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Accounts Payable Outsourcing: How It Works and When to Use It

Posted on by Bizi Business

Accounts payable outsourcing is becoming a strategic advantage for operational leaders and CFOs looking to streamline finance functions without sacrificing control. Instead of managing vendor payments, invoice approvals, and reconciliation in-house, companies are turning to external partners who specialize in these tasks, freeing up internal resources and improving accuracy. In 2025, with rising demands for automation, compliance, and real-time visibility, outsourcing accounts payable isn’t just a cost decision; it’s a smarter way to scale finance operations with less risk and more agility.

What Is Accounts Payable Outsourcing?

Accounts payable outsourcing refers to the practice of delegating your company’s AP functions to an external provider. These third-party experts manage essential tasks like invoice processing, vendor communication, payment scheduling, and account reconciliation, all while integrating seamlessly with your internal systems.

Instead of relying on an overstretched in-house team, businesses can streamline operations by using outsourced accounts payable services to ensure accuracy, speed, and compliance. These providers often use cloud-based platforms to give finance leaders real-time visibility into payment workflows and cash outflows, eliminating bottlenecks and reducing late payment risks.

Whether your business is scaling rapidly or just struggling to close the books on time, outsourcing your AP function offers structure, consistency, and a clearer financial picture month after month.

Learn more about Wiss Accounting Support

The Advantages of Outsourcing Accounts Payable

For growing companies, accounts payable can quickly become a burden. One that consumes time, creates costly errors, and slows down decision-making. That’s where outsourcing offers real, measurable benefits. Below are some of the advantages of outsourcing accounts payable that make it a smart move in 2025:

  • Cost savings: Hiring and training an internal AP team can be expensive. Outsourced teams provide full-service support without the overhead of salaries, benefits, or software subscriptions.
  • Improved accuracy and compliance: AP outsourcing firms specialize in error-free processing and follow consistent controls, helping reduce duplicate payments, missed deadlines, or compliance gaps.
  • Time savings and team focus: Outsourcing frees up your finance department to focus on strategic initiatives rather than chasing invoices or troubleshooting vendor issues.
  • Real-time visibility and automation: Modern AP providers use digital tools to track invoice lifecycles, flag exceptions, and generate real-time reports, giving CFOs and controllers greater control without manual intervention.

By outsourcing, you not only stabilize your AP process, but you also transform it into a performance advantage.

How the Accounts Payable Outsourcing Process Works

For companies looking to streamline operations, understanding how to outsource accounts payable effectively is key. While every provider has its own workflow, most follow a structured process that prioritizes accuracy, security, and integration.

1. Discovery and Onboarding

The process begins with a review of your existing AP workflows, systems, and volume. This allows the outsourcing provider to design a tailored solution that matches your company’s pace and complexity.

2. System Integration

Most modern providers work with your current tech stack or implement cloud-based platforms that allow for secure, real-time access to invoice data, approvals, and payment status. This ensures finance teams maintain visibility and control without having to manually intervene.

3. Role Allocation

Outsourced teams typically handle:

  • Invoice receipt
  • Appropriate accounting classification
  • Exception handling
  • Payment scheduling and reporting

Your internal team retains oversight, approvals, and access to reporting, but without the burden of day-to-day processing.

4. Ongoing Optimization

Leading providers don’t just take over your process. Through automation, compliance checks, and continuous performance reviews, your AP function evolves into a scalable, low-friction part of your finance operation.

If you’re preparing to outsource accounts payable, it’s critical to choose a partner that combines technology, strategic insight, and seamless collaboration.

When Does It Make Sense to Outsource Accounts Payable?

Outsourcing AP isn’t just a solution for large corporations; it’s a timely, strategic decision for any company facing operational strain in its finance function. If you’re unsure whether it’s the right move, consider the following signs.

You might be ready to outsource accounts payable if:

  • Your business is growing quickly, but your internal finance team is maxed out
  • You’re experiencing frequent late payments or strained vendor relationships
  • Month-end close is a chaotic, time-consuming process
  • Your team spends more time on data entry than on financial strategy
  • You need clean, accurate data to support forecasting, budgeting, or board reporting
  • You’re looking to adopt automation tools but lack the in-house resources to implement and manage them

If any of these sound familiar, it may be time to shift your AP process from reactive to reliable by partnering with a team that can handle the load and improve the workflow at the same time.

What to Look for in an Outsourced AP Partner

Choosing the right partner to manage your accounts payable function isn’t just about who can process invoices fastest. The best providers offer more than execution; they deliver accuracy, insight, and strategic alignment.

Here’s what to prioritize when selecting an outsourced AP partner:

  • Proven expertise in your industry: Look for teams that understand the nuances of your vendor relationships, compliance landscape, and accounting systems.
  • Robust security and compliance standards: Your AP data contains sensitive financial and vendor information. Confirm your provider follows strict data protection protocols and audit-ready workflows.
  • Reporting flexibility and transparency: You should always know where things stand. The right partner will offer real-time dashboards, detailed reports, and clear communication, without chasing down updates.
  • Strategic value add-ons: Consider whether the provider can scale with you. Integration with CFO advisory, budgeting support, or FP&A insights can turn AP from a transactional process into a financial performance tool.

A high-quality AP partner should feel like an extension of your team, not a black box. The more they support your strategic goals, the more value they’ll unlock.

Transforming AP from Bottleneck to Advantage

Outsourcing your accounts payable isn’t just a quick fix for operational overload. It’s a strategic decision that can elevate your entire finance function. When done right, it replaces bottlenecks with automation, improves vendor relationships, and creates the kind of financial clarity CFOs need to drive smarter decisions.

