What’s The Best Accounting Method Route For Business Tax Purposes?

Businesses basically have two accounting methods to figure their taxable income: cash and accrual. Many businesses have a choice of which method to use for tax purposes. The cash method often provides significant tax benefits for eligible businesses, though some may be better off using the accrual method. Thus, it may be prudent for your business to evaluate its method to ensure that it’s the most advantageous approach.

Eligibility to use the cash method

“Small businesses,” as defined by the tax code, are generally eligible to use either cash or accrual accounting for tax purposes. (Some businesses may also be eligible to use various hybrid approaches.) Before the Tax Cuts and Jobs Act (TCJA) took effect, the gross receipts threshold for classification as a small business varied from $1 million to $10 million depending on how a business was structured, its industry and factors involving inventory.

The TCJA simplified the small business definition by establishing a single gross receipts threshold. It also increased the threshold to $25 million (adjusted for inflation), expanding the benefits of small business status to more companies. For 2024, a small business is one whose average annual gross receipts for the three-year period ending before the 2024 tax year are $30 million or less (up from $29 million for 2023).

In addition to eligibility for the cash accounting method, small businesses can benefit from advantages including:

Simplified inventory accounting,
An exemption from the uniform capitalization rules, and
An exemption from the business interest deduction limit.

Note: Some businesses are eligible for cash accounting even if their gross receipts are above the threshold, including S corporations, partnerships without C corporation partners, farming businesses and certain personal service corporations. Tax shelters are ineligible for the cash method, regardless of size.

Difference between the methods

For most businesses, the cash method provides significant tax advantages. Because cash-basis businesses recognize income when received and deduct expenses when they’re 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 the payment of expenses.

In contrast, accrual-basis businesses recognize income when earned and deduct expenses when incurred, without regard to 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 a company’s accrued income tends to be lower than its accrued expenses, the accrual method may result in 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.

Switching methods

Even if your business would benefit by switching from the accrual method to the cash method, or vice versa, it’s important to consider the administrative costs involved in a change. For example, if your business prepares its financial statements in accordance with U.S. Generally Accepted Accounting Principles, it’s required to use the accrual method for financial reporting purposes. That doesn’t mean it can’t use the cash method for tax purposes, but it would require maintaining two sets of books.

Changing accounting methods for tax purposes also may require IRS approval. Contact us to learn more about each method.

Although financial statement fraud is the least common form of occupational theft (9% of incidents), it costs organizations the most in financial losses, according to the Association of Certified Fraud Examiners. Businesses defrauded by financial statement schemes had median losses of $593,000.

Early revenue recognition, which distorts profits and can artificially boost a business’s financial profile, is popular among financial statement fraud perpetrators. To comply with Generally Accepted Accounting Principles and preserve your company’s reputation, you must prevent such activities on your watch. It’s also important to be able to detect them in the financial statements of business partners, including acquisition targets and customers applying for credit.

Schemes and warning signs

Owners, executives and others with access to financial statements might recognize revenue improperly by delivering products early, recording revenue before full performance of a contract, backdating agreements or keeping the books open past the end of a period. Some early revenue recorders have shipped merchandise to undisclosed warehouses and recorded those shipments as sales. Or they’ve used bill-and-hold agreements where a customer agrees to buy merchandise, but the company holds the goods until shipment is requested.

Probably the most obvious marker for early revenue recognition is when a business records a large percentage of its revenue at the end of a given financial period. Significant transactions with unusual payment terms can also be a warning sign. When these or other red flags are unfurled, it’s time to call in a fraud investigator.

Fraud professionals typically compare revenue reported by month and by product line or business segment during the current period with that of earlier, comparable periods. They generally employ software designed to identify unusual or unexpected revenue relationships or transactions. Increasingly, they’re using AI tools to analyze what can be large volumes of data and suspicious patterns.

Examples of investigations

If, for example, professionals suspect merchandise has been billed before shipment, they’ll look for discrepancies between the quantity of goods shipped and quantity of goods billed. Professionals will also:

Examine sales orders, shipping documents and sales invoices,
Compare prices on invoices with published prices, and
Note any extensions on sales invoices.

What if professionals suspect merchandise was shipped prematurely? They compare the period’s shipping costs with those in earlier periods. Significantly higher costs could indicate an early revenue recognition scheme.

Fraud professionals also might sample sales invoices for the end of the period and the beginning of the next period to confirm the associated revenues are recorded when they should be. If phantom sales are suspected, reversed sales in subsequent periods and increased costs for off-site storage may provide evidence of fraud.

Preventing fraud

Early revenue recognition could be carried out by one person or several working in collusion. One of the best ways to prevent such schemes is to minimize executive stress. For example, don’t tie all of an employee’s compensation to achieving specific revenue targets. Strong oversight by your company’s board of directors and its finance committee is also critical. Contact us with questions and concerns.

In today’s uncertain marketplace, many businesses are stashing operating cash in their bank accounts, even though they might not have imminent plans to deploy their reserves. However, excessive “rainy day” funds could be an inefficient use of capital. Here’s a systematic approach to help estimate reasonable cash reserves and maximize your company’s return on long-term financial positions.

What’s the harm in stockpiling cash?

An extra cushion helps your business weather downturns or fund unexpected repairs and maintenance. But cash has a carrying cost — the difference between the return companies earn on their cash and the price they pay to obtain cash.

For instance, checking accounts often earn no (or very little) interest, and many savings accounts generate returns below 2%. If a company has cash reserves while simultaneously carrying debt on its balance sheet, such as equipment loans, mortgages and credit lines, it will pay higher interest rates on loans than it’s earning from the bank accounts. This spread represents the carrying cost of cash.

What’s the optimal amount of cash to keep in reserve?

Unfortunately, there’s no magic current ratio (current assets divided by current liabilities) or percentage of assets that’s right for every business. A lender’s liquidity covenants are just an educated guess about what’s reasonable.

However, you can analyze how your company’s liquidity metrics have changed over time and how they compare to industry benchmarks. Substantial increases in liquidity — or ratios well above industry norms — may signal an inefficient deployment of capital.

Prospective financial reports for the next 12 to 18 months can be developed to evaluate whether your company’s cash reserves are too high. For example, a monthly forecasted balance sheet might estimate expected seasonal ebbs and flows in the cash cycle. Or a projection of the worst-case scenario, based on certain what-if assumptions, might be used to establish a company’s optimal cash balance. Forecasts and projections should take into account a business’s future cash flows, including capital expenditures, debt maturities and working capital requirements.

Formal financial forecasts and projections provide a method for building up healthy cash reserves. This is much better than relying on gut instinct. You also should compare actual performance to your forecasts and projections — and adjust them, if necessary.

What’s the highest and best use of excess cash?

