nonbusiness assets with the sale proceeds can make it easier to share your wealth with loved ones, especially those who aren’t interested in participating in the business.

Tax advantages. If your company is a C corporation and the ESOP acquires at least 30% of its stock, it’s possible to defer capital gains on the sale of your stock by reinvesting the proceeds in qualified replacement securities. You can even avoid capital gains tax permanently by holding the replacement securities for life.

Control. Unlike certain other exit strategies, an ESOP allows you to tap your equity in the company without immediately giving up management control. You can continue to act as a corporate officer and, if you serve as the ESOP’s trustee, you’ll retain the right to vote the trust’s shares on most corporate decisions.

The company can benefit because its contributions to the plan are tax deductible. With a leveraged ESOP, the company essentially deducts both interest and principal on the loan. And, of course, both the company and its employees gain from the creation of an attractive employee benefit, one that provides a powerful incentive for employees to stay with the company and contribute to its success.

Beware of an ESOP’s cost

An ESOP can be a powerful estate planning tool for closely held business owners, but it’s important to consider the costs. In addition to the usual costs associated with setting up and maintaining a qualified plan, there are also annual stock valuation costs. Contact FMD to learn more about pairing an ESOP with your estate plan.

Business Owners Can Rest Easier with Sound Cash Flow Management

Slow cash flow is one of the leading causes of insomnia for business owners. Even if sales are strong, a lack of liquidity to pay bills and cover payroll can cause more than a few sleepless nights. The good news is that you can rest easier by exercising sound cash flow management.

Scrutinize your cycles

Broadly speaking, nearly every business — no matter what it does — has two cycles that determine how the dollars flow. These are:

1. The selling cycle. This is how long it takes your business to:

• Develop a product or service,

• Market it, and

• Produce the product or service, close a sale, and collect the revenue.

Good accounts receivable processes — from clearly and accurately invoicing to implementing online payment methods for faster access to money — are a major aspect of cash flow management.

Less experienced business owners often underestimate the length of the selling cycle. Many a start-up has been launched with a budding entrepreneur believing the company could get its wares to market, close deals and earn revenue quickly. Grim reality usually followed.

However, even business owners who’ve been around for a while can miss changes to their selling cycles. Regular customers on whom the company depends may start taking longer to pay, or a key employee might jump ship and be hard to replace. Inefficiencies such as these are often exposed when economic conditions deteriorate.

2. The disbursements cycle. This is how your business manages regular payments to employees, vendors, creditors (including short- and long-term financing) and other parties. As payments go out, cash flow is obviously affected.

Track the timing

The selling and disbursements cycles aren’t separate functions; they overlap. But if they don’t do so evenly, delayed cash inflows can create a crisis. You want them to match as evenly as possible. Or better yet, you want to convert sales to cash more quickly than you’re paying expenses.

How can you keep tabs on it all? First, study your statement of cash flows whenever your company’s financial statements are generated. But do more than that. Regularly create cash flow statements. Despite their similar-sounding name, these reports are run more frequently — usually monthly or quarterly. You can also use financial software to set up a digital dashboard that displays weekly or even daily cash flow metrics.

Take control

If you see warning signs of an imminent cash crunch, consider these options to better control the potential crisis:

Slow down growth. Rapid growth can be both a blessing (you’re selling more) and a curse (you’re spending more on production). Cash shortages often result from a substantial mismatch between the selling and disbursement cycles, which can easily occur during high-growth periods. Out-of-control growth can also impair quality, which, in turn, sours relationships with customers and hurts your company’s reputation in the marketplace.

Review expenses. Sometimes, you can lower monthly cash outflows by converting costs from fixed to variable. Fixed expenses include mortgage or lease payments, payroll, and insurance. When an employee quits, consider using an independent contractor to fill the position. Or if a key piece of equipment breaks, explore leasing rather than purchasing. In addition, review your company’s tax planning strategies. A lower tax bill can make a big difference in cash flow.

