Month: August 2026

Preface: “The more things change, the more they stay the same.” — Jean-Baptiste Alphonse Karr, Les Guêpes (1849)

Act 21 of 2026: What Pennsylvania’s New Local Sales Tax Sourcing Rule Means for Your Business

If you do business in or around Philadelphia or Allegheny County, a provision buried inside Pennsylvania’s new budget-implementation law — Act 21 of 2026 (formerly Senate Bill 146), signed July 12, 2026 — is worth your attention. It changes how local sales tax is “sourced,” meaning which transactions owe Philadelphia’s or Allegheny County’s local sales tax and which don’t. The change applies to tax years beginning after December 31, 2025, and the Department of Revenue has indicated it will begin enforcing the new rule for sales made on or after October 1, 2026 — so businesses have a short window to get their systems ready.

A quick refresher: Pennsylvania’s state sales tax rate is 6%. On top of that, Philadelphia adds 2% (combined 8%) and Allegheny County adds 1% (combined 7%). No other city or county in the state imposes a local sales tax.

The rate hasn’t changed. Act 21 does not raise or lower any tax rate — Philadelphia is still 2%, Allegheny County is still 1%. What changed is the rule for deciding which sales those local rates apply to, not how much tax is owed once a sale is subject to them.

Before Act 21: tax followed the seller

Philadelphia and Allegheny County each had their own local sales tax rule, written separately from the state’s rule. In practice, both worked the same way: the tax followed the seller, not the customer. A business located in Philadelphia charged the 2% local tax on its sales no matter where the goods ended up, even if they were shipped out of the city. A business located outside Philadelphia generally didn’t have to charge that 2%, even if it shipped directly to a customer in Philadelphia. Allegheny County’s 1% tax worked the same way. This was different from how Pennsylvania’s regular 6% state sales tax already worked, which is based on where the customer receives the goods, not where the seller is located.

After Act 21: tax follows the customer

Act 21 fixes that mismatch. Now, Philadelphia’s and Allegheny County’s local sales tax follows the same rule as the state’s 6% tax: it’s based on where the customer receives the goods, not where the seller is located.

So the question is no longer “where is the seller located?” It’s “where does the customer receive the item, or where will it be used?” If that’s an address in Philadelphia, the 2% local tax applies. If it’s in Allegheny County, the 1% local tax applies. If it’s anywhere else in Pennsylvania, only the 6% state rate applies — no local add-on. That’s true even if the seller itself is based in Philadelphia or Allegheny County.

Practical steps to take now

• • • Verify customer addresses. The tax now turns on the delivery/use location, so your invoicing or e-commerce system needs an accurate ship-to or place-of-use address for every sale — not just a billing address. A stale address field is now a tax-rate risk.
    • Update your tax engine or POS settings. If you use a sales tax automation tool (Avalara, Vertex, TaxJar, or similar), or hard-code rates in your accounting platform, confirm the jurisdiction logic reflects the new rule for Philadelphia and Allegheny County.
    • Refresh exemption certificate files. Collect current, properly completed exemption certificates (Form REV-1220) from wholesale, resale, and exempt-organization customers, and confirm certificates on file haven’t expired.
    • Check your marketplace and platform settings. If you sell through a marketplace facilitator or a hosted e-commerce platform, confirm the platform’s tax settings have been updated to source Philadelphia and Allegheny County sales correctly — don’t assume the platform handled it automatically.
    • Spot-check recent transactions. Since the change applies to tax years beginning after December 31, 2025, it’s worth reviewing earlier-2026 transactions to confirm they were taxed correctly, especially anything invoiced before systems were updated.
    • Train the team. Make sure whoever handles invoicing, order entry, or customer service understands that the local tax now depends on the customer’s delivery address, not the business’s location — a common source of manual errors during the transition.

If you’re located in Philadelphia or Allegheny County

Don’t assume every sale you make still carries the local tax. Under the new rule, a sale you ship to a customer outside the city or county generally won’t carry the Philadelphia or Allegheny County add-on, even though your business sits inside that jurisdiction. You still charge the local rate on sales delivered within the jurisdiction, exactly as before — but the obligation now runs sale-by-sale, based on the delivery address, not on your storefront’s address as a blanket rule.