After prospective financial reports and industry benchmarks have been used to determine a company’s optimal cash balance, management needs to find ways to reinvest its cash surplus. For example, you might consider repurposing the surplus to:

Invest in marketable securities, such as mutual funds or diversified stock-and-bond portfolios,
Repay debt to lower the carrying cost of cash reserves,
Repurchase stock, especially when minority shareholders routinely challenge management’s decisions, or
Acquire a struggling competitor or its assets.

With proper due diligence, these strategies could allow your business to reap a higher return over the long run than leaving funds in a checking or savings account.

We can help

Contact us for help creating formal financial forecasts and projections and evaluating benchmarking data to devise sound cash management strategies. We can guide you toward more efficient use of capital, while reserving enough cash on hand to meet your business’s short-term operating needs.

Most anyone who’s ever put together a resume would probably tell you the easiest part is the very end. That’s where you put your educational degrees. However, thanks to a trend sweeping many industries, that part may be getting even easier. Why? Because many hiring organizations are no longer looking at education at all.

It’s called “skills-based hiring.” Under this approach, employers focus on candidates’ verifiable abilities, knowledge and experience applicable to some open positions rather than on applicants’ educational backgrounds.

Recent surveys

In an August 2023 post on its Talent Blog, social media giant LinkedIn reported that “those with paid Recruiter licenses on LinkedIn tend to search for candidates by their skills five times more often than they search for candidates by their degrees.” In addition, a multilingual analysis of job posts on the site revealed that many employers are more often advertising job roles unaccompanied by professional degree requirements.

Another report, conducted by student-focused data analysis firm Intelligent.com and published in November 2023, found that a perhaps astounding 45% of the 800 U.S. companies surveyed said they were planning to eliminate bachelor’s degree requirements for some of their positions this year. The survey also found that 55% of responding businesses had already removed degree requirements for some positions last year, particularly entry- and mid-level jobs.

Trend drivers

The skills-based hiring trend may catch many people off-guard — especially those who grew up being told, “Go to college and you’ll get a better job!” Its roots may lie in changing societal attitudes toward university education. The escalating price tag and high anxiety associated with student debt have many younger people rethinking whether they want to attend traditional colleges, and employers seem to be responding.

There are other reasons as well. Proponents argue that skills-based hiring reduces bias, strengthens objectivity and boosts diversity. They say job candidates are more likely to be judged on the skills they bring to the table rather than the prestigiousness of the institution of higher learning they attended.

If you’re looking for more practical reasons to follow the approach, there are those as well. Focusing on skills rather than education may result in better “job matching” — that is, aligning job listings with qualified applicants. Theoretically, and in many cases realistically, this reduces time to hire as well as boosts engagement and retention. Employees are hired to do what they do best rather than based on educational backgrounds that may not fit with what the hiring organization really needs.

No panacea

To be clear, skills-based hiring shouldn’t be regarded as a panacea that will cure any and all employment ills. Every organization, including yours, needs to develop a hiring strategy best suited to its mission, operations and job market. Nonetheless, this is a trend worth keeping an eye on. Our firm can help you measure and analyze your hiring and labor costs.

The Department of Labor (DOL) has announced adjustments to civil monetary penalties for certain failures associated with qualified retirement plans. These adjustments are made annually to account for inflation and ensure that penalties remain effective deterrents. As employers and plan sponsors, staying informed about ERISA compliance and potential penalties is crucial.

Penalty Adjustments for 2024

Failure to furnish or maintain records – $37 per participant.
Failure to file Form 5500 – $2,670 per day.
Failure to notify participants of certain Internal Revenue Code benefit restrictions or to provide an automatic contribution arrangement notice – $2,112 per day.
Failure to provide participants either a blackout notice or a notice of the right to divest employer securities – $169 per participant per day.
Failure to provide a Summary of Benefits Coverage – $1,406.
Failure to provide materials requested by the DOL – $190 per day, not to exceed $1,906 per request.

At Yeo & Yeo CPAs & Advisors, we understand the complexities of managing employee benefit plans. Our dedicated Employee Benefit Plan Audit Services Group comprises year-round, full-time specialists committed to understanding your unique needs. Partner with Yeo & Yeo to navigate the complexities of employee benefit plan compliance. Contact us today for a stress-free audit experience and knowledgeable guidance on your benefit plans.

A complete list of ERISA violations subject to penalty is available on the DOL website.

Typically, an estate plan includes accommodations for your spouse, children, grandchildren and even future generations. But some members of the family can be overlooked, such as your parents or in-laws. Yet the older generation may also need your financial assistance.

How can you best handle the financial affairs of parents in the later stages of life? Incorporate their needs into your own estate plan while tweaking, when necessary, the arrangements they’ve already made. Here are five critical steps:

Open the lines of communication. Before going any further, have an honest discussion with your elderly relatives, as well as other family members who may be involved, such as your siblings. Make sure you understand your parents’ wishes and explain the objectives you hope to accomplish. Understandably, they may be hesitant or too proud to accept your help or provide information, so some arm twisting may be required.

Identify key contacts. Just like you’ve done for yourself, compile the names and addresses of professionals important to your parents’ finances and medical conditions. These may include stockbrokers, financial advisors, attorneys, CPAs, insurance agents and physicians.

List and value their assets. If you’re going to be able to manage the financial affairs of your parents, having knowledge of their assets is vital. It would be wise to keep a list of their investment holdings, IRA and retirement plan accounts, and life insurance policies, including current balances and account numbers. Be sure to add in projections for Social Security benefits. When all is said and done, don’t be surprised if their net worth is higher or lower than what you (or they) initially thought. You can use this information to formulate the appropriate estate planning techniques.

Execute documents. The next step is to develop a plan incorporating several legal documents. If your parents have already created one or more of these documents, they may need to be revised or coordinated with new ones. Some elements commonly included in an estate plan are:

Wills. Your parents’ wills control the disposition of their possessions, such as cars and jewelry, and tie up other loose ends. (Of course, jointly owned property with rights of survivorship automatically passes to the survivor.) Notably, a will also establishes the executor of your parents’ estates. If you’re the one providing financial assistance, you’re probably the optimal choice.
Living trusts. A living trust can supplement a will by providing for the disposition of selected assets. Unlike a will, a living trust doesn’t have to go through probate, so this might save time and money, while avoiding public disclosure.
Powers of attorney. This document authorizes someone to legally act on behalf of another person. With a durable power of attorney, the most common version, the authorization continues after the person is disabled. This enables you to better handle your parents’ affairs.
Living wills or advance medical directives. These documents provide guidance for end-of-life decisions. Make sure that your parents’ physicians have copies so they can act according to your parents’ wishes.

Make monetary gifts. If you decide the best approach for helping your parents is to give them monetary gifts, it’s relatively easy to avoid gift tax liability. Under the annual gift tax exclusion, you can give each recipient up to $18,000 in 2024 without paying any gift tax. Any excess may be sheltered by the generous $13.61 million gift and estate tax exemption amount in 2024. Contact us with any questions.

