Shining a Light on Your Business’s Brand

Your business’s brand is more than just a logo or tagline. It represents the culmination of everything you’ve accomplished to date, as well as a promise to uphold the reputation you’ve established.

But that doesn’t mean your brand has to remain static. In fact, it may need a refresh as your company grows, markets evolve and customer expectations change. The only way to know for sure is to occasionally shine a light on your brand to determine whether it’s still optimally visible to the people you want to reach.

Locate yourself

When reassessing your brand, first locate where your company stands today. Consider its strengths and how they’ve evolved over time — or very recently. Maybe you’ve pivoted over the last several years to address changing economic or market conditions. Look for strong suits such as:

• Notable excellence in product or service design,

• Exceptional customer service,

• Providing superior value for your price points, and

• Innovation in your industry.

You need to match your business’s mission, vision and strengths to the needs and wants of the market you serve — and express that through your brand. To that end, ask current customers what they like about doing business with you. And survey both customers and prospects about what they consider when making buying decisions.

Pinpoint your personality

If you look at any widely known brand, you’ll see a logo and broader branding effort that conveys a certain personality. Some companies want to appear creative and playful; others want to communicate stability and security.

What personality will draw customers to your business? You may think every company in your industry has the same target audience. If that’s true, you must come up with an edge that differentiates your business from its rivals.

Your company may have various points of contact with customers, such as business cards, print advertisements and catalogs, and your website’s home page and social media accounts. All play a role in your brand’s personality.

Review what your company does at each contact point, considering whether and how these efforts accurately and effectively represent the business’s core values and emphasize its strengths. Doing so will give you more insight into the best way to portray your personality through your brand.

Check up on the competition

Of course, competitors have brands all their own — and they’re after your target audience. So, in creating or refining your brand, you’ll need to identify their tactics and develop countermeasures.

To do so, engage in competitive intelligence. This simply means ethically and legally gathering information on their latest products or services, pricing and special offers, marketing and advertising methods, and social media activities.

In some cases, you may discover that a full rebranding campaign is necessary to differentiate your business from the competition. For example, let’s say a major player has entered your market and you’re worried about visibility, or perhaps your brand is blurring with another company’s.

Stand out

Branding is an ongoing process of reflecting on your company’s identity and refining how you present it to the world. By building on your strengths, expressing a clear and consistent personality, and keeping a close eye on competitors, your business can stand out in a crowded marketplace. Let FMD help you evaluate branding from a cost-planning perspective to ensure that any chosen strategy aligns with your budget and strategic goals.

Receivables Rx: Key Metrics to Assess the Health of your Cash Flow

For many businesses, accounts receivable (AR) is one of the largest assets on the balance sheet. It represents the cash you’ve earned but haven’t yet collected. Efficient AR management is critical for maintaining healthy cash flow, reducing bad debt and fueling growth. But a key question often goes unasked: How do your company’s receivables compare to others in your industry? This is where benchmarking comes in.

Why benchmarking matters

Benchmarking is the process of comparing your company’s financial and operational metrics against those of peers in your industry. For receivables, benchmarking helps determine whether your collections practices, customer credit policies and cash management strategies align with competitors. The key is to use data from businesses that closely resemble your own in terms of size, customer base and industry segment.

Without context, an AR balance or ratio can be misleading. For example, collecting in 45 days might sound reasonable. However, if the industry average is 30 days, you’re financing your customers longer than your competitors are, potentially straining your liquidity. Benchmarking provides a reality check, highlighting areas where you may be lagging and where improvements could quickly boost cash flow.

3 diagnostic tools

There are three primary tools you can use to monitor how well your company manages receivables:

1. AR turnover ratio. This ratio is computed by dividing net credit sales by your average AR balance. The average balance equals the sum of your beginning and ending AR balances, divided by two. This ratio measures how many times, on average, receivables are collected during a period. A higher turnover suggests more efficient collections. When compared to industry data, it can reveal whether your business is converting receivables to cash as quickly as your peers.

2. DSO ratio. A more intuitive way to evaluate AR is to estimate the average days it takes to collect payment after a sale. The days’ sales outstanding (DSO) ratio equals the number of days in the period divided by the AR turnover ratio. For example, if your AR turns 10 times per year, your DSO ratio would be approximately 36.5 days (365 divided by 10). A lower DSO ratio generally means faster collections. If your DSO is higher than industry benchmarks, it could signal overly generous credit terms or collections inefficiencies.

3. AR aging report. This report categorizes receivables based on how long they’ve been outstanding. It breaks down the total balance into aging buckets, such as 0 to 30 days, 31 to 60 days, 61 to 90 days and over 90 days. Benchmarking your percentages in each bucket against industry norms helps identify whether overdue accounts are a common issue in your sector or a problem specific to your business’s collections practices.

The percentage of delinquent accounts (typically those over 90 days outstanding) is another critical number. You may decide to outsource these accounts to third-party collectors to eliminate the hassles of making collections calls and threatening legal actions to collect what you’re owed.

Fraud considerations

Although fraud in accounts receivable is uncommon relative to day-to-day operational challenges, when it does arise it most often involves lapping of customer payments, fictitious customer accounts, or the misclassification of personal expenses through the business. These schemes are not typically identified through standard AR benchmarking tools, but if irregularities are suspected, our forensic accounting team has the expertise and resources to conduct a thorough investigation and safeguard your organization.

Turning insights into action

Benchmarking isn’t just about spotting differences — it’s about acting on them. FMD can help evaluate your company’s AR management, including providing reliable industry-specific benchmarks, brainstorming practical strategies to shorten your collections cycle and investigating any suspicious trends. Contact us for more information.

How will the Changes to the SALT Deduction Affect your Tax Planning?

The One Big Beautiful Bill Act (OBBBA) shifts the landscape for federal income tax deductions for state and local taxes (SALT), albeit temporarily. If you have high SALT expenses, the changes could significantly reduce your federal income tax liability. But it requires careful planning to maximize the benefits — and avoid potential traps that could increase your effective tax rate.

A little background

Less than a decade ago, eligible SALT expenses were generally 100% deductible on federal income tax returns if an individual itemized deductions. This provided substantial tax savings to many taxpayers in locations with higher income or property tax rates (or higher home values).

Beginning in 2018, the Tax Cuts and Jobs Act (TCJA) put a $10,000 limit on the deduction ($5,000 for married couples filing separately). This SALT cap was scheduled to expire after 2025.

What’s new?

Rather than letting the $10,000 cap expire or immediately making it permanent, Congress included a provision in the OBBBA that temporarily quadruples the limit. Beginning in 2025, taxpayers can deduct up to $40,000 ($20,000 for separate filers), with 1% increases each subsequent year. Then in 2030, the OBBBA reinstates the $10,000 cap.

While the higher limit is in place, it’s reduced for taxpayers with incomes above a certain level. The allowable deduction drops by 30% of the amount by which modified adjusted gross income (MAGI) exceeds a threshold amount. For 2025, the threshold is $500,000; when MAGI reaches $600,000, the previous $10,000 cap applies. (These amounts are halved for separate filers.) The MAGI threshold will also increase 1% each year through 2029.

Deductible SALT expenses include property taxes (for homes, vehicles and boats) and either income tax or sales tax, but not both. If you live in a state without income taxes or opt for the sales tax route for another reason, you don’t have to save all your receipts for the year and manually calculate your sales tax; you can use the IRS Sales Tax Deduction Calculator to determine the amount of sales tax you can claim. (It includes the ability to add actual sales tax paid on certain big-ticket items, such as a vehicle.) The increased SALT cap could lead to major tax savings compared with the $10,000 cap. For example, a single taxpayer in the 35% tax bracket with $40,000 in SALT expenses and MAGI below the threshold amount would save an additional $10,500 [35% × ($40,000 − $10,000)].

The calculation would be different if the taxpayer’s MAGI exceeded the threshold. Let’s say MAGI is $560,000, which is $60,000 over the 2025 threshold. The cap would be reduced by $18,000 (30% × $60,000), leaving a maximum SALT deduction of $22,000 ($40,000 − $18,000). Even reduced, that’s more than twice what would be permitted under the $10,000 cap.

The itemization decision

The SALT deduction is available only to taxpayers who itemize their deductions. The TCJA nearly doubled the standard deduction. As a result of that change and the $10,000 SALT cap, the number of taxpayers who itemize dropped substantially. And, under the OBBBA, the standard deduction is even higher — for 2025, it’s $15,750 for single and separate filers, $23,625 for heads of household filers, and $31,500 for joint filers.