If you’re located outside those jurisdictions (including out-of-state sellers)

If you ship goods to customers in Philadelphia or Allegheny County and already collect Pennsylvania’s 6% state sales tax (because you have nexus in PA, physical or economic), you now need to evaluate whether each delivery address falls inside Philadelphia (add 2%) or Allegheny County (add 1%). Sourcing follows the customer’s location, not yours — being headquartered elsewhere doesn’t exempt you from the local add-on when that’s where the goods land.

Bottom line

This new law doesn’t change what you owe in tax dollars-and-cents terms — Philadelphia is still 2%, Allegheny County is still 1%. What it changes is the test for deciding when those local rates apply, shifting from the seller’s location to the customer’s delivery address, in line with the same destination-based rule already used for the state’s 6% tax.

Preface: “A teacher affects eternity; [they] can never tell where [their] influence stops.” —Henry Adams, The Education of Henry Adams (1907)

Back to School, Back to Tax Planning: A Teacher’s Guide to Financial Decisions

The pencils are sharpened, classroom decorations are going up, lesson plans are taking shape, and somewhere a teacher is wondering how several hundred dollars of classroom supplies somehow disappeared into one shopping cart. It must be back-to-school season.

Teachers understand preparation better than almost anyone. A successful school year rarely begins when students walk through the classroom door on the first morning. It begins weeks earlier with planning, organizing, purchasing supplies, preparing lessons, establishing goals, and thinking about what students will need to succeed. Yet when it comes to personal finances and taxes, many of us take exactly the opposite approach. We wait until tax season, gather whatever documents we can find, hand everything to the accountant, and hope for good news.

There is a fundamental difference between tax preparation and tax planning that is worth understanding. Tax preparation looks backward. Tax planning looks forward. Preparing a tax return tells us what happened last year. Planning gives us an opportunity to influence what happens next. A teacher would never wait until the last day of school to develop the year’s lesson plan, and taxpayers should not wait until April to begin thinking about financial decisions that may have needed to occur before December 31.

Back-to-school season therefore provides a surprisingly good opportunity for teachers to conduct a financial checkup. There are still several months remaining in the calendar year, which means there may still be time to adjust tax withholding, increase retirement savings, organize classroom expenses, address income from a side business, and consider other financial decisions before year-end.

Let’s begin with something nearly every teacher understands: classroom expenses. Imagine Sarah, an elementary school teacher who begins preparing her classroom in August. She purchases books, organizational materials, educational supplies, and other items she believes will help her students succeed. Before long, she has spent several hundred dollars of her own money. Like many teachers, Sarah thinks, “I’ll save the receipts and deduct everything on my tax return.”

Unfortunately, tax law is not always as generous as Sarah’s classroom.

Eligible educators can receive a federal above-the-line deduction for certain unreimbursed educator expenses, subject to an annual limitation and other requirements. Qualifying expenses can include certain books, supplies, equipment, and professional-development costs. However, teachers should understand the applicable limitations rather than assuming every dollar personally spent on their classrooms will produce an equivalent tax deduction.

There is also an important lesson here about reimbursements. If your school or employer offers an appropriate reimbursement arrangement for qualifying business expenses, don’t automatically assume that paying the expense personally and taking a tax deduction is the better option. A tax deduction generally saves only a percentage of the amount spent. An eligible tax-free reimbursement may put substantially more money back in your pocket.

In other words, never spend a dollar simply to save a fraction of a dollar in taxes.

And please keep your receipts. Telling your accountant, “I’m pretty sure I spent about $800,” is not quite the same thing as documentation. Teachers know that “I definitely turned in that assignment” does not always mean the assignment can actually be located. Tax records sometimes suffer from the same problem. A shoebox full of receipts may technically resemble a recordkeeping system, but your accountant would probably appreciate something a little more organized.

Classroom expenses, however, may be one of the smaller opportunities available to teachers. Retirement planning can potentially have a much greater impact on long-term financial success.

Depending on their employer and individual circumstances, educators may have access to pensions, 403(b) plans, 457(b) plans, IRAs, or other retirement savings opportunities. The rules surrounding these accounts can be complex, but the underlying principle is simple: small financial decisions made consistently over long periods can become very large financial decisions.

