David Block, EA, CFP, CTC

COMMON BOOKKEEPING MISTAKES THAT MAKE TAX FILING HARDER

Most business owners don’t have a tax problem.
They have a behavior problem that shows up in their bookkeeping.

And that behavior quietly costs them money all year.

With how quickly tax rules are changing, your 2026 tax strategy is already being decided right now — not next March.

👉 Example: The IRS just finalized which occupations qualify under the “no tax on tips” rules.

That sounds like a win… until your bookkeeping and payroll aren’t set up correctly.

If tips aren’t properly separated from service charges…
If payroll taxes aren’t handled correctly…
If your reporting isn’t clean…

You don’t get the benefit.

This is what I mean by Behavioral Profit Strategies:
Small habits → flawed systems → lost money.

And most of it starts here 👇

If filing your taxes this year felt like trekking through mud, there’s a good chance these showed up somewhere:

• Missing receipts and documentation
If you can’t prove it, you can’t deduct it confidently.

• Clean records = protection + more legitimate write-offs.
Mixing personal and business expenses
This isn’t just messy — it’s risky.
You blur the line, the IRS (or a court) can erase the line.

• Not reconciling accounts regularly
What you don’t review, compounds.
Monthly reconciliation = fewer surprises, better decisions.

• Misclassifying expenses
Wrong category = wrong strategy.
This is where a lot of quiet tax savings get lost.

• Ignoring receivables and payables
If your numbers aren’t real, your decisions won’t be either.

—

Here’s the hard truth:

Most tax stress in April is created by decisions (or avoidance) in May–December.

That’s why we don’t just “do tax returns.”
We fix the behaviors and systems that drive the outcome.

Because when your books are clean:
• Your tax strategy actually works
• You stop overpaying
• You stop guessing

If this past filing season felt harder than it should have, that’s not bad luck — it’s a signal.

Let’s fix it before it costs you another year.

If you want help, not just with a comprehensive Tax Plan that can save you potentially 30-50% of the tax you pay now, but also in building a system that works with you (not against you), schedule a quick Zoom call with the link on this page.

We’ll look at what’s happening under the surface and show you where the money is leaking.

Schedule your call now.

Send a message to learn more

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YOU (yes YOU) HAVE DATA THAT NEEDS PROTECTING

Anthropic disclosed that in mid-September, it had detected suspicious activity inside one of its systems. Activity later confirmed to be part of an advanced espionage attack.

The attackers weren’t just getting advice from AI. They were using AI “agents” to run the cyberattacks themselves.

And doing so at a level of efficiency that used to require teams of elite hackers.

AI is a powerful tool. And just like any other tool, in the wrong hands, it can cause serious damage.

And the unfortunate result is that now, even lower-resourced cybercriminals can punch far above their weight.

Cybersecurity teams across industries are now being urged to experiment with AI-powered defense (things like automated threat detection, vulnerability scanning, and incident response). Because what we know about cybersecurity has fundamentally changed.

And whether you’re ready for that change or not, this shift affects your business, too.

So today, I want to take this (unsettling but important) moment to ground a practical conversation about the most important cybersecurity measures small businesses should be putting in place right now.

WHAT ARE THE MOST IMPORTANT CYBERSECURITY MEASURES FOR SMALL BUSINESSES?

*"It takes 20 years to build a reputation and five minutes to ruin it.” —Warren Buffett*

“I don’t need to worry about cyber threats – my business is too small to interest hackers.”

Forgive me, but the numbers say otherwise: 75 percent of small businesses experienced at least one cyber attack in the past year.

And 60 percent of small businesses that suffer a cyber attack go out of business within 6 months.

Even one incident can bring crippling costs: remediation, legal liability, customer churn, and regulatory penalties. And as an accountant, I’m no stranger to the ugly downstream impact in my clients’ businesses — lost client relationships and months of cleanup work.

So, to protect your business’s data, I recommend a five-fold approach:

1. Develop an official data protection policy. Your policy defines how your team manages, protects, and recovers data across all systems.

It should include:

Rules for file permissions and data access levels

Procedures for securing devices and Wi-Fi networks

Steps for data backup and disaster recovery

Standards for handling sensitive customer and employee data

Protocols for incident reporting and response

2. Data backups. If your system gets locked by ransomware or crashes unexpectedly, could you recover your files tomorrow?

Without proper backups, most small businesses can’t.

Best practices here are to back up all critical data daily (or more frequently for high-traffic operations), and store backups in two locations: one cloud-based and one offline (air-gapped).

