Author: dsauder

Preface: “Plans are nothing; planning is everything.” — Dwight D. Eisenhower

Year-End 2025 Industry Mini-Guides: How to Use 100% Bonus Depreciation Before December 31

If you’ve been waiting for the clearest “do I buy this now or not?” answer, here it is: 100% bonus depreciation is back for 2025, and it can dramatically lower your tax bill — but only if you handle the timing and documentation correctly.

The 2025 law change restored full expensing for many business assets and made it retroactive to qualifying property placed in service on or after January 19, 2025.

That retroactive piece is why this is the biggest year-end planning lever for small businesses right now.

Below are quick, practical mini-guides by industry so you can see what matters to your business — plus a simple December checklist at the end.

First: the two rules that matter most

1. “Placed in service” beats “purchased.”

You don’t get the deduction just because you paid for it.

To qualify for 2025, the asset generally must be ready and available for use by December 31, 2025. Delivery, installation, and actual use all matter.

2. Bonus depreciation and Section 179 work together.

Bonus depreciation is automatic for eligible assets unless you opt out.

Section 179 is elective and sometimes better for certain assets or planning goals. Your best result usually comes from using both strategically.

Mini-Guide #1: Contractors & Construction

What usually qualifies:

• • • • Heavy equipment: skid steers, excavators, lifts, compactors, loaders
      • Jobsite tools and machinery
      • Trailers and work vehicles (especially those over 6,000 lbs GVWR)
      • Surveying, GPS, and jobsite tech
      • Computers, tablets, and office/field software systems

Year-end traps to avoid:

• • • • Ordering in December isn’t enough. If the machine arrives in January, it’s a 2026 deduction, even if you paid in 2025.
      • “Sitting on the lot” isn’t placed in service. If it’s not ready for use (or you don’t have possession), you likely can’t claim it yet.

Smart December move:

• • • • Review your 2025 purchases that have already been put into service. With 100% bonus depreciation restored retroactively, you may have deductions you weren’t expecting when you bought earlier this year.

Mini-Guide #2: Farms & Ag Businesses

What usually qualifies:

• • • • Tractors and combines (new or used, if first use by you)
      • Harvesting, planting, and feeding equipment
      • Grain bins and certain farm structures/equipment
      • Irrigation equipment
      • Farm trucks and trailers
      • Dairy and livestock systems that are tangible depreciable property

Year-end traps to avoid:

• • • • Installation timing. A grain bin delivered but not installed/usable by 12/31 may not count for 2025.
      • Financing confusion. Financing does not prevent eligibility — what matters is placed-in-service timing and business use.

Smart December move:

• • • • If you’re considering a major equipment upgrade anyway, placing it in service before year-end can turn a big purchase into a big deduction.

Mini-Guide #3: Manufacturing & Light Industry

What usually qualifies:

• • • • Production machinery and shop equipment
      • Robotics and automation tools
      • Forklifts, pallet systems, warehouse equipment
      • Quality control and testing tech
      • Computers/software tied directly to production
      • Certain facility improvements that are depreciable equipment (not land/building structure)

Year-end traps to avoid:

• • • • Long lead times. If you order now but it won’t arrive until Q1, plan for a 2026 deduction instead of assuming 2025.
      • Capital improvement vs. equipment. Some building work can qualify (like certain interior improvements), others can’t. Classification matters.

Smart December move:

• • • • Don’t guess whether a project is “equipment” or “building.” We can often re-classify parts of a project to maximize what qualifies.

Mini-Guide #4: Professional Services, Offices & Small Retail

What usually qualifies:

• • • • Computers, monitors, servers, networking gear
      • Point-of-sale systems
      • Phone systems and security equipment
      • Office furniture and fixtures
      • Certain leasehold/tenant improvements that are depreciable property
      • Specialized equipment used in service delivery (medical, dental, salons, studios, etc.)

Year-end traps to avoid:

• • • • Bundled invoices. If your contractor bills “office remodel” as one number, you may lose deductions that could have qualified as equipment. Breakouts help.
      • Low-cost items add up. Don’t ignore “small stuff” purchases (workstations, laptops, POS upgrades). They often qualify and can swing your year-end result.

Smart December move:

• • • • If you’re planning tech upgrades for next year, doing them now may pay for part of the purchase in tax savings.

Should you always take 100% bonus depreciation?

Not necessarily.

Reasons you might scale it back or opt out:

• • • You’re already low-income in 2025 and want deductions for a higher-income year.
    • Full expensing could reduce other benefits (like parts of the QBI deduction) depending on your situation.
    • You’re applying for bonding/financing and want stronger book income (tax strategy and reporting goals don’t always match).

That’s why a short planning call before year-end is worth it.

Your December 2025 Checklist

Use this as a quick “am I set?” list:

1.  List everything you bought in 2025 that’s used for the business.

           2. Mark what’s already placed in service (in use or ready to use).For items not yet in service:

• • • • • confirm delivery/installation date
        • decide whether to accelerate or accept a 2026 deduction

           3. Pull documentation now: invoices, serial numbers, delivery receipts, install confirmations, and photos if helpful.

            4. Ask one key question before buying more:

“Will this be placed in service by December 31, 2025?”