Address asset management. How much money are you making for each dollar that’s invested in working capital, equipment and other assets? By monitoring turnover ratios, you may be able to identify and reduce weaknesses in asset management. For example, an increase in “days outstanding” in accounts receivable might improve with tighter credit policies, early-bird discounts or incentives for employees who handle collections.

Essential skills

Strong cash flow management skills are essential to running a successful business. FMD can review your sales and disbursement cycles, improve your financial reporting, and identify ways to manage your company’s cash better.

How The One, Big, Beautiful Bill Proposes to Change the Gift and Estate Tax Exemption

The Tax Cuts and Jobs Act (TCJA) effectively doubled the unified federal gift and estate tax exemption — and annual inflation adjustments have boosted it even further. For individuals who make gifts or die in 2025, the exemption amount is $13.99 million ($27.98 million for married couples).

Under the TCJA, the exemption amount is scheduled to revert to the pre-TCJA level after 2025, unless Congress extends it. This has caused uncertainty for wealthy individuals whose estates may be exposed to gift and estate taxes if the higher exemption were to expire after 2025.

The good news is that Congress has finally taken steps to address this expiring tax provision (among many others). The U.S. House of Representatives passed The One, Big, Beautiful Bill in May. Under the proposed bill, beginning in 2026, the federal gift and estate tax exemption would be permanently increased to $15 million ($30 million for married couples). That amount would continue to be annually adjusted for inflation.

Gift and estate tax exemption basics

Under the TCJA, the federal gift and estate tax exemption increased from $5 million to $10 million per individual, with annual indexing for inflation. Taxable estates that exceed the exemption amount have the excess taxed at up to a 40% rate. In addition, cumulative lifetime taxable gifts that exceed the exemption amount are taxed at up to a 40% rate.

Under the annual gift tax exclusion, you can exclude certain gifts of up to the annual exclusion amount ($19,000 per recipient for 2025) without using up any of your gift and estate tax exemption. If you make gifts in excess of what can be sheltered with the annual gift tax exclusion amount, the excess reduces your lifetime federal gift and estate tax exemption dollar-for-dollar.

Under the unlimited marital deduction, transfers between spouses are federal-estate-and-gift-tax-free. But the unlimited marital deduction is available only if the surviving spouse is a U.S. citizen.

Next steps

The proposed legislation is now being considered by the Senate. It’s likely to change (perhaps significantly) before the Senate votes on it. If there are changes, it’ll then go back to the House for a vote before being sent to President Trump for his signature.

In addition to disagreements about the bill’s tax provisions, there are Senators who don’t agree with some of the spending cuts. Regardless, changes to the estate tax rules are expected this year. Contact FMD to learn how these potential changes could affect your estate plan.

Mission and Vision Statements Help Businesses Rise Above the Din

Many of today’s businesses operate in a cacophonous marketplace. Everyone is out blasting emails, pushing notifications and proclaiming their presence on social media. Where does it all leave your customers and prospects? Quite possibly searching for a clear perception of your company.

One way — well, two ways — to rise above the din is to craft a mission statement and a vision statement. Although they may seem like superfluous marketing exercises to some, these two statements can help clarify your identity to customers and prospects. They can also matter to lenders, investors, the news media and job candidates.

Why you’re here

Let’s start with the mission statement. Its purpose is to express to the world why you’re in business, what you’re offering and whom you’re looking to serve. For example, the U.S. Department of Labor has this as its mission statement:

To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

Forget flowery language and industry jargon. Write in clear, simple, honest terms. Keep the statement brief, a paragraph at most. Answer questions that any interested party would likely ask. Why did your company go into business? What makes your products or services worth buying? Who’s your target market?

You know the answers to these questions. But distilling them into a clear, concise mission statement can do more than raise your visibility in the marketplace. It may also help renew your commitment to your original or actual mission or reveal where you’ve gotten off track.

With a mission statement in place, you can engage in more focused strategic planning. Moreover, it helps boost employee engagement, serving as a driving philosophy for everyone. And as mentioned, the right mission statement really is a marketing asset: It tells the buying public precisely who you are.