Kellen Riker was recently promoted to manager. Let’s learn about Kellen and his perspective on his career, working with clients, and what makes being an accountant fun.

What are your roles in the firm?

As a manager in the Assurance Service Line, I oversee assurance engagements, including communicating with the clients and training internal staff. I am a member of the Government Services Group and am involved in developing processes and ensuring our team is meeting compliance requirements. I am also the Yeo Young Professionals service chair for the Yeo & Yeo Foundation board, helping evaluate donation requests and coordinate the 2024 firm-wide service project.

Tell us about your career path.

I joined Yeo & Yeo in 2018 as a staff accountant in the Flint office. From there, I learned the ins and outs of the Assurance Service Line while obtaining my CPA license. Over the years, I have become more involved in the firm, joining the Foundation board, joining the Government Services Group, and serving as the Yeo Young Professionals president. Through these experiences and the mentorship of my managers, I’ve learned leadership skills that benefit both my clients and my colleagues.

What do you enjoy most about your career?

The thing I enjoy most about my career is the people I work with and the people I work for. I’ve developed great relationships with the clients I work with each year. I also collaborate with many people in different offices across the firm, which has helped me gain new perspectives. I truly feel that the people I work with are my friends and not just my coworkers.

What do you enjoy most about working with clients?

I enjoy getting to know each client on a personal level. As an auditor, we work with many of the same clients each year, which gives us the opportunity to really learn about who our clients are as individuals. I always look forward to catching up with clients, asking them how their families are or how their big vacations went. It’s very rewarding to know that I am delivering a great service and experience to each client and that I’m helping them achieve their goals.

What makes being an accountant fun?

There is a lot more to auditing than just performing an audit. I really enjoy helping clients achieve their goals above and beyond simply delivering the completed audit. Our job as accountants is to help our clients succeed. Sometimes, that includes providing consulting services, implementing a new standard, or offering training. Helping clients develop their skills and improve their expertise is fun and rewarding.

What do you enjoy doing outside of the office?

Some of my biggest hobbies and interests are reading books, watching hockey, playing video games, and spending time with my family.

What are some of the things you do to continuously learn and grow?

My favorite way to learn and grow is to listen to others’ input on topics and processes. When I can gain an understanding of another person’s thought process, it broadens my perspectives and helps me come up with new ideas.

For businesses, and people for that matter, the beginning of the calendar year can be a bit of a grind. The holidays have passed, summer vacations are relatively far off and everyone is trying to build momentum for a strong, healthy year.

Amongst all the nose-to-the-grindstone stick-to-itiveness, however, you and your leadership team shouldn’t lose sight of strategic planning. Your competitors probably haven’t, and the business landscape is always shifting in ways large and small. If you’ve let strategic planning slide a bit recently, here are some ways to reinvigorate it.

Push back against procrastination

Ideally, most companies should engage in an active strategic planning initiative at least once a year. This would involve doing research and holding meetings that eventually result in actionable, measurable goals.

However, some businesses may get so caught up in day-to-day operations that strategic planning goes by the wayside. Sometimes, this is a positive sign. Perhaps the company is so busy and profitable that it must focus on maximizing the opportunities at hand.

But it can be dangerous as well. A sudden market shift or disruptive competitor may leave the business flat-footed. Generally, companies shouldn’t let more than three years pass without productively engaging in strategic planning.

Go to your happy place

Because strategic planning is all about the big picture rather than the day-to-day, the process tends to work best when you put the people involved in a fresh setting. This is why the company retreat has long been an iconic undertaking, often depicted in movies and TV shows.

Granted, there is the potential for excessive spending and counterproductive distractions when organizing and holding one of these events. But if planned carefully and undertaken mindfully, getting your strategic planning team out of the office, or away from their computer screens at home, may pay off.

Engage an outside facilitator

Intuitively, it may seem like a business owner or CEO should lead a strategic planning session. And this can certainly be a cost-effective approach. But the objectivity of an outside professional may be worth investing in.

First, a facilitator may be able to better create a “there are no bad ideas” environment. Team members are often more willing to speak freely when they’re not directly addressing the owner or chief executive of the company. Plus, experienced facilitators are usually good at “working the room” (making people feel at ease), as well as adhering to a productive agenda.

Devise an action plan

Strategic planning should never be all talk and no action. Typically, the first session will review the business’s mission (what it does), vision (where it’s going), current financial results, and perhaps some of its recent notable successes and setbacks. It’s critical, however, to be results oriented. This means:

Setting several clearly worded goals,
Devising reasonable strategies for pursuing those goals, and
Identifying the specific objectives that will enable you to accomplish the goals.

One way to ease the pressure of strategic planning is to not try to do everything at once. If you can accomplish the three points above in one session, schedule a follow-up meeting to devise an action plan with a timeline and assigned responsibilities. That plan can then be formally approved by business ownership.

Helpful voices

One last point: Don’t restrict strategic planning to only internal voices. Your professional advisors can also lend their expertise to the process, whether by attending a session or reviewing an action plan. For help with the financial side of strategic planning, contact us.

If your business has significant inventory on its balance sheet, it can be costly. The carrying costs of inventory include warehousing, salaries, insurance, taxes, and transportation, as well as depreciation and shrinkage. Plus, tying up working capital in inventory detracts from other strategic investment opportunities.

Reducing these costs can help improve a company’s profits and boost operating cash flow. Here are two alternative inventory management systems to consider.

1. JIT method

Just-in-time (JIT) inventory management involves planning shipments of raw materials to arrive just before they’re required. This saves money in inventory costs by reducing the amount of inventory on hand. It also increases production responsiveness and flexibility. Elements of JIT management include:

Smaller lot sizes. This allows your company to be more flexible and meet changes in market demand. It can also decrease inventory cycle time, lead times and pipeline inventory. Because lot sizes are smaller, companies that use the JIT method can achieve a consistent workload on the production system.

Tighter set-up times. By reducing set-up times and the associated costs, you can afford to produce smaller lot sizes. Also, if your company is inefficient on machine setups, you’ll likely change products less often.

Flexibility. A flexible workforce can quickly reassign tasks during bottlenecks or unplanned spikes in demand.

Close supplier relationships. Suppliers must provide frequent, on-time deliveries of high-quality materials. So, close ties with them are vital to the JIT system. Long-term relationships with suppliers promote loyalty and improved overall quality.

Regular maintenance schedules. For companies with a high degree of automation, preventive maintenance is critical. Unplanned downtime can be disruptive and costly.

Quality control. JIT systems are designed to control quality at the source, rather than later in the process. For that reason, production workers are responsible for their own work, and if a defective unit is discovered, it’s returned to the area where the defect occurred. This makes employees accountable and empowers them to produce higher-quality products.

2. Accurate response method

Accurate response inventory management systems focus on forecasting, planning and production. The underlying premise of accurate response focuses on flexible processes and shorter cycle times to better match supply with demand. By speeding up the supply chain process, management can delay decisions regarding raw materials, obtain more market information and better determine production requirements.

