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What the IRS Is Focusing on in 2026

February 13, 2026 by admin

IRS enforcement priorities continue to evolve, and in 2026, the agency remains focused on accuracy, reporting transparency, and compliance consistency. While most businesses aim to follow the rules, certain patterns and errors tend to attract closer attention during reviews or audits.

One major area of focus is income reporting. Discrepancies between reported income and information returns such as 1099s or other third-party documentation often trigger questions. Businesses that receive income from multiple sources must ensure all revenue is accurately reported and properly categorized.

Another ongoing area of scrutiny involves deductions. While deductions are a legitimate and important part of tax planning, exaggerated or poorly documented expenses raise red flags. Businesses should ensure that deductions are reasonable, directly related to operations, and supported by clear records.

Common areas the IRS continues to monitor include:

Inconsistent income reporting across tax forms
Excessive business expense deductions relative to revenue
Improper classification of workers as contractors instead of employees
Payroll tax filing and payment errors
Home office deductions that do not meet usage requirements

Technology and data matching have also become more sophisticated. Automated systems allow the IRS to compare filings more efficiently, increasing the likelihood that inconsistencies are identified quickly. This makes accurate reporting and documentation more important than ever.

Good recordkeeping remains one of the strongest defenses against compliance issues. Businesses that maintain organized financial records, reconcile accounts regularly, and document key decisions are better prepared if questions arise. Addressing potential issues early can prevent small errors from becoming larger problems.

Understanding IRS focus areas helps businesses take a proactive approach to compliance. By reviewing filings carefully, maintaining accurate records, and seeking guidance when needed, businesses can reduce risk and operate with greater confidence in today’s regulatory environment.

When Should You Sell an Investment?

January 5, 2026 by admin

Financial growth of business was evident in investment graph, where an upward arrow on chart indicated increased profit, success. financial, growth, graph, investment, money, profit, business, arrow. Selling an investment can be more difficult than buying one for many investors. When you buy an investment, you obviously have high hopes for how well that investment will perform. Unfortunately, it’s unlikely that every investment will meet your expectations. In that situation, holding on to your investment essentially means that you are not putting that money to its best use. Here’s a brief look at some of the signs that may indicate it is time to sell.

Changes in Investment Value

Experienced investors often establish a specific price target for an investment at the time they buy it. They also establish just how much of a decline from their purchase price they are willing to accept. If the security hits one of these two numbers, they sell. You may benefit from doing something similar. Decide on a percentage gain that you want from a particular investment and sell when it hits your target. Likewise, determine how much of a decline in the price of a security you are willing to accept and sell when the price falls to that target number.

An Investment’s Underperformance

You may opt to buy a specific investment because you have certain expectations for that investment. For example, you may buy stock in a company that you believe has a technology that is superior to anything currently available and has enormous potential for future profits. Or, you may buy a mutual fund* with a track record of strong long-term returns that you are optimistic will continue.** Short-term fluctuations in price are normal in investing. However, if you own stock in a company that loses money year after year or own shares of a mutual fund that consistently underperforms its benchmark index, selling may be the wiser option.

A Shift in Your Risk Tolerance

Your ability to handle the potential for losing some or all of your money in an investment is known as your risk tolerance and influences the types of investments you buy. You may find that, at some point, the risk level of an investment you own no longer matches your risk tolerance. It could also happen that your risk tolerance changes when, for example, you move closer to retirement. You may choose to sell an investment so that the asset allocation you have is more in line with your current situation.***

You Identify a Need to Rebalance Your Portfolio

Your investment portfolio may become unbalanced over time as some asset classes outperform other asset classes. When it gets to the point when one asset type comprises a larger or smaller percentage of your portfolio than you intended when first devising a suitable asset allocation, then you may consider selling some investments to rebalance your portfolio.

Determining when the time has come to sell an investment can be a tough decision. Emotions, fear of missing out, and other factors can cloud your judgement. That’s why the input of an experienced, objective financial professional can be so helpful in making investment decisions.