              5. Talk to your CPA before the purchase if it’s big — the “best tax move” depends on your whole return.

Want us to run the numbers?

If you send us:

• • • a list of 2025 equipment/vehicle/tech purchases, and
    • anything you’re thinking about buying before year-end,

we’ll estimate the tax impact and suggest the best mix of bonus depreciation and Section 179 for your goals.

Conclusion

For most small businesses, this is the single biggest year-end lever for 2025 — but only if the timing and documentation are right.

 

Preface: “Beware of little expenses; a small leak will sink a great ship.” —Benjamin Franklin

The Importance of a Good Bookkeeper for Your Business

In business, those “small leaks” are usually hiding in the books — and the only way to spot them early is with great bookkeeping. Running a successful business takes more than great products or services — it demands accurate, timely, and insightful financial management. At the heart of that process is one of the most critical yet often overlooked roles: the bookkeeper.

A good bookkeeper does far more than just “keep the books.” They are the financial backbone of your business, maintaining clarity, accuracy, and organization so you can make informed decisions with confidence.

Why Every Business Needs a Good Bookkeeper

Bookkeeping is the foundation of sound financial management. It ensures that every transaction — from invoices to expenses — is properly recorded and categorized. Without accurate records, businesses risk making decisions based on incomplete or incorrect information, leading to missed opportunities or costly compliance issues. A few months of messy books can turn into missed tax deductions, cash-crunch surprises, or expensive cleanup fees at year-end.

A skilled bookkeeper ensures:

• • • Accuracy in financial records: Every entry matches supporting documentation, such as receipts and bank statements.

    • Timely reporting: You always have up-to-date data when you need it — whether for a loan application, tax planning, or strategic decisions.

    • Compliance and peace of mind: Proper documentation is maintained, accounts are reconciled regularly, and federal, state, and local requirements are met.

For example, imagine a small construction company that loses track of vendor payments because invoices aren’t entered promptly. This not only damages relationships but can distort profit margins. A strong bookkeeper prevents such oversights, keeping cash flow steady and vendors paid on time.

Key Skills and Qualities of a Great Bookkeeper

The best bookkeepers bring a mix of technical expertise and soft skills that contribute directly to business success. Indicators of a high-performing bookkeeper include:

• • • Attention to detail: Catches small discrepancies — like a $100 misclassified expense — before they become major issues.

    • Consistency and reliability: Maintains disciplined routines for reconciliations, payroll, and reporting.

    • Technical competence: Proficiency in tools like QuickBooks, Xero, or Sage, plus the ability to automate workflows and generate meaningful reports.

    • Understanding of the business: Knows what drives revenue, cost, and profitability in your industry.

    • Communication skills: Translates financial data into clear insights and explains trends and variances in plain language.

Signs You Have (or Don’t Have) a Good Bookkeeper

A good bookkeeper makes your life easier. Financial reports are timely, your accountant has clean data for tax filings, and you always know your cash position. They proactively alert you to issues like declining margins, late payments, or unnecessary spending.

Inconsistent bookkeeping often shows up as:

• • • Frequent errors or missing documentation

    • Unexplained discrepancies in bank reconciliations

    • Late filings or inaccurate financial statements

    • Difficulty answering basic questions about your accounts

These problems waste time and can lead to major headaches during audits, financing applications, or tax season.

The Strategic Value of Great Bookkeeping

Good bookkeeping isn’t just about compliance — it’s about strategy. Accurate records allow businesses to:

• • • Monitor profitability by project or product line

    • Track key performance indicators (KPIs) like gross margin and cash flow

    • Make smarter growth decisions based on reliable financial data

    • Move faster: With current books, you can act on opportunities or problems in real time — not months later.

For instance, a retail store might discover through clean bookkeeping that one product line delivers 40% of profits but only 10% of sales. That insight can guide marketing and inventory decisions — something sloppy books could easily obscure.

Conclusion

A good bookkeeper is not just a record-keeper — they’re a trusted financial team player in your success. Investing in skilled bookkeeping ensures that your business operates with clarity, confidence, and control.

Whether you’re a startup trying to gain traction or an established company looking to optimize profitability, having the right bookkeeper in place is essential. A great bookkeeper is the unsung hero behind every healthy business — making sure every number tells the true story, on time.

Preface: “Everything worth pursuing comes with a little pain. The trick is not minding that it hurts.” ― Morgan Housel, Same as Ever: A Guide to What Never Changes

Book Summary: Same as Ever: A Guide to What Never Changes by Morgan Housel

Morgan Housel’s Same as Ever argues that although the world around us changes rapidly — technology, markets, societies — the core of human behavior remains surprisingly constant. People still respond in similar ways to fear, greed, risk, and uncertainty, even when the external surroundings look completely different. Housel’s central message is that understanding what doesn’t change in people gives us a more reliable foundation for our decisions than trying to predict every new change.

He illustrates his ideas through a series of engaging stories and examples. One illustrates how risk often comes not from what we expect, but from what we don’t see coming. He defines risk as “what’s left over after you think you’ve thought of everything.” Housel also highlights that happiness and success depend less on the absolute conditions of our lives and more on how our expectations match reality. He suggests that what matters more than our circumstances is how we view them, and that “the first rule of happiness is low expectations.” In our fast‑moving world, the things we think will make us happy can change fluidly, but the internal human drivers—our desire for purpose, recognition, and meaningful connection—remain remarkably stable.