This inventory management method incorporates the following key elements:

Overall performance. Accurate response measures the cost per unit of stockouts and markdowns. Then it factors this information into the overall evaluation of the company’s performance. Let’s say your company can’t meet demand. The lost sales would be factored into the overall costs, which would then justify increasing production to obtain and maintain customers.

Predictable and unpredictable products. Predictable products can be made further in advance to “reserve” capacity during the selling season for unpredictable products. Then your company won’t have to accumulate and pay for large inventories.

For more information

Incorporating JIT and accurate response techniques can dramatically improve your company’s efficiency. Lowering inventory levels cuts operating capital needs and gives you a competitive edge. Reducing the expenditures for warehouses, employees and equipment produces a stronger balance sheet and income statement and improves cash flow. Contact us discuss whether it makes sense to implement these systems at your business.

When launching a small business, many entrepreneurs start out as sole proprietors. If you’re launching a venture as a sole proprietorship, you need to understand the tax issues involved. Here are nine considerations:

1. You may qualify for the pass-through deduction. To the extent your business generates qualified business income, you’re currently eligible to claim the 20% pass-through deduction, subject to limitations. The deduction is taken “below the line,” meaning it reduces taxable income, rather than being taken “above the line” against your gross income. However, you can take the deduction even if you don’t itemize deductions and instead claim the standard deduction. Be aware that this deduction is only available through 2025, unless Congress acts to extend it.

2. You report income and expenses on Schedule C of Form 1040. The net income will be taxable to you regardless of whether you withdraw cash from the business. Your business expenses are deductible against gross income and not as itemized deductions. If you have losses, they’ll generally be deductible against your other income, subject to special rules related to hobby losses, passive activity losses and losses from activities in which you weren’t “at risk.”

3. You must pay self-employment taxes. For 2024, you pay self-employment tax (Social Security and Medicare) at a 15.3% rate on your net earnings from self-employment up to $168,600, and Medicare tax only at a 2.9% rate on the excess. An additional 0.9% Medicare tax (for a total of 3.8%) is imposed on self-employment income in excess of $250,000 for joint returns, $125,000 for married taxpayers filing separate returns and $200,000 in all other cases. Self-employment tax is imposed in addition to income tax, but you can deduct half of your self-employment tax as an adjustment to income.

4. You generally must make quarterly estimated tax payments. For 2024, these are due April 15, June 17, September 16 and January 15, 2025.

5. You can deduct 100% of your health insurance costs as a business expense. This means your deduction for medical care insurance won’t be subject to the rule that limits medical expense deductions.

6. You may be able to deduct home office expenses. If you work from a home office, perform management or administrative tasks there, or store product samples or inventory at home, you may be entitled to deduct an allocable part of certain expenses, including mortgage interest or rent, insurance, utilities, repairs, maintenance and depreciation. You may also be able to deduct travel expenses from a home office to another work location.

7. You should keep complete records of your income and expenses. Specifically, you should carefully record your expenses in order to claim all the tax breaks to which you’re entitled. Certain expenses, such as automobile, travel, meals, and home office expenses, require extra attention because they’re subject to special recordkeeping rules or deductibility limits.

8. You have more responsibilities if you hire employees. For example, you need to get a taxpayer identification number and withhold and pay over payroll taxes.

9. You should consider establishing a qualified retirement plan. The advantages are that amounts contributed to it are deductible at the time of the contributions and aren’t taken into income until they’re withdrawn. You might consider a SEP plan, which requires minimal paperwork. A SIMPLE plan is also available to sole proprietors and offers tax advantages with fewer restrictions and administrative requirements. If you don’t establish a retirement plan, you may still be able to contribute to an IRA.

Turn to us

Contact us if you want additional information regarding the tax aspects of your business, or if you have questions about reporting or recordkeeping requirements.

Many employers rightly proclaim that their employees are their most valuable assets. If this holds true for your organization, it stands to reason that paying those employees consistently and accurately is among the most important things you must do.

Unfortunately, payroll errors plague many employers. Among the biggest dangers of inaccurate payroll administration is that your organization may fall out of compliance with its payroll tax obligations.

Failure to properly withhold or deposit

As you’re no doubt aware, employers are obligated to properly withhold income tax, Social Security and Medicare contributions from employees’ pay, as well as match the Social Security and Medicare contributions.

Setup errors involving Form W-4, “Employee’s Withholding Certificate,” may occur that compromise this process. Residential address change mistakes and visa status changes can adversely affect withholding as well.

Perhaps the most dangerous mistake is failing to timely deposit withheld income taxes, Social Security and Medicare contributions, and employer matching amounts. IRS penalties accrue quickly because they increase as time goes by. That is:

If a deposit is one to five calendar days late, the penalty is 2% of the unpaid deposit,
If a deposit is six to 15 calendar days late, the penalty is 5% of the unpaid deposit, and
If a deposit is more than 15 calendar days late, the penalty is 10% of the unpaid deposit.

The penalty amount may be 15% if more than 10 calendar days elapse after the date of the first notice or letter from the IRS. Alternatively, a 15% penalty may apply on the day a notice or letter for immediate payment is received.

If the IRS can make the case that a failure to deposit payroll taxes was willful, a 100% penalty may apply. And such penalties can be levied personally against all responsible individuals in an organization.

Failure to include items in taxable income

Remember, salaries or wages aren’t always the only includable items in employees’ taxable incomes. Employers must also include the value of awards, bonuses and, as required in certain cases, fringe benefits.

Failing to withhold sufficient amounts from employees’ total reportable income can also result in noncompliance with IRS rules. In turn, this could lead to penalties for failing to properly withhold or deposit payroll taxes. What’s more, the employer could be subject to information return penalties for incorrect Forms W-2, “Wage and Tax Statement.”

A multifaceted threat

Make no mistake, payroll errors are expensive — not only because of IRS penalties but also because of the resources you must expend to correct them.

Perhaps worst of all, they hurt your employer brand. Many employees will put up with only a few mistakes, if any, before they jump ship to another job. Contact us for help identifying all your payroll costs and assistance catching costly errors.

A will or revocable trust may form the core of your estate plan, but for many people, a substantial amount of wealth bypasses these traditional estate planning tools and is transferred to their loved ones through beneficiary designations. These “nonprobate assets” may include IRAs and certain employer-sponsored retirement accounts, life insurance policies, and some bank or brokerage accounts.

Too often, people designate a beneficiary when they first acquire a nonprobate asset and then forget about it. But over time, these beneficiary designations may become inappropriate or obsolete as a result of changes in life circumstances, estate planning goals or tax laws. So, it’s a good idea to review beneficiary designations periodically — or when circumstances change — and update them if necessary.

