Every business will eventually face leadership transitions. Whether key people retire, pursue new opportunities or become unable to do their job, your business must maintain continuity. Often, smooth transitions depend on “bench strength.” This refers to the depth of employees prepared to step into critical roles. Developing this internal talent pool is one of the most effective ways to support your succession plan and protect your organization’s stability and well-being.

Why it matters

Succession plans are only as strong as the individuals available to carry them out. Many organizations identify successors for specific positions. But what if a designated successor leaves your business or is unable to assume the role when needed? Bench strength enhances flexibility by preparing multiple employees to step into critical roles as circumstances change.

Cultivating your bench can reduce the risk of operational disruptions and help preserve institutional knowledge. Instead of launching a time-consuming external search if a vacancy arises, your business can promote qualified employees who already understand your culture, customers and strategic priorities. Internal promotions often accelerate leadership transitions while reassuring employees that advancement opportunities exist within your organization.

Deeper talent pool

To build bench strength, start by identifying promising employees and assessing potential leadership gaps. Regular performance reviews can help you evaluate employees’ skills, career aspirations and readiness for future roles. At the same time, examine upcoming organizational needs and determine which positions are essential for your business’s long-term success.

Leadership training, mentoring programs, cross-functional projects and job rotations can help employees gain experience beyond their current responsibilities. For example, a high-performing sales manager might be asked to lead a companywide initiative. A finance leader might participate in strategic planning discussions. These experiences broaden skills and prepare staffers for leadership responsibilities.

Connecting the two

Bench strength and succession planning are closely related, but they generally serve different purposes. Succession planning focuses on identifying and preparing specific individuals for key leadership positions. Bench strength, by contrast, emphasizes maintaining a broader pool of employees who can fill roles as business needs evolve.

The most resilient organizations integrate both activities. Your succession plan should ensure your business has qualified successors for critical leadership positions. Strong bench strength, meanwhile, provides the flexibility to respond to unexpected departures, organizational growth and changing market conditions. Together, these strategies help reduce talent gaps and support long-term business continuity.

Move forward confidently

Leadership transitions are inevitable, but disruption doesn’t have to be. Organizations that consistently develop internal talent are better positioned to manage change and maintain stability. When leadership transitions become necessary, a strong bench allows your business to move forward confidently, knowing capable successors are ready to step in and lead. For help building your bench and planning for succession, contact us.

© 2026

U.S. Bureau of Labor Statistics data shows that hiring has slowed in recent months. Even so, thousands of people continue to start new jobs, and every new hire represents a significant investment of time and money for organizations. With labor costs remaining a concern for many businesses, it’s more important than ever to help employees become productive members of your workforce as quickly as possible. An effective onboarding process can help you do this.

Start before day one

Successful onboarding begins before a new hire’s first day on the job. Once a candidate accepts your job offer, explain what to expect before, during and after the first day. A welcome email can provide practical details, such as where to park (for on-site employees), when to arrive and to whom to report. Whenever possible, give new hires digital access to employment forms, benefit information and introductory training materials so they can complete administrative tasks in advance and arrive better prepared.

The first day should combine orientation with a personal welcome. Designate a specific person, ideally the employee’s direct supervisor, to guide the new hire through a structured agenda. For on-site positions, ensure the workspace is fully set up with the necessary equipment before arrival. For remote employees, verify that technology and systems access are working properly. In either setting, introduce new employees to teammates and other key colleagues to help them begin building relationships immediately.

Investing in career development

Supervisors play a central role in helping new employees succeed, but experienced peer mentors can make the transition smoother. A mentor can answer day-to-day questions, explain workplace norms and help new hires navigate your organization’s culture. These informal connections often build confidence and accelerate integration into the team.

Training should begin immediately after orientation and continue beyond the first week. Avoid taking a one-size-fits-all approach or assuming employees will simply learn as they go. Instead, develop structured training programs tailored to each role, with clear learning objectives and opportunities for ongoing professional development. Employees who receive meaningful training are generally more confident and productive.

Continuous improvement

Many organizations assume their onboarding programs are effective until negative feedback reveals otherwise. Like any critical business process, onboarding should be regularly evaluated and refined.

Encourage supervisors to check in with new hires throughout the onboarding period, which typically lasts one to two weeks. These discussions should emphasize active listening and honest feedback. If your organization uses peer mentors, ask them to share observations as well. The insights you gather can help you identify weaknesses and improve your onboarding program.