With the right partner, accounts payable outsourcing becomes more than a cost-saving move. It turns a traditionally reactive process into a proactive, performance-focused advantage.

Wiss brings this vision to life with tailored AP support, deep advisory expertise, and the ability to scale alongside your business. Whether you’re looking to offload day-to-day processing or integrate AP into a broader financial strategy, Wiss delivers precision, partnership, and peace of mind.

QSBS Changes Under OBBBA: What Founders Need to Know

Posted on by Michelle Antico

Donald Trump’s “One Big Beautiful Bill Act” (OBBBA) made the Qualified Small Business Stock (QSBS) regime both broader and faster for new issuances—inviting a fresh look at entity choice, equity design, trust planning, and exit timing.

The Federal Pivot Under OBBBA

New QSBS for stock acquired after July 4, 2025.

What changed vs. prior law (headline items):

Holding period relief

New tiered exclusion for newly issued QSBS—50% after 3 years, 75% after 4 years, 100% after 5 years. Pre-OBBBA, you generally needed 5 years to get any exclusion. (Old stock keeps old rules.)

Bigger companies can qualify

The issuer asset cap rises from $50M → $75M (at issuance), indexed for inflation after 2026.

Bigger personal cap

The per-issuer cap increases from $10M → $15M (MFS: $7.5M), also inflation-indexed going forward. (10×-basis alternative remains.)

Rate mechanics unchanged

Any non-excluded QSBS gain is still taxed at the 28% collectibles rate (plus NIIT as applicable). AMT treatment continues to avoid a preference item when you’re in the 100% bucket.

Key Implication

For post-OBBBA stock, exits no longer face a “cliff.” A 3–4 year IPO/M&A path can still deliver meaningful exclusion while keeping the 5-year target in sight. Existing QSBS (pre-7/4/2025) still follows the prior five-year/legacy caps framework.

State Treatment—Why Location Still Matters

Especially for tech hubs.

New Jersey (big change)

NJ now conforms to §1202 for tax years beginning on or after January 1, 2026. That means qualifying QSBS gain excluded federally will be excluded for NJ GIT starting in 2026.

New York

NY generally conforms to federal treatment; NY residents can reflect the federal QSBS exclusion in computing NYS and NYC personal income tax. (NYC’s system conforms via NY AGI starting point; watch trust-situs nuances.)

Massachusetts

MA now fully conforms—for tax years beginning January 1, 2022, qualifying QSBS gain excluded federally is also excluded for Massachusetts personal income tax. A 3% preferential rate remains for certain non-federally qualifying stock.

Washington

Despite no income tax, WA’s capital gains excise tax excludes QSBS to the extent excluded federally (so OBBBA benefits flow through).

California

No conformity—QSBS gains are generally fully taxable for CA PIT and worth noting is CA’s historically aggressive residency sourcing rules for founders who move pre-exit.

Additional QSBS-Friendly Tech Centers

Beyond the original list, several other vibrant tech hubs also fully conform to IRC § 1202—namely Arizona, Colorado, Connecticut, Delaware, Georgia, Texas, Utah, Virginia, and Wisconsin. This uniform state-level conformity further amplifies QSBS planning benefits across ecosystems like Silicon Slopes, the DMV corridor, Atlanta’s fintech boom, and Phoenix’s semiconductor cluster. Tennessee, Florida, Nevada, Wyoming, South Dakota and Alaska, while not conforming states, are equally favorable due to the absence of state-level capital gains tax.

New Jersey Spotlight

NJ’s 2026 conformity is retro-relevant for holders who hit the five-year mark in or after 2026—worth modeling now for expected exits.

Planning Opportunities to (Re)Model Now

Below are practical levers—especially relevant for founders, early employees, angels, and family offices in tech ecosystems.

Stacking (multiplying caps across taxpayers)

Gifting QSBS to family members and/or properly structured non-grantor trusts can create additional per-issuer exclusions (e.g., $15M each under post-OBBBA). Risks: assignment-of-income/step-transaction if gifts occur too close to a “practically certain” sale; state anti-ING rules (e.g., NY) can collapse non-grantor treatment.

Action: plan gifts well before LOIs; document business purpose; evaluate trust situs.

Packing (optimizing the 10× basis alternative)

Capital contributions and other basis-building moves can expand the 10× basis limit (still available alongside the $15M cap). Coordinate high-basis and low-basis dispositions within a year to maximize the exclusion math; avoid tripping §1202 anti-churning and redemption rules.

Trust situs & state mitigation

Even if your state doesn’t recognize QSBS (e.g., CA), careful pre-sale planning may reduce state tax: consider non-grantor trusts sitused in states with favorable rules, and/or residency planning well ahead of a binding sale. Additional benefits: such trusts can also provide asset protection against creditors and litigation, and meaningful estate tax savings when combined with lifetime exemption strategies.

Caution: NY in particular treats ING trusts unfavorably; substance, administration, and timing are scrutinized.

Exit timing under the new tiers

For new QSBS (issued ≥ July 5, 2025), aligning liquidity windows to 3/4/5 years can materially change proceeds after tax; build board-level “go/no-go” gates around these dates. (Old QSBS keeps the 5-year rule.)

Mind the redemption traps

Section 1202(c)(3) anti-churning can strip QSBS status if there are related-party or significant redemptions within specified two- and four-year windows around issuances.

Action: diligence cap tables and repurchase histories before relying on QSBS.

Keep §1045 in your toolkit

The 60-day rollover can still defer gain on QSBS held ≥ 6 months when a sale happens before you hit the target holding period—positioning you to re-qualify later. (OBBBA didn’t repeal §1045; confirm nuances if you seek to “upgrade” old stock into post-OBBBA benefits.)

qsbs table

Practical scenarios we’re seeing

Pre-OBBBA holders in NJ

If your five-year date lands in 2026, the federal exclusion already applied—now NJ lines up, too. Model the state delta on tender/secondary vs. deferring to five years.

