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IRS Says I Owe Over $50,000 — What Happens Next?

Thu, 05 Feb 2026 18:27:50 GMT

A Guide for Business Owners Facing Serious Tax Debt

If you’re reading this because the IRS says you owe $50,000, $97,000, or even more , you are probably not feeling calm right now.

Most business owners find themselves staring at a notice, running numbers in their head, wondering what this means for their business, their family, and their future.

So let’s start here: Take a breath.

This is serious — but it is also solvable.

You Are Not a Bad Business Owner

One of the most painful parts of IRS debt is the shame that often comes with it. Business owners sometimes assume that owing this much must mean they failed somehow.

In reality, tax debt at this level usually builds quietly over time. A business grows. Cash flow gets tight, or a difficult season hits. Payroll still has to be met. Payroll tax deposits get delayed or Income tax estimates aren’t set aside, because the money has to come from somewhere. The business owner keeps going, hoping to catch up later.

And then one day, the IRS balance is no longer small. It’s significant. It’s frightening and it is urgent.

This is not a moral failure. It is a financial situation that needs a clear plan.

What Does It Mean When the Balance Is Over $50,000?

When a business owes more than $50,000, it usually means the situation has moved into a more serious category.

Often, the balance involves more than one tax year. Sometimes payroll taxes are part of the picture. Penalties and interest may have accumulated faster than expected.

At this level, the problem is no longer something to ignore or “deal with later.” It requires a structured approach.

The good news is that the IRS has established procedures for cases like this. But timing and clarity matter.

What Happens Next?

This is not like bargaining with a credit card company about an unpaid balance. The IRS follows a fairly predictable sequence when taxes remain unpaid. The key is understanding the process.

At first, notices continue to arrive, becoming more urgent over time. Eventually, letters may reference intent to levy or additional collection action if the balance is not addressed. In higher-dollar business cases, the IRS may escalate further by filing a federal tax lien or assigning a Revenue Officer to the account.

This does not mean the situation is hopeless. It means the IRS process is moving forward.

The earlier a business owner responds appropriately, the more options tend to remain available.

Will the IRS Take My Bank Account?

This is one of the most common fears business owners have — especially after reading words like “levy” or “intent to seize.”

The truth is that levies do not happen without warning. The IRS does not typically take aggressive enforcement action out of nowhere. Collection actions occur after repeated notices, missed deadlines, and lack of response.

Most business owners who take action early never reach that stage. The goal is to address the situation before it becomes enforcement-driven.

Why Calling the IRS Immediately Can Create More Stress

Many business owners feel an understandable urge to call the IRS right away, hoping to explain or fix the problem quickly.

But calling without preparation can sometimes lead to more confusion.

It is easy to agree to payment terms that are not sustainable, or to begin a process without understanding the full scope of the case.

The first step is usually clarity:

What years are involved?
Are all returns filed?
Is payroll tax part of the balance?
How much of the total is penalties and interest?
What stage of the IRS process is this in?

Once the full picture is clear, next steps become much easier to evaluate.

Is This Something a Business Owner Can Handle Alone?

For smaller balances, some taxpayers can manage communication on their own.

But when the debt exceeds $50,000, the situation is often more complex. Deadlines matter more, the IRS may be less flexible, and the cost of mistakes increases.

Many professionals view high-dollar tax resolution as a specialty area, because it involves a different level of process, strategy, and negotiation than routine tax filing.

The most important thing is not whether you handle it alone or with support — it is that the situation is addressed thoughtfully and correctly.

What Are the Options for Resolving Large Tax Debt?

Most IRS resolution outcomes fall into a few broad categories.

Some taxpayers qualify for structured payment arrangements. Others may need temporary relief while cash flow stabilizes. In certain situations, settlement options may be available depending on the taxpayer’s full financial circumstances.

The right approach depends on many factors, including income, assets, compliance history, and the type of tax involved. There is no one-size-fits-all answer, and what you’ve heard on TV and radio ads about settling for pennies on the dollar may not tell the whole story. But there is almost always a path forward.

Resolution Is Often a Turning Point

The goal is not just to “fix the IRS problem.” The long-term goal is to make sure the business never ends up here again, and is truly profitable (after paying taxes) going forward.

We use a framework to create stability going forward – K-A-C (our name). It stands for:
Know your numbers.
Adjust and allocate intentionally — especially for taxes.
Consistently implement the plan.

For many business owners, tax resolution becomes the turning point where they finally install the financial systems that prevent future surprises.

A Final Word of Reassurance

If you owe the IRS more than $50,000, it is understandable to feel afraid.

But most IRS problems at this level are not hopeless. They are procedural. They follow a system. And with the right information and the right support, they can be addressed step by step.

The most important thing is not to ignore the situation or assume the worst.

The best first move is clarity: understanding what the IRS is claiming, what stage the case is in, and what options may be available.

In future articles, we’ll walk through common notices, enforcement timelines, and what business owners should know before taking their next step. In the meantime, please contact us if you would like to get started on knowing more about your numbers!

NOTICE: USPS Implements New Procedures That Can Affect Postmark Dates

Thu, 05 Feb 2026 18:18:45 GMT

You may have heard the buzz about some changes taking place in the United States Postal Service. On December 24, 2025, adjustments were implemented that could affect whether time sensitive items are considered to be mailed “on time”.

According to the USPS website modifications have been made to transportation operations. This will result in some mail pieces not getting to the processing facilities on the same day they are mailed. That means the date on the postmark that is applied at the processing facility might not match the date the customer drops off mail or the date a mail carrier collects it.

What does this mean to you? Any time sensitive documents that are dropped into one of those big blue mailboxes might not be postmarked the same day. That could mean that a tax return or other time sensitive documents could be considered late.

What can you do? According to the same article on the USPS website, a customer can ensure that the postmark date matches the date of mailing by visiting a Post Office Retail Location and requesting a manual postmark at the retail counter. This is a free service. Customers that want to retain a record, or proof of the date the Post office accepted possession of their mail, can purchase a Certificate of Mailing. (A Certificate Of Mailing provides evidence that you sent an item when you say you did. This official record only shows the date your mail was accepted. It does not provide record of delivery or insure items against loss.)

What do we recommend? For any IRS correspondence we recommend using Certified Mail. This will provide you with a mailing receipt as confirmation the item was sent. That receipt can be kept in your files as verification of timely filing.

In summary, recent USPS operational changes may impact how and when postmarks are applied, which can create unintended risks for time-sensitive mail. Being aware of these changes and taking proactive steps—such as obtaining a manual postmark or using Certified Mail—can help ensure important documents are considered timely and properly documented. We encourage all clients to plan ahead to avoid potential delays or complications.

Why Waiting Until Tax Time Is Too Late

Thu, 05 Feb 2026 18:00:49 GMT

Have you ever said, or thought, “I will deal with the books at tax time”?

You probably have and we know that because we get more phone calls and leads during tax season than any other time of the year. (Yay us!) It is understandable because that is when you must deal with the books and taxes (or else). But waiting until tax time robs you of planning opportunities and often presents you with unwanted surprises.

The stress of scrambling to get the books cleaned up really is not worth it. You probably have no idea what that random charge for $54.38 was in March, almost a year ago. So, you stick it somewhere and call it a day. But was it inventory, advertising, or supplies? Having an accurate total for each category on your P&L can help you during the year to understand what you’re really spending your money on. And in the worst-case scenario, the IRS is going to find you and ask, is it even deductible? Cue the dramatic music: dun, dun, dunnn!

What if your fryer is on its last leg and you want/need to buy a new one? If you wait until tax time to get your bookkeeping in order, your tax preparer will have no way of telling you if you should buy the new equipment now or later, which means you could be missing out on tax savings. All of this could happen because you said, “I’ll deal with it at tax time”. There could also be serious implications for payroll and tip reporting and sales tax liabilities if you’re not keeping a close eye on your books throughout the year.

At KAC we take knowing your numbers very seriously. There are big decisions that have to be made before the end of the year, like whether or not to buy that shiny new fryer. However, since you decided to “deal with it at tax time” you now find yourself saying “why did I wait until tax time?” You do not want to spend the first few months of the new year looking back at last year because at this point, last year is old news. If you are focusing your time and energy on last year, it means you do not have enough data to effectively plan for the upcoming year.

What if you had a phenomenal year last year? You know you were raking in the cash and it was nice, but now that you are dealing with your bookkeeping you are realizing how much money you made and your tax preparer is going to look at you with a worried expression and she/he is going to say “I wish you had not waited until tax time.” You could owe a lot in tax, and on top of that if you did not pay estimated quarterly taxes, you will now owe a ton of penalties and interest (there goes all that cash you raked in).

The TL;DR version is do not wait! Get a jump on your books early and stay on top of them throughout the year. You’ll be able to make better decisions throughout the year, face fewer costly surprises, and maybe even get to make really good decisions that save you tax dollars. Let this be the last year you waited until tax time.

Year-End Financial Health Check: 5 Steps Every Small Business Should Take

Thu, 08 Jan 2026 19:09:43 GMT

Are you so glad the year is over? Are you completely burnt out, and you don’t even want to look at your P&L?

