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Estate Planning for Business Owners – What to Know Before Year-End

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Estate planning isn’t only about passing on personal wealth. It’s a critical part of protecting your business legacy. As a business owner, your estate plan should answer one key question: What happens to the company if something happens to you?  

Here’s what to review before year-end:  

Create or Update Your Will  
Ensure your will addresses both personal and business assets. If you don’t have one, your estate, including your business, may be tied up in probate for months or even years.  

Set Up a Succession Plan  
Whether you want your children to take over or your partners to buy you out, a clear succession plan helps prevent disputes and ensures a smooth transition.  

Review Your Operating Agreement  
Does your current operating agreement cover ownership transfers in the event of death or incapacity? If not, it’s time for an update.  

Establish or Review Buy-Sell Agreements  
A buy-sell agreement outlines how business shares are sold or transferred, who has the right to buy them, and how they're valued. This protects both your family and your co-owners.  

Explore Estate Tax Strategies  
Business owners often exceed estate tax thresholds. Gifting shares, creating trusts, or using valuation discounts are just a few tools to explore with your CPA and estate attorney.  

An estate plan isn't static, it should evolve as your business grows. Take time before year-end to align your financial goals with your legacy. Doing so ensures your business continues in the hands you trust. 

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Is It Time to Upgrade Your Accounting System? Signs to Look For

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Your accounting system is the backbone of your financial operations. But as your business evolves, what once worked may now be holding you back. An outdated system can lead to inefficiencies, missed tax deductions, and even compliance risks.

So how do you know when it’s time to make a change? Here are some red flags:

Manual Data Entry Dominates Your Workflow

If your team is still spending hours re-entering data from one platform to another, you're wasting time that could be spent on growth and strategy. Manual processes also introduce human error—one of the biggest causes of financial discrepancies.

Lack of Integration with Key Tools

Can your accounting software integrate seamlessly with your CRM, payroll system, or inventory management tools? If not, you're working in silos. Integrated systems boost accuracy, reduce time spent toggling between programs, and help you get a clearer picture of your financials.

Limited Reporting & Dashboards

Your accounting platform should provide actionable insights at a glance. If you're stuck exporting spreadsheets and building custom reports every month, it’s a sign your system isn’t keeping up.

Your Business Has Outgrown the Software

Small-business tools don’t always scale well. If your revenue has increased or you’ve added locations, services, or employees, your accounting needs have likely become more complex.

Modern, cloud-based systems like QuickBooks Online Advanced, Xero, or NetSuite offer features like automation, role-based access, real-time dashboards, mobile apps, and integrations with hundreds of business tools. For manufacturers, construction firms, or real estate investors, these platforms can support job costing, inventory, and depreciation schedules with ease.

The Bottom Line: Upgrading your accounting system is an investment in accuracy, efficiency, and future growth. If you're unsure what platform is best for your business, consult with your CPA to evaluate your current setup and explore tailored options.

Book a complimentary consultation today at 562-495-3331 or visit us at Holmes & Associates.

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New Deductions, New Red Tape: What to Watch Out for Under the OBBBA

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While the One Big Beautiful Bill Act comes with generous tax breaks, it also adds layers of complexity that could trip up even experienced taxpayers. Here's what you need to know about the less-publicized provisions, and how to stay compliant.

1. Deductions for Overtime, Tips & Auto Loans

Trump’s campaign promise of “no tax on tips” is partially realized, at least for now.

New deductions include:

  • Tip and overtime income (with income-based phaseouts)

  • Auto loan interest

  • An increased standard deduction for seniors (2025–2028)

These perks sound good, but they come with income thresholds and expiration dates, meaning timing and eligibility are everything.

2. Complicated New Savings Vehicles: “Trump Accounts”

Trump Accounts are new, tax-advantaged savings accounts that:

  • Include a $1,000 baby bonus for children born in the next 4 years

  • Allow $5,000/year contributions, growing tax-free until age 18

  • Convert to traditional IRAs upon adulthood

They may be useful, but the rules are layered. We recommend evaluating these in the context of your current retirement or education savings strategies.

3. Shrinking (and Confusing) Clean Energy Credits

Many of the clean energy tax credits introduced under the Inflation Reduction Act are being phased out or restricted, especially for companies tied to “foreign entities of concern.”

Planning a solar project or EV purchase? Don’t assume your credits still apply, reach out for an updated review.

4. Watch for Medicaid & SNAP Changes (and Their Financial Ripple Effects)

Though not directly related to business taxes, the bill includes major cuts to federal benefits like Medicaid and SNAP and imposes stricter eligibility requirements. For individuals relying on these programs or employers in healthcare sectors, the ripple effects may be significant.

5. Strategy Beats Surprises

Whether you're navigating a new deduction, managing charitable contributions under tighter rules, or exploring Trump Accounts, the key takeaway is this:

The tax code just got more generous and more confusing at the same time.