Also, make sure to test your backup restoration process regularly. Don’t just assume it works until you try.

3. Encrypt your data. Encryption is the digital equivalent of locking your filing cabinet. Even if attackers do break in, encryption can keep them from exploiting what they find.

Make sure all laptops, external drives, and cloud systems use AES-256 encryption or equivalent. Send emails with sensitive data using encrypted portals (never plain attachments). And use multi-factor authentication (MFA) for access to accounting, banking, and payroll systems.

4. Monitor and report activity. Continuous data monitoring helps you catch unusual patterns. Like a login from an odd location, large file transfers, or unauthorized access attempts, for instance.

Affordable tools can provide real-time activity logging, automated alerts for suspicious behavior, and regular security reports for management or auditors.

So you can respond before small issues become catastrophic.

5. Use secure software. Before you choose accounting platforms, client portals, or CRM systems, dig into their security certifications and compliance features.

You’re looking for features like built-in encryption and MFA, data loss prevention tools, integration with your other security systems, and compliance with frameworks like SOC 2, GDPR, or CCPA.

A final word

YOUR small business – regardless of size or industry – has data in need of protecting.

So take these steps seriously. Review them with your team.

And while I may not be your IT technician, I am here to help you build smarter systems for your business. If reading this has you realizing that yours could use a little cleanup, then grab a time on my schedule for a business systems tightening session. Schedule a time to talk.

THE SHUT-DOWN AND YOU

Among the consequential entities affected? The IRS. On Wednesday, the agency announced plans to furlough a large portion of its workforce as well as closing most of its functions as the federal government shutdown continues.

What does that actually mean for your business?

While most agency operations have gone dark (including audits, collections, non-disaster transcript processing, and taxpayer service lines), your deadlines won’t disappear.

The Taxpayer Advocate Service (the department that typically helps untangle those bureaucratic messes) is also shut down. That means any active case you’ve been working on, like an audit response, installment plan, or amended return issue, is frozen until further notice.

Moments like these are exactly why I’m in your corner.

Your strategy doesn’t have to suffer from this shutdown. We can still make sure your filings are compliant and your documentation protects you from unnecessary penalties once the IRS reopens its doors.

So, if you need extra peace of mind about your business’s tax position through this shutdown, reply here or DM me, or call our office to schedule a conversation: 212-247-9090.

DOES YOUR BUSINESS DO R&D?

Developers are cashing in on research and development tax credits. The work they’re doing (from building game engines to writing code and designing algorithms) qualifies as research and development under IRS guidelines.

But it’s not just the gamers who can get in on this – if your business does any kind of innovation (manufacturing improvements, software tweaks, product testing), your work might qualify too.

If you’re curious, I’d love to take a look with you and see if those credits could lower your tax bill next spring (and, get the right substantiation processes in place to protect you from an audit) reply here or DM me, or call our office to schedule a conversation: 212-247-9090.

But before you start dreaming about tax credits and new deductions, let’s talk about something a bit less glamorous… but just as critical for keeping your finances (and sanity) in good shape.

Because today, we’re talking about cleaning up your tax strategy. Specifically, what you need to do before year-end to avoid costly Form W-9 mistakes with your contractors.

WHAT CAN I DO BEFORE YEAR-END TO PREVENT COSTLY W-9 MISTAKES?

The process of collecting Form W9s is one of those “check-the-box” tasks every business has to do that usually goes: get, file, forget.

But I want to urge you today to pay a little more attention to your W9 process.

Here’s why I say that: Your W9 process is your legal defense against thousands of dollars in IRS penalties.

By the time a missing or incorrect Taxpayer Identification Number (TIN) shows up in February (when you’re filing), it’s too late to claim “reasonable cause.” Before year-end is when you have to build your paper trail.

To prove “reasonable cause,” your business must show that you:

1. Acted in a responsible manner, and
2. The failure was due to something beyond your control.

In other words, if you can show you followed the prescribed solicitation rules, you can make the penalty go away.

But the IRS needs to see proof: dates, copies of requests, and records showing your follow-ups. So, make sure to keep all W9-related emails, mailed requests, and signed forms for at least four years after the last 1099 for that vendor.

And if you didn’t know, you can actually check if your contractor’s W9 info matches IRS records before filing any 1099s with the TIN Matching Program.

You simply upload your payee’s name and TIN through the IRS e-Services portal, and the system tells you if it’s a match.

A successful match can give you statutory protection, which reduces your penalty exposure with the IRS and is powerful evidence of due diligence. But it’s not absolute immunity. Make sure you pair it with documented solicitations.