If you don’t want the coming year to mirror this last year, if you want to end next year feeling revived and excited instead of being worn out and generally disinterested then let’s go through this year end checklist together.

Let’s start a new habit.

Disclaimer: These steps should be taken AFTER you have reconciled your bank and credit card accounts. Once that is done and all the pieces are in place, then we can look at the final numbers. DO NOT do these steps before you have reconciled, otherwise you’ll end up doing them twice.

Step 1: They say the first step is the hardest – and this is a hard one, but we have to do it. Let’s open that P&L. I know, it might be painful, but it could hold some good surprises. (Let’s be positive!)

Look at the P&L for the year but also look at a month-over-month comparison. Do you see any trends in revenue or expenses? Get out your calendar or planner and make notes for the future of months you want to offer deals or specials, or months you might not need to keep as many staff on the floor.

Step 2: This one is not as hard but probably more confusing – let's look at your balance sheet. First, let’s look at your bank accounts; do they match what your bank statement shows? (If not, we might have some problems we need to fix.) Next, check your assets, do those numbers make sense? And finally, let’s check your liabilities. If you have credit cards, you want to verify the balances on the balance sheet match what your credit card statements show. Similarly, if you have loans, you want to do basically the same thing- make sure your end of year balance matches what your lien holder shows.

The balance sheet is where we see the most problems. (Or, as it sometimes looks, the unbalanced sheet) If it doesn’t make sense to you, you’re not alone. It’s taken many years of training for it to make sense to me. But it is very important that it does make sense (to someone, even if it’s not you right now).

Step 3: Next, let’s dig into your accounts payable and accounts receivable. Is there any money you can chase right now? Or is there anything that needs to be written off (because the guy won’t answer his phone, and his address is fake, which you know because you drove by, not in the creepy way but in the “where’s my money” sort of way? I for sure have never done that before.)

On the other hand, are there any bills you need to pay? Nah, I know you’ve paid all your bills. But it is important to review your AP and make sure that your payables are all still open and owed. If you have any negatives or if there are bills you know you paid still on the list, we might have some problems.

Step 4: Inventory. Don’t forget to take inventory at the end of the year! You should be doing this monthly, but if you haven’t done it in the last 12, please take an inventory now. I can’t be with you for that whole process; I’ve got other articles to write but just know I’m there with you in thought.

Step 5: Last one! Let’s get all your documents ready for your tax preparer (which hopefully is us but I understand if you haven’t fully committed yet, you will soon…) Grab your bank statements, your credit card statements, your asset purchase paperwork, your loan documents, your payroll reports and forms, and your inventory that you just took for the whole year and send all that information to your tax preparer. They will love you for it. If you just joined me on this journey, you could soon become their top client.

5 steps, that’s all it took, (well technically 6 if you count reconciling first, but I like 5 better) and you have now identified areas that can improve and set yourself up for success for the rest of the new year. And if you keep taking these steps on a monthly basis, soon they’ll get easier and then you might start to like your numbers a whole lot more. If you want to understand any of these steps better, or if you want to start liking your numbers sooner, call us and ask about our Insights Package . Then we might become your favorite, and we’ll become business buddies, and you’ll wonder why you never called us before.

The Truth About “Pennies on the Dollar” IRS Settlements

Thu, 08 Jan 2026 18:57:03 GMT

I’m going to tell you a story about a business owner I’ll call Mark . He had built a small but stable company, employed a handful of people, and, for most of his career, did exactly what the IRS expects—filed his returns, made his deposits, and treated payroll taxes as a priority rather than an afterthought.

Then a serious medical issue intervened.

What began as a health scare turned into surgery, recovery time, and months of uncertainty. While Mark was focused on getting well enough to work again, his business continued to operate, his employees still needed to be paid, and cash flow began to tighten in ways that don’t show up neatly on financial statements. Faced with impossible choices, he did what many business owners do in a crisis: he paid his employees and vendors first and told himself he would catch up on the payroll tax deposits once things stabilized.

He didn’t.

By the time his health improved, Mark was facing a substantial payroll tax liability, compounded by penalties and interest, and now accompanied by increasingly serious notices from the IRS. The debt felt overwhelming, and the situation felt personal—not reckless or dishonest, but the result of circumstances he never anticipated.

That was when the mail started arriving.

Among the envelopes was a letter from a tax resolution company, professionally designed and carefully worded, promising relief and a “fresh start.” It suggested that he might qualify to settle his IRS debt for pennies on the dollar. It framed his medical hardship as a key factor. It implied that the size of his debt made him a strong candidate.

We’ve all seen versions of these ads. They offer certainty in moments that feel anything but certain.

Mark called the number.

After a brief intake process and a sizable retainer, he was told that an Offer in Compromise would be submitted to the IRS on his behalf. Months passed. Communication was sporadic. Eventually, the answer arrived.

The offer was rejected.

The IRS concluded that Mark had the ability to pay his tax debt over time. The medical crisis that caused the problem, the good-faith effort to keep his business alive, and the personal toll the situation had taken were not part of the calculation. The offer failed, the retainer was gone, and the payroll tax liability remained—larger, older, and now more urgent than before.

Mark’s experience illustrates a reality that is rarely explained in tax resolution marketing. These companies suggest that if you owe back taxes, the IRS is willing to negotiate like a credit card company and cut you a deal simply because you’re struggling.

That message is appealing. Unfortunately, it’s also deeply misleading. Here’s how it really works.

An Offer in Compromise (OIC) is a real IRS program. It does allow some taxpayers to settle their tax debt for less than the full amount owed. But the idea that everyone qualifies—or that the IRS routinely accepts lowball offers—is one of the biggest myths in tax resolution.

The IRS Is Not Negotiating on Feelings

One of the most common misconceptions I see is that hardship alone qualifies someone for an Offer in Compromise. People assume that if they’ve had a rough few years, the IRS will meet them halfway.

That’s not how it works.

The IRS does not negotiate based on sympathy, stress, or fairness in the abstract. It negotiates based on math. Very specific math.

At the center of every Offer in Compromise review is a concept most taxpayers have never heard of: Reasonable Collection Potential , or RCP .

What Is Reasonable Collection Potential?

RCP is the IRS’s estimate of how much it believes it can collect from you over time—whether through monthly payments, asset liquidation, or enforced collection if necessary.

In plain terms, the IRS asks:

How much disposable income do you have each month?
What assets do you own, and what equity is available?
How long does the IRS have left to collect?

Your tax balance is not the starting point. Your financial capacity is.

If the IRS believes it can collect the full balance—even slowly—it has no incentive to accept less. That’s true even if paying the debt would be uncomfortable or inconvenient.

Why “Pennies on the Dollar” Is Rare

Here’s a pattern I see repeatedly: a taxpayer owes a large amount—say $150,000. They assume that because the number is big, settlement is inevitable. A marketing firm the taxpayer contacts reinforces that assumption, often before doing any meaningful financial analysis.

But when the actual numbers are reviewed, the picture changes.

Maybe the taxpayer has steady income. Maybe they own a home with equity. Maybe they have retirement accounts or business assets. Maybe their monthly expenses exceed IRS “allowable” standards but not by enough to matter.

When those numbers are plugged into the IRS formula, the RCP comes back close to—or even higher than—the total balance owed.

At that point, an Offer in Compromise is dead on arrival.

Example

Consider a taxpayer with $120,000 in tax debt. On paper, that sounds like an ideal settlement candidate.

But after analysis:

They earn $110,000 per year
They own a home with $80,000 in equity
Their allowable monthly disposable income is $1,200

From the IRS’s perspective, this taxpayer can pay. Maybe not immediately, but over time.

No matter how persuasive the offer narrative is, the IRS will not accept “pennies on the dollar” when its own math shows otherwise.

Why Tax Resolution Advertising Is So Misleading

Many tax resolution firms focus on selling hope , not accuracy. They emphasize the existence of the program without explaining its gatekeeping standards. They talk about success stories without explaining how narrow those cases are.

What they rarely say upfront is this: most Offers in Compromise are rejected .

That’s not because taxpayers did something wrong. It’s because the IRS is applying its formula exactly as designed.

The IRS Doesn’t Bargain—It Calculates

The biggest mental shift taxpayers need to make is this: the IRS is not negotiating in the traditional sense. There is no back-and-forth. There is no “meet in the middle.”

There is an evaluation, a calculation, and a decision.

If your offer is lower than what the IRS believes it can collect, it will be rejected—regardless of how compelling your personal story may be.

Why This Matters

The danger of the “pennies on the dollar” myth isn’t just disappointment. It’s wasted time, wasted money, and lost opportunities for better solutions.

I’ve seen people who could have pursued installment agreements, partial payment plans, or penalty relief—but instead spent months chasing an Offer in Compromise that never had a realistic chance.

An Informed Taxpayer Is a Protected Taxpayer

Offers in Compromise are powerful tools—for the right cases. But they are not universal solutions, and they are not shortcuts.