As you conduct this review, consider the following best practices and potential pitfalls:

Name a primary beneficiary and at least one contingent beneficiary. Without a contingent beneficiary for an asset, if the primary beneficiary dies before you — and you don’t designate another beneficiary before you die — the asset will end up in your general estate and may not be distributed as you intended. In addition, certain assets, including retirement accounts, offer some protection against your creditors, which would be lost if they’re transferred to your estate. To ensure that you control the ultimate disposition of your wealth and protect that wealth from creditors, it’s important to name both primary and contingent beneficiaries and to avoid naming your estate as a beneficiary.

Update beneficiaries to reflect changing circumstances. Designating a beneficiary isn’t a “set it and forget it” activity. Failure to update beneficiary designations to reflect changing circumstances creates a risk that you will inadvertently leave assets to someone you didn’t intend to benefit, such as an ex-spouse.

It’s also important to update your designation if the primary beneficiary dies, especially if there’s no contingent beneficiary or if the contingent beneficiary is a minor. Suppose, for example, that you name your spouse as primary beneficiary of a life insurance policy and name your minor child as contingent beneficiary. If your spouse dies while your child is still a minor, it’s advisable to name a new primary beneficiary to avoid the complications associated with leaving assets to a minor (court-appointed guardianship, etc.).

Consider the impact on government benefits. If a loved one depends on Medicaid or other government benefits (a disabled child, for example), naming that person as primary beneficiary of a retirement account or other asset may render him or her ineligible for those benefits. A better approach may be to establish a special needs trust for your loved one and name the trust as beneficiary.

Keep an eye on tax developments. Changing tax laws can easily derail your estate plan if you fail to update your plan accordingly. For instance, the SECURE Act, passed in late 2019, changed the rules for inherited IRAs.

To avoid unintended consequences, review your beneficiary designations regularly to make sure they’re still appropriate and that they align with your overall estate planning goals. We’d be pleased to answer any of your questions.

Jordan Bohlinger was recently promoted to manager. Let’s learn about Jordan and his perspective on his career, work/life balance, and what makes being an accountant fun.

What are your roles in the firm?

As a manager in the Assurance Service Line, I specialize in audits of school districts and nonprofits. I also assist with the preparation and review of 990 tax returns for the firm’s nonprofit clients, as well as financial statement preparation. In everything I do, I strive to give our clients confidence that their numbers are being reported accurately while also ensuring they are maintaining compliance and evaluating risks.

Tell us about your career path.

In 2017, I graduated from Northwood University and was looking to start my career. I was hired as an intern in Yeo & Yeo’s Flint office. Over the next six years, I learned a lot and discovered my passion for working with nonprofit and education clients. In 2021, I joined our Education Services Group and was given more opportunities to share my knowledge with clients and staff. It’s been very rewarding to see how I’ve grown in my career from intern to manager and how much I’ve learned along the way.

What do you enjoy most about your career?

I enjoy building relationships with people across the state. Working with the same clients every year allows me to get to know my clients well, and I value the relationships I have made. I also enjoy being involved in the community. Through various Yeo & Yeo events, I’ve volunteered and supported the American Cancer Society, Habitat for Humanity, and our local Humane Society. It is important to give back, and I’m grateful I have the opportunity to do so through Yeo & Yeo.

How do you balance your career, personal life, and passions?

Having a career in public accounting can result in long days and busy times of the year, which means finding a good work/life balance is extremely important. Planning my time well and setting daily and weekly goals for myself keeps me on target to finish my work efficiently. This also means incorporating family time and events into my schedule and sticking to it. I put just as much effort into my family as I do my career to ensure both aspects of my life are successful and fulfilled.

What advice do you have for those considering a career in public accounting?

I would encourage anyone interested in accounting to become a part of any club, group, or committee that will allow them to get to know other people in the profession. Surrounding yourself with like-minded professionals is essential to success. In addition, I would embrace any situation that would put you in a leadership role or would allow you to take on more responsibility. This includes taking professional development classes, volunteering, and attending networking events. Putting yourself out there as being willing to learn, grow, and develop new skills is crucial to advancing your career in this industry. Finally, if you can, find a mentor in the field whom you trust and can go to for advice. Having someone you can reach out to for questions, opinions, or moral support is priceless.

What makes being an accountant fun?

I enjoy solving challenging problems for my clients. While auditing appears to be streamlined on the surface, each audit brings different challenges that I can help my clients overcome.

What do you enjoy doing outside of the office?

I enjoy golfing, collecting Pokémon cards, and cheering on the Lions and Red Wings. I also spend a lot of my time supporting my daughters in their extracurricular activities. With one of my daughters being involved in competitive gymnastics and dance, we get the opportunity to travel all over for competitions. We’re always on the go, and we all enjoy spending time together in warm and sunny places.

Businesses of all shapes and sizes are well-advised to buy various forms of insurance to manage operational risks. But insurance itself is far from risk-free. You might overpay for a policy that you don’t really need. Or you could invest in cheap coverage that does you little to no good when you need it.

Perhaps the most insidious risk associated with insurance, however, is fraud. Dishonest individuals, whether inside your company or outside of it, can exploit a policy to defraud your company. Let’s explore three of the most typical forms of insurance fraud and some best practices for fighting back.

1. Premium diversion

According to the website of the U.S. Federal Bureau of Investigation, this is the most common form of insurance fraud. It occurs when an employee or insurance agent fails to submit premium payments to the underwriter. Rather, the person steals the funds for either personal use or to cover other business expenses.

It might seem like there’s not much you can do to stop an unethical insurance agent from committing this crime. But you can reduce the odds of running into a fraudster by performing a thorough background check on any insurance agent or broker that you choose to work with.

Internally, if possible, segregate the duties of the employee who submits premium payments from the person who accounts for those funds. Don’t allow one employee to control the whole process. In addition, educate all staff members about the danger of premium diversion and the consequences — such as termination and prosecution — of committing it or any type of fraud. Implement a confidential hotline so employees can report suspicious activities.

2. Workers’ compensation schemes

Under one of these scams, an employee exaggerates or fabricates an injury or illness to receive workers’ compensation benefits. For example, a worker might mischaracterize a relatively minor injury suffered at work as a major one. Or an employee could submit a claim for a condition that isn’t related to work.

To help prevent false workers’ comp insurance claims, develop required reporting processes for employees. Staff members should provide detailed information about incidents and any medical treatment they received. Your insurer should be able to provide comprehensive forms and suggest industry-specific measures to ensure employees provide truthful, relevant claims information.

Also, conduct regular audits of workers’ comp claims. Doing so may uncover patterns of fraudulent activity — even long-running schemes. For instance, if one employee repeatedly submits claims but is known to engage in physically demanding or dangerous activities outside of work, it may be appropriate to scrutinize those claims.

3. Health insurance scams

Here, a perpetrator might add a fictitious employee to your company’s plan or use a stolen or “synthetic” (mixture of real and false) identity to enroll a nonexistent dependent. The fraudster then pockets whatever reimbursements come in.