Consider a 40-year-old teacher who decides to increase retirement savings by $200 per month. Assuming a hypothetical 7% annual return, those additional contributions could grow to approximately $162,000 by age 65. Investment returns are never guaranteed, but the illustration demonstrates the power of time and compounding. Finding another small tax deduction may feel satisfying today, but building a disciplined retirement strategy can influence financial security for decades.

This is an important distinction because tax planning should not become a treasure hunt for deductions. The goal is not simply to pay the least possible tax this year. The goal is to make wise financial decisions that improve your long-term position while appropriately considering the tax consequences.

Withholding is another area teachers should review before year-end. Perhaps you got married. Maybe your spouse changed jobs or received a significant raise. Perhaps you welcomed a child, began receiving investment income, or started earning money outside the classroom. These changes can affect your overall tax situation even when your regular teaching paycheck looks almost exactly the same.

August or September is a much better time to discover a withholding problem than the following April. There may still be time to make adjustments during the remaining pay periods of the year. April is a wonderful month for warmer weather, baseball, and spring flowers. It is considerably less enjoyable when it includes discovering an unexpected tax bill that could have been anticipated months earlier.

Side income deserves particular attention because many teachers are also entrepreneurs without necessarily thinking of themselves that way. A teacher might tutor students after school, coach, teach summer programs, provide consulting services, sell educational materials online, or operate an entirely separate business. Once someone begins earning income independently, the tax picture can change considerably.

Unlike regular wages, independent business income may not have taxes withheld automatically. Self-employment taxes, estimated income tax payments, business expenses, recordkeeping requirements, and potentially even additional retirement planning opportunities can enter the conversation. A teacher earning $10,000 from tutoring does not necessarily have $10,000 available to spend. Some of that money may eventually belong to the government.

The good news is that a legitimate business may also have legitimate deductible expenses. The important word is legitimate. Good tax planning means understanding which costs are truly business-related, maintaining appropriate records, and discussing the activity with your tax advisor before tax season rather than attempting to reconstruct an entire year of business activity afterward.

Continuing education is another area worth considering. Teachers frequently pursue graduate degrees, certifications, conferences, continuing education, and professional-development programs. Depending on the circumstances, various tax rules, employer reimbursements, or education-related provisions may apply. Rather than assuming an expense is deductible—or assuming it isn’t—keep the documentation. Save tuition statements, reimbursement records, receipts, and information describing the program. Your tax professional can then evaluate the facts under the applicable rules.

Charitable giving and classroom generosity can create similar questions. Teachers are generous people. Many purchase items for students, contribute to school-related programs, participate in fundraisers, or support charitable organizations within their communities. But generosity alone does not automatically make an expenditure tax deductible. A personal expenditure for a student, an eligible educator expense, an employer-reimbursed expense, and a charitable contribution can receive very different tax treatment. Documentation and understanding the nature of the payment matter.

Teachers should also consider whether anything significant has changed in their lives during the year. Did you purchase or sell a home? Welcome a child? Get married or divorced? Receive an inheritance? Begin graduate school? Start a business? Make a significant charitable gift? Experience a substantial change in household income? These events can have tax and financial consequences, and waiting until tax-return preparation season may eliminate planning opportunities that were available earlier.

This leads to perhaps the most useful tax-planning question of all. Instead of asking, “What can I deduct?” consider asking, “What financial decisions should I make before December 31?”

That question changes the conversation. Maybe the answer is increasing retirement contributions. Perhaps it is correcting withholding. Maybe it involves making estimated tax payments on side income, improving your recordkeeping, evaluating charitable giving, or simply organizing documents so that tax season becomes easier. In some situations, the best tax-planning decision may have little to do with obtaining another deduction and everything to do with building a stronger financial future.

So, as students return to school, perhaps teachers deserve a little homework of their own. Pull out last year’s tax return and look at it before next April. Review your most recent pay stub and determine whether your withholding still makes sense. Organize receipts for classroom expenses. Review how much you are contributing toward retirement. Make a list of any income you earn outside your teaching position. Gather documentation for continuing education. Think about major changes that have occurred in your family or finances. If something significant has changed, consider talking with your tax advisor while there is still time to do something about it.

And unlike some homework assignments, waiting until the night before this one is due really can cost you money. Perhaps the greatest financial lesson teachers can borrow from their own classrooms is the value of preparation. Great teachers establish goals, develop a plan, monitor progress, make adjustments, and occasionally rewrite the lesson when circumstances change. Successful financial planning works much the same way. We cannot predict everything that will happen during the year, but we can prepare thoughtfully and adjust when life changes.