But the higher SALT cap might make it worthwhile for some taxpayers who’ve been claiming the standard deduction post-TCJA to start itemizing again. Consider, for example, a taxpayer who pays high state income tax. If that amount combined with other itemized deductions (generally, certain medical and dental expenses, home mortgage interest, qualified casualty and theft losses, and charitable contributions) exceeds the applicable standard deduction, the taxpayer will save more tax by itemizing.

Beware the “SALT torpedo”

Taxpayers whose MAGI falls between $500,000 and $600,000 and who have large SALT expenses should be aware of what some are calling the “SALT torpedo.” As your income climbs into this range, you don’t just add income. You also lose part of the SALT deduction, increasing your taxable income further.

Let’s say your MAGI is $600,000, you have $40,000 in SALT expenses and you have $35,000 in other itemized deductions. The $100,000 increase in income from $500,000 actually raises your taxable income by $130,000:

MAGI	$500,000	$600,000
SALT deduction	$40,000	$10,000
Other itemized deductions	$35,000	$35,000
Total itemized deductions	$75,000	$45,000
Taxable income	$425,000	$555,000

At a marginal tax rate of 35%, you’ll pay $45,500 (35% × $130,000) in additional taxes, for an effective tax rate of 45.5%.

In this scenario, even with your SALT deduction reduced to $10,000, you’d benefit from itemizing. But if your $10,000 SALT deduction plus your other itemized deductions didn’t exceed your standard deduction, the standard deduction would save you more tax.

Tax planning tips

Your MAGI plays a large role in the amount of your SALT deduction. If it’s nearing the threshold that would reduce your deduction or already over it, you can take steps to stay out of the danger zone. For example, you could make or increase (up to applicable limits) pre-tax 401(k) plan and Health Savings Account contributions to reduce your MAGI. If you’re self-employed, you may be able to set up or increase contributions to a retirement plan that allows you to make even larger contributions than you could as an employee, which also would reduce your MAGI.

Likewise, you want to avoid moves that increase your MAGI, like Roth IRA conversions, nonrequired traditional retirement plan distributions and asset sales that result in large capital gains. Bonuses, deferred compensation and equity compensation could push you over the MAGI threshold, too. Exchange-traded funds may be preferable to mutual funds because they don’t make annual distributions.

At the same time, because the higher cap is temporary, you may want to try to maximize the SALT deduction every year it’s available. If your SALT expenses are less than $40,000 and your MAGI is below the reduction threshold for 2025, for example, you might pre-pay your 2026 property tax bill this year. (This assumes the amount has been assessed — you can’t pre-pay based only on your estimate.)

Uncertainty over PTETs

In response to the TCJA’s $10,000 SALT cap, 36 states enacted pass-through entity tax (PTET) laws to help the owners of pass-through entities, who tend to pay greater amounts of state income tax. The laws vary but typically allow these businesses to pay state income tax at the entity level, where an unlimited amount can be deducted as a business expense, rather than at the owner level, where a deduction would be limited by the SALT cap.

The OBBBA preserves these PTET workarounds, and PTET elections may remain worthwhile for some pass-through entities. An election could reduce an owner’s share of self-employment income or allow an owner to take the standard deduction.

Bear in mind, though, that some states’ PTET laws are scheduled to expire after 2025, when the TCJA’s $10,000 cap was set to expire absent congressional action. There’s no guarantee these states will renew their PTETs in their current form, or at all.

SALT deduction and the AMT

It’s worth noting that SALT expenses aren’t deductible for purposes of the alternative minimum tax (AMT). A hefty SALT deduction could have the unintended effect of triggering the AMT, particularly after 2025.

Individual taxpayers are required to calculate their tax liability under both the regular federal income tax and the AMT and pay the higher amount. Your AMT liability generally is calculated by adding back about two dozen “preference and adjustment items” to your regular taxable income, including the SALT deduction.

The TCJA increased the AMT exemption amounts, as well as the income levels for the phaseout of the exemptions. For 2025, the exemption amount for singles and heads of households is $88,100; it begins to phase out when AMT income reaches $626,350. For joint filers for 2025, the exemption amount is $137,000 and begins to phase out at $1,252,700 of AMT income.

The OBBBA makes these higher exemptions permanent, but for joint filers it sets the phaseout threshold back to its lower 2018 level beginning in 2026 — $1 million, adjusted annually for inflation going forward. (It doesn’t call for this change for other filers, which might be a drafting error. A technical correction could be released that would also return the phaseout thresholds to 2018 levels for other filers.)

The OBBBA also doubles the rate at which the exemptions phase out. These changes could make high-income taxpayers more vulnerable to the AMT, especially if they have large SALT deductions.

Navigating new ground

The OBBBA’s changes to the SALT deduction cap, and other individual tax provisions, may require you to revise your tax planning. FMD can help you chart the best course to minimize your tax liability.

If You’re Asked to be an Executor, Be Sure You’re Up to the Task

Make no mistake, serving as an executor (or a “personal representative” in some states) is an honor. But the title also includes significant responsibilities. So if a family member or a close friend asks you to be the executor of his or her estate, think about your answer before agreeing to the request. Let’s take a closer look at an executor’s tasks.

First steps

In a nutshell, an executor handles all jobs required to settle the deceased’s estate. The first task is to obtain certified copies of the death certificate, which are needed to notify financial institutions where the deceased had accounts. Typically, the funeral home or other organization that handled the deceased’s remains can provide them. It’s not unusual to need a dozen or more copies.

An executor must also locate and read the will, if one exists. An attorney who specializes in estate planning can advise you on the terms of the will and the laws that apply. If the deceased had a trust, additional responsibilities may be involved.

Depending on local law, you may also need to file the will in probate court, even if probate proceedings aren’t necessary. Probate, or the legal process for administering an estate, is more common with larger, more complex estates. If the deceased had minor or dependent adult children, they may need to be connected with their guardians.

A clear, logical trail of the actions taken can show that the decisions you made as executor were prudent and in the interest of the estate. This can be critical if a beneficiary contests the estate’s administration.

Take inventory of the assets

Ideally, the deceased will have created a list of his or her assets. If not, some digging may be required. For instance, reviewing the deceased’s checkbook register or bank account statements may reveal regular deposits to a retirement account or life insurance premium payments. Then you’ll need to find out the value of these assets.

If the deceased received government benefits, such as Social Security, notify the agency as soon as possible. You may need to have fine jewelry and similar assets appraised. And you’ll need to maintain insurance on some assets while they remain in the estate, such as vehicles and real estate.

File a tax return, settle debts and distribute assets to beneficiaries

The deceased’s taxes and debts are typically paid before assets are distributed to the heirs. These might include outstanding tax obligations, funeral expenses, ongoing mortgage and utility payments, and credit card bills.

You may need to file an income tax return for the year of the deceased’s death, and check that the deceased’s other tax filings are up to date. If he or she had been sick, it’s possible that some tax obligations were neglected. Estates valued at $13.99 million or less (for 2025) generally don’t need to file estate tax returns.

You should be able to open a bank account in the name of the estate to make any payments. If you’ll need to delay payments while you sort out the deceased’s assets and expenses, let creditors know as soon as possible.

Keep beneficiaries and heirs apprised of the status of the will. After the deceased’s bills and taxes have been paid, you typically can begin distributing assets according to the terms of the will. However, some states require court approval before you take this step.

Close the estate

Your final task is to close the estate. This typically occurs after debts and taxes have been paid and all remaining assets have been distributed. Some states require a court action or agreement from the estate’s beneficiaries before the estate can be closed and the executor’s responsibilities terminated.

Be aware that completing the executor’s jobs can take a year or more, depending on the complexity of the estate. Moreover, in carrying out these duties, the executor acts as a fiduciary for the estate and can be liable for improperly spending estate assets or failing to protect them. Contact FMD for additional information regarding the duties of an executor.

How Businesses Can Fund a Buy-Sell Agreement

Businesses with more than one owner benefit from having multiple viewpoints and varying skill sets. However, they also face serious risks of uncertainty and conflict if one of the owners suddenly departs or undergoes a major life change. A carefully crafted buy-sell agreement can guard against these risks — if it’s securely funded.

Transfer guidelines

A “buy-sell” (as it’s often called) is a legally enforceable contract among a company’s owners that sets guidelines for transferring ownership interests. It gives the remaining owners or the business itself the right — or, in some cases, the responsibility — to buy an exiting owner’s interest if a “triggering event” occurs. Such events may include an owner’s death, disability, divorce, retirement, voluntary departure, and loss of professional license or certification.