To reduce the risk of such scams, establish strong plan verification procedures. These might include background checks on all participants, including submissions of required documentation such as Social Security and driver’s license numbers. Additionally, conduct regular plan audits to reconcile those enrolled with current payroll records and department headcounts.

Just a few

Unfortunately, these are just a few of the types of insurance fraud that can strike your business. Any one of them can cost you real money, slow down productivity as you deal with the mess, and hurt your reputation in the marketplace and as an employer. We can assist you in tracking your insurance costs and establishing internal controls that help prevent fraud.

Chelsea Meyer, CPA, was recently promoted to senior manager. Let’s learn about Chelsea and her perspective on her career, her keys to success, and what is changing in public accounting.

What are your roles in the firm?

I am a member of the Tax & Consulting Service Line, and I specialize in tax planning and preparation for individuals, businesses, and trusts and estates, as well as business advisory services and financial statement compilations and reviews. As a QuickBooks Certified ProAdvisor, I also assist clients with the implementation and efficient use of their accounting systems. I am a member of the firm’s Nonprofit Services Group and the Trust & Estate Services Group. I serve as a career advocate and mentor for staff across multiple Yeo & Yeo locations, and I also help plan and coordinate the Kalamazoo office’s fun activities.

Tell us about your career path.

I graduated with my Master of Science in accounting from Grand Valley State University in 2013. Shortly after, I joined Yeo & Yeo’s Ann Arbor office full-time as a staff accountant. I worked on a wide variety of clients and projects in my first few years at the firm, and after taking more trust and estate training, I began to develop a focus on the industry. In May 2019, I transferred to the Kalamazoo office to be closer to family as my husband and I were looking to start our own. Once there, I continued to increase my knowledge in trust and estates, as well as complex tax and financial statement projects. Now, as a senior manager, I’m excited to continue managing client engagements and helping staff develop in their careers.

What do you enjoy most about your career?

I enjoy helping people. On the trust and estate side, we are often called in during stressful times. To be the person who can help clients break down a seemingly large mountain of tasks into actionable steps is very rewarding.

How do you balance your career, personal life, and passions?

I strive to maintain a consistent schedule. On days I extend my hours in the office, I will make a point to dedicate extra time in the morning with my kids and family. I also make it a priority to have days that I disconnect to focus on family and do what I need to do at home. I work closely with my supervisors and peers to balance the firm’s needs while satisfying family needs, too.

What is the biggest factor that has helped you be successful?

My dad owned a restaurant, and I worked in restaurants from the time I was in middle school through high school and college. This gave me the baseline skills I needed to interact with a wide variety of personalities. Early in my career, I was open to working on anything, which helped me become well-rounded and learn what I wanted to specialize in. It also gave me the opportunity to apply my people skills to a professional environment, working with many different types of clients.

How is public accounting changing?

Some exciting things are happening with AI and the accounting process. Some companies are developing programs that automate a lot of daily transaction entry, allowing both internal and external accountants to focus more on the high-level info decision makers really want and need. At the same time, there are security and privacy concerns to consider. Too, staffing and work-life balance in public accounting are seeing a shift. More and more firms, including Yeo & Yeo, are exploring ways to offer more flexibility to staff. I think these shifts present a lot of opportunities for companies that are open to change. It’ll be interesting to see how this continues to evolve over the next few years.

What makes being an accountant fun?

Every day is different. Things are constantly changing, which gives you opportunities to learn and grow. We’re constantly talking to clients and other professionals, helping solve problems and overcome challenges. I also work on many special projects, streamlining processes, implementing new processes, or conducting research. I always look forward to these types of engagements, where I can really dive into a client’s business and help them succeed.

The Employee Retention Tax Credit (ERTC) was introduced back when COVID-19 temporarily closed many businesses. The credit provided cash that helped enable struggling businesses to retain employees. Even though the ERTC expired for most employers at the end of the third quarter of 2021, it could still be claimed on amended returns after that.

According to the IRS, it began receiving a deluge of “questionable” ERTC claims as some unscrupulous promotors asserted that large tax refunds could easily be obtained — even though there are stringent eligibility requirements. “We saw aggressive marketing around this credit, and well-intentioned businesses were misled into filing claims,” explained IRS Commissioner Danny Werfel.

Last year, in a series of actions, the IRS began cracking down on potentially fraudulent claims. They began with a moratorium on processing new ERTC claims submitted after September 14, 2023. Despite this, the IRS reports that it still has more than $1 billion in ETRC claims in process and they are receiving additional scrutiny.

Here’s an update of the other compliance efforts that may help your business if it submitted a problematic claim:

1. Voluntary Disclosure Program. Under this program, businesses can “pay back the money they received after filing ERTC claims in error,” the IRS explained. The deadline for applying is March 22, 2024. If the IRS accepts a business into the program, the employer will need to repay only 80% of the credit money it received. If the IRS paid interest on the employer’s ERTC, the employer doesn’t need to repay that interest and the IRS won’t charge penalties or interest on the repaid amounts.

The IRS chose the 80% repayment amount because many of the ERTC promoters charged a percentage fee that they collected at the time (or in advance) of the payment, so the recipients never received the full credit amount.

Employers that are unable to repay the required 80% may be considered for an installment agreement on a case-by-case basis, pending submission and review of an IRS form that requires disclosing a significant amount of financial information.

To be eligible for this program, the employer must provide the IRS with the name, address and phone number of anyone who advised or assisted them with their claims, and details about the services provided.

2. Special withdrawal program. If a business has a pending claim for which it has eligibility concerns, it can withdraw the claim. This program is also available to businesses that were paid money from the IRS for claims but haven’t cashed or deposited the refund checks. The tax agency reported that more than $167 million from pending applications had been withdrawn through mid-January.

Much-needed relief

Commissioner Werfel said the disclosure program “provides a much-needed option for employers who were pulled into these claims and now realize they shouldn’t have applied.”

In addition to the programs described above, the IRS has been sending letters to thousands of taxpayers notifying them their claims have been disallowed. These cases involve entities that didn’t exist or didn’t have employees on the payroll during the eligibility period, “meaning the businesses failed to meet the basic criteria” for the credit, the IRS stated. Another set of letters will soon be mailed to credit recipients who claimed an erroneous or excessive credit. They’ll be informed that the IRS will recapture the payments through normal collection procedures.

There’s an application form that employers must file to participate in the Voluntary Disclosure Program and procedures that must be followed for the withdrawal program. Other rules apply. Contact us for assistance or with questions.

There’s no way around it — owning and operating a business comes with risk. On the one hand, operating under excessive levels of risk will likely impair the value of a business, consume much of its working capital and could even lead to bankruptcy if those risks become all-consuming. But on the other hand, no business can operate risk-free. Those that try will inevitably miss out on growth opportunities and probably get surpassed by more ambitious competitors.

How can you find the right balance? One way to manage your company’s “risk profile” is to implement a formal enterprise risk management (ERM) program.