Housel further challenges the idea of constant upward growth. He explains that while we often expect “progress” in an unbroken upward trend, the reality is far more messy: there are setbacks, randomness, invisible improvements (for example what didn’t happen), and cycles of calm and chaos. One chapter is titled “Calm Plants the Seeds of Crazy” which emphasizes that good times tend to provoke over‑confidence, risk taking, and therefore set up the next crisis. Because of this, measuring success purely by visible change can mislead us. Instead, he encourages readers to look for long‑term patterns—how people and systems behave over decades rather than months.

In terms of structure and style, the book is organized into short, engaging chapters (or stories) each focused on a specific theme — such as “Risk is What You Don’t See” or “Expectations and Reality.” Housel uses a mix of historical anecdotes, personal reflections, business/finance examples, and accessible language. This makes the book readable and thought‑provoking rather than dense or purely academic. His approach gives readers a lens for thinking rather than a rigid how‑to guide.

One of the book’s key strengths is its broad applicability. Although Housel draws heavily from his background in economics and investing, many of his lessons apply to life, leadership, relationships, and decision‑making in general. For example, the insight that you can’t predict exactly what will happen, but you can understand how people will behave is a powerful guidance not just for investing but for managing teams, planning strategy, or navigating personal growth.

That said, the book is more diagnostic than prescriptive: it offers lenses for thinking rather than step‑by‑step instructions. Some readers may find it leaves them wanting more concrete “what to do” checklists. Also, because much of its point focuses on universal human behavior, a few ideas may feel familiar or repeat across chapters. But the repetition of these ideas may also reinforce the permanence of these patterns.

In practical terms, Same as Ever invites us to pay attention to our own expectations, to align our behavior with what’s enduring rather than what’s trendy, and to value consistency, curiosity, and patience. It suggests that instead of chasing the latest “next big thing,” we should recognize and lean into the things that remain true across time. For example, when making business or investment decisions, rather than guessing what will change, we ask: “What about this is likely to remain true ten, twenty, thirty years from now?”

Practical some actionable points and reflections drawn from the book:

• • • Adjust expectations: Realize that happiness and success often depend on the gap between expectation and reality. Setting realistic expectations matters.
    • Focus on what you can control: Since you can’t predict many major events, build resilience by controlling what you can—the decisions, behaviors, mindset.
    • Think in terms of permanence: When evaluating something (an investment, a career move, a business strategy), ask: “What about this is likely to remain true 10, 20 years from now?”
    • Recognize the human factor: Because people’s incentives, behaviors and biases are consistent, leadership and strategy should reflect human nature, not idealized models.
    • Embrace long‑term / compound perspective: Whether in money, relationships, career, or personal development—small consistent efforts, patience, cooling the urge for the “next big thing” often win.
    • Story and narrative matter: When communicating decisions (in business or life), consider how the story you’re telling aligns with human behavior—not just the data.
    • Don’t confuse newness for importance: Just because something is novel doesn’t mean it’s more important than the fundamentals.
    • Manage comparisons and mindset: The impulse to compare with others (wealth, status) is enduring—recognizing it helps reduce unnecessary dissatisfaction.

In conclusion, Same as Ever is a compelling exploration of how human nature anchors us amid rapid change. It offers a lens for clearer thinking — helping us focus not just on what is changing, but on what never changes. For students, leaders, or anyone looking to build resilience in uncertain times, this book offers deep and helpful insight. If I were to sum it up in one line: In a world of flux, recognizing the constants gives you the leverage to navigate what changes with greater confidence.

 

Preface: “There are men who can write poetry, and there are men who can read balance sheets. The men who can read balance sheets cannot write.” – Henry R. Luce

Why CPA-Prepared Financial Statements Matter for Bonding Purposes

For many construction companies, contractors, and service providers working on government or large private projects, obtaining a bond is a critical part of doing business. Whether it’s a bid bond, performance bond, or payment bond, these guarantees reassure project owners that your company has the financial stability and operational capability to complete the job.

One of the most important tools surety companies rely on to assess your business’s financial health is your CPA-prepared financial statements. But what exactly do these statements include, and why do they matter so much for bonding?

Let’s break down what business owners should know.

The Role of CPA-Prepared Financial Statements in Bonding

Surety underwriters rely on financial statements to evaluate your company’s ability to meet project obligations. A CPA-prepared statement offers a professional, independent view of your financial condition—something far more reliable than internally prepared bookkeeping reports.

When applying for a bond, underwriters want to understand:

• • How profitable and stable your business is.
  • Whether you have adequate working capital to complete projects.
  • If your debt levels are manageable.
  • How efficiently your business manages cash flow and operations.

The higher the bond amount, the more detailed and formal the financial statements need to be.

Types of CPA-Prepared Financial Statements

There are three primary levels of CPA-prepared financial statements, each offering a different degree of assurance:

1. 1. Compilation

A compilation is the most basic level. The CPA assembles financial data provided by management into a financial statement format but does not verify its accuracy.
Use Case: Suitable for small bond amounts or internal management use.

