bookkeeping

Six last-minute tax tips for businesses
Six last-minute tax tips for businesses 266 266 Lindsay Yeager

Year-round tax planning generally produces the best results, but there are some steps you can still take in December to lower your 2025 taxes.

Here are six to consider:

1. Postpone invoicing. If your business uses the cash method of accounting and it would benefit from deferring income to next year, wait until early 2026 to send invoices.

2. Prepay expenses. A cash-basis business may be able to reduce its 2025 taxes by prepaying certain 2026 expenses — such as lease payments, insurance premiums, utility bills, office supplies and taxes — before the end of the year. Many expenses can be deducted even if paid up to 12 months in advance.

3. Buy equipment. Take advantage of 100% bonus depreciation and Section 179 expensing to deduct the full cost of qualifying equipment or other fixed assets. Under the One Big Beautiful Bill Act, 100% bonus depreciation is back for assets acquired and placed in service after January 19, 2025. And the Sec. 179 expensing limit has doubled, to $2.5 million for 2025. But remember that the assets must be placed in service by December 31 for you to claim these breaks on your 2025 return.

4. Use credit cards. What if you’d like to prepay expenses or buy equipment before the end of the year, but you don’t have the cash? Consider using your business credit card. Generally, expenses paid by credit card are deductible when charged, even if you don’t pay the credit card bill until next year.

5. Contribute to retirement plans. If you’re self-employed or own a pass-through business — such as a partnership, S corporation or, generally, a limited liability company — one of the best ways to reduce your 2025 tax bill is to increase deductible contributions to retirement plans. Usually, these contributions must be made by year-end. But certain plans — such as SEP IRAs — allow your business to make 2025 contributions up until its tax return due date (including extensions).

6. Qualify for the pass-through deduction. If your business is a sole proprietorship or pass-through entity, you may be able to deduct up to 20% of qualified business income (QBI). But if your 2025 taxable income exceeds $197,300 ($394,600 for married couples filing jointly), certain limitations kick in that can reduce or even eliminate the deduction. One way to avoid these limitations is to reduce your income below the threshold — for example, by having your business increase its retirement plan contributions.

Most of these strategies are subject to various limitations and restrictions beyond what we’ve covered here. Please consult a Smolin Representative before implementing them. We can also offer more ideas for reducing your taxes this year and next.

Hiring a bookkeeper for your small business
Hiring a bookkeeper for your small business 266 266 Lindsay Yeager

Choosing the right bookkeeper is one of the most important staffing decisions your business will make. A skilled bookkeeper maintains accurate financial records, manages cash flow, and ensures compliance with accounting and tax requirements. But finding the right person can be challenging, especially in today’s competitive job market. Whether you’re replacing a long-time team member or hiring for the first time, here are some key factors to consider when interviewing candidates.

Education and Experience

A good starting point is evaluating each candidate’s educational background. Some bookkeepers have degrees in accounting, finance or business, while others have completed bookkeeping training programs or earned software certifications. Advanced training isn’t required, but it can demonstrate professionalism and a commitment to maintaining current skills.

Experience and up-to-date accounting knowledge also matter. Most small businesses benefit from hiring someone with several years of bookkeeping experience, ideally in a similar industry or in a business of comparable complexity. Familiarity with U.S. Generally Accepted Accounting Principles and applicable tax laws is valuable, even if a candidate isn’t a formally trained accountant. Because accounting and tax rules change frequently, you’ll want someone who stays current on the latest developments.

Technical Skills

Modern bookkeepers rely heavily on technology. Ask candidates about their experience with your specific accounting program and related tools, such as payroll systems, tax software, budgeting applications, artificial intelligence tools and spreadsheet programs.

If you’re open to changing systems, experienced bookkeepers can often recommend software solutions that improve efficiency and visibility. A bookkeeper’s ability to adapt to new technology or automate manual processes is often just as valuable as his or her ability to keep the books balanced.

Compliance awareness is another important factor. Many bookkeepers manage or assist with payroll filings, sales tax reporting, Form 1099 preparation and other compliance tasks. Even if you rely on a CPA firm for final tax returns, your bookkeeper’s understanding of the underlying rules drives the work’s accuracy and timeliness. Someone who’s handled these responsibilities in previous roles will likely require significantly less training and supervision.