Welcome, prepare and support

Employees who feel welcomed, prepared and supported from their first day on the job are more likely to become enthusiastic contributors and deliver stronger long-term performance. Contact us for help evaluating your onboarding process, measuring its return on investment and aligning it with your business objectives.

© 2026

Many small businesses don’t have enough employees to worry about the play-or-pay provisions of the Affordable Care Act (ACA). However, as your business grows, these rules can apply sooner than expected. This issue also may not be on your radar because there’s a common misconception that the repeal of ACA penalties under the Tax Cuts and Jobs Act applied to both individuals and businesses. While the individual mandate penalty was eliminated beginning in 2019, the employer shared responsibility rules are still in effect.

Don’t let ACA compliance become a blind spot for your business. Here’s what you need to know to comply with the law’s requirements.

The play-or-pay threshold

The ACA’s employer shared responsibility rules apply to applicable large employers (ALEs). In general, ALEs are businesses with 50 or more full-time employees, including full-time equivalents (FTEs). Once a business crosses that threshold, it must comply with several requirements related to employee health coverage. An employer’s size for the year is determined by the number of full-time employees plus FTEs in its prior year. The challenge is that many business owners don’t realize they’re approaching the ALE threshold until it’s too late.

First, for ACA purposes, a full-time employee generally is an individual employed on average at least 30 hours of service per week or 130 hours per month. So some employees you might consider to be part-time because they work less than 40 hours a week may be considered full-time for ACA purposes.

Second, FTEs are determined by adding all hours of service for the month for employees who weren’t full-time employees (but no more than 120 hours per employee), and dividing by 120. This can push a company into ALE status faster than expected. For example, a small company with 35 full-time employees and a significant number of part-time workers could exceed the 50-full-time-employee threshold once part-time hours are aggregated.

2 types of penalties

Under the ACA, an ALE may incur a penalty if it doesn’t offer minimum essential coverage to its full-time employees and their eligible dependents or if it offers such coverage, but that coverage isn’t affordable and/or fails to provide minimum value. The penalty is typically triggered when at least one full-time employee receives a premium tax credit for buying individual coverage through a Health Insurance Marketplace.

One of two penalty structures may apply, depending on the circumstances. First, under Section 4980H(a), a penalty may be assessed if an ALE fails to offer coverage to at least 95% of its full-time employees and their dependents. This penalty is calculated based on the total number of full-time employees, excluding the first 30. Second, under Section 4980H(b), a penalty may apply for each full-time employee who receives a premium tax credit for purchasing coverage through a Health Insurance Marketplace because the employer’s coverage is unaffordable or doesn’t provide minimum value.

Updated penalties for 2026

The adjusted penalty amounts (per the applicable number of full-time employees used to calculate the specific penalty) for failures occurring in the 2026 calendar year are:

• $3,340 (up from $2,900 in 2025) under Sec. 4980H(a), for ALEs not offering health coverage, and $5,010 (up from $4,350 in 2025) under Sec. 4980H(b), for ALEs offering coverage but that have employees who qualify for premium tax credits or cost-sharing reductions.

The IRS uses Letter 226-J to inform ALEs of their potential liability for an employer shared responsibility penalty. A response form, Form 14764, “ESRP Response”,  is included with Letter 226-J so that an ALE can inform the IRS whether it agrees with the proposed penalty. A response is generally due within 30 days. Be on the lookout for this letter so that you’re prepared to promptly review and respond if the IRS contacts you.

Considerations for growing businesses

As your workforce expands, it’s important to address the following questions:

• How close is your company to the 50-full-time-employee threshold?
• Are you properly identifying who’s a full-time employee under the ACA and calculating your number of FTEs based on part-timers’ hours?
• If your company becomes an ALE, how will it structure health coverage to satisfy affordability and minimum value requirements?
• Are your payroll and human resource systems prepared to support ACA reporting requirements, including Forms 1094-C and 1095-C?

Addressing these issues early can help ensure that expansion plans don’t come with unexpected ACA penalties.

For more information

Careful compliance with the ACA remains critical for companies that qualify as ALEs. Growing small businesses should be particularly wary as they become midsize ones. Contact us with questions about your obligations and ways to better manage the costs of health care benefits.

© 2026

Small business owners must answer an important question: Should we use the cash or accrual accounting method for federal income tax purposes? Larger entities are required to use the accrual method. But certain small businesses can elect to use the cash method. You may want to consider this option if it will help lower your taxes. However, it’s not right (or even available) for every situation.

Does your business qualify for the cash method?