Now, what happens if your contractor won’t give you a W9?

You have to start what’s called backup withholding: keeping 24 percent of their payments and sending that money to the IRS.

If you don’t? That 24 percent becomes your liability, not the contractor’s. You’ll owe the unpaid tax, plus penalties and interest.

Pro move: Don’t make payments to the contractor until the W9 form is received so you can avoid this headache altogether.

WHY YOU SHOULD ACT NOW

Here’s why I’m putting this in front of you right now:

Annual solicitation letters for missing W9s are due by December 31.
Running a bulk TIN Match in October or November gives you time to correct errors before 1099 season.
You still have time to update your accounting software to automatically flag noncompliant vendors and apply the 24 percent withholding rule in January.

By knocking out all three before year-end, you’re essentially bulletproofing your business against one of the IRS’s most common small-business penalties.

So, if you’re not sure whether your vendor files are airtight, now’s the time to check. My team and I can help you run a TIN Match audit, set up your documentation process, and make sure you’re ready before the IRS comes asking questions.

Again, you can reply here or DM me, or call our office to schedule a conversation: 212-247-9090.

CASH ≠ PROFITABLE

My guess is, back when Bill Holley first sketched out Cracker Barrel’s original logo on a napkin, he didn't imagine its retirement would cause a nationwide uproar.

As Professional Marketers, I'm sure you know that the restaurant chain, known for its comfort food and front-porch nostalgia, recently unveiled a simplified logo. Then, a week later, they changed it back.

On social media, some longtime fans called it cold and sterile. Others wanted the “old Cracker Barrel” back. A few even suggested the redesign carried political undertones.

Safe to say, it wasn’t the quiet rebrand they’d hoped for.

Which goes to show a core truth about running your business: Profitability and success aren’t only about trimming expenses or pushing for higher sales numbers. They hinge on what your customers actually value. And, in your case, what the customers of your customers value.

Sometimes it’s not just the buttermilk biscuits or the fried apples, but the feeling they associate with your brand.

It’s a helpful principle as you aim to run a profitable business, definitely. But today, we're going to take a look at the math side of that profitability: how to calculate whether or not your business is profitable (and what that means for the decisions you make moving forward).

*How Do I Know I’m Running A Profitable Business?*

As Zig Ziglar wrote, “Profitability comes from loyalty, productivity, and having a character base from which to work.”

Netflix launched its self-produced shows in 2012. In the following decade, while its costs grew rapidly, its revenue grew even faster. Profitability ratios improved, even as the company poured billions into content.

That’s the power of measuring profitability with the right ratios.

Having cash in the bank does NOT always mean your business is profitable.

So, then, how do you determine if you have a profitable business? Let me show you…

*How Do I Measure My Business’s Profitability?

To start, I’d recommend focusing on your net profit margin. It's an all-inclusive metric that accounts for every expense (from the cost of goods and overhead to taxes and debt payments). Meaning, you get a straightforward picture of your business's overall health.

Now, this isn’t the only metric to track. You should also keep an eye on your gross profit margin (your revenue minus the cost of goods sold) and operating profit margin (what's left after all operating expenses), because they can pinpoint more specific issues with pricing or overhead before they affect your bottom line.

*How Do I Calculate My Net Profit Margin?*

Here’s the formula:

Net Income ÷ Total Revenue x 100 = Net Profit Margin Percentage

Let’s run through an example together. Imagine a small neighborhood bakery:

- Revenue: 50K in sales this quarter
- Cost of goods sold: 15K (flour, sugar, butter, eggs, etc.)
- Operating Expenses: 20K (rent, wages, utilities, marketing)
- Other Expenses: 500 dollars (oven repair)
- Loan Interest: 250 dollars
- Taxes: 3K

Step 1: Find your net income. Subtract all your expenses from your total revenue. For our bakery example, this would be:

50K – 15K – 20K – 500 dollars – 250 dollars – 3K = 11.25K net profit

Step 2: Divide that total by your revenue.

11.25K ÷ 50K = 0.225

Step 3: Convert that number to a percentage by multiplying by 100.

0.225 x 100 = 22.5 percent net profit margin

That’s a very strong margin. This bakery is not just a profitable business. It’s profitable enough to reinvest, hire, or weather slower sales months.

How Do I Know If My Net Profit Margin is Good?