Where you’re going

So, what does a vision statement do? It tells interested parties where you’re going; that is, what you want to accomplish.

A vision statement should be even briefer than your mission statement. Think of it as a tagline for a movie or even an advertising slogan. You want to deliver a memorable quote that will get readers’ attention and let them know you’re moving into a future where you’ll provide the highest quality products and services in your industry.

Whereas a mission statement is anchored in the present, a vision statement focuses on the horizon. For instance, the mission statement of the Alzheimer’s Association is:

The Alzheimer’s Association leads the way to end Alzheimer’s and all other dementia — by accelerating global research, driving risk reduction and early detection, and maximizing quality care and support.

But its vision statement is simply: “A world without Alzheimer’s and all other dementia.”

Create a vision statement that’s a rallying cry for your company. Don’t be afraid to be aspirational, bold and appeal to people’s emotions. Remember, this isn’t where you are, it’s where you intend to go.

How to proceed

Creating mission and vision statements can be a fun, creative way to unite a company. If you already have both, well done! But don’t forget that you can still revisit and refine the language. And if you ever decide to do a major marketplace pivot or even undergo a business transformation, you’ll likely want to rewrite your mission and vision statements entirely.

The House Passes The One, Big, Beautiful Bill Act: An Overview of its Tax Provisions

The U.S. House of Representatives passed its sweeping tax and spending bill, dubbed The One, Big, Beautiful Bill Act (OBBBA), by a vote of 215 to 214. The bill includes extensions of many provisions of the Tax Cuts and Jobs Act (TCJA) that are set to expire on December 31. It also includes some new and enhanced tax breaks. For example, it contains President Trump’s pledge to exempt tips and overtime from income tax.

The bill has now moved to the U.S. Senate for debate, revisions and a vote. Several senators say they can’t support the bill as written and vow to make changes.

Here’s an overview of the major tax proposals included in the House OBBBA.

Business tax provisions

The bill includes several changes that could affect businesses’ tax bills. Among the most notable:

Bonus depreciation. Under the TCJA, first-year bonus depreciation has been phasing down 20 percentage points annually since 2023 and is set to drop to 0% in 2027. (It’s 40% for 2025.) Under the OBBBA, the depreciation deduction would reset to 100% for eligible property acquired and placed in service after January 19, 2025, and before January 1, 2030.

Section 199A qualified business income (QBI) deduction. Created by the TCJA, the QBI deduction is currently available through 2025 to owners of pass-through entities — such as S corporations, partnerships and limited liability companies (LLCs) — as well as to sole proprietors and self-employed individuals. QBI is defined as the net amount of qualified items of income, gain, deduction and loss that are effectively connected with the conduct of a U.S. business. The deduction generally equals 20% of QBI, not to exceed 20% of taxable income. But it’s subject to additional rules and limits that can reduce or eliminate the tax benefit. Under the OBBBA, the deduction would be made permanent. Additionally, the deduction amount would increase to 23% for tax years beginning after 2025.

Domestic research and experimental expenditures. The OBBBA would reinstate a deduction available to businesses that conduct research and experimentation. Specifically, the deduction would apply to research and development costs incurred after 2024 and before 2030. Providing added flexibility, the bill would allow taxpayers to elect whether to deduct or amortize the expenditures. (The requirement under current law to amortize such expenses would be suspended while the deduction is available.)

Section 179 expensing election. This tax break allows businesses to currently deduct (rather than depreciate over a number of years) the cost of purchasing eligible new or used assets, such as equipment, furniture, off-the-shelf computer software and qualified improvement property. An annual expensing limit applies, which begins to phase out dollar-for-dollar when asset acquisitions for the year exceed the Sec. 179 phaseout threshold. (Both amounts are adjusted annually for inflation.) The OBBBA would increase the expensing limit to $2.5 million and the phaseout threshold to $4 million for property placed into service after 2024. The amounts would continue to be adjusted annually for inflation. (Under current law, for 2025, the expensing limit is $1.25 million and the phaseout threshold is $3.13 million.)