Under Internal Revenue Code Section 448(c), your business may be eligible for the cash accounting method if it had average annual gross receipts that don’t exceed a specific, inflation-adjusted threshold for the prior three-year period. For 2026, businesses with average annual gross receipts up to $32 million are eligible.

Some businesses may be eligible for cash accounting even if their gross receipts are above the threshold. Examples include S corporations, partnerships without C corporation partners, farming businesses and certain personal service corporations.

In addition, the Sec. 448(c) gross receipts test serves as the eligibility standard for several other tax provisions available to qualifying small businesses, such as:

• Simplified inventory accounting,
• An exemption from the uniform capitalization rules,
• An exemption from the business interest deduction limit, and
• The option to use the completed contract method (rather than the percentage-of-completion method) for certain long-term contracts.

When determining your business’s gross receipts, you may need to include those earned by certain related entities, such as those under common control. Special rules apply to organizations that have existed for less than three years. Also, tax shelters, including syndicates, don’t qualify for small business status, even if their gross receipts are below the threshold.

How do the methods differ?

The cash method often provides significant tax advantages. Because cash-basis businesses recognize income when received and deduct expenses when paid, they have greater control over the timing of income and deductions. For example, toward the end of the year, they can defer income by delaying invoices until the following tax year or shift deductions into the current year by accelerating expense payments.

In contrast, accrual-basis businesses recognize income when earned and deduct expenses when incurred, regardless of the timing of cash receipts or payments. Therefore, they have little flexibility to time the recognition of income or expenses for tax purposes.

The cash method also provides cash flow benefits. Because income is taxed in the year received, it helps ensure that a business has the funds needed to pay its tax bill.

However, for some businesses, the accrual method may be preferable. For instance, if your accrued income tends to be lower than your accrued expenses, the accrual method may result in a lower tax liability. Other potential advantages of the accrual method include the ability to deduct year-end bonuses paid within the first 2½ months of the following tax year and the option to defer taxes on certain advance payments.

Is it time for a change?

Even if your business would benefit from switching its accounting method, you should consider the administrative costs. Changing accounting methods for tax purposes may require IRS approval. And, if your business prepares its financial statements in accordance with U.S. Generally Accepted Accounting Principles, using the cash method for tax purposes would require you to maintain two sets of books (cash-basis tax records and accrual-basis financial reporting records).

Fortunately, you don’t have to make this decision by yourself. We can help determine the right method for your situation. Contact us to learn more.

© 2026

Most business owners would like to offer their employees a 401(k) retirement savings plan with all the bells and whistles. But for small businesses with lean budgets and small staffs, offering such benefits may be out of the question. Fortunately, SEP IRAs and SIMPLE IRAs are less expensive and easier to administer. Might one of these tax-advantaged options work for your workforce?

SEP: Flexible and zero setup fees

Simplified Employee Pension (SEP) IRAs are individual retirement accounts you establish on behalf of each participant. (Self-employed individuals can also establish SEP IRAs.) Participants own their accounts, so they’re immediately 100% vested. If participants decide to leave your company, their account balances go with them. Most people roll their accounts over into a new employer’s qualified plan or traditional IRA account.

SEP IRAs don’t require annual employer contributions. That means you can choose to contribute only when cash flow allows. In addition, there are typically no setup fees for SEP IRAs. But participants generally must pay trading commissions and fund expense ratios (a fee typically set as a percentage of the fund’s average net assets).

In 2026, the SEP IRA annual contribution limit is 25% of a participant’s compensation, up to $72,000. That amount is higher than the standard 401(k) account contribution limit of $24,500 (in 2026). What’s more, employer contributions are tax-deductible. Meanwhile, participants won’t pay taxes on their SEP IRA funds until they’re withdrawn.

However, there are a few downsides to consider. Although participants own their accounts, only employers can make SEP IRA contributions. And if you contribute sparsely or sporadically, participants may see little value in the accounts. Also, unlike many other qualified plans, SEP IRAs don’t permit participants age 50 or over to make additional “catch-up” contributions.

SIMPLE: Easy and participant-friendly

Another possibility is to offer a Savings Incentive Match Plan for Employees (SIMPLE) IRA. As with a SEP IRA, your business creates a SIMPLE IRA for each participant, who’s immediately 100% vested in the account. Unlike SEP IRAs, SIMPLE IRAs allow participants to contribute to their accounts if they choose.