Essentially, the buy-sell creates a market for a withdrawing owner’s interest. It also defines how the price of an ownership interest will be determined, including identifying a valuation method and standard of value. By outlining when and to whom interests can be sold — and for how much — the agreement ultimately helps prevent conflicts among remaining owners or with the withdrawing owner’s family.

Popular choice

When a triggering event occurs, a substantial amount of money is typically needed to buy the departing owner’s interests. So, it’s critical to properly fund a buy-sell.

One popular choice is life insurance. Although such coverage might seem useful only to provide liquidity in the event of an owner’s death, it’s not limited to such situations.

The right policy, sometimes combined with riders or other types of coverage, can help ensure that departing owners or their beneficiaries efficiently receive the agreed-upon price for ownership interests following eligible triggering events. Meanwhile, it can ease the strain on the company’s cash flow and reduce the likelihood that the business will have to sell assets to fund an ownership interest buyout.

Various structures

Buy-sells can be structured to use life insurance in various ways. One option is a cross-purchase agreement, where each owner takes out a policy on each of the other owners.

For example, let’s say you buy coverage for your business partner. If that individual dies, triggering the buy-sell, you’ll collect the death benefit and use it to buy the ownership interest from your partner’s estate.

Assuming it’s large enough, the policy should guarantee you’ll have the funding to fulfill your obligations under the agreement. Other benefits include:

• The insurance proceeds won’t be taxable as long as you plan properly, and

• Your tax basis in the newly acquired interests will equal the purchase price.

On the downside, a cross-purchase agreement can be cumbersome if there are more than a few owners because of the number of policies required. It can also be unfair if there’s a significant disparity in owners’ ages or health, causing the policy premiums to vary substantially.

One alternative is establishing a trust or separate partnership to buy a policy on each owner. If an owner dies, the trust or partnership collects the death benefits on behalf of the remaining owners and pays each one’s share of the ownership interest buyout.

Another option is a redemption agreement. Under this approach, the business — not the individual owners — buys a policy on each owner’s life. The company holds the insurance and receives the proceeds following a qualifying triggering event, which it then uses to buy a departing owner’s interest.

A disadvantage of a redemption agreement is that the remaining owners won’t receive a step-up in basis when the company buys the departing owner’s interest. This can result in higher capital gains taxes.

Additionally, in the 2024 case of Connelly v. United States, the U.S. Supreme Court held that the value of corporate-owned life insurance used to meet a redemption agreement should be included in the value of a deceased owner’s business interest for federal estate tax purposes. And that doesn’t include any offsetting reduction for the company’s obligation to redeem the deceased owner’s interest.

The ruling may have adverse consequences for estates subject to the federal estate tax. Under current law, the unified federal estate and gift tax exemption is $13.99 million for 2025 and $15 million for 2026.

Bottom line

The bottom line is, if not properly funded, a buy-sell agreement won’t likely benefit anyone. Work with your attorney to create and occasionally review yours. Meanwhile, FMD can help you choose an optimal funding strategy and advise you on the tax implications.

Using POD or TOD Accounts may Result in Undesirable Results in Certain Situations

Payable-on-death (POD) and transfer-on-death (TOD) accounts are attractive estate planning tools because they allow assets to pass directly to named beneficiaries without going through probate. This can save time, reduce administrative costs and provide your beneficiaries with quicker access to their inheritance. However, there are drawbacks to using these accounts. In some cases, they can lead to unintended — and undesirable — results.

Pluses and minuses

POD and TOD accounts are relatively simple to set up. Generally, POD is used for bank accounts while TOD is used for stocks and other securities. But they basically work the same way. You complete a form provided by your bank or brokerage house naming a beneficiary (or beneficiaries) and the assets are automatically transferred to the person (or persons) when you die. In addition, you retain control of the assets during your lifetime, meaning you can spend or invest them or close the accounts without beneficiary consent.

While POD and TOD accounts can streamline asset transfers, they also have limitations and potential drawbacks. These designations override instructions in your will, which can lead to unintended consequences if your estate plan isn’t coordinated across all accounts and assets.

They also don’t provide detailed guidance for how the beneficiary should use the funds, so they may not be the best fit if you want to place conditions or protections on the inheritance. Another consideration is that if your named beneficiary predeceases you and you haven’t updated the account, the funds may end up going through probate after all.

Not right for all estates

Despite their simplicity and low cost, POD and TOD accounts may have some significant disadvantages compared to more sophisticated planning tools, such as revocable trusts. For one thing, unlike a trust, POD or TOD accounts won’t provide the beneficiary with access to the assets in the event you become incapacitated.

Also, because the assets bypass probate, they may create liquidity issues for your estate, which can lead to unequal treatment of your beneficiaries. Suppose, for example, that you have a POD account with a $200,000 balance payable to one beneficiary and your will leaves $200,000 to another beneficiary.

When you die, the POD beneficiary automatically receives the $200,000 account. But the beneficiary under your will isn’t paid until the estate’s debts are satisfied, which may reduce his or her inheritance.

Unequal treatment can also result if you use multiple POD or TOD accounts. Say you designate a $200,000 savings account as POD for the benefit of one child and a $200,000 brokerage account as TOD for the benefit of your other child.

Despite your intent to treat the two children equally, that may not happen if, for example, the brokerage account loses value or you withdraw funds from the savings account. A more effective way to achieve equal treatment would be to list the assets in both accounts in your will or transfer them to a trust and divide your wealth equally between your two children.

Coordinate with other estate planning documents

POD and TOD accounts are often best suited for relatively straightforward transfers where you want to ensure quick, direct access for your beneficiary — such as passing a savings account to a spouse or adult child. They work well as part of a broader estate plan, especially when coordinated with a will, trust or other legal documents to ensure that your wishes are carried out consistently.

For more complex family or financial situations — blended families, minor beneficiaries, or significant assets — additional estate planning tools may be necessary to avoid conflicts and ensure long-term protection of your legacy. Contact FMD for additional details.

5 Ways Businesses Can Assess Health Care Benefits Spending

If your business sponsors health care benefits for its employees, you know the costs of doing so are hardly stable. And unfortunately, the numbers tend to rise much more often than they fall. According to global consultancy Mercer’s Survey on Health & Benefit Strategies for 2026, 51% of large organizations surveyed said they’re likely to make plan design changes to shift more costs to employees next year — presumably in response to price increases.

Small to midsize companies face much the same dilemma. With costs widely anticipated to rise, should you cut benefits, increase the cost-sharing burden on employees or hold steady? There’s no way to know for sure until you assess your current health benefit costs. Here are five ways to ascertain whether you’re spending wisely:

1. Choose and calculate metrics. Business owners can apply analytics to just about everything these days, including health care coverage. For example, you might use benefits utilization rate to identify the percentage of employees who actively use their benefits. Low usage may indicate your benefits aren’t aligned with the particular needs of your workforce.

Another metric is cost per participant, which is generally calculated by dividing total health care spend by number of covered employees. The result can help you judge the efficiency of your budget and potentially allow you to identify cost-saving opportunities.

2. Audit medical claims payments and pharmacy benefits management services. Mistakes happen — and fraud is always a possibility. By regularly re-evaluating claims and pharmacy services, you can identify whether you’re losing money to inaccuracies or even wrongdoing. Your business may need to engage a third-party consultant for this purpose, though some companies might be able to leverage training and specialized software to conduct internal reviews.

3. Scrutinize your pharmacy benefits contract. As the old saying goes, “Everything is negotiable.” Conduct a benchmarking study to see how your business’s pharmacy benefits costs stack up to similarly sized and situated companies. If you believe there’s room for negotiation, ask your vendor for a better deal. Meanwhile, look around the marketplace for other providers. One of them may be able to make a more economical offer.

4. Interact with employees to compare cost to value. The ideal size and shape of your plan depend on the wants and needs of your workforce. Rather than relying on vendor-provided materials, actively manage communications with employees regarding the design of your health care plan and its costs. Determine which benefits are truly valued and which ones aren’t.

Ultimately, your goal is to measure the financial impacts of gaps between benefits offered and those employees actually use. Then, explore feasible ways to adjust your plan design to close these costly gaps.

5. Get input from professional advisors. Particularly for smaller businesses, internal knowledge of health care benefits may be limited. Don’t get locked into the idea that you and your leadership team must go it alone.

Consider engaging a qualified consultant to help you better understand the full range of health care benefits available to your company. Ask your attorney to review your plan for potential compliance violations, as well as to check your contracts for negotiable items. Last, keep our firm in mind. FMD can perform financial analyses, audit claims, and offer strategic guidance to optimize spending and improve plan efficiency.