Optimization, not elimination

Most businesses have internal controls to prevent fraud, maintain compliance and reduce errors. But an ERM program goes much further. It’s a top-down framework that starts at the C-suite and addresses risk at every level of the organization. An effective ERM program helps you and your leadership team not only identify major threats, but also devise feasible strategic, operational, reporting and compliance objectives.

Traditional risk management techniques, which are often informal and ad hoc, use a “siloed” approach. In other words, each department focuses on minimizing its own risks. The efficacy of this approach is limited at best, for a couple reasons. First, it fails to address how risks may arise in the way departments interact — or don’t interact — with each other. Second, it often wrongly assumes that the goal of risk management is to eliminate risk. In truth, the proper goal of risk management is to optimize risk; that is, develop strategic objectives and operate the business under acceptable levels of inevitable risk.

An ERM program takes an integrated approach. It recognizes that many risks are enterprise-wide and interrelated. For example, say a business identifies a new vendor offering substantially reduced prices on key materials. From the accounting department’s perspective, the deal may seem like a no-brainer. But an analysis under an ERM program could reveal that the vendor is situated in a high-risk area for natural disasters or civil unrest. Or the ERM analysis might show that the vendor is a bad match technologically or has poor cybersecurity.

Good starting point

Naturally, every company’s framework for an ERM program will differ depending on factors such as its size and structure. But one tool that’s proven helpful to many businesses is the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management — Integrated Framework, which was originally published in 2004.

COSO is a joint initiative of five private sector organizations that develop frameworks and guidance on ERM, internal controls and fraud deterrence. The five organizations are the American Accounting Association, the American Institute of Certified Public Accountants, Financial Executives International, the Institute of Internal Auditors and the Institute of Management Accountants.

The original COSO framework covers four categories of objectives: strategic, operations, reporting and compliance. It also sets forth eight key components: 1) internal environment, 2) objective setting, 3) event identification, 4) risk assessment, 5) risk response, 6) control activities, 7) information and communication, and 8) monitoring. Note that, in 2017, COSO published an updated complementary publication entitled Enterprise Risk Management — Integrating with Strategy and Performance.

Perfect framework

Are you tired of putting out fires or having to rethink major strategic decisions because they’re just a little bit off the mark? If so, a formal ERM program may be the solution you’re looking for. We’d be happy to help you build the perfect framework for your business.

Yeo & Yeo is pleased to announce the promotion of three professionals.

Jordan Bohlinger has been promoted to manager. Bohlinger is a member of the firm’s Education Services Group. He specializes in audits of school districts and nonprofit organizations. He holds a Bachelor of Business Administration in accounting from Northwood University and is a member of the Michigan School Business Officials. In the community, he serves as treasurer of the Bay Valley Academy Gymnastics Booster Club. He joined Yeo & Yeo in 2017 and is based in the firm’s Flint office.

Renee Elliott has been promoted to outsourced accounting manager. Elliott specializes in managing bookkeeping and back-office duties for small and midsize businesses. She is a Certified QuickBooks ProAdvisor, and has experience overseeing financial processes, managing client accounts, ensuring compliance with regulations, and providing strategic financial guidance. She holds a Bachelor of Business Administration in finance from Baker College. She joined Yeo & Yeo in 2019 and is based in the firm’s Saginaw office.

Kellen Riker, CPA, has been promoted to manager. Riker is a member of the firm’s Government Services Group. He specializes in audits of for-profit businesses, school districts, and governments. He holds a Master of Business Administration in finance from the University of Michigan-Flint and is a member of the Michigan Government Finance Officers Association. He serves as the Yeo Young Professionals service chair for the Yeo & Yeo Foundation. In 2022, he was recognized as a 40 Under 40 honoree by the Flint & Genesee Group. He joined Yeo & Yeo in 2018 and is based in the firm’s Flint office.

To help you remember the important 2024 deadlines, refer to this summary of when various tax-related forms, payments and other actions are due. Please review the calendar and let us know if you have any questions about the deadlines or would like assistance in meeting them.