Other advantages of SIMPLE IRAs include:

• They’re relatively easy for employers to set up and administer.
• They don’t require your business to file IRS Form 5500, “Annual Return/Report of Employee Benefit Plan.”
• You don’t need to submit the plan to nondiscrimination testing.
• Participants pay no setup fees and enjoy tax-deferred growth on their account funds.
• Participants can contribute up to $17,000 annually in 2026.
• Participants age 50 or over can make catch-up contributions of up to $4,000 in 2026 ($5,250 for those ages 60 to 63).

Participants can contribute more to a SIMPLE IRA than to a self-owned traditional or Roth IRA. But SIMPLE IRA contribution limits are lower than limits for 401(k)s. Also, because contributions are made with pretax dollars, participants can’t deduct them. They also can’t take out plan loans. Then again, making pretax contributions does lower their taxable income. 

Perhaps most important is that employer contributions to SIMPLE IRAs are mandatory, regardless of your cash-flow situation. However, in general, you can deduct contributions as a business expense.

SIMPLE Roth IRAs are available, too. Ask your financial and employee benefits advisors whether this might be a better option for your business.

Lower-cost options

If you’ve thought you can’t afford to offer workers a retirement plan, think again. In addition to SEP and SIMPLE IRAs, there are now some lower-cost 401(k) options available as well. We can review your budget, tax situation and benefit needs and suggest how best to proceed. Contact us.

© 2026

Recognize the issue

Many business owners don’t realize how far behind they’ve fallen until they need, for example, to file a tax return or complete a loan application. Take notice if you:

• Haven’t reconciled bank and credit card accounts in months,
• Have unfiled tax returns or unanswered tax notices,
• Are missing receipts or have incomplete expense records,
• Are uncertain about cash flow or profitability,
• Can’t generate accurate, timely financial reports, or
• Spend significant time searching for basic financial information.

If these issues sound familiar, you’re not alone. Growing businesses often outpace the systems and processes that once worked well. Acknowledging the problem is the first step toward solving it.

Start with the basics

When recordkeeping lags and you try to catch up, it’s tempting to focus on everything at once. A more effective approach is to prioritize the essentials, starting with key financial documents. First, gather bank and credit card statements, invoices, payroll records, and tax filings. Organizing these records by month can make the cleanup process more manageable.

Next, identify which bookkeeping tasks are incomplete. For instance, you may need to reconcile accounts, categorize transactions, record outstanding invoices or update payroll information. Creating a checklist can help you tackle the work systematically and avoid overlooking important items. Technology may also help streamline the process. QuickBooks® and other accounting platforms can automate routine tasks and simplify account reconciliations.

Address tax issues promptly

If your tax filings or payments aren’t up-to-date, address the situation as soon as possible. Delays can increase IRS penalties and interest, as well as complicate administration.

Begin by determining which returns have been filed and which obligations remain outstanding. If you’ve received notices from the IRS or other taxing authorities, review them carefully and respond within the required time frame. This can help limit penalties and prevent small problems from becoming major ones. Accurate bookkeeping plays an important role here. If your records are current, it will be easier to prepare returns, substantiate deductions and respond to questions.

View cleanup as an opportunity

Updating records does more than fix past issues. The process can also provide valuable insight into your business’s current financial position and future growth opportunities.

Once your books are current, you’ll be better equipped to evaluate cash flow, monitor profitability and make informed business decisions. Clean books provide the foundation for reliable budgeting and planning. Updating records may also reveal opportunities to improve efficiency and focus your business strategy on the most profitable activities.

Ask for help

You might be able to address minor bookkeeping issues yourself, but more complex situations call for professional assistance. Don’t wait until the next tax deadline or business opportunity exposes the problem. Contact us. We can help you update your financial records and provide the timely, reliable information you need to monitor profitability, manage cash flow and grow your business.

© 2026

Projecting your business’s income for this year and next can allow you to time income and deductible expenses to your tax advantage. It’s generally better to defer tax — unless you expect to be in a higher tax bracket next year. Timing income and expenses can be easier for cash-basis taxpayers. But accrual-basis taxpayers have some unique tax-saving opportunities when it comes to deductions.

Review incurred expenses

The key to saving tax as an accrual-basis taxpayer is to properly record and recognize expenses that were incurred this year but won’t be paid until 2026. This will enable you to deduct those expenses on your 2025 federal tax return. Common examples of such expenses include:

• Commissions, salaries and wages,
• Payroll taxes,
• Advertising,
• Interest,
• Utilities,
• Insurance, and
• Property taxes.
• 
  

You can also accelerate deductions into 2025 without actually paying for the expenses in 2025 by charging them on a credit card. (This works for cash-basis taxpayers, too.)