If there’s one takeaway I want readers to have, it’s this: an Offer in Compromise is not about how much you owe—it’s about what the IRS believes it can collect .

Understanding that distinction protects you from unrealistic promises and helps you approach tax resolution with clarity instead of hope alone.

And when it comes to dealing with the IRS, clarity is always the better strategy.

If you would like clarity on your tax situation, KAC Consulting, Inc. can help! Contact us today for more information .

Budgeting for Slow Season: How to Survive the Slump

Thu, 04 Dec 2025 17:04:36 GMT

Every January Mike’s Bistro went quiet. During the Holiday season there was barely time to breathe. Lines out the door, catering orders piling up, and staff pulling double shifts.

He assumed the income from the holiday rush would be enough to carry him through the slow season. But, by the third week of January the rush was gone and his bank balance told a harsh truth: Mike had no cushion and no plan. The bills started stacking up and he had to dip into his personal savings to keep the doors open.

Sound familiar?

If you are a restaurant or small business owner, seasonal slowdown can feel like whiplash. But it doesn’t have to catch you off guard. With the right planning and budgeting, you can survive — and even thrive — during your slow season.

Here’s how:

1. Know Your Seasons — Don’t Guess

Every business has its rhythm. For restaurants, January and February can be brutal. For landscapers, winter is practically hibernation. Retailers might slump after the holidays, while salons get quiet midsummer.

The key is to know your data . Look back at last year’s sales — month by month. Identify your dips and peaks. If you use a POS system or bookkeeping software, it takes just minutes to spot the patterns.

Once you know when business naturally slows down, you can prepare instead of panicking.

2. Create a Slow Season Safety Net

When times are good, it’s tempting to celebrate every win. But slow months are a lot easier to handle when you’ve built a safety net ahead of time.

Every month set aside a percentage of profits — no matter how small — into a separate savings account. That account isn’t for emergencies. It’s the cash that will keep the bills paid when the slow season comes. (We recommend reading the book “ Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine ” The Profit First method is simple. The tips and guidelines you will find regarding budgeting and planning are invaluable.)

Mike learned this lesson the hard way. Now, every month, he automatically transfers a set percent into the bank account he designated as a safety net. Come slow season, he doesn’t stress about covering bills.

3. Review (and Trim) Your Expenses

When business slows, it’s the perfect time to take a microscope to your spending. This might seem overwhelming but by breaking expenses into three buckets it can be easier to tackle.

Fixed Expenses. This category is for things like rent, insurance and loan payments that are not easily changed.
Variable Expenses. The are expenses like supplies, shipping costs and contract labor that can change based on the business’ activity. Can you renegotiate vendor contracts or reduce waste?
Discretionary Expenses. Some expenses are just extras and can be paused, reduced or eliminated. Are there subscriptions or software you are paying for but barely use?

Even small cuts can make a big difference. You don’t need to run lean forever — just enough to stay nimble during your slower stretch.

4. Keep Cash Flow Moving

The biggest mistake during a slow season is going quiet. Instead, be proactive:

Create slow season promotions that drive sales. If you run a restaurant launch a “locals-only” special or winter tasting menu.

Add off season revenue streams. For a landscaping company that might mean offering services to put up holiday lighting and outdoor decorations.

Focus on Business To Business sales during slow times. A fitness trainer or massage therapist could offer corporate wellness plans to local businesses.

The goal is to generate some activity — and stay top-of-mind with customers who might otherwise forget about you until spring.

5. Use the Downtime Wisely

Instead of viewing your slow season as a setback, see it as an opportunity.

This is your time to:
✅ Cross train your team
✅ Update your bookkeeping or accounting systems
✅ Plan marketing campaigns for busy seasons
✅ Take a breath and refocus on long-term goals

The downtime can either drain your energy — or sharpen your strategy. The choice is yours.

The Takeaway

Mike’s story is every small business owner’s story — the highs of success and the lows of the unexpected. But now he doesn’t dread slow season because he built a system that made his business resilient. With a safety net in place now Mike uses his slow months to make the busy months easier.

Success isn’t just about making money when times are good — it’s about protecting your business when they’re not. Would you like to see how KAC Consulting, Inc. can help you in good and slow times? Contact us today !

The Truth Behind ‘Zero Tax’: Strategy, Myth or Bad Math?

Thu, 04 Dec 2025 16:24:26 GMT

Social media is flooded with sensational claims about “the path to zero tax.” Influencers and so-called experts are eager to share tax loopholes or hacks to avoid paying taxes altogether. But what’s real, and what’s just hype? Let’s separate myth from reality, so you can make informed, responsible decisions and avoid costly mistakes.

Myth vs. Reality: Do the Rich Really Pay No Tax?

You may have heard that the rich pay no tax. But the latest data compiled by the Tax Foundation shows that the top 50% of earners paid 97% of the federal income tax, totaling 2.1 trillion dollars, and the top 1% of earners paid 40.4% of the tax. In other words, the rich do pay tax. The wealthy may have access to more sophisticated planning, but the idea that anyone—rich or not—can easily pay “zero tax” is a myth.

How Income Tax is Calculated

In the US, Federal Income tax is just that…. tax on your income. In simple terms, if you have no income, you pay no tax. But that means YOU HAVE NO INCOME. Keep that in mind as we get deeper into this discussion. Income tax is calculated on adjusted gross income (AGI) - income minus allowable deductions. The US tax system uses tax brackets - as your adjusted gross income increases, so does your tax bracket. There are some nuances (like the difference between ordinary income and capital gains), but the key fact remains: income is taxed. 

Where the ‘Zero Tax’ Idea Comes From – And When It’s Technically True

There is a kernel of truth behind the “zero tax” strategy. One example is that people who own significant appreciating assets (like real estate) can borrow against those assets and live off the borrowed funds. Borrowed money is generally not considered income. However, most of us are not in a position for this to make sense. (Living off that Home Equity Line of Credit or HELOC is not a wise financial plan.) Additionally, long term capital gains and qualified dividends are not taxed if your income is under $96,700 for a couple filing jointly. Again, you must have assets to earn dividends and have capital gains, which result when you sell an appreciated asset (an asset that has gone up in value). 

In short: some can live on money not considered income, but it usually involves either living on debt, on money that you have already been taxed on, or you have income under a certain threshold.

The Business Loss Strategy: Misunderstood and Misused

One of the more common “zero tax” strategies promoted online is using business losses to erase taxable income. The idea is that if you start or buy a business, then generate (or “create”) enough deductible expenses or losses, your total taxable income drops to zero—resulting in no tax due. While it’s true that legitimate business expenses and losses can reduce taxable income, this strategy is often misunderstood, exaggerated, or abused.

An Example: 

Wage and other income of $200,000
Business income $50,000 minus business expenses (including equipment and vehicles that were financed) of $210,000 = ($160,000) business loss
Itemized Deductions ($40,000)
Taxable Income $0

In this example, the taxable income is $0. “Great,” you say, “zero tax.” But I would counter, you didn’t make any money . You are leaving the table with zero dollars in your pocket and probably some debt on that equipment. Let’s be clear- business expenses represent real money- not some magical tax loophole . This scenario is not sustainable for several reasons. One is that if you consistently have business losses, you will be inviting IRS scrutiny. There are rules regarding business vs hobby losses. I’ll leave that discussion for another article. The second reason this is not sustainable is that if you spend more than your business earns, you won’t be in business for long. 

‘Zero Tax’ – Strategy or Mirage?

Paying less tax is a smart goal. Paying no tax, however, is rarely a sign of financial genius - it’s usually a sign of low income, high debt, or both. While there are legitimate tax strategies that can reduce or even eliminate tax in certain scenarios, they depend on real wealth, real planning, and economic activity - not loopholes. Instead of chasing viral “zero tax hacks,” focus on strategies that build wealth. After all, the goal isn’t to show zero tax - it’s to have enough income that paying taxes is simply part of a successful financial life. 

Key Points

The wealthy do pay income tax - data shows the top 1% of earners pay more than 40% of federal income tax. 
Federal income tax is based on income , not clever tricks. If your taxable income is zero, it usually means your actual income is zero (or close to it). 
Some legitimate tax strategies can reduce tax to zero in specific cases - such as borrowing against appreciated assets or having low enough income to qualify for 0% capital gains rates. However, these strategies require significant assets. 
Many “zero tax” strategies promoted online - like generating large paper losses in a business are often misunderstood, unsustainable and invite an IRS audit
Reducing taxes is about long-term, strategic planning, not chasing gimmicks that leave you broke or audited.

Are you interested in long-term, strategic planning? Contact us today and let's see how we can work together!

Is Your Menu Putting You Out of Business?

Thu, 04 Dec 2025 15:39:06 GMT

A Candid Conversation That Revealed a Deeper Problem

Just last week, I met with a restaurant owner whose operation appeared—at least externally—to be thriving. His dining room was consistently active, yet beneath that surface of apparent success was a financial trajectory that had been quietly deteriorating for months.

Despite steady revenue, he was withdrawing money from his savings every single month to cover operating expenses. He admitted he had been reluctant to raise prices, relying instead on what surrounding restaurants were charging rather than on his own cost structure. His hesitation was rooted in fear—fear of guest backlash, fear of making things worse.