*You should consider the fund’s investment objectives, charges, expenses, and risks carefully before you invest. The fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.

**Past performance does not guarantee future results.

***Asset allocation does not guarantee a profit or protect against loss.

Understanding Depreciation Deductions for Business Real Estate

December 16, 2025 by admin

Depreciation is one of the most powerful tax advantages available to real estate owners. If you own commercial property or use real estate in your business, depreciation deductions can significantly reduce your taxable income over time. However, many business owners miss out on maximizing these benefits due to a lack of understanding.

Here’s a clear and practical guide to how depreciation works for business real estate and how you can use it to your financial advantage.

What Is Real Estate Depreciation?
Depreciation is the process of deducting the cost of a long-term asset over its useful life. For real estate, this means that instead of writing off the full cost of a building in the year it was purchased, you gradually deduct portions of its value each year.

Importantly, land itself does not depreciate—only the building and certain improvements do.

Depreciation Basics for Business Property

Depreciable assets: Buildings, structural components (roof, HVAC, plumbing), and certain improvements
Non-depreciable assets: Land, inventory, and personal residences
Depreciation method: The IRS requires the Modified Accelerated Cost Recovery System (MACRS)
Depreciation period:
- Residential rental property: 27.5 years
- Commercial property: 39 years

How to Calculate Depreciation
Let’s say you buy a commercial building for $1 million, with land valued at $200,000. Only the building portion ($800,000) is depreciable.

Annual depreciation deduction = $800,000 ÷ 39 = $20,513 per year

That’s over $20,000 per year in tax deductions—without spending another dime.

Requirements for Depreciation

To claim depreciation on a property:

You must own the property (not lease it).
You must use it for business or income-producing purposes.
It must have a determinable useful life (expected to last more than a year).
The property must be placed in service (available for use) before you can begin depreciation.

Improvements vs. Repairs

Repairs (e.g., fixing a leak) are usually fully deductible in the year incurred.
Improvements (e.g., replacing the roof or adding a new HVAC system) must be capitalized and depreciated over time.

Bonus Depreciation and Section 179

Although buildings themselves must be depreciated over decades, certain components or improvements may qualify for bonus depreciation or Section 179 expensing, allowing you to deduct more upfront.

Bonus Depreciation: Temporarily allows 100% immediate expensing of qualified improvements (dropping to 80% in 2023 and phasing out by 2027 under current law).
Section 179: Allows immediate expensing of certain improvements, such as roofs, HVACs, and alarm systems, up to a limit ($1.22 million in 2024, subject to phaseouts).

These tools can accelerate deductions and improve cash flow.

Cost Segregation: Supercharge Your Depreciation

A cost segregation study breaks your building into components (e.g., flooring, lighting, fixtures) that can be depreciated faster—over 5, 7, or 15 years instead of 39.

While the study involves a cost (usually performed by specialists), the tax savings can be substantial—especially for high-value properties.

What Happens When You Sell? Depreciation Recapture

Depreciation lowers your taxable income, but it can also increase your tax bill when you sell.

Depreciation recapture: When you sell the property, the IRS may “recapture” depreciation and tax it at a maximum rate of 25%.
That doesn’t mean depreciation isn’t worth it—far from it—but you should plan ahead with your accountant or tax advisor to manage the exit strategy.

Documentation and Compliance

To stay compliant:

Keep detailed records of the purchase price, improvement costs, and depreciation schedules.
Use IRS Form 4562 to report depreciation each year.
Consult a tax professional to ensure accuracy and to explore strategies like cost segregation and bonus depreciation.

Final Thoughts
Depreciation deductions can significantly lower your tax liability and free up cash for reinvestment in your business. By understanding how to apply these rules to your commercial real estate, you can build wealth more efficiently and strategically.

Remember: Real estate doesn’t just appreciate in value—it also helps you depreciate your tax burden.