Look at prepaid expenses

Review all prepaid expense accounts. Then write off any items that have been used up before the end of the year.

If you prepay insurance for a period of time beginning in 2025 and ending in 2026, you can expense the entire amount this year rather than spreading it between 2025 and 2026, as long as a proper method election is made.

More tips to consider

Be sure to review your outstanding receivables and write off any that you can establish as uncollectible. Also, pay interest on shareholder loans. For more information on these strategies and to discuss other ways your business can reduce 2025 taxes, contact us.

© 2025

If you’re a real estate developer or a small business owner who owns commercial real estate, you might be thinking about selling a property. If it has appreciated significantly, a Section 1031 like-kind exchange may allow you to defer tax on some or all of the gain. With this transaction, you exchange one property for another qualifying property rather than sell the property outright. You generally don’t pay tax on the gain on the relinquished property until you sell the replacement property.

You may be familiar with the basics of a Sec. 1031 exchange, but you might not understand all the rules and restrictions. Here are four common myths to be aware of so you can avoid missing planning opportunities or facing unexpected taxes.

Myth 1: The replacement property must be identical to the property you give up

The definition of like-kind property is surprisingly broad. To qualify for Sec. 1031 exchange treatment, you may exchange any real property held for investment or productive use in your trade or business (relinquished property) for like-kind investment, trade or business real property (replacement property).

For these purposes, most real property is considered like-kind with other real property. However, neither the relinquished property nor the replacement property can be real property held primarily for sale.

Myth 2: You never have to pay current-year tax in a like-kind exchange

A properly structured Sec. 1031 exchange can defer gain. But that doesn’t mean every exchange is completely tax-free.

If it’s a straight property-for-property exchange, you generally won’t have to recognize any gain from the exchange. You’ll take the same basis (your cost for tax purposes) in the replacement property that you had in the relinquished property. Even if you don’t have to recognize any gain on the exchange, you must report it on Form 8824, “Like-Kind Exchanges.”

However, the properties aren’t always equal in value. In these situations, some cash may be added to the deal. This cash is known as “boot.” If you receive boot, you’ll have to recognize gain up to the amount of boot received.

For example, let’s say you exchange a building with a basis of $100,000 for a building valued at $125,000, plus $10,000 in cash. Your realized gain on the exchange is $35,000 because you received $135,000 in value for an asset with a basis of $100,000. However, because it’s a Sec. 1031 exchange, you have to currently recognize (and pay tax on) only $10,000 of your gain — the amount of cash (boot) you received.

It’s also important to remember that no matter how much boot you receive, you’ll never recognize more than your actual realized gain on the exchange. In addition, your basis in the like-kind replacement property you receive equals the basis you had in the relinquished property reduced by the amount of boot you received but increased by the amount of any gain recognized.

Myth 3: Cash is the only type of boot

Boot can take forms other than cash. If the property you’re exchanging is subject to debt from which you’re being relieved, the amount of the debt is generally treated as boot. The reason is that if someone takes over your debt, it’s equivalent to that person giving you cash.

Of course, if the replacement property is also subject to debt, then you’re treated as receiving boot only to the extent of your net debt relief, the amount by which the debt you become free of exceeds the debt you pick up.

Myth 4: You must have the replacement property lined up immediately

It’s possible, but rare to find someone who wants to simultaneously swap like-kind properties with you. Fortunately, you don’t have to acquire the replacement property from the same party you relinquish your property to. And you don’t have to acquire the replacement property on the same day you transfer the relinquished property.

In most Sec. 1031 exchanges, the relinquished property is sold first, and the taxpayer uses the exchange proceeds to acquire a replacement property. However, a qualified intermediary must hold the proceeds from the relinquished property until they’re transferred to acquire the replacement property. And deadlines apply: Generally, you must 1) identify a potential replacement property within 45 days after transferring the relinquished property, and 2) complete the acquisition of the replacement property within 180 days.

These deadlines are strictly enforced. Missing either one can cause the entire transaction to lose tax-deferred treatment. While you don’t need to have the replacement property lined up immediately, you do need a plan. Begin evaluating replacement property options as early as possible and work closely with your professional advisors throughout the process.

Don’t let misconceptions derail your Sec. 1031 exchange

Like-kind exchanges can be a tax-savvy way to dispose of investment or business real property and retain working capital for your business or investment activities. But you’ll need to meet all the requirements. If you’re considering selling investment or business real estate, contact us to discuss this strategy further.

© 2026