Tech exits at 3–4 years (post-OBBBA stock)

Partial exclusions at 50%/75% may change deal math on earlier M&A vs. waiting to year 5; layer in WA treatment (if applicable) and CA nonconformity for distributed teams.

Founders in CA contemplating relocation

Pre-sale, fact-pattern-driven relocation can eliminate CA tax on intangible gain; timing and continuing ties are critical. Pair with trust situs analysis (INGs won’t solve it alone in NY; CA has its own look-throughs).

Bottom Line

OBBBA reshapes the QSBS calculus for new stock—introducing partial exclusions that reward earlier exits and lifting caps to better match modern venture scale. Meanwhile, New Jersey’s 2026 conformity removes a persistent state-tax drag for local residents, while California’s nonconformity continues to demand separate planning. For owners and boards, the question is no longer just “Do we have QSBS?”—it’s “Are we harvesting it fully across taxpayers, trusts, states, and time?”

Tight Action List for Deal Teams

  • Map who actually holds the stock (individuals, funds, grantor/non-grantor trusts)—and their states.
  • Re-paper equity programs to avoid §1202 anti-churning pitfalls (redemptions/repurchases windows).
  • Build a 3/4/5-year exit calendar for post-OBBBA issuances; stage-gate board materials accordingly.
  • Pre-LOI: evaluate stacking (done early) and packing (basis strategy) opportunities.
  • For CA/MA/NY/NJ/WA/TX footprints, produce a one-page state matrix for CFO sign-off before signing a term sheet.

Maximize Your QSBS Benefits with Expert Guidance

OBBBA has fundamentally reshaped the QSBS landscape, offering founders, investors, and deal teams new opportunities to optimize tax benefits and exit strategies. From faster exclusions to higher caps, these changes demand a fresh look at your planning approach. Whether you’re navigating entity choice, equity design, or state-specific tax implications, proactive planning is key to maximizing these benefits.

Ready to make the most of the new QSBS rules? Contact us today to explore tailored strategies that align with your goals and ensure you’re fully leveraging OBBBA’s advantages.

Education Savings Plans: OBBBA Updates You Need to Know

Posted on by Michelle Antico

President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025, and with it came some key changes to education savings plans for your child’s future and education. 

Expanded Rules for 529 Plans

Starting January 1, 2026, the annual distribution limit is increased to $20,000 for qualified education expenses. Previously, the limit was $10,000. 

The Act expands on the definition of qualified education expenses to include the following elementary or secondary school expenses:

  • Tuition
  • Curriculum materials
  • Books and other instructional materials
  • Online education materials
  • Tuition for tutoring classes outside of the home so long as the tutor:
      1. is not related to the student
      2. is licensed as a teacher
      3. has taught at an educational institution
      4. is a subject matter expert in the relevant subject
  • Fees for national standardized tests, advanced placement tests, or tests related to college admissions
  • Fees for dual enrollment in a higher education institution
  • Educational therapies for students with disabilities provided by a licensed practitioner 

The Act also allows 529 funds to be used towards qualified postsecondary credentialing expenses, which include tuition, books, and supplies for beneficiaries enrolled in a qualified postsecondary credential program.

These programs include:

  • Programs authorized by the Workforce Innovation and Opportunity Act
  • Programs for military credentials
  • Approved programs by the federal or state government 
  • Programs aligned with other approved postsecondary credential organizations 

Lastly, the OBBBA now permits tax-free rollovers from 529 accounts to ABLE accounts beyond 2025. Previously, this provision was set to expire on December 31, 2025.

ABLE Accounts

The rules regarding ABLE accounts also saw significant expansion under the OBBBA. These tax-advantaged accounts are intended as a savings and investment vehicle for individuals with disabilities. 

As of January 1, 2026, several provisions were extended:

  • The ABLE-to-Work provision allows employed individuals with disabilities to contribute beyond the annual limit if they are not already contributing to a defined retirement plan.
  • Contributions are eligible for the Saver’s Credit.
  • Tax-free rollovers are allowed from 529 plans.

Starting January 1, 2027, the Saver’s Credit for ABLE account contributions eligible for the credit will increase to $2,100, and the maximum credit allowed will be $1,050. 

Trump Accounts

Perhaps the most exciting provision of the OBBBA for parents is the introduction of Trump Accounts. These accounts are intended to serve as traditional individual retirement accounts for individuals under the age of 18. Special rules will apply to these accounts until the beneficiary turns 18, after which the accounts will presumably follow traditional IRA rules.  

Starting July 4, 2026, accounts can be created for any individual under the age of 18 who has a social security number. Parents, family members, and friends are allowed to contribute a combined total of up to $5,000 per child each year until the child turns 18. Beginning in 2028, this contribution limit will be adjusted annually for inflation.

Additionally, U.S. citizens born between 2025 and 2028 will receive a one-time $1,000 deposit from the U.S. Treasury, funded specifically for these accounts. This deposit will not count toward the annual contribution limit. Employers can also contribute up to $2,500 per year to an eligible employee or their dependent, but these contributions will count toward the $5,000 annual limit.

Earnings within the account will grow tax-free until they are withdrawn. Once the beneficiary reaches the age of 18 or older, distributions will be taxed as ordinary income.

Additional guidance is still needed to understand implementation and the rules that apply to the account after the beneficiary turns 18. It is also unclear if these contributions will count towards the annual gift tax exclusion.