3 Ways to Receive Payments in QuickBooks Online

November 16, 2025 by admin

Subscription Billing on Laptop, Automate Recurring Payments for Business Success, Vector Flat Illustration

Got customer payments coming in? QuickBooks Online has multiple ways to accept and record them.

One of the biggest challenges small businesses face is managing a steady cash flow. Keeping income ahead of expenses is a constant balancing act. QuickBooks Online can help. With easy-to-use forms and a convenient mobile app, it helps you track and deposit incoming payments with ease.

Do you ever receive instant payments for certain products or services? Ever need to record a sale on the go—both for your records and your customer’s? Or maybe you send out invoices and want to ensure payments are accurately logged once they come in. QuickBooks Online has you covered in all these scenarios. Plus, it offers automation tools that speed up the payment process—so you can get paid faster and focus on growing your business.

Let Customers Pay Online

If your business sends invoices for products or services, QuickBooks Online makes it easy to record customer payments. While you can manually enter payments, there’s a faster, more efficient option: QuickBooks Payments. This built-in merchant service lets you accept credit card and bank payments electronically—helping you get paid quicker and streamlining your cash flow.

Once QuickBooks Payments is set up in QuickBooks Online (contact us if you need help), your invoices will include integrated payment options for credit cards and electronic checks. Each invoice will feature a payment button, allowing customers to easily enter their payment information. You’ll be able to track when an invoice is viewed, paid, and deposited. Simply open your list of invoices and click on one to view its details. A timeline panel will slide out from the right side, showing the invoice’s history and status. Plus, you can opt to receive notifications for invoice activity.

If you prefer to record payments manually, find the unpaid invoice in your list and click the Receive Payment link at the end of the row. This opens the Receive Payment screen, where you can fill in any missing details and save. You can also find the same link on the invoice screen itself or from the Invoices page (SalesInvoices).

You can receive payments manually in QuickBooks Online from an invoice itself or from the Invoices page.

There’s no cost for setting up a pay-as-you-go account in QuickBooks Payments. There are only per-transaction fees:

● ACH bank payments are 1%.

● It’s 3.5% if the payment comes in through an invoice (Apple Pay, Google Pay, credit cards, etc.) or if the payments are keyed in.

● If you swipe a card, you’ll pay 2.4%

There’s also a $0.30 fee per transaction. Transaction fees are slightly lower if you pay $20 per month. Payments that come in before 3 p.m. PT should be in your account the next business day.

Accepting Payments Through GoPayment

To take payments while you’re on the road, you’ll need a free mobile card reader from Intuit that connects to your smartphone. It supports tap, chip, and digital wallet payments. You can also manually enter card details (see above rates). To process transactions, you’ll need to download the GoPayment app, available for iOS and Android. The app lets you add product names, prices, and images to make checkout faster and easier. Multiple layers of security are in place to help protect your data during mobile transactions.

Receiving Instant Payments

Sometimes, you’ll receive payment right after delivering a product or service. In these cases, QuickBooks Online allows you to create and provide a sales receipt on the spot. Just click +New in the upper left corner, then select Sales Receipt in the Customers section. The form that opens will look similar to an invoice or estimate. Choose the customer in the upper left corner, and fill out the remaining details as you normally would. When you’re finished, click Save and send to email the receipt. You’ll have the option to preview it before sending and to print it.

The Undeposited Funds Account

The Undeposited Funds account in the QuickBooks Online Chart of Accounts

If your customer paid you on the spot with a credit card, that payment would be processed in your QuickBooks Payments merchant center. But what about a physical check? QuickBooks Online defaults to the Undeposited Funds account for sales transactions. You can change this, but we don’t recommend it. This account temporarily holds payments—typically cash and checks—that haven’t yet been deposited into your bank.