Audit alert: Beware of Potential Conflicts of Interest

As year end approaches, many businesses will soon be preparing for their annual audits. One key consideration is ensuring there are no potential conflicts of interest that could compromise the integrity of your company’s financial statements. A conflict of interest can cloud an auditor’s judgment and undermine their objectivity. Vigilance in spotting these conflicts is essential to maintain the transparency and reliability of your financial reports.

Understanding conflicts of interest

According to the American Institute of Certified Public Accountants (AICPA), “A conflict of interest may occur if a member performs a professional service for a client and the member or his or her firm has a relationship with another person, entity, product or service that could, in the member’s professional judgment, be viewed by the client or other appropriate parties as impairing the member’s objectivity.” Companies should be on the lookout for potential conflicts when:

• Hiring an external auditor,

• Upgrading the level of assurance from a compilation or review to an audit, and

• Using the auditor for non-audit purposes, such as investment advisory services and human resource consulting.

Determining whether a conflict of interest exists requires an analysis of facts. Some conflicts may be obvious, while others may require in-depth scrutiny.

For example, if an auditor recommends an external payroll provider’s software to an audit client and receives a commission from the provider, a conflict of interest likely exists. Why? While the third-party provider may suit the company’s needs, the payment of a commission raises concerns about the auditor’s motivation in making the recommendation. That’s why the AICPA prohibits an audit firm from accepting commissions from a third party when it involves a company the firm audits.

Now consider a situation in which a company approaches an audit firm to assist in a legal dispute with another company that’s an existing audit client. Here, given the inside knowledge the audit firm possesses of the company it audits, a conflict of interest likely exists. The audit firm can’t serve both parties to the lawsuit and comply with the AICPA’s ethical and professional standards.

Managing potential conflicts

AICPA standards require audit firms to avoid conflicts of interest. If a potential conflict is unearthed, audit firms have the following options:

• Seek guidance from legal counsel or a professional body on the best path forward,

• Disclose the conflict and secure consent from all parties to proceed,

• Segregate responsibilities within the firm to avoid the potential for conflict, and/or

• Decline or withdraw from the engagement that’s the source of the conflict.

Ask your auditors about the mechanisms the firm has implemented to identify and manage potential conflicts of interest before and during an engagement. For example, partners and staff members are usually required to complete annual compliance-related questionnaires and participate in education programs that cover conflicts of interest. Firms should monitor for conflicts regularly because circumstances may change over time, for example, due to employee turnover or M&A activity.

Safeguarding financial reporting

If left unchecked, conflicts of interest can compromise the credibility of your financial statements and expose your company to unnecessary risks. Our firm takes this issue seriously and adheres to rigorous ethical guidelines. If you suspect a conflict exists, contact FMD to discuss the matter before audit season starts and determine the most appropriate way to handle it.

95% of Affluent Investors Need to Update Their Estate Plans: Are You Prepared?

According to a new report from Escalent’s Cogent Syndicated division, a staggering 95% of affluent investors need to either create or update their estate plans. With the $90 trillion intergenerational wealth transfer underway, many are not fully prepared for the complexity that lies ahead. The report titled Trajectory of Intergenerational Wealth Transfer highlights a critical gap in wealth transfer planning that could have a long-lasting impact on investors and their families.

What’s the Problem?

Many investors are still without crucial estate planning documents. In fact, more than three in ten affluent investors don’t have a will or trust. Of those who do, a large portion is young enough that their current plans may need significant updates before the average life expectancy of 79.4 years. With life’s unpredictable nature—changing assets, evolving family dynamics, and shifting tax laws—estate plans should be reassessed regularly.

Opportunities for Estate Planners

As estate planning becomes more important with the $90 trillion wealth transfer, there is a significant opportunity for financial advisors and estate planners to assist their clients in reviewing and revising their plans. Millennials and Gen Z investors are particularly underprepared, with 42% of them lacking any formal estate plan despite already building wealth and expecting to inherit more.

While there is a growing interest in online tools for estate planning, millennials and Gen Z investors indicate that they still seek support from estate planning attorneys and financial advisors. In fact, about half of millennials plan to work with these professionals when creating their estate plans, signaling the demand for a hybrid approach combining digital tools and personalized guidance.

Proactive Assessments are Key

As Steve Ethridge, Senior Director at Cogent Syndicated, states, “Many affluent investors already have estate plans, but life’s unpredictable nature means these documents will need to be reevaluated.” By offering proactive assessments, financial advisors can not only ensure that estate plans remain up-to-date but also become indispensable partners in safeguarding their clients’ legacies.

What Should You Do?

• Review Your Estate Plan: Ensure that your will, trust, and other legal documents reflect your current financial situation.

• Consult Professionals: Work with both estate planning attorneys and financial advisors to integrate online tools and personalized services for a comprehensive approach.

• Start Planning Now: If you haven’t already, create an estate plan to protect your assets and loved ones.

With the right planning, you can make the most of your wealth transfer opportunities and protect your legacy for generations to come.

How do Businesses Report Cloud Computing Implementation Costs?

Today, many organizations rely on cloud-based tools to store and manage data. However, the costs to set up cloud computing services can be significant, and many business owners are unsure whether the implementation costs must be immediately expensed or capitalized. Changes made in recent years provide some much-needed clarity to the rules.

Advantages of cloud storage

Before diving into the accounting rules, it’s important to understand the potential benefits of cloud-computing arrangements, including:

Cost savings. Cloud storage reduces the need for physical servers and IT infrastructure, lowering capital expenses.

Remote access. Cloud systems let your team access data and tools from anywhere. This can be ideal for hybrid or remote work models — or small business owners who frequently travel.

Scalability. As your business grows, cloud services can easily scale to match your data and software needs.

However, it’s critical to vet cloud-service providers carefully. Always choose a provider that offers strong security protocols and automated data backup. This reduces the risk of data loss from hardware failure or human error. As companies grow, they may decide to switch to cloud providers that offer enhanced security or more robust features.

Implementation costs

Whether your business is adopting cloud services for the first time or transitioning from one provider to another, setup costs can be significant. These often range from several thousand to tens of thousands of dollars. First-time implementation costs typically include:

• Consulting and planning,

• System configuration,

• Data migration,

• Integration with existing tools,

• User training, and

• Post-launch support.

Among the most labor-intensive, expensive parts of the process are migrating data securely and ensuring that cloud applications are tailored to your workflow. Additionally, time spent coordinating between your team, vendors and consultants can add up quickly.

Switching cloud providers can also be costly. You’ll likely need to repeat many of the same implementation steps. Plus, you might face other challenges, such as reformatting or cleaning data, re-establishing integrations, retraining employees and minimizing downtime. Some providers may charge exit fees or make data retrieval cumbersome. The more customized your current system is, the harder (and costlier) it may be to transfer your setup to a new platform.

Accounting rules

Previously, U.S. Generally Accepted Accounting Principles (GAAP) required companies to immediately expense all setup costs for cloud contracts that didn’t include a software license. This treatment impaired a company’s profits in the year it implemented a cloud-computing arrangement.

Fortunately, the Financial Accounting Standards Board updated the accounting rules in 2018. Now, businesses can capitalize and amortize certain implementation costs for service contracts that don’t include a software license. Specifically, costs related to the application development phase — such as configuration, coding and testing — can be capitalized and gradually expensed over the life of the contract. However, costs from the preliminary research phase or post-launch support still must be immediately expensed. Spreading out certain implementation costs over the contract’s life can improve financial ratios and reduce year-over-year volatility in reported profits.

The updated guidance went into effect in 2020 for calendar-year public companies and in 2021 for all other entities. However, you may not be aware of these changes if your company is adopting cloud services for the first time — or if you previously implemented a cloud arrangement under the old rules and are now switching providers.

For more information 

The accounting rules for cloud computing arrangements can be complex, especially when determining which costs qualify and how to apply them across different contracts. Contact FMD for guidance on reporting these arrangements properly under current GAAP. We can help you review agreements, classify implementation costs, and choose a provider that offers both strong security and the functionality your business needs.

Should a Living Trust be Part of Your Estate Plan?

As its name suggests, a living trust (also known as a revocable trust) is in effect while you’re alive. It’s a legal entity into which you title assets to be managed during your lifetime and after your death.

As the trust’s grantor, you typically serve as the trustee and retain control over the assets during your lifetime. Thus, you can modify or revoke the trust at any time, allowing for adjustments as circumstances or intentions change. Let’s take a closer look at why you should consider including one in your estate plan.

Setting up a living trust

To create a living trust, engage an estate planning attorney to draw up the trust agreement. Then, title the assets you want to transfer to the trust. Assets can include real estate, financial accounts, and personal items such as art and jewelry.