But the numbers were unequivocal:
If he continued operating under the same assumptions, he would exhaust his resources and have to close the doors within 18 months.

The Crucial Question: “When Did You Last Cost Your Menu?”

When I asked when he had last conducted a comprehensive plate-costing analysis, he paused, then confessed he couldn’t remember. He had a general sense of which items were “profitable,” but that belief was based more on intuition than on data.

To establish a baseline, we chose one of his higher-priced, supposedly high-margin entrées and examined it in meticulous detail. Together, we itemized every cost associated with that dish: the ingredients, the small plastic containers for butter and cream, the complimentary rolls, and even the to-go packaging that roughly one-third of guests utilized.

What emerged from that analysis was sobering. A plate he believed was generating strong profit was, in reality, carrying a 40% cost—a level that left little room for labor, overhead, or debt service. And if this was true for one flagship menu item, we both understood it was likely symptomatic of the entire menu.

Menu Costing is Essential

I reminded him of a truth we see repeatedly: restaurant owners often assume that their best-selling items are also their most profitable, even though these two metrics rarely align without deliberate cost control and menu strategy. You cannot manage what you have not measured.

Menu costing provides more than clarity; it provides a structured method for transforming a menu from a passive list of offerings into an intentional, revenue-driving instrument.

A Clearer Path Forward

1. Establish Data Integrity - Calculate plate costs with accuracy, capturing all expenses that typically slip through the cracks.

2. Identify Profit Leaders and Margin Eaters - Identify which dishes are supporting the business and which ones are quietly eroding margins.

3. Implement Strategic, Evidence-Based Pricing - Armed with reliable numbers, adjust prices—not reactively or fearfully, but with rational confidence.

4. Reposition the Frontline Team as Sales Professionals - Inform the staff which items truly contribute to financial stability, enabling them to guide customers intentionally

Most owners are overwhelmed by the idea of auditing an entire menu, but the process truly begins with a single plate. Analyze one thoroughly, and you may uncover insights that fundamentally reshape how you view your business.

Accurate, consistent plate costing is the cornerstone of profitability. Once you have it, even incremental adjustments can yield meaningful improvements.

Your Menu Holds Untapped Value — Let’s Reveal It

Countless restaurants operate with hidden vulnerabilities simply because their menu has not been designed to support the business strategically.

Menu costing is not merely a financial exercise; it is a lifeline for owners who want their restaurants to thrive rather than survive month-to-month.

If you’re ready to understand the true profitability of your menu and create a pricing structure that sustains your business, we can guide you through the process—and help you write a success story rooted not in guesswork, but in clarity and control. Schedule a free advisory session now.

Before You Spend a Dime— Why Return on Investment Matters

Thu, 20 Nov 2025 21:46:24 GMT

While Return on Investment tells you whether past investments paid off, forecasting it ahead of time can help you choose the right opportunities and avoid costly mistakes. Restaurants have such slim profit margins that ROI isn’t optional. It’s survival. This is a lesson one restaurant owner learned the hard way.

Meet David.

David is a typical small restaurant owner. He is passionate about food and creating the best possible experience for his customers. But, like many independent restaurant owners, when it comes to big decisions, David trusted his gut. And it nearly sank his business.

In late winter, David decided to invest $25,000 to expand with an outdoor seating area. He believed it would bring in more customers during the spring months, which would boost revenue and set him apart from the competition.

But David never sat down to do the math. He didn’t ask any questions. How many new customers would this expansion really bring in? How long would it take to recoup the investment? Do current customers even want this change? Passion is essential in business. But numbers keep the doors open.

At first, the buzz was exciting. Photos of the upgrade went up on social media and looked amazing. The marketing campaign brought in a small burst of interest, but few repeat customers. But, by the middle of summer, the numbers told a different story.

Total revenue increase from outdoor dining: only $7,000
Unexpected costs: $3,000 in permits, $2,000 in maintenance
Weather delays: Lost 4 peak weekends due to rain
Net profit? Basically zero

Worse, the investment delayed upgrades to his kitchen, which caused longer wait times and affected customer satisfaction. David had sunk $25K into something that felt right—but didn’t pay off.

How ROI-Based Decision Making Could Have Helped

If David had used a simple ROI based decision-making process , things could have turned out very differently. Here are what those steps would have looked like.

1. Understand ROI Basics

Projected net profit is calculated by subtracting the projected costs from the expected revenue over a specific period of time. For example, if you want your project to produce a return on investment over three years, you would project your net profit over three years. Then, to find the percentage of ROI, divide the projected net profit over time by the estimated cost of the project (investment), then multiply the result by 100.

ROI = ((net profit – investment) / investment) x 100

2. Identify Decision Area

For restaurants there are many areas that could be analyzed for return on investment. Things to consider would be new equipment, menu changes, or investments in technology, such as an updated POS System.

David should have asked: “Will outdoor seating bring in more profit than other things I could invest in?” This would have given him more insight into the best area to focus his capital.

3. Estimate All Costs

As we all know, most investments end up costing more than we originally expected. Think about legal fees, market research and insurance. Instead of assuming $25,000 was the final price, if David had done some more research he would have realized he needed to include costs for permits and licensing and extra maintenance costs.

4. Forecast the Returns

How can you forecast realistic return on investment? Use historical data or industry benchmarks when possible. Also, look at average foot traffic and sales from previous years. David didn’t factor in the extra time for table turnover in an outdoor space. Research shows that people may stay longer for a meal when seated outside. After considering all the factors David might have decided to invest his money in an endeavor that had the potential of a much better ROI.

5. Calculate ROI

After completing all of the research, now is the time to calculate the projected return on investment. After plugging your forecasted numbers into the ROI formula, it is important to ask questions about the results. How long will it take to break even? Is the ROI positive, and over what period of time? Is there a better place to invest that capital? For David, he would have come up with a negative ROI in year one. This would have given him the opportunity to do more research or refocus his goals.

6. Compare Alternatives

If you’re choosing between options (e.g., a new fryer vs. a marketing campaign), calculate forecasted ROI for each and compare. Then you can choose the one with the best ROI and strategic fit . (Use our free ROI comparison calculator to compare options.)

What if, instead of outdoor seating, David spent $8,000 on a new kitchen line to speed up service? If that option showed an ROI by end of year 4, it would be a better option.

Here is an example:

7. Track Results

The work doesn’t end once the decision is made on where to invest. After implementation, spend the time to measure real returns versus the projected ones. Keeping detailed records can help with future decisions. Also, if the ROI falls short adjust your strategy midstream as needed.

David didn’t measure the actual impact of the patio until it was too late. With proper tracking, he could’ve adapted mid-season—maybe offering events or promotions to fill outdoor seats more often.

8. Refine the Process

ROI-based decision making improves over time as you continue to collect more accurate data. This allows you to continue to learn from past outcomes and fine tune future forecasting. David now keeps a spreadsheet with every investment, the projected ROI and actual performance. This makes his future decisions smarter -and less stressful.

The Takeaway

David isn’t alone. Many restaurant owners make high-stakes decisions based on passion and guesswork. But businesses don’t run on vibes—they run on numbers.

By using a clear, ROI-based decision-making process, you can maximize profits, reduce financial risk, and make smarter investment decisions. Don’t let guesswork guide your business - make every dollar count.

Grab our free ROI Calculator for Restaurants and start making data-backed decisions today.

Are you looking for a return that really pays off? Invest in a conversation with KAC Consulting, Inc., schedule a meeting by click here !

Lock the Gate! Why Multi-Factor Authentication is Your Secret Weapon Against Hackers

Mon, 10 Nov 2025 06:00:26 GMT

Passwords are like old bike locks: they do work, but sometimes, they just aren’t enough. That’s because hackers are clever, and they want your info. That’s where Multi-Factor Authentication (MFA) comes in. It’s a fancy name for a simple idea: let’s make it much, much harder for the bad guys to break in.

What Is Multi-Factor Authentication?

Multi-Factor Authentication (MFA), or Two-Factor Authentication (2FA), means you need more than just a password (which is hopefully not “password123!”) to get into your online accounts. It usually requires either:

Something you have: Like a code sent to your phone, or an app that gives you a special number
Something you are: Like your fingerprint or face (no, your evil twin won’t work)

It’s kind of like needing a key and a secret knock to get into your house. If a hacker steals your password, they still can’t get in without that second part.

Why Are Financial Institutions and the IRS Insisting on MFA?

To protect your sensitive information: because it is…well…sensitive…
To prevent fraud and identify theft: Cybercriminals often steal passwords through scams or data breaches. MFA blocks most unauthorized access by requiring a second proof of identity
To meet security regulations: There are laws and industry standards that require strong protection of financial and tax data. Using MFA helps these organizations comply with those security requirements
To build customer confidence: As annoying as it is, would you really trust us or your bank or the IRS if we DIDN’T take your security seriously? If your favorite coffee shop is using MFA how much more so should your tax preparer!