1. 2. Review

A review provides limited assurance that the financial statements are free of material misstatements. The CPA performs analytical procedures and inquiries but does not conduct an audit.
Use Case: Often acceptable for moderate bonding needs—typically up to a few million dollars.

1. 3. Audit

An audit provides the highest level of assurance. The CPA performs detailed testing, verification, and examination of records, internal controls, and supporting documentation.
Use Case: Required for larger bonding capacities or when the surety wants the highest level of confidence in your numbers.

Key Components of Financial Statements for Bonding

A well-prepared set of financial statements should include:

• • Balance Sheet – showing assets, liabilities, and equity. Sureties closely analyze working capital (current assets minus current liabilities) and net worth.
  • Income Statement (Profit & Loss) – showing revenues, costs, and profitability trends.
  • Statement of Cash Flows – detailing cash inflows and outflows from operations, financing, and investments.
  • Notes to Financial Statements – explaining accounting policies, contingent liabilities, and other critical information.
  • Work-in-Progress (WIP) Schedule – required for contractors, showing contract revenues, costs incurred, estimated profits, and billings. A well-prepared WIP schedule helps demonstrate how effectively your company manages ongoing jobs—a key metric for surety confidence.

Why CPA-Prepared Statements Matter More Than Bookkeeping Reports

Bookkeeping records can help you run your business day-to-day, but they often lack the accuracy, structure, and third-party verification that bonding companies demand.

CPA-prepared financials:

• • Add credibility – Sureties know the statements were prepared following professional standards.
  • Reflect proper accounting methods – Especially important for contractors using percentage-of-completion or completed-contract methods.
  • Highlight strengths and risks – A CPA can help you present financial information in the best possible light while disclosing risks properly.

In short, high-quality statements can directly affect your bonding capacity and the rates you pay for surety bonds.

How Business Owners Can Prepare

Here are a few practical steps to strengthen your financial position for bonding:

• • Keep accurate records year-round. Don’t wait until year-end to reconcile accounts or gather data.
  • Work with your CPA throughout the year, not just at tax time. Ongoing advisory helps anticipate financial issues that could affect bonding.
  • Manage debt wisely. Sureties look favorably on companies that maintain low leverage and consistent profitability.
  • Build retained earnings. Keeping profits in the business increases equity and bonding capacity.
  • Provide timely updates. Surety underwriters appreciate current financials and open communication about business changes.

The CPA’s Role Beyond Reporting

A knowledgeable CPA doesn’t just prepare statements—they can be a strategic advisor. By analyzing your ratios, margins, and WIP schedules, your CPA can help you:

• • Identify cash flow bottlenecks.
  • Improve project profitability.
  • Plan tax-efficiently while maintaining a strong balance sheet.
  • Communicate effectively with surety underwriters and lenders.

Final Thoughts

For any business that bids on bonded work—especially in construction, manufacturing, or large service contracts—CPA-prepared financial statements are not just a formality; they are a foundation for trust and opportunity.

Investing in a well-prepared review or audit may seem like an added cost, but it’s a smart investment. It can unlock higher bonding limits, lower costs, and open doors to bigger projects—all while giving you a clearer picture of your company’s financial health.

If you’re preparing for an upcoming bonding cycle or want to strengthen your company’s financial presentation, our team can help you choose the right reporting level and position your business for success.

Preface: “You can’t have a million-dollar dream with a minimum wage work ethic.” — Zig Ziglar

No Tax on Tips and Overtime: What the OBBB Act Means for You

During the summer of 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law—a sweeping piece of legislation that introduced significant tax changes for both individuals and businesses. Among its many provisions are two that directly impact working Americans: new deductions for tips and overtime pay.

These changes aim to put more money in the hands of employees in industries where tips and overtime are a significant part of their income.

Qualified Tips Deduction

Starting in tax year 2025, individuals who earn tips can deduct a portion of them from their taxable income. The law defines a qualified tip as any cash tip received in an occupation that regularly received tips before December 31, 2024 (for example, restaurant servers, bartenders, hotel staff, and hairstylists).

Here’s how it works:

• • • You can deduct up to $25,000 per year in qualified tips.
    • The deduction starts to phase out if your modified adjusted gross income (AGI) exceeds $150,000 (or $300,000 for joint filers).
    • Once your AGI reaches $400,000 ($550,000 for joint filers), the deduction fully phases out.
    • Married couples must file jointly to claim the deduction, and the taxpayer’s Social Security number must appear on the tax return.

Example:

If you earn $50,000 in wages and $10,000 in tips as a restaurant server, you may be eligible to deduct the $10,000 in qualified tips, reducing your taxable income by that amount. However, this deduction only applies if you meet all IRS reporting and income requirements.

Important: Even though the income tax on these tips can be reduced, you still owe Social Security and Medicare (FICA) taxes on them.

Reporting Requirements for Tips

The IRS requires proper documentation for all qualified tips:

• • • Employers are required to report tips on Form W-2.
    • Employees who receive unreported tips must report them on Form 4137 (Social Security and Medicare Tax on Unreported Tip Income).
    • Independent workers who receive tips should expect to receive Form 1099-NEC or Form 1099-K from their clients or payment processors.