Take the Next Step for Your Child’s Education Savings Plans

The OBBBA introduces major enhancements to education savings plans, from higher contribution limits for 529 plans and expanded qualified expenses to new options like Trump Accounts and improved ABLE account benefits. These changes open the door for families to save more efficiently and take full advantage of new tax benefits, ensuring your child’s educational future is well supported.

Navigating these updates can be complex, but you don’t have to do it alone. If you want to make informed decisions and maximize these new opportunities, reach out today for personalized guidance from our experts. We’re here to help you create a strategy that fits your family’s needs and makes the most of what the OBBBA offers.

The Linkage between Recruitment and Retention

Posted on by Michelle Antico

Recruitment and retention go hand in hand, yet many companies overlook their connection. Attracting top talent is just the start—keeping them engaged and committed is the true challenge.

It’s a familiar story: A recruiter identifies an exceptional candidate for a client. The interview process goes smoothly, and the candidate seems like a perfect fit. Yet, within 3-6 months, things fall apart.

What went wrong? The easiest explanation is to blame the recruiter for not finding the “right” candidate. However, a more common scenario is that the company fails to support the new hire from day one.

Too often, organizations assume their work is done once the offer letter is signed. Onboarding is treated as a one-day event—a quick process involving paperwork, a benefits overview, a tour of the office, and setting up a laptop. But effective onboarding is far more than a checklist.

Many companies overlook the importance of a strong People Operations team, which serves as the bridge between new employees and their respective teams. This team plays a critical role, from onboarding on day one to ensuring the employee’s long-term integration and success. The first 30-90 days are pivotal in shaping how a new hire perceives their role, the company, and its culture.

Culture, at its core, is about how employees feel within the organization. Do they dread Sunday nights, knowing Monday looms? Or are they genuinely excited to contribute to an inclusive, collaborative environment?

How the Best Companies Retain Talent

The most successful organizations don’t just meet expectations—they exceed them. They deliver on the promises made during the interview process. When companies fail to follow through, trust is broken, and employees leave.

Here are the key attributes of companies with the highest recruitment and retention rates:

Structured Onboarding and Integration

Successful companies prioritize a seamless onboarding experience. They have a clear plan in place, including meaningful projects for the new hire, introductions to colleagues and stakeholders, and a roadmap for integration. This preparation helps new employees feel welcomed and valued from the start.

Regular check-ins during the first few months are equally important. These conversations provide an opportunity to address concerns early and demonstrate that the company genuinely cares about its employees’ experiences.

Leadership Investment in Employee Development

Employees thrive when leadership is actively invested in their growth. This includes offering continued education, training, and career mentorship. A structured career path with clear goals motivates employees and fosters engagement.

Clear and Consistent Communication

Leadership must communicate the company’s vision and goals clearly and consistently. Misaligned messaging or a lack of transparency erodes trust. While some information must remain confidential, employees appreciate being informed about company developments whenever possible.

Recognition and Competitive Compensation

Recognition and rewards are essential for retention. Compensation and benefits should align with industry benchmarks, and employees should feel their efforts are appreciated. Sometimes, a simple “thank you” can go a long way in making employees feel valued.

Additionally, there must be a balance between compensation, promotion opportunities, and the value employees derive from their work. No one wants to feel overworked and undervalued.

Flexibility and Work-Life Balance

Flexibility is no longer a perk—it’s an expectation. Remote work options, reasonable workloads, and open PTO policies (when implemented effectively) contribute to positive mental health and job satisfaction. Employees need to feel supported in balancing their professional and personal lives.

Adequate Resourcing

Companies must ensure they have the right number of resources to avoid overburdening employees. Open positions should be filled promptly, or temporary support should be brought in to manage workloads. Asking employees to take on additional responsibilities indefinitely leads to burnout and higher turnover.

Cultural Alignment in Hiring

Hiring the right talent is critical. New hires should align with the company’s culture, values, and diversity, equity, and inclusion (DEI) strategy. Employees notice when new team members reflect the organization’s core values, and this alignment strengthens the workplace environment.

A Positive Work Environment

Employees want to work with people they respect and enjoy. A pleasant, collaborative environment fosters stronger relationships and improves retention.

Recruiting and Retention: A Unified Strategy

Recruiting and retention are not separate processes—they are deeply interconnected. The most successful organizations understand this and excel at both recruitment and retention.

Kevin Kurtz is a Partner leading Wiss’ internal and client recruiting practice. He can be reached at [email protected].

The End of Paper Checks: What You Need to Know

Posted on by Michelle Antico

The way Americans pay taxes and receive government payments is about to change dramatically. Executive Order 14247, “Modernizing Payments To and From America’s Bank Account,” signed by President Trump on March 25, 2025, mandates the end of paper checks for all Treasury Department, IRS, and Social Security Administration transactions.

Starting September 30, 2025, paper checks will no longer be issued for tax refunds, Social Security payments, or other government disbursements. Equally important, taxpayers can no longer mail paper checks for estimated tax payments, extension payments, or balance due payments to the IRS. 

This sweeping change affects millions of Americans who currently rely on paper checks for their tax transactions. While the transition aims to modernize government operations and improve security, it requires immediate attention from taxpayers and their advisors to avoid disruptions. 

If you’re already set up with electronic payments, you’re ahead of the curve. But if you still write checks to the IRS or receive paper refunds, the clock is ticking to make necessary changes to your payment methods.

What Changes on September 30, 2025

The deadline brings three major shifts that will impact how you interact with tax authorities:

No More Paper Refund Checks 

Tax refunds will only be available through electronic methods. If you typically receive a paper check in the mail, you’ll need to provide bank account information for direct deposit or choose an alternative electronic option. 

Paper Check Payments End 

You can no longer send paper checks for any tax payments, including quarterly estimated payments, extension payments, or balance due payments with your tax return. 