Let’s cut through the noise and build a plan that fits.

Call us at 562-495-3331 or visit Holmes & Associates to schedule your mid-year review.

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What the One Big Beautiful Bill Act Means for Your Taxes in 2025 and Beyond

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The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4th, 2025—and like any massive piece of legislation, it comes with both opportunities and complications for business owners and individuals. At Holmes & Associates, we’re here to break it down into actionable steps, so you know what changes matter to you.

1. Big Wins for Business Owners

Permanent 100% Bonus Depreciation & R&D Expensing

Businesses can now permanently deduct 100% of qualifying equipment purchases and domestic R&D expenses in the year they’re placed in service. This eliminates a tax penalty and gives businesses confidence to invest.

Pro Tip: Consider pairing this with a cost segregation study if you own commercial real estate.

Section 179 Expensing and Interest Deduction Improvements

Small business-friendly provisions—like the expanded Section 179 expensing rules and the less restrictive TCJA interest deduction cap—are now permanent.

2. Entity Structure Still Matters

Pass-Through Deduction Permanently Extended

The 20% deduction for pass-through income (such as from S-Corps and partnerships) has been made permanent. While controversial for creating unequal treatment compared to C-Corps, it means now’s a good time to revisit your business entity structure and confirm it still aligns with your goals.

3. SALT Cap Raised—Temporarily

From 2025–2029, the SALT (State and Local Tax) deduction cap increases from $10,000 to $40,000 for households making under $500,000.

It reverts to $10,000 after 2029—so timing is everything if you're in a high-tax state like California.

4. Estate and Gift Tax Changes Ahead

In 2026, the estate and gift tax exemption will be set at $15 million (adjusted for inflation). Now is the time to review your estate plan, especially if you're close to that threshold or considering significant asset transfers in the coming years.

5. Time to Book a Mid-Year Strategy Session

With OBBBA now official and tax season in the rearview mirror, July is the perfect time to:

  • Adjust estimated tax payments

  • Review entity selection

  • Maximize deductions under the new rules

  • Begin 2026 planning with updated exemption thresholds in mind

Let’s talk about what these changes mean for your specific situation.

Book a complimentary consultation today at 562-495-3331 or visit us at Holmes & Associates.

Mid-Year Tax Check-Up for Business Owners: What You Can Still Do Before Year-End

As the halfway point of the year passes, July is the perfect time for business owners to assess their financial health and make strategic adjustments. A mid-year tax check-up can help you avoid surprises come tax season and identify opportunities for savings.

Start by reviewing your income and expenses to ensure your bookkeeping is up-to-date. Accurate records allow your CPA to project your tax liability and suggest strategies like adjusting estimated payments or maximizing deductions.

Consider accelerating purchases or investments that may qualify for deductions. Also, review retirement contributions, potential tax credits, and any changes to payroll that may impact tax filings. For many small businesses, this is also a good time to re-evaluate entity structure or check eligibility for the Qualified Business Income (QBI) deduction.

A mid-year check-in with your CPA can keep your business on track, improve cash flow planning, and reduce year-end stress.

  • Take advantage of Section 179 and bonus depreciation.

  • Conduct a cost segregation study to accelerate depreciation.

  • Track passive vs. active income carefully for tax treatment.

  • Harvest real estate losses to offset gains.

Real estate pros should also consider timing transactions to reduce tax impact and confirm if they qualify as Real Estate Professionals (REP) under the IRS guidelines.

Your CPA can help evaluate your portfolio and optimize your strategy before December 31.

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House Passes H.R. 1: Key Corporate Tax Credit Changes Proposed

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On May 22, the House of Representatives passed H.R. 1, the One Big Beautiful Bill Act, marking a significant development in this year’s budget reconciliation process. This bill includes major proposed changes to a number of corporate tax credits that could impact businesses of all sizes.

While the House’s approval is an important step forward, the bill must still make its way through the Senate, where further negotiations and revisions are expected, before becoming law. As such, many of the provisions outlined below may still change.

Key Corporate Tax Credit Provisions in the Current House Version:

Employee Retention Tax Credit (ERTC):

The bill proposes a retroactive cutoff date of January 31, 2024. It also includes longer IRS assessment periods and introduces new penalties targeting credit promoters.

Paid Family and Medical Leave Tax Credit:

This credit would become permanent and feature updated calculation methods, along with changes to how state-mandated leave and employee classifications are handled.

Domestic R&D Expenditures:

The amortization requirement for domestic research and development expenses would be suspended. Businesses could once again fully deduct qualifying expenses, including software development costs, from 2025 through 2029.

Energy Tax Credits under the Inflation Reduction Act:

Several credits related to energy investment and production would be revised, though specifics remain under discussion.