The Treasury Department is updating withholding rules for wages after December 31, 2025, to account for this new deduction.

Qualified Overtime Pay Deduction

The OBBB Act also introduces a deduction for qualified overtime pay from 2025 through 2028. This provision benefits employees who often work more than 40 hours per week.

Key Details:

• • • Individuals can deduct up to $12,500 per year, or $25,000 for joint filers.
    • The deduction begins phasing out when AGI exceeds $150,000 ($300,000 for joint filers) and is completely phased out at $275,000 ($550,000 for joint filers).
    • Married taxpayers filing separately are not eligible.

What Counts as Overtime Pay?

“Qualified overtime compensation” refers to overtime required under the Fair Labor Standards Act (FLSA) — pay at least 1.5 times your regular rate for hours worked beyond 40 per week. This deduction recognizes that many workers rely on overtime income to make ends meet.

Example:

Suppose a factory employee earns $60,000 in regular wages and $10,000 in overtime pay. Under this rule, they could deduct up to $10,000 of that overtime income (subject to income phase-outs), thereby reducing taxable income and potentially saving thousands in taxes.

Reporting Overtime Pay

Just like tips, employers must report overtime pay on Form W-2, while independent contractors should expect to receive a Form 1099-NEC.

For wages earned before January 1, 2026, the IRS allows reasonable estimates when separately identifying overtime income on reporting forms.

A Word of Caution

While these new deductions are generous, they only apply to federal income tax, not to FICA or FUTA (employment) taxes. That means you still pay Social Security and Medicare taxes on your full income, including tips and overtime.

Make sure you keep detailed records — pay stubs, tip logs, and any documentation from your employer — to substantiate your deductions if the IRS requests verification.

Bottom Line

The new tips and overtime deductions in the OBBB Act provide a significant tax break for millions of workers, particularly in service- and labor-intensive industries.

If you regularly earn tips or overtime pay, you could reduce your taxable income by thousands each year through 2028.

However, eligibility depends on income thresholds and proper reporting.

Preface: “It is not the beauty of the building you should look at: it’s the construction of the foundation that will stand the test of time.” – David Allen Coe

Understanding Construction Allowances and Their Tax Benefits

If you currently lease retail space—or plan to in the future—it’s important to understand how “construction allowances” from a landlord may impact your taxes. The good news? If certain IRS requirements are met, these allowances can often be excluded from your taxable income.

What Are Construction Allowances?

A construction allowance is money (or a rent reduction) provided by a landlord to a tenant for the purpose of improving or building out leased space. These improvements usually involve the interior of the property, such as remodeling, adding walls, lighting, flooring, or fixtures.

In general, if you receive such an allowance and spend it on qualified construction or improvements to your leased retail space, you don’t need to include it in your gross income—meaning it’s not taxable.

This rule applies to leases signed after August 5, 1997 and only if all IRS criteria are met.

What Qualifies as a Construction Allowance?

A qualified construction allowance meets three key requirements:

1. 1. 1. Short-Term Retail Lease (15 Years or Less)
         The lease must be for a term of 15 years or less and cover retail space—defined as nonresidential property used in selling tangible goods or services to the general public.
      2. Used for Construction or Improvements
         The allowance must be used to construct or improve “qualified long-term real property,” meaning permanent improvements like flooring, lighting, or walls that remain with the building and revert to the landlord when the lease ends.
      3. Used Only for Business Improvements
         The money must be spent only for improvements related to your trade or business—not for personal purposes.

Timing Matters

The IRS places time limits on when these funds must be spent. To qualify, the construction allowance must be used in the same tax year it’s received—or within a short grace period.

You have up to 8½ months after the end of the tax year in which you received the allowance to spend it on qualifying improvements.

This rule ensures that the allowance truly supports active business development rather than being used as a delayed income benefit.

Example

Let’s make this practical:

Big Mall Co. leases retail space to Simple Designs Co., a calendar-year taxpayer. The lease starts November 1 and includes a $5,000 construction allowance for tenant improvements. Simple Designs receives the payment on December 31.

To exclude this $5,000 from taxable income, Simple Designs must use it by September 15 of the following year (8½ months after year-end) to construct or improve its retail space.

If the funds are used after that date—or for nonqualified improvements—the allowance becomes taxable income.

Why It Matters

This provision helps small business owners manage the cost of preparing a leased retail space without incurring additional tax liability. It’s particularly beneficial for:

• • • Retailers renovating leased storefronts
    • Franchises opening new locations
    • Businesses upgrading facilities for improved customer experience

However, businesses must maintain detailed records showing how and when the construction funds were used to support their tax position in the event of an IRS audit.

Planning Tip

Before signing a lease, review the construction allowance clause carefully and consult your tax advisor. Key things to verify include:

• • • The lease term (must be 15 years or less)
    • The type of improvements allowed
    • Whether improvements revert to the landlord at lease end
    • How and when the allowance must be used

Proper documentation and timing are critical.

Final Thoughts

Construction allowances can be a powerful tax advantage for business tenants—reducing upfront costs and improving cash flow—as long as the rules are followed.

If you’re negotiating a lease or recently received a construction allowance, consult your CPA or tax advisor to ensure proper classification and compliance. Missteps could result in unexpected taxable income.