Electronic-Only Government Operations 

The Treasury Department, IRS, and Social Security Administration will operate entirely through electronic payment systems for routine transactions. 

These changes don’t affect everyone equally. If you already use direct deposit for refunds and pay taxes electronically, you won’t notice much difference. However, taxpayers who prefer traditional payment methods will need to adapt quickly.

Electronic Payment Options Available 

The good news is that several electronic payment methods are available, each with different features and costs: 

Free Government Options 

IRS Direct Pay and Direct Deposit offer the most straightforward transition for individual taxpayers. These services are free and don’t require advance registration, making them ideal for last-minute adopters. You can set up direct deposit when filing your return or use Direct Pay for tax payments throughout the year. 

Electronic Federal Tax Payment System (EFTPS) provides another free option but requires enrollment that can take several business days. Once set up, you can make payments online or by phone, giving you flexibility in how you manage tax payments. 

Third-Party Payment Processors 

Credit cards, debit cards, and digital wallets are accepted for tax payments, though the IRS doesn’t charge fees; third-party processors do. These options work well if you want to earn credit card rewards or need immediate payment processing. 

Electronic Funds Withdrawal (EFW) integrates with tax preparation software, allowing you to schedule payments when you file electronically. This option works well if you use professional tax software or work with a tax preparer who files electronically. 

Emerging Options 

The IRS has suggested it will offer prepaid debit cards as an option for tax refunds, though details about this program remain limited as the implementation date approaches. 

Special Challenges for Trusts and Estates 

Trusts and estates face unique obstacles in this transition. Current IRS systems don’t support direct deposit for trust and estate refunds, and Forms 1041, 709, and 706 lack fields for direct deposit information. 

Additionally, trusts and estates cannot use IRS Direct Pay, which individual taxpayers rely on for convenient electronic payments. This creates a gap in available options for fiduciaries managing trust and estate tax obligations. 

The American Institute of CPAs has formally recommended that Treasury and IRS exempt trusts and estates from the executive order until proper systems are in place. They’ve also suggested allowing trusts and estates to access IRS Direct Pay, similar to individual taxpayers. 

Recent inquiries to software providers indicate that system updates depend on IRS changes to their underlying software. Representatives from major tax software companies don’t expect significant updates before the September 30 deadline. 

Preparing for the End of Paper Checks 

Taking action now prevents last-minute complications when the deadline arrives: 

Review Your Current Payment Methods 

Identify whether you currently receive paper refunds or send paper checks for tax payments. If either applies, you’ll need to make changes before September 30, 2025. 

Choose Your Electronic Method 

Consider which electronic option best fits your situation. Free government options work well for most taxpayers, while third-party processors offer additional features at a cost. 

Test Your Setup 

Try your chosen electronic method before you need it for a major transaction. This helps identify any issues while you have time to resolve them. 

Update Your Records 

Ensure your bank account information is current and accurate in all tax-related systems. Incorrect banking details can delay refunds or cause payment failures. 

Communicate Changes 

If you work with a tax preparer, discuss these changes during your next meeting. If you handle your own taxes, make note of the new requirements for future reference. 

Why This Change Matters 

Executive Order 14247 aims to modernize federal payment infrastructure while enhancing efficiency and security. Electronic payments process faster than paper checks, reduce administrative costs, and offer better fraud protection.

For taxpayers, electronic methods provide faster refunds and more convenient payment options. However, the transition requires adjustment for those comfortable with traditional paper-based systems.

The change also reflects broader trends toward digital financial services. Banks, businesses, and government agencies increasingly operate in electronic environments, making this transition part of a larger modernization effort.

Take Action Before the Deadline

Don’t wait until September 2025 to address these changes from the end of paper checks. Start planning your transition now to avoid complications during tax season. 

Review your current tax payment methods and refund preferences. If you rely on paper checks for either payments or refunds, research electronic alternatives that meet your needs. Consider factors like cost, convenience, and security when making your choice. 

For complex situations involving trusts, estates, or business entities, consult with a tax professional who can help navigate available options and potential challenges. 

The shift away from paper checks represents a significant change in how Americans interact with tax authorities. While the transition requires effort, electronic payment methods offer improved speed, security, and convenience once properly implemented. 

Ready to prepare for the end of paper checks? Contact our team to discuss how the Treasury’s new requirements affect your specific tax situation and develop a strategy that ensures smooth transitions for all your tax obligations. 

Navigating OBBBA: Key Changes to State Tax

Posted on by Michelle Antico

As enacted on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) has reshaped the tax landscape in ways that will reverberate across state and local jurisdictions for years to come. For business owners and tax professionals, understanding these changes goes beyond federal tax compliance—it’s about navigating a complex and evolving patchwork of state-level responses that could significantly affect state and local taxes (SALT) obligations.

A clear understanding of OBBBA’s provisions will be essential for reviewing SALT positions and developing forward-looking strategies. With most state legislatures having adjourned before OBBBA’s enactment, the crucial decisions around state conformity and decoupling will be delayed until the 2026 legislative sessions. This creates uncertainty as businesses navigate new federal provisions while anticipating how states will respond.

Section 174 Research & Experimental Expenses

One of the most significant business-friendly changes in OBBBA is the permanent restoration of immediate expensing for Domestic Research and Experimental (R&E) Expenses. Beginning in 2025, businesses can deduct these costs in the year incurred rather than capitalizing and amortizing them over five years.

The Act also provides transition relief, allowing eligible small businesses to retroactively expense R&E costs from 2022-2024 that were previously capitalized. Also, taxpayers may be able to elect to accelerate remaining unamortized amounts from prior years, either deducting them entirely in 2025 or spreading them over two years.