You’ll also need to appoint a successor trustee, or multiple successor trustees. The trustee can be a family member or a friend, or an entity such as a bank’s trust department. In the event of incapacity, a successor trustee can seamlessly take over management of the trust without the need for court-appointed guardianship or conservatorship, preserving financial stability and decision-making continuity.

Avoiding probate

A primary advantage of a living trust is its ability to minimize the need for trust assets to be subject to probate. Probate is the process of paying off the debts and distributing the property of a deceased individual. It’s overseen by a court.

For some estates, the probate process can drag on. By avoiding it, assets in a living trust can typically be distributed more quickly while still in accordance with your instructions.

In addition, probate can be a public process. Living trusts generally can be administered privately. And if you become incapacitated, the trust document can allow another trustee to manage the assets in the living trust even while you’re alive.

Knowing the pros and cons

Living trusts have both benefits and drawbacks. If you name yourself as trustee, you can maintain control over and continue to use the trust assets while you’re alive. This includes adding or selling trust assets, as well as terminating the trust. However, after your death, the trust typically can’t be changed. At that point, the successor trustee you’ve named will distribute the assets according to your instructions.

On the flip side, a living trust can require more work to prepare and maintain than a will. And you’ll probably still need a will for property you don’t want to move into the trust. Often, this includes assets of lesser value, such as personal checking accounts. In addition, if you have minor children, you’ll need to name their guardian(s) in a will.

Who can help?

Creating a living trust typically requires some upfront effort and legal guidance. Even so, the long-term peace of mind and control it can provide may make it a worthwhile consideration. FMD can help you determine how a living trust fits within your broader estate planning goals. Contact an estate planning attorney to draft a living trust.

Is your Business Ready for Digital Documents and e-Signatures?

Whether signing a vendor agreement, approving a repair estimate or applying for a loan, chances are you’ve signed something digitally in recent months. In 2025, digital documents and e-signatures are no longer just a convenience — they’re fast becoming the standard.

Businesses of all types and sizes are embracing digital workflows to improve efficiency, reduce turnaround times and meet customer expectations. If your company is still relying on paper documents and manual signatures, now may be the time to take a fresh look at what you might be missing.

Potential advantages

For small to midsize businesses, there are generally three reasons to use digital documents with e-signatures. First, of course, it’s faster. When you can review and sign a business document electronically, it can be transmitted instantly and approved much more quickly.

And this works both ways: your customers can sign contracts or submit orders for your products or services, and you can sign similar documents with vendors, partners or consultants. What used to take days or even weeks, as delivery services carried out their duties or paper envelopes crisscrossed in the mail, can now occur in a matter of hours.

Second, it’s a strong safeguard against disaster, theft and mishandling. Paper is all too easily destroyed, damaged, lost or stolen. That’s not to say digital documents are impervious to thievery, corruption and deletion. However, a trusted provider should be able to outfit you with software that not only allows you to use digital documents with e-signatures, but also keeps those files encrypted and safe.

Third, as mentioned, more and more customers want it. In fact, this may be the most important reason to incorporate digital documents and e-signatures into your business. Younger generations have come of age using digitized business services. They expect this functionality and may prefer a company that offers it to one that still requires them to put pen to paper.

Valid concerns

Many business owners continue to have valid concerns about digital documents and e-signatures. For example, you may worry about how legally binding a digitized contract or other important document may be. However, e-signatures are now widely used and generally considered lawful under two statutes: 1) the Electronic Signatures in Global and National Commerce Act of 2000, a federal law, and 2) the Uniform Electronic Transactions Act, which governs each state unless a comparable law is in place.

Indeed, every state has legislation in place legalizing e-signatures. There may be some limited exceptions in certain cases, so check with your attorney for specifics if you decide to transition to using the technology.

Another concern you might have is cybersecurity. And there’s no doubt that data breaches are now so common that business owners must expect hacking attempts rather than hope they never happen.

As mentioned, a reputable provider of digital document technology should be able to equip your company with the necessary tools to defend itself. But don’t stop there. If you haven’t already, establish a sound, regularly updated cybersecurity strategy that encompasses every aspect of your business — including when and how digital documents and e-signatures are used.

Strategic move

Implementing this increasingly used technology is a strategic move. As such, it will likely involve costs related to vetting software providers, training your team, and updating internal assets and processes. But it also may be a wise investment in faster transactions, improved security and a better customer experience. Plus, you’ll pay less in express delivery fees. FMD can help you evaluate the idea, forecast your return on investment, and, if appropriate, build a smooth transition plan that fits your budget and goals.

What Taxpayers Need to Know About the IRS Ending Paper Checks

The federal government has announced a major change that will affect how numerous Americans receive their tax refunds and federal benefit payments. The U.S. Treasury Department, the IRS and the Social Security Administration (SSA) will soon stop issuing paper checks. This transition is designed to increase efficiency, reduce fraud and lower administrative costs — but it also means that taxpayers must prepare for an all-electronic system.

Background information

Many taxpayers still receive paper checks for tax refunds. This is also the case with some Social Security benefits and other federal payments. Under an executive order (EO) signed by President Trump, paper checks will no longer be an option, effective September 30, 2025. Direct deposit will become the default (and only) method of payment, unless the government extends the deadline or provides exceptions.

In the EO, President Trump cites several reasons for eliminating paper checks. One is to reduce the risk of fraud. “Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer,” the EO states.

Taxpayers without bank accounts

One significant challenge to making the transition away from paper checks is the “unbanked” population. These are people who don’t have traditional bank accounts. According to the FDIC, millions of Americans remain unbanked for various reasons, including lack of access, mistrust of banks or high fees.

The government may solve this challenge by issuing refunds on debit cards or encouraging financial institutions to offer free or low-fee accounts for affected taxpayers. Taxpayers without bank accounts should take steps now to open them to avoid delays in receiving their refunds.

Key implications

Some people may opt to request paper refund checks when filing their tax returns for reasons other than not having bank accounts. In some cases, they may have security or privacy concerns about providing account information to the IRS. Or perhaps they don’t know where they want to deposit their refunds when their tax returns are being prepared.

Here are three ways you may be affected after the federal government completes the transition from paper checks to an all-electronic system:

1. A bank account will be required. Taxpayers must have U.S.-based bank accounts or credit union accounts to receive their refunds.

2. There will be no more delays due to the mail. Direct deposit is faster than mailing paper checks, resulting in reduced wait times.

3. The risk of lost or stolen checks will be eliminated. Electronic transfers will eliminate fraud and identity theft associated with paper checks.

Special considerations for U.S. citizens abroad

Americans living overseas may encounter problems receiving electronic refunds. The IRS typically requires a U.S. bank account for direct deposit. Foreign accounts generally don’t work with the IRS refund system.

To address this issue, the government may offer exceptions or alternative payment methods for individuals outside the United States, but the details are still unclear. Expats should stay informed and plan ahead. The elimination of paper checks could necessitate setting up a U.S.-based bank account or using financial services that provide U.S. banking solutions.

Impact on other taxpayers

The American Institute of CPAs (AICPA) has provided feedback to the Treasury Department about the change. While the AICPA is generally in favor of eliminating paper checks, it raised some issues about taxpayers who may encounter problems with the change.

For example, executors and trustees must fill out forms that currently don’t have a place on them to enter direct deposit information. In addition, the name on an estate checking account won’t match the name on a deceased person’s final tax return. This violates an electronic refund requirement that the name on a tax return must match the name on a bank account into which a refund is to be deposited.

For these and other situations, the AICPA has recommended that the government provide exceptions or extensions of the deadline for certain taxpayers. The group would also like the IRS to provide more guidance on how to proceed in specific situations.

Social Security beneficiaries

The SSA reports that fewer than 1% of beneficiaries currently receive paper checks. If you’re one of them, visit the SSA to change your payment information to include a bank account or enroll in an option to receive your benefits with a Direct Express® prepaid debit card.

Bottom line

The elimination of paper checks is a significant shift in how federal payments are made. While this move will likely result in faster and more secure transactions, it also means taxpayers need to be prepared well before the September 30 deadline. The IRS and SSA will likely release additional guidance and outreach campaigns in the coming months.

If you have questions about how this change will affect filing your tax returns, contact FMD.

Businesses can still Choose to Address Sustainability

For many years, businesses of all shapes and sizes have at least considered sustainability when running their operations. Many people — including customers, investors, employees and job candidates — care about how a company impacts the environment. And reducing energy use, water consumption and waste generally lowers operational costs.

However, the current “environment regarding the environment,” has changed. With the passage of the One, Big, Beautiful Bill Act (OBBBA), the federal government has disincentivized businesses from taking certain green measures. So, you may be reevaluating your company’s stance on sustainability.