Teachers dedicate an extraordinary amount of their time and energy to preparing students for the future. This back-to-school season, consider spending a little time preparing your own financial future as well. You don’t need to become a tax expert, memorize the Internal Revenue Code, or understand every retirement-plan rule. You simply need to ask good questions while there is still time to act.

Because whether we’re talking about the classroom, retirement, or next year’s tax return, a little preparation today can prevent a lot of homework tomorrow.

Preface: “Whenever you see a successful business, someone once made a courageous decision.” — Peter Drucker

Beyond the Interest Rate: Making Capital Investment Decisions

Every business owner eventually arrives at a “major” financing decision. It may be the opportunity to purchase a larger facility, invest in new equipment, hire additional employees, expand into a new market, or acquire another business. These moments are exciting because they represent growth, but they are also intimidating because they require committing significant financial resources without knowing exactly what the future holds. The question that naturally follows is one every entrepreneur has asked at some point: “Is now the right time to invest?”

For many business owners, the first place they look is the interest rate. If borrowing costs seem high, they delay the decision. If rates fall, they become more optimistic. While financing costs certainly deserve careful consideration, I have learned over the years as a CPA that the businesses that consistently succeed are rarely those that simply borrowed money at the lowest rates. Instead, they are the businesses led by owners who understood how to make wise capital allocation decisions with a proper assessment of the marketplace opportunity. The interest rate is important, but it is only one variable in a much larger equation.

Imagine two manufacturers located just a few miles apart. Each has the opportunity to purchase a new automated production line for $750,000. Both qualify for the same financing at 6.5% interest rate. One owner decides to move forward because the equipment will double production capacity, reduce scrap, improve product quality, and allow the company to pursue larger customers. The second owner decides the interest rate is simply too high and postpones the purchase for another year.

Fast forward five years. The first company has expanded into new markets, increased profitability, hired additional employees, and strengthened its reputation for quality and reliability. The second company continues operating with aging equipment, higher labor costs, slower production, and shrinking market share. What made the difference? It certainly wasn’t the interest rate. The difference was understanding the opportunity returns generated by the investment rather than focusing exclusively on the cost of financing it.

Peter Drucker once observed, “The best way to predict the future is to create it.” That statement captures the essence of wise business investing. Great business owners recognize that capital expenditures are not merely expenses—they are opportunities to build a stronger, more competitive organization. They understand that every investment should create value that exceeds its total cost over time.

One of the biggest mistakes I see business owners make is asking the wrong first question. Instead of asking, “Can I afford the monthly payment?” they should ask, “With the market environment, will this investment create more value and a higher rate of return than it costs?” Those are fundamentally different questions. A business can comfortably afford the payments on a poor investment while still damaging its future. Conversely, an exceptional investment often generates returns so significant that the financing costs become almost secondary.

This brings us to an important concept that is often misunderstood: the cost of capital. Many people assume the cost of capital is simply the interest rate charged by the bank. In reality, it is much broader than that. Every dollar invested in one opportunity is a dollar that cannot be invested somewhere else. Purchasing a building may delay investing in technology. Buying new equipment may postpone hiring another salesperson. Expanding into a new market could require giving up another attractive opportunity. Every investment carries an opportunity cost because every dollar has competing uses.

As Warren Buffett wisely said, “Risk comes from not knowing what you’re doing.” The greatest financial risk is often not the loan itself but making an investment without fully understanding its long-term impact on the business. Successful entrepreneurs think beyond today’s interest rate and evaluate how the investment will influence cash flow, productivity, customer satisfaction, and long-term competitiveness.

When thinking about a major financial decision, consider and look beyond the financial statements and ask several important questions. Will this investment generate more cash than it consumes? Profitability is important, but profits do not make loan payments—cash flow does. Will this investment improve productivity by allowing employees to produce more, make fewer mistakes, or serve customers more efficiently? Does it reduce operational risk by improving our customer experience, replacing aging equipment, or strengthening compliance? Will it create a competitive advantage that competitors will struggle to match? Does it align with the company’s long-term mission and vision? Finally, what happens if things don’t go according to plan? Wise entrepreneurs stress-test every investment by asking what happens if sales decline, interest rates increase, or operating costs rise unexpectedly. Strong investments continue to make sense even under less-than-ideal circumstances.