From a state perspective, this creates immediate complexity, as there are several different approaches state may adopt. Some states may choose to conform to OBBBA R&E rules, while other states may decide to conform to pre-OBBBA rules given that the federal tax law may otherwise result in significant reductions in taxable income, while other states may adopt the pre-TCJA version of Section 174, permitting immediate deduction of all R&E expenditures.

Plus, there are a series of elections that businesses may be eligible for, that affect retroactivity, acceleration, and amortization, and businesses will need to evaluate if such elections are available at the state level.

Section 163(j) Business Interest Expense

OBBBA permanently restores the more favorable EBITDA-based calculation for the business interest expense limitation, replacing the less generous EBIT approach that took effect in 2022. This change allows businesses to add back depreciation and amortization when calculating the 30% limitation, effectively increasing the amount of deductible interest expense.

For capital-intensive businesses, this represents meaningful tax relief. However, state conformity varies widely, and some jurisdictions may choose not to adopt the federal changes, such as either adopting pre-OBBBA rules, pre-TCJA rules, or other rules, creating additional compliance complexity.

Section 168(k) Bonus Depreciation

The Act makes 100% bonus depreciation permanent for qualified property acquired after January 19, 2025. This provides long-term certainty for capital investment decisions and can significantly improve cash flow for asset-intensive businesses.

Additionally, OBBBA introduces a new category of “qualified production property” eligible for full expensing, covering certain manufacturing buildings placed in service before 2031.

State treatment of bonus depreciation has historically been inconsistent, with many jurisdictions decoupling from federal rules. Businesses will need to carefully track federal and state basis differences to ensure accurate reporting.

Foreign Income (GILTI and FDII)

OBBBA Significantly restructures the International Tax Provisions, renaming GILTI to “Net CFC Tested Income” (NCTI) and FDII to “Foreign-Derived Deduction Eligible Income” (FDDEI). These changes may lead to increased state tax liability in jurisdictions that choose to adopt the new foreign income rules.

The Act reduces the deduction percentages associated with these provisions, which could expand a taxpayer’s federal tax base. While OBBBA introduces more favorable treatment of foreign tax credits to help offset this increase base at the federal level, most states do not offer similar credits. As a result, businesses operating across multiple jurisdictions could face higher state tax burdens.

For multinational companies, modeling the impact of these changes will be essential for assessing cash flow implications and informing broader tax planning strategies.

Increase in the SALT Deduction Limitation

Perhaps the most visible change for individual taxpayers is the temporary increase in the individual SALT deduction cap from $10,000 to $40,000 for 2025-2029, reverting to a $10,000 limitation after 2029. The cap increases by 1% annually and includes an income-based phaseout for taxpayers earning over $500,000. Several state PTET programs are set to expire at the end of 2025, requiring legislative action to continue these beneficial elections.

While the PTET deduction limitations have been modestly adjusted, these changes are not expected to significantly impact most businesses’ existing pass-through entity (PTE) strategies.

Looking Ahead

The complexity introduced by OBBBA demands proactive planning and careful attention to state-by-state developments. States that decouple from any of OBBBA provisions could create timing differences that require detailed tracking.

Assessing how states are impacted from the federal income tax Act requires careful examination of how a state conforms to the Internal Revenue Code (IRC). States may either conform to the IRC on a rolling basis, meaning states automatically adopt changes as enacted, vs. fixed basis, meaning states adopt the IRC as a specific date and may not automatically adopt such changes. In either case, states may subsequently decide to selectively opt-in or opt-out with respect to specific provisions.

Furthermore, as businesses evaluate potential available federal elections, it will be important that state tax implications are evaluated in a broader strategy. 

As we approach 2026, staying informed, planning for multiple outcomes, and remaining flexible will be essential as states begin to clarify their responses to OBBBA. Businesses are strongly encouraged to begin assessing the potential SALT implications now, as the research, modeling, and analysis required to navigate these changes may be time-intensive and complex.

For more information, talk to our team today.

Selling Your Construction Business: Key Steps for Success

Posted on by Michelle Antico

Selling your construction business is a major milestone, one that requires careful planning, a clear understanding of value, and a strategic approach to succession. Whether you’re considering retirement, transitioning to the next generation, or preparing for a third-party sale, knowing what drives value and how to prepare can make a significant difference in your outcome.

This article outlines the essential steps and considerations for owners of closely held construction companies, drawing on industry best practices and valuation insights.

Understand Why and When You Need a Valuation

Valuations are needed for many reasons, including:

Tip: The purpose of your valuation will influence the standard and premise of value used (e.g., fair market value, investment value, liquidation value).

Know What Drives Value in a Construction Company

Valuation is both an art and a science. Key value drivers include:

  • Earning Power: Sustainable profitability and growth trends.
  • Backlog and Pipeline: Quality and diversity of contracts in progress.
  • Customer Base: Recurring clients, mix of public/private work.
  • Management Depth: Succession plans and key personnel.
  • Market Position: Reputation, specialties, and competitive advantages.
  • Financial Health: Clean, audited financials; strong working capital.
  • Equipment and Assets: Condition and marketability of owned assets.
  • Risk Factors: Dependence on key customers, litigation, or regulatory issues.

Prepare Your Business for Sale or Succession

Get Your House in Order

  • Clean up financial statements (preferably 3–5 years of reviewed/audited statements).
  • Identify and remove non-operating or personal expenses.
  • Address any outstanding legal, tax, or compliance issues.
  • Document key processes, contracts, and relationships.

Develop a Succession Plan

  • Identify and train successors (family, management, or external).
  • Consider phased transitions or earn-outs to retain key talent.
  • Review and update buy-sell agreements and shareholder documents.