Apparent interest

According to one survey, a serious interest in sustainability remains present among many businesses. In February, management consultancy Kearney, in association with climate action media platform We Don’t Have Time, released the results of a survey of more than 500 finance executives from companies in the United States, United Kingdom, United Arab Emirates and India.

Of those respondents, 93% said they saw a clear business case for sustainability. Meanwhile, 92% expected to invest more in sustainability this year — with 62% of respondents saying they planned to allocate more than 2.1% of revenue to sustainability in 2025.

Now whether and how fully these investments come to fruition this year is hard to say. However, the fact remains that sustainability has been and will likely continue to be a strategically significant factor in many industries.

Vanishing tax breaks

As mentioned, the OBBBA has thrown a wrench into tax relief related to certain sustainable measures.

For example, the Section 179D Energy Efficient Commercial Buildings Deduction has been around since 2006. It got a big boost from the Inflation Reduction Act (IRA) of 2022, which increased the potential size of the deduction and expanded the pool of eligible taxpayers. However, the OBBBA permanently eliminates this tax break for buildings or systems on which construction begins after June 30, 2026.

The OBBBA also nixes an incentive for the business use of “clean” vehicles. The Qualified Commercial Clean Vehicle Credit, under Sec. 45W of the tax code, hadn’t been previously scheduled to expire until after 2032. However, it’s now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit is up to $7,500 or $40,000.

Has your company installed an electric vehicle charger or another qualified dispenser of or storage facility for clean-burning fuel? If so, you may be able to claim the Alternative Fuel Vehicle Refueling Property Credit under Sec. 30C of the tax code. The IRA had scheduled the credit — which is worth up to $100,000 per item — to sunset after 2032. But under the OBBBA, eligible property must be placed in service on or before June 30, 2026, to qualify.

Tailored strategy

Where does all this leave your business? Well, naturally, it’s up to you and your leadership team whether you want to address sustainability and, if you decide to do so, precisely how. Typically, when devising or revising a strategy in this area, your company should:

• Conduct an up-to-date baseline assessment of energy use, water consumption, waste generation and your business’s overall carbon footprint,

• Set clear goals and metrics based on reliable data and the input of professional advisors,

• Address the impact of logistics, your supply chain and employee transportation, and

• Communicate effectively with staff to gather feedback and build buy-in.

And don’t necessarily give up on tax incentives. Although some federal tax breaks may be going away in the near future, state and local ones might exist that could benefit your business.

Your call

Again, as a business owner, you get to make the call regarding your company’s philosophy and approach to sustainability. If it’s something you intend to prioritize, FMD can help you review your operations and identify cost-effective and possibly tax-saving ways to make a positive environmental impact.

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The OBBBA will soon Eliminate Certain Clean Energy Tax Incentives

For some time, President Trump and the GOP have had their sights on repealing many of the tax incentives created or enhanced by the Inflation Reduction Act (IRA). With the enactment of the One, Big, Beautiful Bill Act (OBBBA), they’ve made progress toward accomplishing that goal. Here’s a closer look at some of the individual-related and business-related clean energy tax incentives that are being scaled back or eliminated by the OBBBA.

Clean energy tax breaks affecting individuals

The OBBBA eliminates several tax credits that have benefited eligible individual taxpayers. It provides short “grace periods” before they expire, though, giving taxpayers a window to take advantage of the credits.

For example, the Energy Efficient Home Improvement Credit (Section 25C) was scheduled to expire after 2032. It’s now available for eligible improvements put into service by December 31, 2025. The IRA increased the credit amount to 30% and offers limited credits for exterior windows, skylights, exterior doors, and home energy audits.

The Residential Clean Energy Credit (Sec. 25D) was scheduled to expire after 2034. It’s also now available only through December 31, 2025. The IRA boosted the credit to 30% for eligible clean energy improvements made between 2022 and 2025. The credit is available for installing solar panels or other equipment to harness renewable energy sources like wind, geothermal or biomass energy.

Clean energy tax breaks affecting businesses

The Alternative Fuel Vehicle Refueling Property Credit (Sec. 30C) for property that stores or dispenses clean-burning fuel or recharges electric vehicles will also become unavailable sooner than originally set by the IRA. The credit — worth up to $100,000 per item (each charging port, fuel dispenser or storage property) — had been scheduled to sunset after 2032. Under the OBBBA, property must be placed in service on or before June 30, 2026, to qualify for the credit.

The law also eliminates the Sec. 179D Energy Efficient Commercial Buildings Deduction for buildings or systems on which the construction begins after June 30, 2026. The deduction has been around since 2006, but the IRA substantially boosted the size of the potential deduction and expanded the pool of eligible taxpayers.

Wind and solar projects stand to take a big hit. The OBBBA eliminates the Clean Electricity Investment Credit (Sec. 48E) and the Clean Electricity Production Credit (Sec. 45Y) for wind and solar facilities placed in service after 2027, unless construction begins on or before July 4, 2026. Wind and solar projects begun after that date must be put in service by the end of 2027.

In addition, wind energy components won’t qualify for the Advanced Manufacturing Production Credit (Sec. 45X) after 2027. The law also modifies the credit in other ways. For example, it adds “metallurgical coal” suitable for the production of steel to the list of critical minerals. And, for critical materials other than metallurgical coal, the credit will now phase out from 2031 through 2033. The credit for metallurgical coal expires after 2029.

Note: The OBBBA permits taxpayers to transfer clean energy credits while the credits are still available (restrictions apply to transfers to “specified foreign entities”).

Clean vehicle credits

If you’ve been pondering the purchase of a new or used electric vehicle (EV), you’ll want to buy sooner rather than later to take advantage of available tax credits. The Clean Vehicle Credit (Sec. 30D) was scheduled to expire after 2032. Under the OBBBA, the credit is available only through September 30, 2025.

The IRA significantly expanded the credit for qualifying clean vehicles placed in service after April 17, 2023. For eligible taxpayers, it extended the credit to any “clean vehicle,” including EVs, hydrogen fuel cell cars and plug-in hybrids. The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1) critical minerals and 2) battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750 credit.

The IRA also created a new credit, Sec. 25E, for eligible taxpayers who buy used clean vehicles from dealers. The credit equals the lesser of $4,000 or 30% of the sale price. It also expires on September 30, 2025.

Additionally, the OBBBA targets the incentive for a business’s use of clean vehicles. The Qualified Commercial Clean Vehicle Credit (Sec. 45W) had been scheduled to expire after 2032. It’s now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit is up to $7,500 or $40,000.

Other limitations

The OBBBA also limits access to the remaining clean energy credits for projects involving “foreign entities of concern” and imposes tougher domestic content requirements. FMD can help you plan for accelerated expiration dates on repealed clean energy incentives and comply with the new restrictions going forward.

Create an Estate Planning Road Map Using A Letter of Instruction

Including a letter of instruction in your estate plan is a simple yet powerful way to communicate your personal wishes to your family and executor outside of formal legal documents. While not legally binding, the letter can serve as a road map to help those managing your estate carry out your wishes with fewer questions or disputes.

Contents of your letter

What your letter addresses largely depends on your personal circumstances. However, an effective letter of instruction must cover the following:

Documents and assets. State the location of your will and other important estate planning documents, such as powers of attorney, trusts, living wills and health care directives. Also, provide the location of critical documents such as your birth certificate, marriage license, divorce documents and military paperwork.

Next, create an inventory — a spreadsheet may be ideal for this purpose — of all your assets, their locations, account numbers and relevant contacts. These may include, but aren’t necessarily limited to:

• Checking and savings accounts,

• Retirement plans and IRAs,

• Health and accident insurance plans,

• Business insurance,

• Life and disability income insurance, and

• Stocks, bonds, mutual funds and other investment accounts.

Don’t forget about liabilities. Provide information on mortgages, debts and other loans your family should know about.

Digital assets. At this point, most or all of your financial accounts may be available through digital means, including bank accounts, securities and retirement plans. It’s critical for your letter of instruction to inform your loved ones on how to access your digital accounts. Accordingly, the letter should compile usernames and passwords for digital financial accounts as well as social media accounts, key websites and links of significance.

Funeral and burial arrangements. Usually, a letter of instruction will also include particulars about funeral and burial arrangements. If you’ve already made funeral and burial plans, spell out the details in your letter.

This can be helpful to grieving family members. You may want to mention particulars like the person (or people) you’d like to give your eulogy, the setting and even musical selections. If you prefer cremation to burial, make that abundantly clear.