Credit for Employer-Paid Payroll Taxes on Employee Tips:

Beginning in 2025, the scope of this credit would expand to include more business sectors, with calculations tied to minimum wage standards.

Employer-Provided Childcare Credit:

This credit would increase from 25% to 40% of qualifying childcare expenses (and up to 50% for qualified small businesses). The maximum annual credit would rise from $150,000 to $500,000 ($600,000 for small businesses), effective in 2026.

What’s Next?

Holmes & Associates, CPAs is closely monitoring the bill as it moves through the legislative process. We’ll continue to share updates and provide guidance once final details are confirmed and the bill is signed into law.

If you have questions about how these proposed changes may affect your business, feel free to contact us today.

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What Is the PTE Tax Election?

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The PTE tax is a California program that allows pass-through entities (like S-Corps or partnerships/LLCs) to pay state income tax at the entity level — instead of passing all the income down to individual owners who then pay personal income tax.

This helps owners get around the $10,000 federal SALT (State and Local Tax) deduction cap from the 2017 Tax Cuts and Jobs Act.

Key Benefits of Making the PTE Election

Federal Tax Deduction for State Taxes

  • Normally, individual taxpayers can only deduct up to $10,000 of SALT on their federal returns.

  • But with the PTE election, the entity pays the California tax and gets the full federal deduction.

  • This lowers federal taxable income, which reduces your federal tax liability.

Credit for Owners on CA Personal Tax Return

  • Even though the entity pays the tax, the owners receive a California credit for their share of that payment.

  • This avoids double taxation — and often results in little or no extra state tax due personally.

Simple Example

Let’s say:

  • A California S-Corp earns $500,000, owned 100% by one shareholder.

  • It opts into the PTE and pays 9.3% tax = $46,500 to CA.

  • That $46,500 is a deduction on the S-Corp’s federal return, saving the shareholder potentially $17,000–$20,000+ in federal tax depending on their bracket.

  • The shareholder then gets a $46,500 credit on their California tax return.

Prepayment Requirement: This Is Critical

To Make the Election, You MUST Prepay by Specific Deadlines:

  • June 15 of the taxable year: You must prepay the greater of:

    • 50% of the prior year’s PTE tax, or

    • $1,000

  • If you don’t make this payment by June 15, you lose the ability to make the election for that year.

Then:

  • The remainder is due by the original tax filing deadline (typically March 15 of the next year for calendar-year entities).

No exceptions: Missing the June prepayment disqualifies you from making the election for that year.

Requirements to Qualify

  • Entity must be a qualified S-Corp, partnership, or LLC taxed as a partnership.

  • All owners must be individuals, estates, or trusts (not other businesses).

  • Each owner must consent to the election.

Bottom Line

Bottom Line: Why the PTE Election Matters

  • Federal deduction – Lowers your federal tax liability beyond the SALT cap.

  • State credit – You're not double-taxed; you receive a California credit.

  • Prepayment – Absolutely required by June 15 to make the election.

  • Strategic tool – Especially beneficial for high-income owners in California.

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Real Estate Investors — Maximize Your Deductions

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As a real estate investor, you're likely juggling property management, financing, and long-term planning, but don’t forget your tax return. Making sure you're claiming all the deductions you're entitled to can significantly reduce your tax liability. From depreciation to travel expenses, smart planning goes a long way.

Top Deductions Real Estate Investors Shouldn’t Miss:

1. Depreciation

One of the biggest benefits of owning rental property is depreciation. Even if your property has increased in market value, the IRS allows you to deduct a portion of the building’s cost each year over 27.5 years (residential) or 39 years (commercial). If you're not tracking this properly, you're leaving money on the table.

2. Mortgage Interest

Interest on loans used to purchase or improve your rental property is fully deductible. Be sure you're including mortgage statements, HELOCs, or other financing tools used for improvements.

3. Repairs and Maintenance

Fixing a leaky faucet? Replacing a broken appliance? Repairs made to maintain the property (not improve it) are fully deductible in the year incurred.

4. Travel and Mileage

If you visit your property for inspections, repairs, or showings, your mileage can be deductible. Keep detailed records or use an app to track trips to ensure accuracy.

5. Property Management and Professional Fees

Do you pay a property manager or CPA? Their fees are deductible as business expenses. This includes legal advice, tax prep, or bookkeeping related to your real estate portfolio.

6. Cost Segregation (Advanced Strategy)

If you own multiple rental properties or large buildings, a cost segregation study could accelerate depreciation by breaking down your building into components (e.g., flooring, HVAC). Ask your CPA if this strategy is worth considering.

Work With a Real Estate-Savvy CPA

Holmes & Associates has deep experience working with real estate investors in Los Angeles and beyond. We understand the nuances of investment property deductions and can help you file on time, and strategically.

Looking to maximize your deductions? We're here to help, contact us today!