It’s a good idea to review this account regularly to ensure you’re not leaving funds languishing. Hover your mouse over the Transactions link in the toolbar and click Chart of Accounts. Scroll down until you find it, as pictured above. To combine the transactions in the Undeposited Funds account to make a bank deposit, click +New in the upper left corner and then click Bank deposit under Other. Make sure the Account in the upper left corner is set to the account where you want to deposit the funds. Click the box in front of each check you want to deposit (or Select all), then Save.

To see your deposit information, click Reports in the toolbar, then click Deposit Detail under Sales and Customers. You’ll have to list the deposits individually on your physical deposit slip. Make sure that the slip matches what you see in QuickBooks Online.

If you need help or have questions, feel free to contact us to schedule a consultation. While the process of receiving payments isn’t overly complicated, it’s essential to ensure every payment is recorded accurately and deposited correctly into your bank accounts.

Make Sure to Not Claim an Ineligible Dependent on Your Taxes

October 7, 2025 by admin

Claiming dependents on your tax return can significantly reduce your tax liability through exemptions, deductions, and credits. However, claiming an ineligible dependent—whether accidentally or intentionally—can lead to serious consequences, including IRS penalties, delayed refunds, and even audits. Understanding the rules and repercussions is essential for responsible tax filing.

Who Qualifies as a Dependent?

Before diving into the risks of misclaiming, it’s important to understand the criteria the IRS uses to determine dependent eligibility. There are two main categories:

1. Qualifying Child

Must meet all of the following:

Relationship: Your child, stepchild, sibling, or descendant.
Age: Under 19, or under 24 if a full-time student (no age limit if permanently disabled).
Residency: Lived with you for more than half the year.
Support: Did not provide more than half of their own financial support.
Filing Status: Not filing a joint return (unless only to claim a refund).

2. Qualifying Relative

Must meet all of the following:

Not a qualifying child of another taxpayer.
Gross Income: Less than the IRS threshold (e.g., $4,700 in 2023).
Support: You provided more than half of their support during the year.
Relationship or residency: Related to you or lived with you all year.

Common Mistakes That Lead to Claiming Ineligible Dependents

Sharing custody: Divorced or separated parents may both try to claim the same child.
Adult children: Claiming a child who earned too much or provided most of their own support.
Extended family or roommates: Claiming individuals who don’t meet relationship or residency requirements.
Double claiming: Both taxpayers in a split household claim the same person.

Consequences of Claiming an Ineligible Dependent

Delayed or Rejected Refund

If the IRS detects a problem (especially if the dependent’s Social Security Number has already been used), your return may be flagged and your refund delayed or denied.

Amended Returns or Audits

You may be required to file an amended return and repay any credits or refunds you received in error. This can trigger an IRS audit, which may require documentation of eligibility.

Penalties and Interest

The IRS can impose penalties for negligence or fraud, along with interest on unpaid taxes.

Loss of Valuable Tax Credits

Claiming an ineligible dependent may incorrectly qualify you for:

Child Tax Credit (CTC)
Earned Income Tax Credit (EITC)
Dependent Care Credit
Head of Household status

If disallowed, you may lose eligibility for these credits for up to 10 years if the IRS deems the claim fraudulent.

What to Do If You’ve Made a Mistake

1. Don’t Ignore IRS Notices

If you receive a notice or letter from the IRS about your dependent claim, respond promptly with any requested documentation or corrections.

2. File an Amended Return

Use Form 1040-X to amend your return if you realize you’ve claimed someone who doesn’t qualify. This can reduce penalties if done proactively.

3. Seek Professional Help

A tax professional can help assess your situation and guide you through rectifying the mistake and dealing with the IRS.

Tips to Avoid Errors

Use tax preparation software with dependent eligibility checks.
Keep thorough records: proof of residency, school records, income, and support documents.
Coordinate with other household members or ex-spouses to avoid duplicate claims.