Provide a list of people you want to be contacted when you pass away and their relevant information. Typically, this will include the names, phone numbers, addresses and emails of the professionals handling your finances, such as an attorney, CPA, financial planner, life insurance agent and stockbroker. Finally, write down your wishes for any special charitable donations to be made in your memory.

Express your personal thoughts

Your letter of instruction complements the legal rigor of your estate planning documents with practical and personal guidance. Indeed, one of the most valuable functions of a letter is to offer personal context or emotional guidance. You can use it to explain the reasoning behind decisions in your will, share messages with loved ones, or express values and hopes for the future. Contact FMD if you’d like additional information.

Budgeting Basics for Entrepreneurs

Starting a business can be rewarding, but the financial learning curve is often steep. The U.S. Bureau of Labor Statistics estimates that one in five new businesses will fail within one year of opening, roughly half will close within five years, and less than a third will survive for 10 years or longer. A common thread in early failures is weak financial planning and oversight.

A comprehensive, realistic budget can help your start-up minimize growing pains and thrive over the long run. However, accurate budgeting can be difficult when historical data is limited. Here are some tips to help jumpstart your start-up’s budgeting process:

Start at the top

First, forecast the top line of your company’s income statement — revenue. How much do you expect to sell over the next year? Monthly sales forecasts tend to become more reliable as the company builds momentum and management gains experience. But market research, industry benchmarks or small-scale test runs can help start-ups with limited history gauge future demand.

Next, evaluate whether you have the right mix of resources (such as people, equipment, tools, space and systems) to deliver forecasted revenue. If your current setup doesn’t support your goals, you may need to adjust your sales targets, pricing or operational capacity.

Get a handle on breakeven

Many costs — such as materials, labor, sales tax and shipping — vary based on revenue. Estimate how much you expect to earn on each $1 of revenue after subtracting direct costs. This is known as your contribution margin.

Some operating costs — such as rent, salaries and insurance — will be fixed, at least over the short run. Once you know your total monthly overhead costs, you can use your contribution margin to estimate how much you’ll need to sell each month to cover fixed costs. For instance, if your monthly fixed costs are $10,000 and your contribution margin is 40%, you’ll need to generate $25,000 in sales to break even.

However, don’t be discouraged if your small business isn’t profitable right away. Breaking even takes time and hard work. Once you do turn a profit, you’ll need to save room in your budget for income taxes.

Look beyond the income statement 

Next, forecast your balance sheet at the end of each month. Start-ups use assets to generate revenue. For instance, you might need equipment and marketing materials (including a website). Some operating assets (like accounts receivable and inventory) typically move in tandem with revenue. Assets are listed on the balance sheet, typically in order of liquidity (how quickly the item can be converted into cash).

How will you finance your company’s assets? Entrepreneurs may invest personal funds, receive money from other investors or take out loans. These items fall under liabilities and equity on the balance sheet.

Monitor cash flows

Even profitable businesses can run into trouble if they fail to manage cash wisely. That’s why cash flow forecasting is essential. Consider these questions:

• Will your business generate enough cash each month to cover fixed expenses, payroll, debt service and other short-term obligations?

• Can you speed up collection or postpone certain payments?

• Are you stockpiling excess inventory — or running too lean to meet demand?

Forecasting monthly cash flows helps identify when cash shortfalls, as well as seasonal peaks and troughs, are likely to occur. You should have a credit line or another backup plan in case you fall short.

Compare your results to the budget

Budgeting isn’t a static process. Each month, entrepreneurs should revisit their budgets and evaluate whether adjustments are needed based on actual results. For instance, you may have underbudgeted or overbudgeted on some items and, thus, spent more or less than you anticipated.

Some variances may be the result of macroeconomic forces. For example, increased government regulation, new competition or an economic downturn can adversely affect your budget. Although these items may be outside of your control, it’s critical to identify and address them early before variances spiral out of control.

Seek external guidance

Does your start-up struggle with budgeting? FMD can help you prepare a realistic budget based on past performance, industry benchmarks and evolving market trends. Contact us to help your small business build a better budget, evaluate variances and beat the odds in today’s competitive marketplace.

Developing A Comprehensive AI Strategy for Your Business

We’ve reached a point where artificial intelligence (AI) offers functionality and enhancements to most businesses. Yours may be able to use it to streamline operations, improve customer interactions or uncover growth opportunities.

However, getting the max benefit calls for doing much more than jumping on the bandwagon. To make this technology truly work for your company, you’ve got to develop a comprehensive AI strategy that aligns with your overall strategic plan.

Identify your needs

Many businesses waste resources, both financial and otherwise, by hastily investing in AI without thoroughly considering whether and how the tools they purchase effectively address specific needs. Before spending anything — or any more — sit down with your leadership team and ask key questions such as:

• What strategic problems are we trying to solve?

• Are there repetitive tasks draining employees’ time and energy?

• Could we use data more effectively to guide business decisions?

The key is to narrow down specific challenges or goals to actionable ways that AI can help. For example, if your staff spends too much time manually sorting and answering relatively straightforward customer inquiries, a simple AI chatbot might ease their workload and free them up for more productive activities. Or if forecasting demand is a struggle, AI-driven analytics may help you develop a clearer picture of future sales opportunities.

Be strategic

As you develop an AI strategy, insist on targeted and scalable investments. In other words, as mentioned, prospective solutions must fulfill specified needs. However, they also need to be able to grow with your business.

In addition, consider whether the AI tools you’re evaluating suit your budget, have reliable support and will integrate well with your current systems. Don’t ignore the tax implications either. The recently passed One, Big, Beautiful Bill Act has enhanced depreciation-related tax breaks that AI software may qualify for if you buy it outright.

Provide proper training

Training is another piece of the puzzle that often goes missing when businesses try to implement AI. Earlier this year, the Pew Research Center published the results of an October 2024 survey of more than 5,200 employed U.S. adults. Although 51% of respondents reported they’d received extra training at work, only 24% of that group said the training was related to AI.

This would seem to indicate that AI-specific training isn’t exactly commonplace. Make sure to build this component into your strategy. Proper training will help ensure a smoother adoption of each tool and increase your odds of a solid return on investment.

As you provide it, also ease employee concerns about job loss or disruption. That same Pew Research Center survey found that 52% of workers who responded are worried about the future impact of AI in the workplace. You may want to help your staff understand how the technology will support their work, not replace it.

Measure and adjust

As is the case with any investment, every AI tool you procure — whether buying it or signing up for a subscription — should deliver results that justify its expense. While shopping for and rolling out a new solution, clearly establish how you’ll measure success. Major factors may include time saved, customer satisfaction and revenue growth.

Once a solution is in place, don’t hesitate to make adjustments if something isn’t working. This may involve providing further training to users or limiting the use of an AI tool until you gain a better understanding of it.

If you’re using a subscription-based solution, you may be able to cancel it early. However, first check the contract terms to determine whether you’d suffer negative consequences such as a substantial termination fee or immediate loss of data.

Account for everything

There’s no doubt that AI has a lot to offer today’s small to midsize businesses. Unfortunately, it can also be overwhelming and financially costly if you’re not careful about choosing and implementing solutions. FMD can help you develop an AI strategy that accounts for costs, tax impact and return on investment.

How will the One, Big, Beautiful Bill Act Affect Individual Taxpayers?

The One, Big, Beautiful Bill Act (OBBBA) includes, among many other things, numerous provisions that can affect an individual’s taxes. The new law makes some changes to existing tax breaks that will be significant to many, but not all, taxpayers. It also creates new breaks that, again, will be significant to certain taxpayers. Finally, it makes permanent the tax rate reductions and most of the changes to deductions and credits made by the Tax Cuts and Jobs Act (TCJA), with occasional tweaks.

State and local tax deduction

The OBBBA increases the limit on the state and local tax (SALT) deduction through 2029. Beginning in 2025, eligible taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately) of SALT, including property tax and either income tax or sales tax, with a 1% annual increase thereafter. However, in 2030, the previous limit of $10,000 ($5,000 for separate filers) will resume.

When modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for separate filers), the cap is reduced by 30% of the amount by which MAGI exceeds the threshold — but not below $10,000 ($5,000 for separate filers). If you expect to be near or over the threshold, taking steps to reduce your MAGI (for example, increasing retirement plan contributions or making IRA qualified charitable distributions) could help you secure the full SALT deduction.

Child Tax Credit

The $2,000 Child Tax Credit (CTC) for children under age 17 was slated to return to $1,000 per child after 2025, with the income phaseout levels subject to lower thresholds. Also, the $500 Credit for Other Dependents (COD) was scheduled to expire at that time. The COD is available for each qualifying dependent other than a qualifying child (such as a dependent child over the age limit or a dependent elderly parent).