Pass-through entity “excess” business losses. The Inflation Reduction Act, through 2028, limits deductions for current-year business losses incurred by noncorporate taxpayers. Such losses generally can offset a taxpayer’s income from other sources, such as salary, interest, dividends and capital gains, only up to an annual limit. “Excess” losses are carried forward to later tax years and can then be deducted under net operating loss rules. The OBBBA would make the excess business loss limitation permanent.

Individual tax provisions

The OBBBA would extend or make permanent many individual tax provisions of the TCJA. Among other things, the new bill would affect:

Individual income tax rates. The OBBBA would make permanent the TCJA income tax rates, including the 37% top individual income tax rate. If a new law isn’t enacted, the top rate would return to 39.6%.

Itemized deduction limitation. The bill would make permanent the repeal of the Pease limitation on itemized deductions. But it would impose a new limitation on itemized deductions for taxpayers in the 37% income tax bracket that would go into effect after 2025.

Standard deduction. The new bill would temporarily boost standard deduction amounts. For tax years 2025 through 2028, the amounts would increase $2,000 for married couples filing jointly, $1,500 for heads of households and $1,000 for single filers. For seniors age 65 or older who meet certain income limits, an additional standard deduction of $4,000 would be available for those years. (Currently, the inflation-adjusted standard deduction amounts for 2025 are $30,000 for joint filers, $22,500 for heads of households and $15,000 for singles.)

Child Tax Credit (CTC). Under current law, the $2,000 per child CTC is set to drop to $1,000 after 2025. The income phaseout thresholds will also be significantly lower. And the requirement to provide the child’s Social Security number (SSN) will be eliminated. The OBBBA would make the CTC permanent, raise it to $2,500 per child for tax years 2025 through 2028 and retain the higher income phaseout thresholds. It would also preserve the requirement to provide a child’s SSN and expand it to require an SSN for the taxpayer (generally the parent) claiming the credit. After 2028, the CTC would return to $2,000 and be adjusted annually for inflation.

State and local tax (SALT) deduction. The OBBBA would increase the TCJA’s SALT deduction cap (which is currently set to expire after 2025) from $10,000 to $40,000 for 2025. The limitation would phase out for taxpayers with incomes over $500,000. After 2025, the cap would increase by 1% annually through 2033.

Miscellaneous itemized deductions. Through 2025, the TCJA suspended deductions subject to the 2% of adjusted gross income (AGI) floor, such as certain professional fees and unreimbursed employee business expenses. This means, for example, that employees can’t deduct their home office expenses. The OBBBA would make the suspension permanent.

Federal gift and estate tax exemption. Beginning in 2026, the bill would increase the federal gift and estate tax exemption to $15 million. This amount would be permanent but annually adjusted for inflation. (For 2025, the exemption amount is $13.99 million.)

New tax provisions

On the campaign trail, President Trump proposed several tax-related ideas. The OBBBA would introduce a few of them into the U.S. tax code:

No tax on tips. The OBBBA would offer a deduction from income for amounts a taxpayer receives from tips. Tipped workers wouldn’t be required to itemize deductions to claim the deduction. However, they’d need a valid SSN to claim it. The deduction would expire after 2028. (Note: The Senate recently passed a separate no-income-tax-on-tips bill that has different rules. To be enacted, the bill would have to pass the House and be signed by President Trump.)

No tax on overtime. The OBBBA would allow workers to claim a deduction for overtime pay they receive. Like the deduction for tip income, taxpayers wouldn’t have to itemize deductions to claim the write-off but would be required to provide an SSN. Also, the deduction would expire after 2028.

Car loan interest deduction. The bill would allow taxpayers to deduct interest payments (up to $10,000) on car loans for 2025 through 2028. Final assembly of the vehicles must take place in the United States, and there would be income limits to claim the deduction. Both itemizers and nonitemizers would be able to benefit.