Preface: “As much as others may need to change, or we may want them to change, the only person we can continually inspire, prod, and shape—with any degree of success—is the person in the mirror.” ― Kerry Patterson, Crucial Conversations Tools for Talking When Stakes Are High

How to Handle Tough Conversations with Grace: Lessons from Crucial Conversations

Have you ever walked away from a tough conversation wishing it had gone differently—wishing you’d said something better, or maybe said nothing at all?

We’ve all been there.

That’s why Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler is such a timeless guide. It’s not about fancy communication theory—it’s about what to do when the stakes are high, emotions are intense, and the outcome really matters.

Whether it’s giving feedback at work, confronting a loved one, or resolving conflict with a friend, these are the moments that can either strengthen or strain relationships.

Defining a Crucial Conversation

A crucial conversation happens when stakes are high, opinions differ, and emotions run strong.

It might be a performance review, a family disagreement, or a tough decision between friends.

In those moments, most of us fall into one of two traps:

• • • We go silent, avoiding the topic to keep the peace.

    • Or we go aggressive, pushing our point so hard that we shut others down.

Neither path works. The authors offer a third option—dialogue.

“Dialogue is the free flow of meaning between two or more people.”

When people feel safe enough to share honestly, understanding deepens, and solutions become wiser.

Core Skills for Navigating Difficult Conversations

1. Start with Heart

Before speaking, pause and ask:

“What do I really want—for me, for them, and for this relationship?”

When we focus on genuine goals rather than ego or emotion, our words carry calmness and respect. This shift often changes the entire tone of the conversation.

2. Learn to Look

Strong communicators watch for signs that the conversation is slipping.

Are people shutting down? Getting defensive? Are you?

Recognizing these cues early lets you pause, reset, and restore safety before things spiral.

3. Make It Safe

People open up only when they feel respected and understood.

If safety is lost, stop addressing the issue and repair the relationship first. Sometimes that means apologizing; other times it means clarifying intentions through “Contrasting”:

“I’m not trying to criticize you—I just want to understand what happened.”

A moment of empathy can reopen the entire discussion.

4. Master Your Stories

We don’t react to facts—we react to the stories we tell ourselves about them.

When someone interrupts, we might think, They don’t respect me. That story fuels anger.

The book challenges readers to separate facts from assumptions. Ask yourself:

• • • What actually happened?

    • What story am I adding to it?

    • What else could be true?

It’s amazing how much calmer we become when we stop assuming the worst.

5. STATE Your Path

When it’s your turn to share your perspective, use the STATE model:

• • • Share your facts

    • Tell your story

    • Ask for others’ views

    • Talk tentatively

    • Encourage testing

This approach balances confidence and humility. You express yourself clearly while showing you’re open to learning.

6. Explore Others’ Paths

Real communication goes both ways.

To keep the conversation open, you need to make space for others to talk too. The AMPP skills help with this:

• • • Ask questions
    • Mirror their emotions (reflect what you see)
    • Paraphrase what they’re saying
    • Prime them if they’re quiet (take a guess at what they might be thinking)

When people sense you genuinely care about their perspective, they’re more likely to lower their guard and speak openly.

“When we stay curious instead of defensive, conversations stop being battles and start becoming bridges.”

7. Move to Action

Even the best conversations fall apart if they end without clear next steps.

The authors emphasize defining:

• • • What will be done

    • Who will do it

    • By when, and

    • How you’ll follow up

Dialogue builds understanding; action builds results.

And as they note, participation doesn’t always equal consensus—what matters is that everyone’s voice has been heard.

Applying These Ideas Beyond Work

While many people read Crucial Conversations for professional growth, its principles are universal.

These tools help in marriages, friendships, and parenting just as much as in meetings and performance reviews.

Improving how we communicate takes practice. The authors suggest starting small:

“Pick one relationship or recurring conversation where you want to improve, and focus on one skill.”

Over time, you’ll notice yourself reacting less, listening more, and creating safer, more meaningful dialogue in every area of life.

Final Thoughts

Crucial Conversations reminds us that difficult discussions aren’t something to fear—they’re opportunities to grow, to connect, and to strengthen trust.

When we replace defensiveness with curiosity and courage, even the hardest talks can become turning points for better relationships.

So next time you feel your pulse quicken before a hard talk, take a breath and remember:

Start with heart. Listen with humility. Speak with respect.

You might be surprised at how much can change—with just one good conversation.

Preface: “Chase the vision, not the money; the money will end up following you.”  –Tony Hsieh

Understanding Reasonable Compensation for S-Corporations (Made Simple)

If you own an S-Corporation or plan to, there’s one important rule you need to know about: reasonable compensation. It might sound like a technical tax term, but it really just means: Are you paying yourself a fair salary for the work you do?

Why It’s a Big Deal

S-Corporations are special kinds of businesses where the company’s profits “pass through” to the owner’s personal tax return. This setup helps avoid some business taxes—but it also comes with IRS rules.

If you work in your S-Corp (not just own it), the IRS says you’re an employee, not just an owner. That means you have to take a real paycheck (with payroll taxes), not just profits or “distributions.” Why? Because wages get taxed differently from profits. And if the IRS sees that you’re only taking profits and no paycheck, they might hit you with taxes, penalties, and interest.