Perhaps the most overlooked consideration in business investing involves non-financial returns. Some of the highest-return investments never appear directly on an income statement or balance sheet. What is the financial value of developing exceptional teams? How much is a culture worth that attracts talented employees and retains them for years? What is the value of earning a reputation for outstanding customer service that allows a business to command premium prices? How much is a loyal customer worth over the next twenty years? These questions cannot always be answered with precise calculations, yet they frequently determine whether a company flourishes or merely survives. Will the investment help or hinder key attributes of your businesses success? Jim Collins, author of Good to Great, reminds us that “Greatness is not a function of circumstance. Greatness is largely a matter of conscious choice.” Investing in leadership development, employee training, technology, innovation, and customer relationships often produces returns that exceed those of physical assets alone. These investments may not immediately increase profits, but they create stronger organizations capable of sustained growth for decades.

Business owners also tend to place too much emphasis on relatively small changes in interest rates. Consider two different investment opportunities. One project generates a 20% annual return while being financed at 7%. Another produces only a 5% return but carries financing at 5%. Which investment would you rather own? The answer is obvious. The quality of the investment matters far more than a modest difference in borrowing costs. Outstanding opportunities remain outstanding even when interest rates rise.

One of my favorite examples comes from agriculture. Imagine a farmer deciding whether to purchase a neighboring farm that perfectly complements his operation. The interest rate may be higher than he would prefer, but the land provides additional acreage, operational efficiencies, economies of scale, and opportunities for future generations. If the purchase strengthens the farm for decades, was the interest rate really the deciding factor? Probably not. The wiser question was whether the land helped build the future the farmer envisioned.

The same principle applies to virtually every business decision. The goal is not to make investments because financing is available. Neither should businesses avoid investing simply because interest rates are higher than they were several years ago. The objective is to invest intentionally, thoughtfully, and strategically in market opportunities that create long-term value.

Before making your next capital expenditure, resist the temptation to ask only one question: “Can we afford it?” Instead, ask yourself a series of better questions. Will this investment make our company stronger? Will it improve the experience of our customers? Will it make our employees more productive and engaged? Will help us create a better wake for those who will follow after? Will it create a meaningful competitive advantage? Will it position us for success five or ten years from now? Most importantly, if we choose not to invest today, where will our competitors—and our business—be five years from now?

As the years roll, interest rates will continue to rise and fall. Market opportunities will expand and contract. Economic conditions will inevitably change. Yet history consistently demonstrates that enduring businesses are not built by entrepreneurs who merely looked at the interest rates. They are built by leaders who allocated capital wisely based on assessing market opportunity, balanced financial discipline with strategic vision, and possessed the courage to invest in the future even when certainty was impossible.

In the end, capital is far more than money. It is marketplace opportunity. Every dollar entrusted to a business owner carries the responsibility of creating something better—better products, better service, better careers for employees, better experiences for customers, and ultimately a stronger organization. The question is not simply whether you can afford the investment. The question is whether the investment helps build the future you are trying to create with the marketplace opportunity. And in business, your proper analysis of the marketplace opportunity and its alignment with your business dreams may be the most important financial decision you will ever make.

Preface: “Since 1984, the proportion of beneficiary families whose benefits are taxed has risen over time from less than one in 10 to more than half” – Income Taxes on Social Security Benefits from Social Security Administration: Research, Statistics & Policy Analysis

Social Security – How Your Social Security Benefits Are Taxed

The following is the fourth in a series of blog posts on the subject of Social Security. The first three installments, which can be found here, here, and here:

• • • Reviewed the history of the Social Security program
    • Explained how to claim Social Security retirement benefits
    • Explained how to claim Social Security survivor and family member benefits

This fourth installment will discuss:

• • • How Social Security benefits are taxed

Future posts in this series will address:

• • • How earned income is taxed to fund Social Security
    • Estimating Social Security’s returns on investment

Tax on Social Security Benefits

For almost the first 50 years of Social Security, Social Security retirement benefits were not subject to income tax. It was only with the Social Security Amendments of 1983 that they became partially taxable for some recipients. This taxation of benefits went into effect in 1984 and has been with us ever since. In fact, it has expanded apace.