Bob’s Story: Why MFA Matters

Let’s meet “Bob”. Bob is a regular guy who uses the same password—“BobsTax2020!”—for everything. Life is good. Logging in is fast, and he never thinks twice.

Then… BOOM!

Bob gets an email: “Did you move to Texas?” His bank calls. The IRS rejects his tax return because it says one has already been filed. Even the pizza place calls (and he’s never even ordered pineapple). Someone stole Bob’s password in a data breach, and suddenly, his accounts are a mess and he can’t file his tax return because the hackers filed using his information and got a refund under his social security number. He spends his weekend fixing everything and explaining to his tax preparer and credit card company, “No, I did NOT buy a jet ski in Miami!”

Bob learns his lesson and sets up MFA on all his accounts. Now when he logs in, he has to enter a code from his phone. At first, he complains (“Why is this so annoying?”). But every time, he remembers the “Great Jet Ski Heist” and laughs—because his accounts are now safer than his tax preparer’s hidden stash of Snickers.

This Isn’t Just a “Bob Problem”

Microsoft reports there are over 300 MILLION fraudulent sign-in attempts to their cloud services ALONE. By using MFA, they say over 99.9% of account comprise attacks can be blocked. ( One simple action you can take to prevent 99.9 percent of attacks on your accounts )

The IRS deals with more than 1.4 BILLION cyberattacks annually! Major Management Challenges Facing the IRS | U.S. Treasury Inspector General for Tax Administration OIG

Scary, right?

“But MFA Is Annoying!” (And Other Excuses)

Okay, MFA adds a quick step, and it feels like it “never works” when you are in a rush. The fact of the matter is that it does work though. It’s not perfect, but it’s there to keep you and your data safe. That extra code or tap on your phone stops most hackers cold.

What if I lose my phone?
Don’t panic! Most sites give you backup codes or a way to use another device. Write them down and tuck them somewhere safe (not under your keyboard!).

Need help or want more info?
Check out these links:

In a world full of hackers and scams, Multi-Factor Authentication is your digital guard dog. Sure, it barks every time you log in, but it’ll keep your online life safe and sound. Turn on MFA wherever you can—especially for your bank, tax, and email accounts. It’s one of the easiest ways to keep your info safe, which is why KAC Consulting, Inc. uses this and other features to keep your data safe. To find out more, please contact us today!

When Bad Bookkeeping Triggers an IRS Audit: Lessons from US Tax Court

Thu, 06 Nov 2025 18:27:27 GMT

A Red Flag That Started It All

Lakeview Hospice Care, Inc., a family-run hospice agency in Burbank, California, found itself in Tax Court after what began as a routine red flag: its corporate tax return showed no officer compensation .

For a C corporation with active owners, that’s a problem. The IRS expects a corporation to compensate its officers if they’re performing services. When a company has substantial revenue but reports zero officer wages, it signals that something may be off in the accounting.

That missing salary line on the return caught the attention of the IRS , prompting an audit. But when the revenue agent started digging, she uncovered much deeper issues in the company’s bookkeeping.

A Bookkeeping System That Didn’t Add Up

Lakeview’s books were maintained by a long-time outside bookkeeper who had set the company up on an accrual accounting system. Unfortunately, the system wasn’t being used properly.

Among the problems the IRS found:

Accounts receivable were reversed to zero without explanation.
The general ledger contained numerous vague “adjusting journal entries” labeled simply as “reverse of year-end accruals.”
Invoices were handled manually — stamped “paid” and placed in folders — instead of being linked to the ledger or billing system.
No monthly reconciliation was done between the bank accounts and the books.

The company’s records didn’t match its billing activity or its bank deposits. Although the books were labeled “accrual basis,” the data didn’t actually reflect income when it was earned or expenses when incurred.

That inconsistency gave the IRS authority under Section 446(b) of the tax code to disregard Lakeview’s accounting and reconstruct its income using another method.

The IRS Turns to the Bank Deposits Method

When books are incomplete, the IRS can use the bank deposits analysis to estimate income. The auditor adds up all deposits for the year, then adjusts for:

Nontaxable items (like account transfers or shareholder contributions), and
Changes in receivables and payables to approximate accrual-based income.

Using this method, the IRS initially claimed Lakeview underreported more than $200,000 in income across two years.

The Tax Court agreed that the auditor’s method was appropriate — Lakeview’s records simply didn’t “clearly reflect income.” But the Court also found that the IRS’s totals were too high , because the company’s explanation for certain deposits made sense.

Some of those deposits came from owners, refunds, or other non-taxable sources — not from hospice revenue. The judge accepted Lakeview’s adjustments and ruled that those amounts should be removed from income.

✅ In short: Lakeview lost on the method but won on the numbers.

Where Lakeview Lost Ground: The Deductions

The Court did not, however, side with Lakeview on its expenses. Some of the questioned deductions included

$222,000+ in “miscellaneous accruals,”
Advertising expenses paid to a related person
“Other deductions”
$171,000+ Net Operating Loss from a prior year

When pressed, Lakeview couldn’t provide invoices, receipts, or other proof. Some expenses were handwritten, others were tied to related parties, and others were simply labeled as “accruals” with no support.

The judge sided with the IRS - those expenses lacked substantiation and the deductions are disallowed. The net operating loss was also denied because the company couldn’t back it up with prior-year records.

In short, Lakeview’s bookkeeping errors erased many of its deductions.

A Mixed Result — and a Pending Bill

Judge Holmes called it a “mixed result.”

The IRS was right to question the books and reconstruct income, but Lakeview was right that not all deposits were taxable.

The company avoided penalties because it had relied — in good faith — on professional help. But the Court ordered that the final tax amount be computed later under Rule 155 , a standard procedure to calculate the final bill after applying the Court’s adjustments.

So, while we don’t yet know how much Lakeview will owe, it’s likely to be a significant tax balance – probably tens of thousands - once the math is finalized.

My Opinion on this Case: When Business Owners Don’t Provide the Data

There’s an old saying in the accounting world: “Garbage in, garbage out.”

No matter how skilled a bookkeeper may be, they can only work with the information they’re given. If a business owner doesn’t provide timely bank statements, credit card records, invoices, and receipts, the financial reports — and the tax returns based on them — will never be accurate.

Many accounting and bookkeeping firms struggle with this same issue. It’s not always carelessness on the bookkeeper’s part; sometimes it’s simply that the client hasn’t provided the data needed to close the books correctly. In Lakeview’s case, that may have been a big part of the problem. The outside bookkeeper set up an accrual system, but without complete input from management, the records never reflected reality.

At the same time, this doesn’t absolve the outside bookkeeper of responsibility. The Tax Court seemed to recognize that balance — removing the penalties partly because Lakeview had relied on a professional, but still making it clear that the bookkeeping itself was unreliable. In my view, a competent bookkeeper should press harder for accurate information or even disengage if the client won’t provide it. Personally, I would have fired this client rather than continue producing records that I knew weren’t accurate. A professional’s duty isn’t just to record what’s handed to them, but to ensure that the books meet quality standards and will stand up in audit.

Takeaway Tips: How to Avoid Lakeview’s Mistakes

Always report officer compensation.
Even for C corporations, listing zero wages when officers are active can draw attention from the IRS.
Use accrual accounting correctly.
Record income when earned, and expenses when incurred — not just when money moves.
Keep complete documentation.
Every deduction should be backed by invoices, receipts, or agreements. Ledger entries alone aren’t enough.
Reconcile your accounts monthly.
Your bank activity, billing system, and accounting software should always line up.
Give your bookkeeper what they need.
Timely access to bank statements, credit card accounts, and supporting paperwork is essential. Your financials can only be as accurate as the information you provide.

Author’s Note

Written by KAC Consulting, Inc. — a firm specializing in bookkeeping, tax advisory, and resolution services for small businesses. We help owners maintain clean, compliant records and audit-ready financials.

�� Don’t wait until tax season to find out there’s a problem. Contact us before year-end for a professional books review and make sure your financials are accurate, complete, and audit-ready.

The W-9 Lesson: How One Business Owner Learned the Hard Way

Thu, 06 Nov 2025 18:10:30 GMT

Meet Jake. Jake is a hardworking general contractor who needed to hire extra hands during a particularly busy summer. He didn’t want to deal with payroll taxes or paperwork, so when his helpers asked how they’d get paid, he said, “You’re contractors. I’ll just write you a check every week.”

Easy enough—or so he thought...

When tax season rolled around in January, Jake’s tax preparer asked him for W-9 forms for all of his contractors so she could prepare their 1099-NEC forms. He hadn’t collected any information for any of them. He had names and phone numbers. Which is not enough.

When 1099 Reporting Kicks In

Here’s the deal: If you pay independent contractors $600 or more during the year (see below for changes to 2026 reporting), you may have to issue form 1099-NEC to report payments for services performed for your trade or business. How do you know who needs to receive a 1099? The IRS guidelines state that if the following four conditions are met, you must generally report a payment as non-employee compensation.