Date	Deadline for
January 31	Individuals: Filing a 2023 income tax return (Form 1040 or Form 1040-SR) and paying tax due, to avoid penalties for underpaying the January 16 installment of estimated taxes. Businesses: Providing Form 1098, Form 1099-MISC (except for those that have a February 15 deadline), Form 1099-NEC and Form W-2G to recipients. Employers: Providing 2023 Form W-2 to employees. Employers: Reporting Social Security and Medicare taxes and income tax withholding for fourth quarter 2023 (Form 941) if all associated taxes due weren’t deposited on time and in full. Employers: Filing a 2023 return for federal unemployment taxes (Form 940) and paying any tax due if all associated taxes due weren’t deposited on time and in full. Employers: Filing 2023 Form W-2 (Copy A) and transmittal Form W-3 with the Social Security Administration.
February 12	Individuals: Reporting January tip income of $20 or more to employers (Form 4070). Employers: Reporting Social Security and Medicare taxes and income tax withholding for fourth quarter 2023 (Form 941) if all associated taxes due were deposited on time and in full. Employers: Filing a 2023 return for federal unemployment taxes (Form 940) if all associated taxes due were deposited on time and in full.
February 15	Individuals: Filing a new Form W-4 to continue exemption for another year if you claimed exemption from federal income tax withholding in 2023. Businesses: Providing Form 1099-B, 1099-S and certain Forms 1099-MISC (those in which payments in Box 8 or Box 10 are being reported) to recipients. Employers: Depositing Social Security, Medicare and withheld income taxes for January if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for January if the monthly deposit rule applies.
February 28	Businesses: Filing Form 1098, Form 1099 (other than those with a January 31 deadline), Form W-2G and transmittal Form 1096 for interest, dividends and miscellaneous payments made during 2023. (Electronic filers can defer filing to March 31.)
March 11	Individuals: Reporting February tip income of $20 or more to employers (Form 4070).
March 15	Calendar-year S corporations: Filing a 2023 income tax return (Form 1120-S) or filing for an automatic six-month extension (Form 7004) and paying any tax due. Calendar-year partnerships: Filing a 2023 income tax return (Form 1065 or Form 1065-B) or requesting an automatic six-month extension (Form 7004). Employers: Depositing Social Security, Medicare and withheld income taxes for February if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for February if the monthly deposit rule applies.
April 1	Employers: Electronically filing 2023 Form 1097, Form 1098, Form 1099 (other than those with an earlier deadline) and Form W-2G.
April 10	Individuals: Reporting March tip income of $20 or more to employers (Form 4070).
April 15	Individuals: Filing a 2023 income tax return (Form 1040 or Form 1040-SR) or filing for an automatic six-month extension (Form 4868) and paying any tax due. (See June 17 for an exception for certain taxpayers.) Individuals: Paying the first installment of 2024 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding. Individuals: Making 2023 contributions to a traditional IRA or Roth IRA (even if a 2023 income tax return extension is filed). Individuals: Making 2023 contributions to a SEP or certain other retirement plans (unless a 2023 income tax return extension is filed). Individuals: Filing a 2023 gift tax return (Form 709) or filing for an automatic six-month extension (Form 8892) and paying any gift tax due. Filing for an automatic six-month extension (Form 4868) to extend both Form 1040 and Form 709 if no gift tax is due. Household employers: Filing Schedule H, if wages paid equal $2,600 or more in 2023 and Form 1040 isn’t required to be filed. For those filing Form 1040, Schedule H is to be submitted with the return and is thus extended to the due date of the return. Calendar-year trusts and estates: Filing a 2023 income tax return (Form 1041) or filing for an automatic five-and-a-half-month extension (Form 7004) (six-month extension for bankruptcy estates) and paying any income tax due. Calendar-year corporations: Filing a 2023 income tax return (Form 1120) or filing for an automatic six-month extension (Form 7004) and paying any tax due. Calendar-year corporations: Paying the first installment of 2024 estimated income taxes, completing Form 1120-W for the corporation’s records. Employers: Depositing Social Security, Medicare and withheld income taxes for March if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for March if the monthly deposit rule applies.
April 30	Employers: Reporting Social Security and Medicare taxes and income tax withholding for first quarter 2024 (Form 941) and paying any tax due if all associated taxes due weren’t deposited on time and in full.
May 10	Individuals: Reporting April tip income of $20 or more to employers (Form 4070). Employers: Reporting Social Security and Medicare taxes and income tax withholding for first quarter 2024 (Form 941) if all associated taxes due were deposited on time and in full.
May 15	Employers: Depositing Social Security, Medicare and withheld income taxes for April if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for April if the monthly deposit rule applies. Calendar-year exempt organizations: Filing a 2023 information return (Form 990, Form 990-EZ or Form 990-PF) or filing for an automatic six-month extension (Form 8868) and paying any tax due. Calendar-year small exempt organizations (with gross receipts normally of $50,000 or less): Filing a 2023 e-Postcard (Form 990-N) if not filing Form 990 or Form 990-EZ.
June 10	Individuals: Reporting May tip income of $20 or more to employers (Form 4070).
June 17	Individuals: Filing a 2023 individual income tax return (Form 1040 or Form 1040-SR) or filing for a four-month extension (Form 4868), and paying any tax, interest and penalties due, if you live outside the United States or you serve in the military outside the United States and Puerto Rico. Individuals: Paying the second installment of 2024 estimated taxes (Form 1040-ES) if not paying income tax through withholding or not paying sufficient income tax through withholding. Calendar-year corporations: Paying the second installment of 2024 estimated income taxes, completing Form 1120-W for the corporation’s records. Employers: Depositing Social Security, Medicare and withheld income taxes for May if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for May if the monthly deposit rule applies.
July 10	Individuals: Reporting June tip income of $20 or more to employers (Form 4070).
July 15	Employers: Depositing Social Security, Medicare and withheld income taxes for June if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for June if the monthly deposit rule applies.
July 31	Employers: Reporting Social Security and Medicare taxes and income tax withholding for first quarter 2024 (Form 941) and paying any tax due if all associated taxes due weren’t deposited on time and in full. Employers: Filing a 2023 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or requesting an extension.
August 12	Individuals: Reporting July tip income of $20 or more to employers (Form 4070). Employers: Reporting Social Security and Medicare taxes and income tax withholding for second quarter 2024 (Form 941) if all associated taxes due were deposited on time and in full.
August 15	Employers: Depositing Social Security, Medicare and withheld income taxes for July if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for July if the monthly deposit rule applies.
September 10	Individuals: Reporting August tip income of $20 or more to employers (Form 4070).
September 16	Individuals: Paying the third installment of 2024 estimated taxes (Form 1040-ES), if not paying income tax through withholding or not paying sufficientincome tax through withholding. Calendar-year corporations: Paying the third installment of 2024 estimated income taxes, completing Form 1120-W for the corporation’s records. Calendar-year S corporations: Filing a 2023 income tax return (Form 1120-S) and paying any tax, interest and penalties due, if an automatic six-month extension was filed. Calendar-year S corporations: Making contributions for 2023 to certain employer-sponsored retirement plans if an automatic six-month extension was filed. Calendar-year partnerships: Filing a 2023 income tax return (Form 1065 or Form 1065-B) if an automatic six-month extension was filed. Employers: Depositing Social Security, Medicare and withheld income taxes for August if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for August if the monthly deposit rule applies.
September 30	Calendar-year trusts and estates: Filing a 2023 income tax return (Form 1041) if an automatic five-and-a-half-month extension was filed and paying any tax, interest and penalties due.
October 10	Individuals: Reporting September tip income of $20 or more to employers (Form 4070).
October 15	Individuals: Filing a 2023 income tax return (Form 1040 or Form 1040-SR) if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States and Puerto Rico) and paying any tax, interest and penalties due. Individuals: Making contributions for 2023 to certain existing retirement plans or establishing and contributing to a SEP for 2023 if an automatic six-month extension was filed. Individuals: Filing a 2023 gift tax return (Form 709) and paying any tax, interest and penalties due if an automatic six-month extension was filed. Calendar-year C corporations: Filing a 2023 income tax return (Form 1120) if an automatic six-month extension was filed and paying any tax, interest and penalties due. Calendar-year C corporations: Making contributions for 2023 to certain employer-sponsored retirement plans if an automatic six-month extension was filed. Calendar-year bankruptcy estates: Filing a 2023 income tax return (Form 1041) if an automatic six-month extension was filed and paying any tax, interest and penalties due. Employers: Depositing Social Security, Medicare and withheld income taxes for September if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for September if the monthly deposit rule applies.
October 31	Employers: Reporting Social Security and Medicare taxes and income tax withholding for third quarter 2024 (Form 941) and paying any tax due if all associated taxes due weren’t deposited on time and in full.
November 12	Individuals: Reporting October tip income of $20 or more to employers (Form 4070). Employers: Reporting Social Security and Medicare taxes and income tax withholding for third quarter 2024 (Form 941) if all associated taxes due were deposited on time and in full.
November 15	Exempt organizations: Filing a 2023 information return (Form 990, Form 990-EZ or Form 990-PF) if a six-month extension was filed and paying any tax, interest and penalties due. Employers: Depositing Social Security, Medicare and withheld income taxes for October if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for October if the monthly deposit rule applies.
December 10	Individuals: Reporting November tip income of $20 or more to employers (Form 4070).
December 16	Calendar-year corporations: Paying the fourth installment of 2024 estimated income taxes, completing Form 1120-W for the corporation’s records. Employers: Depositing Social Security, Medicare and withheld income taxes for November if the monthly deposit rule applies. Employers: Depositing nonpayroll withheld income tax for November if the monthly deposit rule applies.