Maximize Value Before Sale

  • Strengthen backlog and client relationships.
  • Diversify project types and geographies.
  • Reduce reliance on the owner or a few key employees.
  • Invest in technology, safety, and operational efficiency.

Work with the Right Advisors

Valuation Consultant

Choose a credentialed professional (ASA, NACVA, AICPA/ABV) with construction industry experience.

Legal Counsel

Review contracts, buy-sell agreements, and regulatory compliance.

Tax Advisor

Plan for the tax implications of a sale or transfer.

Transaction Advisor/Broker

If selling to a third party, consider an M&A advisor with construction sector expertise.

Understand Valuation Methodologies

Valuation professionals use several approaches:

Market Approach

Compares your business to similar public companies or recent M&A transactions. Adjusts for size, marketability, and control.

Income Approach

Projects future cash flows and discounts them to present value (Discounted Cash Flow or Capitalized Earnings methods).

Asset Approach

Values the business based on the fair market value of assets minus liabilities (often a floor for value).

Key Adjustments:

  • Discounts for lack of marketability (often 20–40% for closely held stock).
  • Premiums for control (if selling a controlling interest).
  • Adjustments for non-recurring or extraordinary items.

Special Considerations for Construction Companies

  • Contract Types: Mix of hard bid vs. negotiated, fixed price vs. cost-plus, and public vs. private work can impact value.
  • Backlog Analysis: Buyers will scrutinize the quality, profitability, and risk of your backlog.
  • Key Person Risk: Heavy reliance on the owner or a few individuals can reduce value.
  • Buy-Sell Agreements: Should be regularly updated and reviewed by a valuation professional to ensure fairness and clarity.

Common Pitfalls to Avoid

  • Waiting too long to plan for succession or sale.
  • Overestimating value based on rules of thumb or hearsay.
  • Failing to address contingent liabilities or legal issues.
  • Not preparing for due diligence.
  • Ignoring the impact of restrictive agreements or outdated buy-sell provisions.

Maximizing Value When Selling Your Construction Business

Succession and sale planning for a construction business is a complex process that requires early preparation, objective valuation, and a team of experienced advisors. By understanding what drives value, addressing key risks, and preparing your business for transition, you can maximize your outcome and ensure a smooth handoff, whether to family, management, or a third-party buyer.

For more information, reach out to our team today.

Tax Exempt Organizations Face New Rules Under the One Big Beautiful Bill Act

Posted on by Michelle Antico

Signed into law on July 4, the One Big Beautiful Bill Act introduces several key changes impacting tax-exempt organizations, including charities, private foundations, higher education institutions, and health systems.

Below is an overview of the most significant provisions:

Excise Tax on Executive Compensation

Tax-Exempt Hospitals and Health Systems

A 21% excise tax is imposed on compensation exceeding $1 million for all employees of tax-exempt organizations. This rule is not limited to just the top five highest-paid individuals. Compensation earned for medical services remains exempt, consistent with the original proposal.

Endowment Tax for Higher Education Institutions

Tiered Tax Structure

The former flat 1.4% excise tax on net investment income for private colleges and universities has been replaced with a tiered system, featuring rates of 1.4%, 4%, or 8%. The applicable rate depends on factors such as the size of the endowment and the number of full-time students who meet specific criteria.

Broadened Scope of Net Investment Income

The definition now includes:

  • Interest earned from student loans.
  • Royalties generated from intellectual property funded by federal sources.

This adjustment expands the range of taxable income for impacted institutions.

Philanthropic Incentives

Universal Charitable Deduction

Starting in 2026, taxpayers who do not itemize can deduct up to:

  • $1,000 for individuals.
  • $2,000 for married couples filing jointly for annual cash donations.

This measure is intended to encourage broader charitable contributions.

Adjusted Limits for Itemizers

Itemizing taxpayers now face:

  • Starting in 2026, taxpayers who itemize deductions will only be able to deduct charitable contributions that exceed 0.5% of their Adjusted Gross Income (AGI).
  • A decrease in the deduction rate for top-bracket taxpayers from 37% to 35%, reducing tax benefits for high earners.

Permanent 60% AGI Limit

  • The 60% AGI cap for cash contributions to public charities is now permanent unless future legislation changes it.
  • Donors can combine cash and non-cash gifts to meet the 60% threshold, addressing prior uncertainties.

Corporate Giving Requirement

Corporations must now contribute at least 1% of their taxable income to be eligible for a charitable deduction. This new rule may discourage companies from donating if their contributions fall below the stipulated threshold.

Private Foundations

Enhanced Reporting Obligations

While the IRS has not yet issued full implementation guidelines, the legislation introduces key changes, including:

  • Expanded disclosure of related-party transactions.
  • More detailed grant reporting.
  • Stricter oversight of administrative expenses.
  • Increased reporting frequency or shorter filing timelines.

Updated Self-Dealing Provisions

The new rules broaden the definition of self-dealing, increasing the likelihood that insider transactions—such as loans, leases, or service arrangements—may incur penalties, even if previously permissible.

Government Funding for Nonprofits

Reduction in Federal Funding Support

Several federal grant programs traditionally aiding tax-exempt organizations—particularly those focused on housing, food security, and refugee services—have been reduced or eliminated.

Greater Dependence on Private Funding

With reduced public funding, tax-exempt organizations are increasingly relying on private philanthropy to maintain operations. However, private donations often fail to offset the decline in government support, especially for groups serving vulnerable communities.

Preparing Tax Exempt Organizations for the Road Ahead

Although the legislation almost exclusively focuses on tax matters, it has significant implications for the tax-exempt sector. Now is an opportune moment for organizations to:

  • Reevaluate governance policies.
  • Review compliance procedures.
  • Examine compensation structures.
  • Reexamine planned giving strategies.