You made the payment to someone who is not your employee.
You made the payment for services in the course of your trade or business.
You made the payment to an individual, partnership, estate, or in some cases, a corporation.
You made reportable payments to a payee that total the threshold amount or greater during the year. Which is $600 for 2025. (An Important Note: The new $2,000 threshold signed into effect by the OBBB starts in 2026 for payments made after December 31, 2025. Don’t let rumors fool you—keep collecting those W-9s and issue 1099s for $600+ payments this year.)

To correctly issue 1099 forms to your contractors, they will need to fill out a W-9 — the form that gives you their name, address, and taxpayer identification number (SSN or EIN). Jake didn’t know this, so he was missing the one thing he needed most — their tax IDs.

The January Headache

Instead of kicking off the new year with fresh projects, Jake spent hours chasing down contractors. He called. He texted. He left message after message. Some replied right away — but others had new phone numbers, moved away, or just vanished , taking Jake’s peace of mind with them. The IRS 1099 filing deadline was fast approaching, and Jake couldn’t complete half of his forms.

There are two big issues when you pay contractors without getting a W-9:

Issuing the 1099 — the problem everyone knows about. Without the contractor’s SSN or EIN, you can’t correctly issue a 1099, and the IRS may fine you for missing or incorrect forms.
Backup Withholding — the problem no one talks about. And this one can cost you money.

The Backup Withholding Trap

Here’s what the IRS expects if you make payments to a contractor that are equal to or greater than the $600 threshold:

Make sure you have the contractor’s name, address, and Tax Identification Number on a form W-9. This ensures you have everything you need to issue Form 1099.
If you don’t have the contractors’ Taxpayer Identification Number, you must withhold 24% of their payment and send it to the IRS. This is called backup withholding . This is a very common area of non-compliance. The law (IRC 3406(a)(1)(A)) states backup withholding is required if the payee fails to furnish his Tax Identification Number to the payor.

Let’s put this in Jake’s world. Jake paid one of his missing contractors $1,000 for some deck work. Since he never got a W-9 he should have withheld $240 (24%) and paid the contractor $760. The $240 would have been sent to the IRS. In this scenario, that $240 is not Jake’s money, it was the contractors, and Jake would be paying the tax on behalf of the contractor.

But, here is the bad news. When the IRS reviews Jake’s filings and notices the missing forms or unreported payments, they will assess that tax against Jake, not the contractor. That means Jake could be on the hook for that $240, plus penalties and interest.

The Cost of Procrastination

By the time Jake finally tracked down a few of his contractors, the filing deadline had passed. He ended up filing some 1099s late, paying penalties, and still couldn’t report the payments for the ones who disappeared.

And the worst part? All of it could have been avoided with five minutes of paperwork before cutting that first check.

Jake’s New Rule (It Should be Yours Too)

Now, Jake won’t let anyone lift a hammer until he gets their W-9 . His new motto: “No W-9, no pay.” If you pay contractors, learn from Jake’s mistake:

✅ Always collect a W-9 before making the first payment.
✅ If you don’t have one, start backup withholding (24%) AND pay that to the IRS.
✅ Remember, if you skip both, the IRS may come after you , not the contractor.

Moral of the story:
Paperwork may not be fun, but it’s a whole lot easier than trying to hunt down missing contractors in January.

How can KAC Consulting, Inc. help?

If you would much rather focus on the parts of your job that you love most, or you need help with bookkeeping and compliance, please contact us today and let's see how we can work together!

Simplify Payroll with Gusto and Our Expert Support

Thu, 06 Nov 2025 17:11:54 GMT

Managing payroll can feel overwhelming for small business owners. Between tracking hours, filing taxes, and staying compliant, it’s easy to lose valuable time. That’s why we partner with Gusto, a modern payroll platform designed to make the process simple and stress-free.

Gusto automates the hard parts of payroll. It syncs employee hours, calculates taxes, and files forms automatically. You can run unlimited payrolls without extra fees and even customize pay schedules for different employees. Everything is handled in minutes, so you can focus on growing your business instead of crunching numbers.

Why Gusto?

Gusto makes payroll and HR simple, fast, and affordable:

Finish payroll in minutes – Employee hours sync automatically, and taxes/forms are filed for you.
Unlimited payroll runs – Pay weekly or customize schedules at no extra cost.
Integrated time tracking & PTO – No more spreadsheets!
Workers’ comp made easy – Pay-as-you-go options, no lump sums.
Beyond payroll – Health insurance, 401(k), and other benefits in one platform.
No hidden fees – Big company service at a small business price.

Benefits Your Team Will Love

Beyond payroll, Gusto offers benefits your team will appreciate. Health insurance, 401(k) plans, and workers’ compensation are all integrated into one easy-to-use dashboard. Employees can manage their benefits online, request time off, and access important documents without piles of paperwork

Health plans tailored to your budget.
Automatic syncing of benefits and payroll.
Paperless onboarding and HR tools.
Employee perks like Cashout for unexpected expenses.

Ready to Get Started?

We offer two ways to get started. If you want a hands-off approach, let KAC and Gusto manage things for you. Our team and Gusto will ensure compliance and accuracy for your payrolls! Do you prefer to do it yourself? Use our referral link to sign up for Gusto and enjoy all the features directly.

Option 1: Let KAC Consulting, Inc and Gusto handle everything for you.

We’ll manage your payroll and HR so you can focus on growing your business. *
�� Contact us here or call us: 210-988-2841 to learn more.

Option 2: Prefer to do it yourself?

Sign up for Gusto using our referral link and enjoy all the benefits. Plus, once you pay your first invoice, you will receive a $100 Visa gift card. *

�� DIY with Gusto Payroll Referral Link

*And yes, KAC Consulting, Inc. earns a little something too.

Mon, 03 Nov 2025 17:45:00 GMT

KAC Consulting, Inc: The Founder’s Story

My journey into business began in the most unglamorous of settings: my parents’ sheet metal equipment repair and sales shop. The place was always humming with the clang of metal, the smell of oil, and the steady rhythm of hard work. My dad poured everything he had into that business—arriving early, staying late, fixing machines, and helping customers. My most vivid memory is of my dad in his sweat-stained coveralls, working to fix a customer’s machine or track down a part.

But like so many small business owners, he struggled with the business side. He was incredible with his hands – he could fix anything - but not so much with the numbers. He’d discount fees for friends, undercharge for repair work, and only made modest 10-15% commissions on equipment sales. Money was always tight—we lived the real middle-class struggle.

As a kid, I’d spend summers typing invoices on an old typewriter and posting accounts receivable cards. I knew a debit from a credit by the time I was in middle school. My mom taught me how to balance the bank accounts to the penny, and I saw firsthand how hard it was to keep a small business afloat, much less make money and save for the future. I saw the difference between reality and perception. People often think that business owners are raking in money and calling the shots. But what I saw was the opposite. My parents worked harder than anyone I knew, yet financial security was always just out of reach. That experience planted a seed in me. I became convinced that somewhere in those numbers, there must be a better way—a secret to making business less of a struggle.

Fueled by that curiosity, I built a career in bookkeeping and eventually joined a CPA firm. But I remember one quiet afternoon in that office, surrounded by tax files, when the truth landed hard: preparing tax returns and summarizing the past was important, but it didn’t actually help small business owners move forward. I wanted to do more—help them understand their finances, make smarter decisions, and change the trajectory of their businesses.

At the same time, I was navigating a rough period in my personal life, searching for a new sense of purpose and fulfillment. That’s when I decided, in 2013, to step out on my own and start KAC Consulting Inc, with the mission to truly support small business owners the way my parents once needed.

In the early days, I hoped my daughter would join me, but she was sure that bookkeeping and tax work weren’t for her. However, as the business grew, I needed help with data entry from time to time, and she stepped in. What began as reluctant assistance grew into remarkable talent—she developed an incredible knack for untangling complex bookkeeping puzzles and is now our go-to expert for clean-ups. Watching her find her confidence and shine in this work makes me incredibly proud. Working alongside my daughter, my son-in-law, and a close friend, we’ve become a true family business—one where every client is known by name and story.

Our client base was diverse at first, because the language of numbers is universal. But when the pandemic hit, it was our restaurant clients who most captured our hearts. We watched as they faced daunting challenges—closures, uncertainty, and an ever-changing landscape. Their resilience was inspiring. The owners and operators who could read their numbers, who saw the story in their books, pivoted quickly and survived. We were able to support them in their toughest moments as clean, accurate bookkeeping became their lifeline—allowing them to quickly apply for government programs, access critical relief, and most importantly, regain hope. Our mission came into focus: we wanted to do everything we could to help restaurants not just survive but thrive.

At KAC Consulting, numbers aren’t just something that happen to you—they’re the story you get to write. Our mission is to help business owners, especially in the restaurant and hospitality industry, find clarity and confidence, and build a future they are truly proud of. As a family, as teachers, and as partners, we’re here to help you turn your numbers into your next chapter—one filled with resilience, growth, and peace of mind.

Choosing the Right Tax Preparer: Are all Tax Preparers the Same?