What Counts as “Reasonable”?

The IRS says reasonable compensation is the amount you would pay someone else to do your job in your business. So, if you’re doing full-time management, your pay should match what someone in that role would normally earn.

Here are some things the IRS looks at when deciding if your pay is reasonable:

• • • What kind of work you do
    • How much time you spend working
    • Your skills and experience
    • What you pay other employees
    • What similar jobs pay at other businesses
    • How much profit your business makes

The idea is to make sure your salary isn’t too low (to avoid taxes) or too high (which could hurt your business financially).

Why Getting This Right Matters

If you underpay yourself, the IRS might say some of your profits should’ve been wages. That means:

• • • You could owe back payroll taxes
    • You could face penalties and interest
    • You might even risk your S-Corp status

On the flip side, paying yourself too much means your business pays more employment tax than necessary.

So, What’s the Right Salary?

It depends on what you actually do for the business. For example:

• • • If you work 40 hours a week and run day-to-day operations, you should get a market-rate salary.
    • If you only help out once in a while or offer advice, a smaller salary might make sense.

The goal is to find a fair balance that matches your role and how similar businesses pay.

How a CPA Can Help You

Getting reasonable compensation right can be tricky. That’s why it helps to work with a CPA They can:

• • • Look at your role and what you do day to day
    • Compare what others in similar roles earn
    • Review your current pay and business profits
    • Help you figure out benefits and taxes
    • Keep records in case the IRS ever asks questions

Final Thoughts

Paying yourself fairly from an S-Corporation isn’t just about following the rules—it’s smart business. It helps you avoid IRS problems, pay the right taxes, and keep your business strong.

Preface: “The precise point at which a tax deduction becomes a ‘loophole’ or a tax incentive becomes a ‘subsidy for special interests’ is one of the great mysteries of politics.” – John Sununu

Understanding IRS Schedule A Itemized Deductions Under the OBBB Act

When filing taxes, taxpayers can choose between the standard deduction or itemized deductions on IRS Schedule A. The One Big Beautiful Bill (OBBB) Act, signed into law in 2025, made several important updates that impact itemized deductions for individuals. Below is a breakdown of the key changes and how they may affect your tax return.

State and Local Tax (SALT) Deduction Limit

• • • From 2025 through 2029, the SALT deduction limit increases to $40,000 ($20,000 if married filing separately).
    • In 2025, the limit starts at $40,000 ($20,000 separate). It rises slightly each year by 1% until 2029.
    • However, the benefit phases out for high-income taxpayers:
      • If your modified adjusted gross income (AGI) exceeds $500,000 ($250,000 if separate), your deduction limit is reduced.
      • The reduction equals 30% of the excess income above the threshold, with at least a $10,000 ($5,000 if separate) reduction.
    • After 2029, the limit returns to $10,000 ($5,000 if separate) in 2030.

Home Mortgage Interest Deduction

• • • The home mortgage interest deduction rules from the Tax Cuts and Jobs Act (TCJA) are made permanent.
    • You can deduct interest on up to $750,000 of acquisition debt ($375,000 if married filing separately).
    • The suspension of interest deductions on home equity debt also remains permanent.

Car Loan Interest Deduction

• • • Typically, personal loan interest is not deductible.
    • Under the OBBB Act, for 2025–2028, you can deduct up to $10,000 per year of interest on loans for U.S.-assembled passenger vehicles.
    • The deduction phases out for taxpayers with AGI over $100,000 ($200,000 for joint filers).
    • Important: This deduction applies even if you don’t itemize.

Charitable Contribution Deductions

• • • Starting in 2026, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) of cash charitable contributions.
    • For those who itemize, a new 0.5% floor applies: your allowable deduction is reduced by 0.5% of your contribution base.
    • Example: If your contribution base is $100,000, $500 would be subtracted from your allowable deduction.

Personal Casualty and Theft Loss Deduction

• • • Under the OBBB Act, the rules limiting deductions to federally declared disasters are made permanent.
    • The law expands this to include state-declared disasters such as floods, fires, or explosions recognized by a governor.
    • Losses tied to qualified disasters between 2019 and September 2025 are also covered.

Gambling Losses

• • • Gambling losses can only offset gambling winnings.
    • The OBBB Act introduces a new restriction: starting after 2025, only 90% of wagering losses are deductible, and this deduction is limited to the amount of gains.
    • Example: If you win $10,000 and have $12,000 in losses, you can deduct only $9,000.

Moving Expenses

• • • The TCJA suspended most moving expense deductions, and the OBBB Act makes this permanent.
    • Only active-duty military members and intelligence community employees (and their families) qualify for moving expense deductions or reimbursements.

Miscellaneous Itemized Deductions

• • • The suspension of miscellaneous itemized deductions (like unreimbursed employee expenses) is now permanent.
    • Exception: Educator expenses are allowed above the line up to $300 (increasing with inflation). Starting after 2025, teachers can also itemize classroom expenses above this limit.

Phaseout of Itemized Deductions

• • • A new overall limit applies to high-income taxpayers:
      • • Itemized deductions are reduced by 2/37 of the lesser of:
          1. Total itemized deductions, or
          2. Taxable income above the 37% bracket threshold.
    • This applies after other limits (such as the SALT cap) are calculated.