Check your business’s net profit margin against the average for your industry. Here’s the average for these industries in 2025:

Agricultural inputs: 1.2 percent
Personal services: 10.5 percent
Consulting: 7.2 percent
Education and training services: 8.1 percent
Engineering and construction: 4.9 percent
Apparel retail: 2.1 percent
Medical care facilities: 0 percent
Real estate services: 0 percent
Restaurants: 3.5 percent

(And if the industry you are looking for didn’t make the cut, you can check the full list here: https://fullratio.com/profit-margin-by-industry.)

*Where Do You Go From Here?*

If you run the numbers and discover your margin is thinner than you’d like… don’t panic.

What matters is how quickly you catch it and put a plan in place. That could mean re-evaluating your pricing, trimming unnecessary expenses, or restructuring how you operate.

All things that my team and I can help you with.

So if the numbers worry you, let’s build a strategy to move you toward better profitability. We help you with CFO services and also help you save tax dollars, keeping you even more profitable:
https://www.davidblockcfotaxplanner.com/7loopholes?fbclid=IwY2xjawMiqvVleHRuA2FlbQIxMQABHlAnyjKSr_V_5l7ZrIXiSeP8AyE8xMvfwMMQ8Zi9ioK_1jqKTLoLT66EMCL4_aem_5_aJMQmneEuZj4SJHhrCXA

Interesting blog on finance....

The Belle Curve | Blair duQuesnay | Substack The Belle Curve is a personal finance blog written by Blair duQuesnay. Blair writes about all things investing, markets, and financial planning with a particular interest in women who invest. Click to read The Belle Curve, by Blair duQuesnay, a Substack publication with thousands of subscribers.

HOW YOU CAN USE THE ENERGY CREDITS BEFORE THEY GO AWAY

As a busy business owner, you probably haven’t had time to dig into what the new tax legislation means for your clean energy plans.

Because of the OBBBA, many clean energy tax credits for energy-efficient upgrades are either being cut, phased out, or restructured. And some incentives may have shorter timelines than you might have originally anticipated.

So, let’s talk about what’s changing and where you still have room to maneuver (if we move fast).

ELECTRIC VEHICLES

If you’re planning to electrify part of your business fleet, you have until September 30, 2025, to get those vehicles purchased and in service. That’s the deadline for the Section 30D credit (up to 7.5K per vehicle) and the Section 45W commercial vehicle credit (up to 40K per qualifying vehicle).

And this isn’t a “start the paperwork by September” situation. You need to have the vehicle in your possession and operating for business use before the deadline hits.

There are also rules around final assembly in North America and domestic battery sourcing that determine whether a vehicle qualifies. We’ll need to run those checks before you buy.

RESIDENTIAL ENERGY UPGRADES

If you’re making improvements to your personal residence and you’re a business owner using a portion of your home for work (i.e., you take a home office deduction), there are two big credits for you here: Section 25D for things like solar panels, batteries, and geothermal, and Section 25C for items like energy-efficient HVAC, windows, or insulation). They’re both expiring on December 31, 2025.

The 25D credit is a juicy 30 percent of qualifying costs, and the 25C credit caps at 3.2K per year. But if your system isn’t installed and fully operational by the end of 2025, you lose the credit.

EV CHARGING INFRASTRUCTURE:

This is one of the last standing incentives after the EV credit ends. The Section 30C credit still gives you :

30 percent credit up to 100K per charging port.

But only if the charger is installed in a non-urban or low-income census tract.

SO WHAT SHOULD YOU DO RIGHT NOW?

Let’s break this down into immediate moves and strategic planning:

URGENT MOVES:

Buy or lease EVs now to make the September 30, 2025, deadline. Start talking to dealers. Supply issues can delay delivery and kill eligibility.

For home energy improvements: Get them installed and running by December 31, 2025.

Verify your tax liability. These credits are non-refundable. We’ll project 2025 taxable income to ensure you can absorb the credits.

STRATEGIC PLANNING:

Charging infrastructure: Check if your business is in a qualifying area. If so, this is one of the last big credits left.

Review your state/local programs: These will take on outsized importance. Some states (like CA, NY, IL, and MA) have robust programs that could replace what the feds are sunsetting.

That’s your shortlist. But the reality is, we’ll need to re-evaluate your project economics in light of these changing credits. Without them, some projects may no longer be viable unless strong state or local rebates step in to fill the gap.

We’re entering the final lap for many lucrative clean energy tax credits. Some require action in the next 60 days, others by year-end, and a few still allow for longer-range planning. But across the board, this is a take-action moment.

If you are interested in knowing how this knowledge can help you and/or your business, write me back and we can hop on a Zoom to discuss how you can use the next 60 days effectively.

Hey Marketing Agency Owners!

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