Mon, 03 Nov 2025 06:00:27 GMT

Tax season is like finals week for adults—stressful, confusing, and full of paperwork. But don’t worry, you don’t have to go at it alone. There are several types of tax professionals out there, each with different qualifications and specialties. Whether your tax situation is simple or complex, understanding who does what can help you choose the right person for the job.

Tax season is like finals week for adults—stressful, confusing, and full of paperwork. But don’t worry, you don’t have to go at it alone. There are several types of tax professionals out there, each with different qualifications and specialties. Whether your tax situation is simple or complex, understanding who does what can help you choose the right person for the job.

Enrolled Agents: The Tax Law Nerds

Enrolled Agents (EAs) are licensed by the IRS and specialize in tax matters. They’ve passed a tough 3-part exam and are required to stay up-to-date with continuing education. EAs can represent you in front of the IRS for audits, appeals, and collections. If you own a business or have a complicated return, an EA is a great choice for expert guidance and full representation.

Certified Public Accountants: The Mathletes of Finance

Certified Public Accountants (CPAs) are licensed by state boards and trained in accounting, finance, and tax. CPAs also have unlimited rights to represent you before the IRS, making them a solid option for complex financial situations.

Tax Attorneys: Legal Eagles

Tax attorneys are lawyers who specialize in tax law. They’re licensed to practice by state bar associations and can represent you in legal matters involving the IRS. If your tax issues involve legal disputes, estate planning, or business structuring, a tax attorney can provide the legal expertise you need. Also of note is that a United States Tax Court Practitioner (USTCP) is the only non-attorney who can represent taxpayers in US tax court.

Representation before the IRS: Why it matters

Per the IRS, “Attorneys, CPAs, and enrolled agents continue to be the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals. Attorneys, CPAs, and enrolled agents continue to be the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals.” ( Annual Filing Season Program | Internal Revenue Service)

AFSP Participants: Trained and Reliable

The IRS offers the Annual Filing Season Program (AFSP) to encourage education among non-credentialed tax preparers. Those who complete the program receive a certificate and limited representation of rights. They’re a good fit for straightforward returns and offer a level of verified training that can give you peace of mind.

PTIN Holders: Entry-Level Preparers

Anyone who prepares taxes for pay must have a Preparer Tax Identification Number (PTIN). However, not all PTIN holders have formal training or credentials. They can prepare your return, but they can’t represent you before the IRS. If your return is super simple and you just want someone to double-check your math, this might be enough—but ask questions to make sure they know their stuff. And if they want you to pay them but they do not have PTIN, DO NOT USE THEM! Run Away!

Where is KAC Consulting, Inc. in this lineup?

We have two Enrolled Agents on staff! Cindy has been an enrolled agent for more than 18 years and has been in the field for more than 25, so she has the experience and ongoing training to help you. Kaitlyn has been around taxes for 10 years and was just credentialed as an EA in 2025. We also have a team member who is an AFSP participant.

Rest assured, we know taxes, and we are constantly learning as tax law changes to make sure our clients stay compliant and maximize their tax savings. We also provide bookkeeping and advising services because our goal is to not just see you once a year at tax time, but to work with you and your business throughout the year to keep your books in tip-top shape and hopefully help you do some tax planning.

By doing so, we hope to help make tax season less stressful while helping you grow your business. Contact us today to schedule a consultation to see how these tax nerds can be of help!

What to Watch Out For When Choosing a Tax Preparer

Mon, 27 Oct 2025 05:00:32 GMT

Picking someone to do your taxes isn’t just about saving time—it’s about making sure everything is done right, so you can avoid costly mistakes or even fraud, and maybe even score some extra savings! Just because someone claims to be a tax pro (even if they have a fancy office with a potted plant) doesn’t mean they’re actually qualified. So, before you hand over your personal details or hit “send” on your return, know what red flags to look for

First things first: If someone is charging you to prepare your taxes, they need a special ID called a Preparer Tax Identification Number (PTIN) from the IRS. They must put this PTIN and their signature on your tax return. If a preparer hands you a finished but unsigned return and says, “Just sign here and say you did it yourself,” that’s a huge red flag. It’s like someone installing your brakes but not wanting to put their name on the job. Something’s probably not right.

You have a right (and a duty) to make sure your preparer signs the return and puts their PTIN on it. This isn’t just a suggestion—it’s the law. Never let someone else prepare your return unless they’re willing to take responsibility and sign their name.

Don’t forget: Even if someone else does your taxes, you’re still the one responsible for what’s on your return. If there’s a mistake, the IRS comes looking for you—not your preparer. So, take a good look at your return before you sign it. If something looks weird, ask about it!

Watch out for more warning signs. If a preparer promises you a giant refund before they even look at your papers, or says their fee depends on how big your refund is, proceed with caution. That’s not just sketchy—it’s against the rules. Also, if they refuse to give you a copy of your return, or (believe it or not, this happens) want your refund sent to their bank account instead of yours, run the other way. Scammers are always coming up with new ways to trick people, so stay alert.

Do some homework before you choose a tax preparer. The IRS has a Directory of Federal Tax Return Preparers where you can check out credentials. You can also see if your state has a licensing board or any complaints against the preparer.

Professionalism matters. Make sure your preparer has a secure way to handle your personal info. Whether they keep paper files under lock and key or use secure computer systems, your privacy should always come first.

Good communication is a must. Your preparer should be open to your questions and able to explain anything you don’t understand. There’s no such thing as a dumb question when it comes to your taxes—after all, you’re the one signing that return!

Don’t leave empty-handed. Always get a copy of your completed, signed return. You’ll want it for your own records—and if you ever get audited, you’ll be glad you have it.

Stay tuned! Next month, we’ll break down the different types of tax preparers and explain how each one can help with your specific needs. Making the right choice is easier when you know your options!

Tax Planning for Restaurants: Don’t Leave Money on the Table – How the FICA Tip Credit and Other Strategies Save You Thousands

Thu, 23 Oct 2025 18:10:52 GMT

In this guide, we’ll break down what every restaurant owner needs to know about two key tax credits you may be missing. Read on to make sure you’re not leaving money on the table.

If you own or operate a sit-down restaurant, chances are you are laser-focused on daily challenges: labor costs, menu pricing, and staying compliant with regulations. But when it comes to tax planning, many operators are missing out on substantial savings simply because they don’t know what credits are available—especially the powerful (and often overlooked) FICA Tip Credit.

Understanding Tax Credits: The Basics

What Is a Tax Credit and Why Does It Matter?

A tax credit is a direct reduction of your tax bill—dollar for dollar. Unlike deductions (which reduce taxable income), credits reduce your tax liability directly. For restaurants, these can add up to thousands of dollars in annual savings.

Key Credits for Restaurant Owners

FICA Tip Credit : A federal credit for the employer’s share of Social Security and Medicare taxes paid on employees’ tip income.
Work Opportunity Tax Credit (WOTC) : A credit for hiring employees from targeted groups (e.g., veterans, long-term unemployed).

The FICA Tip Credit: The Hidden Gem

What Is the FICA Tip Credit?

If your employees earn tips—as most servers and bartenders do—you’re required to pay the employer’s share of FICA (Social Security and Medicare) taxes on those tips, even though you don’t directly receive that income. To help offset this cost, the IRS offers the FICA tip credit .

Who qualifies?

Restaurants where tipping is customary and employees report tips
You pay the employer portion of FICA taxes on those tips

How Does It Work?

You pay : Your share of FICA taxes on reported tips.
You claim : A credit for the amount of FICA taxes paid on tips. If your employees’ wages and tips meet or exceed minimum wage, you can typically claim a tax credit for FICA taxes on tips exceeding minimum wage.

Example Calculation:

Let’s say that your employees reported $200,000 in tips in the calendar year. The employer portion of FICA tax on those tips is $15,300, which you pay in as payroll tax. If you pay your employees at least minimum wage, then your FICA tip credit would be the entire $15,300, and you can use it as a dollar-for-dollar reduction of your income tax.* However, if you pay your servers the minimum wage for tipped employees of $2.13 an hour, you must calculate the dollar amount of tips that brings the hourly wage up to standard minimum wage. In Texas, the minimum wage is currently $7.25 per hour. The difference of $5.12 per hour would be ineligible for the FICA tax credit. Let’s say that the tips that the non-qualified tips accounted for one third of the total tips paid ($200,000 x .33 = $66,000). The tip credit can then be taken on $134,000 of tips ($200,000 - $66,000 = $134,000), resulting in a tax credit of $10,251.

Common Reasons Restaurants Miss Out

Not tracking or reporting tips accurately
Setting up the payroll system incorrectly
Not talking to your tax professional about it, or worse yet, using a tax professional who does not understand the credit
Assuming only large restaurants qualify

Actionable Steps: How to Capture the FICA Tip Credit (and Other Tax Benefits)

1. Track Tips Accurately

Require employees to report all cash and charged tips daily.
Implement a system where employees are required to report (as required by the IRS)
Use integrated POS systems (e.g., Shift 4, Toast, Square, Union) for automatic tip recording.

2. Work With Your Payroll Provider

Ensure tip income is properly reported on pay stubs and payroll tax filings.
Confirm your payroll software or provider is calculating the FICA tip credit eligibility each period.