Planning Note: Standard Deduction vs. Itemizing

• • • The OBBB Act makes the standard deduction increase permanent:
      • $15,750 for single filers (2025)
      • $23,625 for heads of household
      • $31,500 for married filing jointly
    • The amounts adjust for inflation in future years.
    • You may still choose to itemize if your deductions (SALT, mortgage, charitable, etc.) are greater than the standard deduction.

Final Thoughts

The OBBB Act reshaped how taxpayers approach Schedule A deductions. For most, the higher standard deduction will remain the simpler choice. However, with changes such as the higher SALT cap, charitable deduction rules, and the new car loan interest deduction, some taxpayers may benefit from itemizing their deductions.

Careful planning is essential, especially for those near phase-out thresholds. Consider consulting a tax advisor to evaluate whether itemizing or taking the standard deduction will provide the best tax outcome under the new rules.

Preface: “Strategy is the hard work of choosing what to do today to improve our tomorrow.” ― Seth Godin, This Is Strategy: Make Better Plans

Book Report: This is Strategy by Seth Godin

Introduction

Seth Godin is a well-known writer and thinker on marketing, leadership, and innovation. In his book This is Strategy: Make Better Plans, Godin explains how people and organizations can make smarter choices that lead to long-term success.

The book isn’t about complicated charts or formulas. Instead, it’s about changing how we think about planning, taking action, and growing in a world that is always changing. Godin’s main message is that success doesn’t come from working harder or faster. It comes from working smarter, asking better questions, and being willing to face discomfort.

The Problem with Default Thinking

Godin begins by pointing out a common problem: many people rush from task to task without making real progress. This leads to stress and burnout. The issue, he says, is that people often know what they want, but they don’t have a real strategy to get there.

Repeating the same actions over and over won’t work if the world has changed. Old methods may feel safe, but sticking to them is a trap. Strategy requires adapting to new realities.

Character as the Foundation of Strategy

One of Godin’s strongest points is the importance of character. He defines character as choosing your values over your instincts. In other words, strategy works best when it’s guided by values, even when those choices are hard.

For example, a strong leader doesn’t avoid tough conversations. They face them because those talks build trust and a stronger team. Godin believes that growth often comes from discomfort. Instead of running from it, he tells readers to seek it out because it helps us grow faster.

Learning Myths and Growth

Godin also challenges the popular idea of “learning styles.” He says people don’t really learn better in just one style—they simply have preferences that make them feel comfortable. Real growth comes when we move out of our comfort zones and try new ways to learn.

This lesson connects to strategy. Businesses can’t just stick to what’s familiar. A company that has always used one kind of marketing might need to explore new platforms or creative methods to grow.

Procrastination and Discomfort

Godin takes another common issue—procrastination—and reframes it. He argues that procrastination usually isn’t laziness. Instead, it’s avoiding the uncomfortable feelings tied to the task. Good strategists recognize this and face the discomfort rather than delay.

He quotes Ted Lasso: “If you’re comfortable, you’re doin’ it wrong.”

Tactics vs. Strategy

A key message in the book is the difference between tactics and strategy.

• • • Tactics are small daily actions.
    • Strategy is the bigger picture—the “why” behind what you’re doing.

Without strategy, tactics are just busywork. Godin says many companies get caught up in tactics like running ads or chasing sales without answering bigger questions like:

• • • Why are we doing this?
    • Where are we going?
    • Who are we serving?

Examples from the Book

• • • Marketing a Product – Strategy is not about pushing out more ads. It’s about building trust and connection with customers. A loyal customer base is worth more than short-term sales.
    • Career Development – Strategy in your career may mean saying “no” to an easy job in order to grow skills in a harder one. Godin says we should look at our careers as a purposeful journey, not just a series of jobs.
    • Community Building – Strategy in a community is not about control. It’s about creating shared values and giving people a chance to be part of something bigger.

Practical Applications

Godin gives several ways to put his ideas into practice:

1. 1. 1. Set Clear Values – Decide what matters most to you before making a plan.
      2. Seek Discomfort – Choose the option that helps you grow, even if it’s harder.
      3. Separate Tactics from Strategy – Ask yourself if your daily actions connect to your bigger plan.
      4. Test and Adapt – Strategies must change as situations change.
      5. Think Long-Term – Focus on sustainability and lasting impact, not just quick wins.

Key Lessons for Everyone

• • • Growth Requires Change – Old methods won’t work forever.
    • Character Matters – Decisions guided by values build trust.
    • Comfort Can Hold You Back – Real growth happens in discomfort.
    • Keep It Simple – Strategy doesn’t need to be complicated, just clear.
    • Strategy Is for All – It’s not only for CEOs; anyone can use it in life or work.

Conclusion

Seth Godin’s This is Strategy is a powerful reminder that success isn’t about nonstop hustle. It’s about smart, values-based strategies that help us grow and make an impact.

For leaders, it’s a call to focus on long-term vision and culture instead of quick wins. For individuals, it’s encouragement to view life and career choices as part of a bigger picture.

In today’s world, where change is constant and distractions are everywhere, Godin’s advice is clear: strategy is more than a plan—it’s a way of living and leading.