Oversight and Planning Abilities

Strong bookkeepers do more than record transactions — they can also help streamline daily operations. Ask candidates about their experience closing the books each month, preparing timely financial statements, reconciling accounts, minimizing workflow bottlenecks and supporting audit requests.

Some bookkeepers also take on higher-level financial responsibilities. For instance, they may prepare budgets, forecasts or weekly management summaries. These skills can be particularly valuable because they may help relieve you of some strategic planning tasks and provide a sounding board for major business decisions. Some candidates may even have training in forensic accounting, which you can leverage to tighten internal controls and reduce fraud risks.

Soft Skills

Technical skills are only part of the hiring equation. A bookkeeper works with sensitive financial data, so trustworthiness, confidentiality and sound judgment are essential.

A bookkeeper also interacts with vendors, employees, customers and your outside accounting firm, so strong communication and collaboration skills matter. Consider whether candidates can explain financial concepts clearly, are organized and proactive, and maintain professionalism. Discuss how they’ve handled reporting discrepancies or audit adjustments in previous roles. You might even present a recent accounting challenge from your business and ask how they’d address it. When assessing competency, you may find that a candidate’s problem-solving approach often reveals as much as his or her resumé.

Long-term Potential

Even the most experienced bookkeeper may struggle if their working style doesn’t align with your business or mesh well with your existing staff. The ideal candidate will demonstrate leadership qualities, a willingness to take initiative and a desire to grow with your company.

When searching for the right candidate for this critical position, a thoughtful hiring process can prevent costly turnover, reporting errors and frustration down the road. In addition to helping brainstorm questions and referring qualified candidates, we can temporarily handle your bookkeeping tasks. Contact a Smolin Representative for guidance during your search.

Have you used up your 2025 FSA funds?
Have you used up your 2025 FSA funds? 266 266 Lindsay Yeager

If you have a flexible spending account (FSA) through your employer to help pay for health or dependent care expenses, now’s a good time to check your balance. FSAs save taxes, but they generally require you to incur expenses to use the funds by year end or forfeit them. Here’s a refresher on the rules and limits.

FSAs for Health Care

A maximum pretax contribution of $3,300 to a health care FSA is permitted in 2025. (This amount is annually adjusted for inflation and will increase to $3,400 in 2026.) You use the pretax dollars to pay for medical expenses not covered by insurance.

An FSA allows you to save taxes without having to claim a medical expense deduction. This is beneficial because, to claim the deduction, you must itemize deductions on your tax return and the expenses are deductible only to the extent that they exceed 7.5% of your adjusted gross income. This threshold can be hard to meet. An added benefit of FSA contributions is that they aren’t subject to Social Security or Medicare taxes.

However, the “use-it-or-lose-it” rule means you must incur qualifying medical expenses by the last day of the plan year (December 31 for a calendar year plan) — unless the plan allows a grace period. A grace period can’t extend beyond the 15th day of the third month following the close of the plan year (March 15 for a calendar year plan). Alternatively, your FSA might allow you to roll over a balance of up to $660 to 2026. (The limit for rollovers from 2026 to 2027 will be $680.)

Don’t Lose Your FSA Dollars: Eligible Expenses to Consider

Take a look at your year-to-date FSA expenditures now to see how much you still need to spend. What are some ways to use up the money? Before year end (or the extended date, if permitted), schedule certain elective medical procedures, visit the dentist or buy new eyeglasses. Even over-the-counter medications and health-related supplies may be eligible.

FSAs for Dependent Care

Some employers also allow employees to set aside funds on a pretax basis in dependent care FSAs. A $5,000 maximum annual contribution is permitted ($2,500 for a married couple filing separately) in 2025. (This amount isn’t annually adjusted for inflation. But under the One Big Beautiful Bill Act, the limit will increase to $7,500 beginning in 2026.)

Dependent care FSAs can be used to pay dependent care expenses for:

  • A child who qualifies as your dependent and who is under age 13, or
  • A dependent or spouse who is physically or mentally incapable of self-care and who has the same principal place of abode as you for more than half of the tax year.