The 1983 law set up dollar thresholds above which 50% of Social Security benefits become taxable. These thresholds are $32,000 for married taxpayers filing jointly and $25,000 for all other filers with one exception: for married taxpayers filing separately who lived together at any time during the year, the threshold is zero.

For purposes of applying this threshold, only half of the Social Security benefits themselves are considered. Also, tax-exempt interest income is added back.

Note that 50% of benefits being taxable does not mean that your benefits are subject to a 50% tax rate. It means that half of those benefits are taxed at your ordinary rate. The other half remains tax-free.

Amazingly, the dollar amounts of these thresholds have not been adjusted for inflation since they were first introduced in 1983. It is interesting to speculate whether this legislation would have received the support it did at the time if people had realized it would eventually apply to a majority of benefit recipients.

While most of this expansion was accomplished through inflation, a change was made a decade later that subjected some portions of benefits to an even higher degree of taxability. The Omnibus Budget Reconciliation Act (OBRA) of 1993 defined a second set of thresholds above which 85% of Social Security benefits are subject to income tax. This higher threshold is $44,000 for married filing jointly and $34,000 for other filers. These thresholds have likewise never been adjusted for inflation.

If income as computed for Social Security purposes falls above the upper threshold, then 85% of that amount of Social Security benefits is subject to tax. Any amount of benefits that falls between the thresholds is 50% taxable, but not if that would make the total taxable portion more than 85% of the benefit received.

If you would like SSA to figure the taxable amount for you, they provide their own calculator here. Many other websites provide unauthorized versions of a similar calculator.

“No Tax on Social Security”

While there was talk in the presidential campaign of 2024 about eliminating tax on Social Security benefits, what the One Big Beautiful Bill Act of 2025 (OBBBA) ended up doing was introducing an entirely new tax deduction for taxpayers over 65.

Beginning in tax year 2025, this new deduction is worth $6,000 per individual. It begins to phase out for married filers with adjusted gross income over $150,000 and fully phases out at $250,000. For single filers, these phaseout thresholds are $75,000 and $125,000. The deduction is available to anyone within these income thresholds who is of age without regard to the amount of Social Security benefits being received. In fact, you don’t have to be receiving any Social Security benefits at all to take this deduction.

The deduction will expire after tax year 2028 if it is not renewed by an act of Congress.

There has still been no change in the law governing taxation of Social Security benefits since OBRA of 1993.

Treatment of Lump Sum Benefits

If a Social Security benefit is for any reason delayed beyond the year it originated and is paid instead in a later year, it is treated for tax purposes as received in the year it was actually paid. Prior year tax returns cannot be amended to include benefits that were not received until a later year. This can result in an unusually large payment in the current year know as a “lump sum” benefit.

The only relief available to recipients of lump sum benefits is an election to figure the taxable amount of the lump sum based on the year the payment originated. The taxable amount of payments that originated in a prior year can be calculated as if they had been received in the prior year. The amount that would have been taxable in the prior year can then be considered the amount taxable in the current year, if this is more beneficial to the taxpayer.

Claim of Right

Occasionally, Social Security benefits must be repaid. For tax purposes, any amount repaid in the current year can be deducted from the amount received in the current year. However, if for any reason a benefit received in one year is not repaid until a later year, tax relief is only available as “claim of right” under Internal Revenue Code Section 1341.

Claim of right is a doctrine that applies to cases where income that was taxed in a prior year is repaid by the taxpayer in a later year. This same doctrine applies to wages or bonus repaid to an employer and also to repayment of unemployment benefits.

If the amount is less than $3,000, no relief is available.

Any claim of right amount greater than $3,000 can either be deducted as an itemized deduction on Schedule A or figured as a refundable credit on Schedule 3, whichever is more beneficial to the taxpayer. The credit is figured in the following way:

• • • Tax is refigured for the year in which the amount was originally reported in income, but as if that amount had never been received.
    • The difference between the refigured tax on the prior year and the actual tax in that prior year is then the credit that may be claimed in the current year.

Preface: “The will to win is not worth much unless you have the will to prepare to win.” – Fielding H. Yost, University of Michigan football coach

Why Great Businesses Are Built During Slow Seasons

Every successful athlete understands a truth that business owners would be wise to embrace: the most important work rarely happens when everyone is watching. When spectators watch the World Cup, Olympics, the Super Bowl, or the World Series, they witness incredible performances. They see athletes competing at the highest level, often making extraordinary accomplishments appear effortless.