Charitable deduction for nonitemizers. Currently, taxpayers can claim a deduction for charitable contributions only if they itemize on their tax returns. The bill would create a charitable deduction of $150 for single filers and $300 for joint filers for nonitemizers.

What’s next?

These are only some of the provisions in the massive House bill. The proposed legislation is likely to change (perhaps significantly) as it moves through the Senate and possibly back to the House. In addition to disagreements about the tax provisions, there are Senators who don’t agree with some of the spending cuts. Regardless, tax changes are expected this year. Turn to FMD for the latest developments.

From the Simple to the Complex: 6 Strategies to Protect Your Wealth from Lawsuits and Creditors

Asset protection is a strategic approach to safeguarding your wealth from potential lawsuits and creditor claims. Indeed, protecting your assets is critical in today’s litigious environment. Without proper planning, a single lawsuit or debt issue could jeopardize years of financial progress. The last thing you want to happen is to lose a portion of your wealth, thus having less to pass on to your heirs, potentially jeopardizing their livelihoods.

6 asset protection techniques

Fortunately, there are legally sound strategies to shield your property, investments and other valuable assets from such risks. Here are six of them, ranging from simple to complex:

1. Give away assets. If you’re willing to part with ownership, a simple yet highly effective way to protect assets is to give them to your spouse, children or other family members. This can be achieved by making outright gifts or establishing an irrevocable trust, taking into account the current federal gift and estate tax exemption amount. After all, litigants or creditors can’t go after assets you don’t own (provided the gift doesn’t run afoul of fraudulent conveyance laws). Choose the recipients carefully, however, to be sure you don’t expose the assets to their creditors’ claims.

2. Retitle assets. Another simple but effective technique is to retitle property. For example, the law in many states allows married couples to hold a residence or certain other property as “tenants by the entirety,” which protects the property against either spouse’s individual creditors. It doesn’t, however, provide any protection from a couple’s joint creditors.

3. Buy insurance. Insurance is an important line of defense against potential claims that can threaten your assets. Depending on your circumstances, it may include personal or homeowner’s liability insurance, umbrella policies, errors and omissions insurance, or liability or malpractice insurance.

4. Set up an LLC or FLP. Transferring assets to a limited liability company (LLC) or family limited partnership (FLP) can be an effective way to share wealth with your family while retaining control over the assets. These entities are particularly valuable for holding business interests, though they can also be used for real estate and other assets.

To take advantage of this strategy, set up an LLC or FLP, transfer assets to the entity and then transfer membership or limited partnership interests to yourself and other family members. Not only does this facilitate the transfer of wealth, but it also provides significant asset protection to the members or limited partners, whose personal creditors generally can’t reach the entity’s assets.

5. Establish a DAPT. A domestic asset protection trust (DAPT) may be an attractive vehicle because, although it’s irrevocable, it provides you with creditor protection even if you’re a discretionary beneficiary. DAPTs are permitted in around one-third of the states, but you don’t necessarily have to live in one of those states to take advantage of a DAPT. However, you’ll probably have to locate some or all of the trust assets in a DAPT state and retain a bank or trust company in that state to administer the trust.

6. Establish an offshore trust. For greater certainty, consider an offshore trust. These trusts are similar to DAPTs, but they’re established in foreign countries with favorable asset protection laws. Although offshore trusts are irrevocable, some countries allow a trust to become revocable after a specified time, enabling you to retrieve the assets when the risk of loss has abated.

A word of warning

Keep in mind that asset protection isn’t intended to help you avoid your financial responsibilities or evade legitimate creditors. Federal and state fraudulent conveyance laws prohibit you from transferring assets (to a trust or another person, for example) with the intent to hinder, delay or defraud existing or foreseeable future creditors. And certain types of financial obligations — such as taxes, alimony or child support — may be difficult or impossible to avoid.

If you want to implement asset protection strategies, don’t hesitate to contact FMD. We can explain your options.