Like health FSAs, dependent care FSAs are subject to a use-it-or-lose-it rule, and grace period relief may apply. But rollovers to the next year aren’t allowed. Therefore, it’s a good idea to check your dependent care expenses to date.

Wrapping up 2025

As 2025 wraps up, be sure to review your FSA balance and check whether your plan offers a grace period or rollover option. Then take steps before year end to ensure you don’t forfeit any FSA funds. Ask your HR department any questions you have about your specific plan. A Smolin Representative can answer your tax-related questions and provide more year-end tax planning tips.

Ready, set, count your inventory
Ready, set, count your inventory 266 266 Lindsay Yeager

When businesses issue audited financial statements, year-end physical inventory counts may be required for retailers, manufacturers, contractors and others that carry significant inventory. Auditors don’t perform the counts themselves, but they observe them to evaluate the accuracy of management’s procedures, verify that recorded quantities exist and assess whether inventory is properly valued.

Why Year-End Inventory Counts Matter for Every Business

Even for businesses that aren’t subject to audit requirements, conducting a physical count is a smart end-of-year exercise. It provides an opportunity to confirm that the quantities in your accounting system reflect what’s actually on the shelves, uncover shrinkage or obsolescence, and pinpoint any weaknesses in your internal controls. Regular counts also support better purchasing decisions, more accurate financial reporting and improved cash flow management — making them a valuable exercise for companies of any size. Here are some best practices to help you prepare and maximize the benefits.

Streamlining the process

Planning is critical for an accurate and efficient inventory count. Start by selecting a date when active inventory movement is minimal. Weekends or holidays often work best. Communicate this date to all stakeholders to ensure proper cutoff procedures are in place. New inventory receipts or shipments can throw off counting procedures.

In the weeks before the counting starts, management generally should:

  • Clean and organize stock areas,
  • Order (or create) prenumbered inventory tags,
  • Prepare templates to document the process, such as count sheets and discrepancy logs,
  • Assign workers in two-person teams to specific count zones,
  • Train counters, recorders and supervisors on their assigned roles,
  • Preview inventory for potential roadblocks that can be fixed before counting begins,
  • Write off any defective or obsolete inventory items, and
  • Count and seal slow-moving items in labeled containers ahead of time.

External Audit Teams and Their Role in Inventory Procedures

If your company issues audited financial statements, one or more members of your external audit team will observe the procedures (including any statistical sampling methods), review written inventory processes, evaluate internal controls over inventory, and perform independent counts to compare to your inventory listing and counts made by your employees.

Handling discrepancies 

Modern technology has made inventory counting far more efficient. Barcode scanners, mobile devices and radio frequency identification (RFID) tags reduce manual errors and speed up the process. Linking these tools to a perpetual inventory system keeps your records updated in real time, so what’s in your system more closely aligns with what’s on your shelves. However, even with automation, discrepancies can still happen.

When your books and counts don’t sync, quantify the magnitude of any inventory discrepancies and make the necessary adjustments to your records and financial statements. Evaluate whether your valuation and costing methods remain appropriate; if not, update them to ensure consistency and accuracy going forward.

Cycle Counts: A Proactive Approach to Accuracy

Resist the temptation to simply write off the difference and move on. Instead, investigate the root causes, such as human counting errors, system data issues, mislocated items, theft, damage or obsolescence. Use the results to strengthen controls and processes. Possible improvements include revising purchasing and shipping procedures, upgrading inventory management software, installing surveillance in key areas, securing high-risk items, and educating staff on proper inventory handling and reporting procedures.

Also consider ongoing cycle counts that focus on high-value, high-turnover items to help detect issues sooner and reduce year-end surprises. For companies that issue audited financials, cycle counts complement — but don’t replace — year-end physical count requirements.

Formally documenting the inventory counting process, findings and outcomes helps management learn from past mistakes. And it provides an important trail for auditors to follow.

For more information

Physical inventory counts can enhance operational efficiency and financial reporting integrity. With the help of modern technology and advanced preparation, the process can be less disruptive and more valuable. When discrepancies arise, management needs to act decisively and systematically. Contact a Smolin Representative for guidance on complying with the inventory accounting rules and optimizing inventory management.

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