What they don’t see are the thousands of hours spent preparing long before the competition began. They don’t see the early mornings in the weight room, the countless practice sessions, the film study, the conditioning, or the recovery that made those performances possible. Championships are won long before game day. The same principle applies to successful businesses.

Many business owners become uneasy when activity slows. Orders decrease, the phones become quieter, and calendars suddenly have a little more white space than usual. The natural tendency is to hope business picks up quickly and simply wait for the busy season to return. However, the most successful companies think differently. Rather than viewing slower periods as lost opportunities, they recognize them as some of the most valuable opportunities they will have all year. They understand that while revenue may temporarily slow, progress doesn’t have to.

In fact, many champion businesses are quietly built during their slowest seasons. Just as athletes use the offseason to improve their skills, business owners should use slower periods to strengthen the foundation of their companies. This is the ideal time to improve internal processes, document procedures, train employees, evaluate technology, review profitability, strengthen customer relationships, and develop future leaders. These activities may not immediately increase revenue, but they often determine how successful the business becomes over the next several years.

One of the greatest mistakes business owners can make is believing that productivity only occurs when serving customers. In reality, some of the highest-return work happens behind the scenes.

A slower season provides an opportunity to ask important questions that are often overlooked during the rush of daily operations. Are our systems efficient? Are we pricing our services appropriately? Is our team receiving the training they need? Are we preparing future leaders? Could technology improve our workflow? What processes create unnecessary frustration for our employees and customers?

These are the questions that move a business from simply operating to continuously improving.

Professional athletes also understand another important principle that applies directly to business: recovery is part of peak performance. No athlete expects to compete at the highest level every day without allowing time for rest, reflection, and rebuilding. Muscles grow stronger during recovery. Minds become sharper after stepping back. Performance improves because intentional time was invested in preparation rather than constant activity. Business owners are no different.

Many entrepreneurs spend months operating at an exhausting pace. Tax season, construction season, harvest season, or holiday demand often requires extraordinary effort. Slower periods provide an opportunity not only to strengthen the business but also to strengthen the leader. Reading a leadership book, attending a business peer group, meeting with trusted advisors, improving strategic planning, or simply spending uninterrupted time thinking about the future of the company can produce tremendous long-term returns. Another lesson athletes teach us is that success yesterday does not guarantee success tomorrow.

Every season begins with learning anew. Businesses face the same reality. Markets change. Customer expectations age. Technology advances. Competitors improve. Businesses that stop learning eventually stop growing. The organizations that consistently outperform their competition are often those that view every slower season as an investment rather than an inconvenience.

As CPAs and business advisors, we have the unique opportunity to work alongside companies across many industries. One observation consistently stands out. The businesses that experience sustained long-term growth are rarely the ones that simply work harder than everyone else. More often, they are the businesses that intentionally improve, they build seasons, sharpen skills, and practice and prepare while others are waiting for business to get busy again.

Financial statements tell the story of yesterday’s decisions. The investments you make today—in your employees, your systems, your leadership, your technology, and your customer experience—will eventually appear as tomorrow’s revenue growth, improved profitability, stronger cash flow, and increased business value. Perhaps that is why the slow season should not be viewed as an interruption to success.

It should be viewed as preparation for it.

The next time your business enters a quieter period, resist the temptation to raise concerns. And wait for activity to return. Instead, ask yourself:

• • • How can we stay focused on our mission?
    • What skills can our team develop to fulfill our vision more aptly?
    • What systems can we strengthen?
    • When we get where we are going where will we be?
    • What decisions today will position us for greater success next year?

The answers to great questions may become the foundation for your company’s next season of growth. Just as athletes prepare long before the competition begins, great businesses prepare long before opportunity arrives. Because when the next busy season comes—and it will—you won’t simply want to be busy. You’ll want to be ready.

Great businesses are not built only during seasons of abundance. They are built during seasons of preparation. Use your slower seasons wisely. Improve your people. Strengthen your systems. Refine your strategy. Invest in your culture. Build your leadership. Listen to you coach. The work you do when few people are watching often becomes the reason everyone notices your success later. Preparation – it’s the champions edge to a great business.