For additional support or questions, reach out to our team today. We’ll continue to provide updates on these developments.

Qualified Opportunity Funds: Key Tax Deadlines and NIIT Implications for 2026

Posted on by Michelle Antico

Taxpayers who deferred capital gains by investing in Qualified Opportunity Funds (QOF) under IRC Section 1400Z-2 should be aware of the fast-approaching December 31, 2026, deadline for recognizing those deferred gains, which is only some 17 months away. 

This alert outlines the applicable tax treatment, including the impact of the Net Investment Income Tax (NIIT), particularly for real estate professionals. 

Inclusion Gain Retains Original Character 

Under Treas. Reg. §1.1400Z2(a)-1(c)(1), any gain recognized in 2026 retains the same character it would have had if it had not been deferred. 

This includes: 

  • Capital gain treatment under IRC §1(h) 
  • Long-term or short-term gain classification under IRC §1222 
  • Section 1231 treatment for property used in a trade or business 
  • Section 1256 treatment for certain contracts 
  • Any other applicable provisions of the Internal Revenue Code 

This means the gain is not recharacterized due to deferral—it is treated as if it were recognized in 2026 with the same attributes it had originally. 

NIIT Implications for Real Estate Professionals 

The 3.8% Net Investment Income Tax (NIIT) under IRC §1411 applies to certain investment income above threshold amounts. However, gains from the sale of property held in real estate business may be excluded from NIIT if the activity does not qualify as a passive activity.  

In general, for taxpayers in the real estate business, a real estate activity does not constitute a passive activity if the following requirements are met: 

  • The taxpayer qualifies as a real estate professional under the passive activity loss rules, and
  • The taxpayer materially participates in the real estate trade or business 

If these conditions are met, the gain is considered non-passive and not subject to NIIT—a treatment that also applies to the inclusion gain in 2026. 

Tax Benefit of Temporary Deferral (the 10% to 15% “Haircut”) 

Keep in mind that: 

  • If the investment in the QOF is held for at least 5 years, the taxpayer’s basis (the investment amount), used to offset the inclusion of the deferred gain, increases by 10% of the deferred gain. 
  • If the taxpayer holds the investment in the QOF for at least 7 years, the taxpayer’s basis will increase by an additional 5% of the deferred gain. 

Key Takeaways 

Here are the essential points taxpayers should keep in mind regarding Qualified Opportunity Funds and their tax implications: 

  • Inclusion gain in 2026 retains its original character (e.g., 1231, capital, etc.) 
  • NIIT applies or does not apply based on how the gain would have been treated originally 
  • Real estate professionals who materially participate may avoid NIIT on the inclusion of the gain deferred from the sale of property held in a real estate business 

Planning Ahead for Qualified Opportunity Funds Tax Implications 

Taxpayers with deferred gains from Qualified Opportunity Funds should consult with their tax advisors to evaluate the character of their original gain and to determine the appropriate tax rates to apply in 2026. Now is the time for taxpayers to consider the impact of these rules on their cash flow planning. Planning ahead can help mitigate unexpected tax liabilities. Contact us today!

Opportunity Zone Tax Benefits: Navigating the OBBBA’s Transformative Changes

Posted on by Michelle Antico

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing significant changes to the U.S. Opportunity Zones (OZ) program. This tax alert summarizes the key opportunity zone tax benefits, updates, and implications for investors and stakeholders. 

From Temporary to Permanent 

Initially established by the 2017 Tax Cuts and Jobs Act (TCJA), the Opportunity Zones (OZ) program is now permanent. The previous sunset date of December 31, 2026, has been removed for new investments. Governors will redesignate OZs every 10 years, with the first redesignation taking effect on January 1, 2027.  

The OBBA does not alter the tax effect on deferred gains under the OZ program, as previously introduced under the TCJA.  Deferred gain under the TCJA OZ program remains taxable on December 31, 2026. 

Tax Incentives and Deferral Changes 

Capital gains deferral is now available on a rolling 5-year basis, replacing the fixed 2026 deadline. Investors receive a 10% basis step-up after 5 years. The previous 7-year 5% step-up has been eliminated. Gains on OZ investments held for more than 10 years remain entirely tax-free. 

New Focus on Rural Areas 

A new category of Qualified Rural Opportunity Funds (QROFs) has been introduced to encourage investment in rural areas (defined as regions outside cities or towns with populations over 50,000). QROFs offer a 30% basis step-up after 5 years and require only 50% of the adjusted basis to be reinvested, compared to 100% for standard OZs. 

Geographic Redesignation 

Effective July 1, 2026, governors must select new OZ census tracts every 10 years. Eligibility criteria have been tightened: the median family income threshold is lowered from 80% to 70% of the area or state median, the contiguous tract rule is eliminated, and Puerto Rico is now limited to 25% of eligible tracts. 

New Reporting Requirements 

New IRS reporting rules require Qualified Opportunity Funds (QOFs) to report asset values, business types, employment data, and more. Non-compliance may result in penalties up to $50,000. 

Strategic Timing Considerations 

A potential ‘dead zone’ in 2026 may prompt investors to delay investments to benefit from the new 2027 rules. Strategic planning is recommended to optimize the balance between current and future tax benefits. 

Maximizing Opportunity Zone Tax Benefits Amid OBBBA Changes 

The OBBBA introduces transformative changes to the Opportunity Zones program, offering enhanced incentives and stricter compliance requirements. Investors should reach out to our tax professionals to navigate the evolving landscape and maximize opportunity zone tax benefits. 

Investors should also consider the impact of recognizing gains deferred under the prior TCJA OZ program on their 2026 taxes.