Final Thoughts

Claiming a dependent can offer significant tax benefits, but the rules are strict and must be followed carefully. If you’re unsure whether someone qualifies, it’s better to double-check than risk penalties or audits. When in doubt, consult a licensed tax professional or the IRS website for guidance.

How to Properly Manage Your Business Cash Flow

September 16, 2025 by admin

Cash flow is the lifeblood of any business. Regardless of how innovative your product is or how many sales you generate, if there’s not enough cash available to cover day-to-day expenses, your business could quickly find itself in trouble. Managing cash flow effectively ensures your company remains financially healthy and resilient during economic ups and downs. Here’s a comprehensive guide to help you properly manage your business cash flow.

1. Understand What Cash Flow Really Means
Cash flow refers to the movement of money in and out of your business. There are two types:

Positive Cash Flow: More money is coming in than going out.
Negative Cash Flow: More money is leaving than coming in.

While short-term negative cash flow may not be fatal, persistent issues can lead to insolvency. Understanding the timing and sources of cash inflows and outflows is critical.

2. Forecast Your Cash Flow
Creating a cash flow forecast helps anticipate future cash shortages and surpluses. This should be a rolling forecast, updated monthly (or even weekly) to reflect changes in the business environment.

Key components of a forecast include:

Projected income (sales, loans, investments)
Fixed and variable expenses (rent, utilities, payroll, inventory)
One-off expenses (equipment, marketing campaigns)

By forecasting ahead, you can spot potential issues and plan how to deal with them before they become serious problems.

3. Accelerate Receivables
Waiting too long to collect money can starve your business of needed cash. Implement strategies to speed up receivables:

Send invoices promptly
Offer early payment discounts
Use digital invoicing systems
Follow up on overdue payments quickly
Consider invoice factoring if needed

4. Manage Payables Wisely
While it’s tempting to pay every bill as soon as it arrives, good cash flow management means holding onto cash as long as it makes sense:

Take full advantage of supplier payment terms
Negotiate better terms when possible
Avoid late fees, which can damage supplier relationships

Be strategic: prioritize payments that affect operations (payroll, rent, key suppliers) and delay less critical expenses if needed.

5. Control Inventory Levels
Excess inventory ties up cash that could be used elsewhere. Use inventory management systems to track usage trends and optimize purchasing:

Implement just-in-time (JIT) inventory where feasible
Identify slow-moving stock and find ways to liquidate it
Work with suppliers on flexible ordering

6. Build a Cash Reserve
Having an emergency cash cushion can prevent panic during slow periods. Set aside a percentage of profits each month until you have 3–6 months of operating expenses saved.

7. Monitor and Analyze Cash Flow Regularly
Use accounting software or dashboards to monitor your cash flow in real time. Regularly analyze key metrics like:

Operating cash flow
Days sales outstanding (DSO)
Days payable outstanding (DPO)
Cash conversion cycle (CCC)

Reviewing this data will help you spot patterns and make better financial decisions.

8. Cut Unnecessary Costs
Lean operations often translate into stronger cash flow. Audit your expenses regularly:

Cancel unused subscriptions
Outsource non-core functions
Switch to cost-effective suppliers
Automate routine tasks to reduce labor costs

9. Secure Financing Before You Need It
If you foresee a future cash gap, explore financing options early while your financials are strong:

Business lines of credit
Short-term loans
Equity investment

Having financing in place can provide a buffer during lean periods without panic borrowing.

10. Educate Your Team
Cash flow isn’t just the finance department’s concern. Train department heads and team leaders on budgeting, purchasing, and financial responsibility. A company-wide culture of financial awareness leads to smarter spending decisions across the board.

Final Thoughts
Properly managing your business’s cash flow isn’t just about survival—it’s about building a strong foundation for sustainable growth. With proactive forecasting, tight control over receivables and payables, strategic spending, and continuous monitoring, your business will be better prepared to weather financial challenges and seize new opportunities.

Remember: Revenue is vanity, profit is sanity, but cash is king. Treat it that way.