The OBBBA makes the doubled CTC permanent, with an increase to $2,200 starting this year and annual inflation adjustments to follow. It also makes permanent the $1,400 refundable portion of the CTC, adjusted for inflation ($1,700 in 2025), and the $500 nonrefundable COD. And it makes permanent the income phaseout thresholds of $200,000, or $400,000 for joint filers.

Education-related breaks

The OBBBA expands the definition of qualified expenses that can be paid for with tax-free distributions from Section 529 plans. For example, tax-free distributions can now cover qualified post-secondary credentialing expenses. In addition, tax-free elementary and secondary school distributions are no longer limited to paying tuition; they can also pay for books and other instructional materials, online educational materials, tutoring or educational classes outside the home, and certain testing fees.

The OBBBA also increases the annual limit on tax-free distributions for qualified elementary and secondary school expenses from $10,000 to $20,000 beginning in 2026.

In addition, the law creates a tax credit of up to $1,700 for contributions to organizations that provide scholarships to elementary and secondary school students. Students who benefit from the scholarships must be part of a household with an income that doesn’t exceed 300% of the area’s median gross income and be eligible to enroll in a public elementary or secondary school.

The OBBBA also makes some tax law changes related to student loans:

Employer-paid student loan debt. If your employer pays some of your student loan debt, you may be eligible to exclude up to $5,250 from income. The OBBBA makes this break permanent, and the limit will be annually adjusted for inflation after 2026.

Forgiven student loan debt. Forgiven debt is typically treated as taxable income, but tax-free treatment is available for student loan debt forgiven after December 31, 2020, and before January 1, 2026. Under the OBBBA, beginning in 2026, only student loan debt that’s forgiven due to the death or total and permanent disability of the student will be excluded from income, but this exclusion is permanent. Warning: Some states may tax forgiven debt that’s excluded for federal tax purposes.

Charitable deductions

Generally, donations to qualified charities are fully deductible up to certain adjusted gross income (AGI)-based limits if you itemize deductions. The OBBBA creates a nonitemized charitable deduction of up to $1,000, or $2,000 for joint filers, which goes into effect in 2026.

Also beginning in 2026, a 0.5% floor will apply to itemized charitable deductions. This generally means that only charitable donations in excess of 0.5% of your AGI will be deductible if you itemize deductions. So, if your AGI is $100,000, your first $500 of charitable donations for the year won’t be deductible.

Qualified small business stock

Generally, taxpayers selling qualified small business (QSB) stock are allowed to exclude up to 100% of their gain if they’ve held the stock for more than five years. (The exclusion is less for stock acquired before September 28, 2010.) Under pre-OBBBA law, to be a QSB, a business must be engaged in an active trade or business and must not have assets that exceed $50 million, among other requirements.

The OBBBA provides new, but smaller exclusions for QSB stock held for shorter periods. Specifically, it provides a 75% exclusion for QSB stock held for four years and a 50% exclusion for QSB stock held for three years. These exclusions go into effect for QSB stock acquired after July 4, 2025. The law also increases the asset ceiling for QSBs to $75 million (adjusted for inflation after 2026) for stock issued after July 4, 2025.

Affordable Care Act’s Premium Tax Credits

The OBBBA imposes new requirements for Premium Tax Credit (PTC) recipients. For example, beginning in 2028, eligible individuals must annually verify information such as household income, immigration status and place of residence. Previously, many insureds were allowed to automatically re-enroll annually.

Beginning in 2026, individuals who receive excess advanced PTCs based on estimated annual income must return the entire excess unless actual income is less than 100% of the federal poverty limit. Currently, individuals with incomes below 400% of the limit are required to make only partial repayments.

Temporary tax deductions

On the campaign trail in 2024, President Trump promised to eliminate taxes on tips, overtime and Social Security benefits and to make auto loan interest deductible. The OBBBA makes a dent in these promises but doesn’t completely fulfill them. Instead, it creates partial deductions that apply for 2025 through 2028. They’re available to both itemizers and nonitemizers:

Tips. Employees and independent contractors generally can claim a deduction of up to $25,000 for qualified tips received if they’re in an occupation that customarily and regularly received tips before 2025. (The eligible occupations will be determined by the IRS and are expected to be released by October 2, 2025.) The tips must be reported on a Form W-2, Form 1099 or other specified statement furnished to the individual or reported directly by the individual on Form 4137. The deduction begins to phase out when a taxpayer’s MAGI exceeds $150,000, or $300,000 for joint filers.

Overtime. Qualified overtime pay generally is deductible up to $12,500, or $25,000 for joint filers. It includes only the excess over the regular pay rate. For example, if a taxpayer is normally paid $20 per hour and is paid “time and a half” for overtime, only the extra $10 per hour for overtime counts as qualified overtime pay. The overtime pay must be reported separately on a taxpayer’s W-2 form, Form 1099 or other specified statement furnished to the individual. This deduction also starts phasing out when MAGI exceeds $150,000, or $300,000 for joint filers.

Deductible tips and overtime pay remain subject to federal payroll taxes and any applicable state income and payroll taxes.

Auto loan interest. Interest on qualified passenger vehicle loans originated after December 31, 2024, generally is deductible up to $10,000, though few vehicles come with that much annual interest. Qualified vehicles include cars, minivans, vans, SUVs, pickup trucks and motorcycles with gross vehicle weight ratings of less than 14,000 pounds that undergo final assembly in the United States. The deduction begins to phase out when MAGI exceeds $100,000, or $200,000 for joint filers.

“Senior” deduction. While the OBBBA doesn’t eliminate taxes on Social Security benefits, it does include a new deduction of $6,000 for taxpayers age 65 or older by December 31 of the tax year — regardless of whether they’re receiving Social Security benefits. The deduction begins phasing out when MAGI exceeds $75,000, or $150,000 for joint filers. Social Security benefits, however, are still taxable to the extent that they were before the OBBBA.

Finally, be aware that additional rules and limits apply to these new tax breaks. In many cases, the IRS will be publishing additional guidance and will provide transition relief for 2025 to eligible taxpayers and those subject to information reporting requirements.

Trump Accounts

Beginning in 2026, Trump Accounts will provide families with a new way to build savings for children. An account can be set up for anyone under age 18 at the end of the tax year who has a Social Security number.

Annual contributions of up to $5,000 can be made until the year the beneficiary turns age 18. In addition, U.S. citizen children born after December 31, 2024, and before January 1, 2029, with at least one U.S. citizen parent can potentially qualify for an initial $1,000 government-funded deposit.

Contributions aren’t deductible, but earnings grow tax-deferred as long as they’re in the account. The account generally must be invested in exchange-traded funds or mutual funds that track the return of a qualified index and meet certain other requirements. Withdrawals generally can’t be taken until the child turns age 18.

TCJA provisions

The OBBBA also makes permanent many TCJA provisions that were scheduled to expire after 2025, including:

• Reduced individual income tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%,

• Higher standard deduction (for 2025, the OBBBA also slightly raises the deduction to $15,570 for singles, $23,625 for heads of households and $31,500 for joint filers),

• The elimination of personal exemptions,

• Higher alternative minimum tax exemptions,

• The reduction of the limit on the mortgage debt deduction to the first $750,000 ($375,000 for separate filers) — but the law makes certain mortgage insurance premiums eligible for the deduction after 2025,

• The elimination of the home equity interest deduction for debt that wouldn’t qualify for the home mortgage interest deduction, such as home equity debt used to pay off credit card debt,

• The limit of the personal casualty deduction to losses resulting from federally declared disasters — but the OBBBA expands the limit to include certain state-declared disasters,

• The elimination of miscellaneous itemized deductions (except for eligible unreimbursed educator expenses), and

• The elimination of the moving expense deduction (except for members of the military and their families in certain circumstances and, beginning in 2026, certain employees or new appointees of the intelligence community).

The permanency of these provisions should provide some helpful clarity for tax planning. However, keep in mind that “permanent” simply means that the provisions have no expiration date. It’s still possible that lawmakers could make changes to them in the future.

Time to reassess

We’ve covered many of the most significant provisions affecting individual taxpayers, but there are other changes that also might affect you. For example, the OBBBA adds a new limitation on itemized deductions for taxpayers in the 37% tax bracket beginning in 2026. It also imposes a new limit on the deduction for gambling losses beginning next year. And sole proprietors and owners of pass-through businesses will also be directly affected by OBBBA tax law changes affecting businesses.

Given all of these and other tax law changes, now is a good time to review your tax situation and update your tax planning strategies. Turn to us to help you take full advantage of the new — or newly permanent — tax breaks.