3. Inform Your Tax Preparer

Communicate that you want to claim the FICA tip credit.
Provide detailed tip and wage records for the tax year.

4. Stay Audit-Ready

Retain daily tip reporting logs, payroll records, and related documentation for at least 4 years.
Review IRS Form 8846 (Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips) annually with your tax professional.

5. Review Other Credits Annually

Ask your tax professional to review eligibility for the Work Opportunity Tax Credit and any relevant state credits during your tax planning session.

Work Opportunity Tax Credit (WOTC)

What is the WOTC?

A federal tax credit is available to employers to incentivize them to hire and retain employees from 10 designated groups:

Long-term family assistance recipient,
Qualified recipient of Temporary Assistance for Needy Families (TANF),
Qualified veteran,
Qualified ex-felon,
Designated community resident,
Vocational rehabilitation referral,
Summer youth employee,
Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient,
SSI recipient, or
Qualified long-term unemployment recipient.

Although the WOTC is set to expire on December 31, 2025 (meaning only employees hired before December 31st would qualify), we are watching for an extension of this tax provision. Stay tuned.

How does it work?

The WOTC is equal to 40% of up to $6000 of wages paid (maximum credit of $2400 per employee) to an individual who is in their first year of employment, is certified by a local agency (in Texas, the Workforce Commission), and performs at least 400 hours of service for the employer. Certain other restrictions apply.

Actionable steps to qualify for the credit

On or before the day that an employment offer is made, the employer and the job applicant must complete Form 8850, so make this part of your application process.
Within 28 calendar days of the employee’s start date, submit the Form 8850 to the state agency that certifies WOTC qualification (in Texas, the Texas Workforce Commission)
Communicate with your payroll provider to ensure wages and hours worked are properly tracked for qualified employees
Following receipt of certification form from the local agency, file form 5884 with tax return to take the tax credit*

Don’t Let Tax Credits Slip Through the Cracks

Every dollar you save in taxes is a dollar you can reinvest in your restaurant, your team, or your own peace of mind. Many restaurant owners are surprised at how much the right tax planning can help their business thrive.

Don’t wait until tax season—take action now:

Review your tip tracking and payroll setup
Ask your bookkeeper or tax professional specifically about the FICA tip credit WOTC

*Note: If your restaurant is operating under S-Corporation or Partnership status, the tax credits typically flow through to the shareholders or partners, reducing tax at the individual level instead of the business level. You may want to review your business entity structure with your tax professional. There are many considerations that go into determining the best structure for your business. However, tax credits are one factor to consider.

Have questions or want to see if you’re maximizing your credits? Book a complimentary tax review with our experienced team today. Tax laws can be confusing, but you don’t have to navigate them alone. Let’s make sure you keep every dollar you’ve earned.

IRS to End Paper Refund Checks—Here’s What You Should Know

Thu, 16 Oct 2025 21:08:07 GMT

You probably have been receiving your refund by direct deposit; but just in case you have not, please read on!

The IRS recently announced that starting September 30, 2025, it will begin phasing out paper tax refund checks for individual taxpayers. If you’ve been receiving your refund by mail, now’s the time to prepare for a switch to direct deposit or another electronic payment method.

This change is designed to make refunds faster and more secure. Direct deposit is not only quicker—it’s also much safer. According to the IRS, paper checks are 16 times more likely to be lost, stolen, or compromised compared to electronic payments.

Most taxpayers already use direct deposit, but if you don’t, it’s easy to get started. You’ll need a bank account or a prepaid debit card with routing and account numbers. Helpful resources are available at FDIC.gov/GetBanked and MyCreditUnion.gov to guide you through the process.

The IRS understands that not everyone can easily make the switch. If you’re unbanked, living overseas, or facing unique personal circumstances, exceptions will be available. More details are expected as the transition moves forward.

This update is part of a broader effort to modernize how the government handles payments. While it’s a positive step for most, it’s important to be ready before the next tax season begins.

Are you tired of trying to keep up with ever changing tax law for your business and personal tax filings? Contact us to see how we can help your business thrive and hopefully keep (or get) a little bit of money back in your pocket

Overcoming Common QuickBooks and Xero Mistakes

Wed, 15 Oct 2025 16:30:00 GMT

You finally clicked the box to reconcile your bank account in your bookkeeping software when the dreaded alert shows up: “The ending balance does not match.” What do you do?

Navigating accounting software, such as QuickBooks and Xero, can be challenging, especially for small business owners who juggle multiple responsibilities. Here are some of the most common mistakes and practical steps you can take to avoid them.

1. Not Reconciling Accounts Regularly

The Issue:

Failing to reconcile accounts consistently can lead to discrepancies between your bank statements and your accounting software, resulting in inaccurate financial data.

What You Can Do:

Set a calendar reminder to reconcile your accounts monthly.
Compare your bank statement line by line with your accounting software’s transactions.
If a discrepancy is found, review each transaction for missing or duplicated entries, and correct them as needed.

2. Incorrect Categorization of Transactions

The Issue:

Misclassifying transactions can distort your financial reports and may have tax implications.

What You Can Do:

Review your chart of accounts and ensure you understand each category.
When entering transactions, double-check the category before saving.
Run periodic reports (such as a general ledger report) and scan entries that appear out of place or seem unusually high or low.
Utilize bank rules in your software to automate frequent, recurring transactions, but review these rules regularly to ensure accuracy.

3. Duplication Errors in Accounting Software

The Issue:

Duplicate transactions, often from manual entry and automatic bank feeds, can inflate expenses and skew financial data.

What You Can Do:

Before saving imported bank feed transactions, review for potential duplicates.
Regularly scan transaction lists for duplicate amounts and dates.
Use built-in tools in QuickBooks or Xero to search for and merge duplicate entries.
Periodically run a data audit to ensure accuracy.

As you can see, there’s a lot you can do as a business owner to take control of your books and avoid common QuickBooks and Xero mistakes. However, if you find these processes overwhelming or want to ensure your records are error-free, KAC Consulting Inc is ready to help you achieve accurate, reliable bookkeeping and provide guidance so you can focus on what you do best. Contact us today to learn more!

Recent Tax Court Case: Business Losses Denied—What Business Owners Can Learn

Wed, 01 Oct 2025 08:30:25 GMT

Background
Wesley and Janet Young, an Oklahoma couple, owned and operated Pecandarosa Ranch, which combined pecan farming, raising livestock, horse activities, and events. Despite their busy efforts and substantial investment—including building an arena and maintaining a large property—they reported significant financial losses from the ranch for many years.

What Happened
The Youngs claimed the ranch was a real business, deducting all its losses from their other income on their tax returns. However, the IRS challenged their tax filings, arguing that the ranch wasn’t genuinely run to make a profit. The Tax Court agreed with the IRS and not only denied the loss deductions but also imposed penalties.

Key Lessons for Small Business Owners:

Show a Real Profit Motive:
The court looks at whether your activity is genuinely intended to make money. Things like detailed business plans, budgets, and regular reviews of your finances are strong evidence of a real business motive.

Keep Businesslike Records:
The Youngs used personal accounts and didn’t keep thorough up-to-date records for the ranch. For your business, use a separate bank account, maintain organized books (using tools like QuickBooks), and track your income and expenses carefully.

Separate Fun from Business:
If your business involves hobbies or things you enjoy (like sport or farming), be extra diligent. Personal enjoyment is fine, but make sure your operations, spending, and decisions focus on making money—not just having fun.

Sustained Losses Are a Red Flag:
Reporting losses year after year—especially if you also have outside income—can make the IRS skeptical. Occasional tough years are understandable, but without a clear path to profitability, you may not be able to deduct ongoing losses.

Professional Advice is Key, but Not a Cure-All:
Relying solely on tax preparers for filing returns doesn’t protect you if your business isn’t run for profit. Get professional advice on how to structure and operate your business before there’s a problem.

Bottom Line
Simply putting time and money into a business isn’t enough. To protect your deductions, run the operation in a genuinely businesslike way with a clear profit goal, strong records, and regular review of results.

Do you need help to make sure you are compliant with IRS regulations and maximizing allowable tax savings? Please contact us to see how KAC Consulting, Inc. can assist!

Summary based on Young v. Commissioner, U.S. Tax Court (2025)

New Catch-Up Contribution Rules: Why Payroll Setup Matters

Tue, 30 Sep 2025 20:20:52 GMT

If you or your employees are over age 50, you may be making “catch-up” contributions to boost retirement savings. But a key change is coming: for certain employees, those extra contributions will soon be Roth only—and that brings new payroll and tax planning considerations.

What’s Changing?

Starting January 1, 2027: Employees who earned more than $145,000 in the prior year must make their catch-up contributions as Roth (after-tax), not traditional (pre-tax).
Result: These contributions will no longer be tax-deductible—taxes are paid upfront, but withdrawals in retirement will be tax-free.
Threshold: The $145,000 limit is indexed for inflation and may rise over time

The Payroll Integration Issue

Many business owners use payroll systems like Gusto, ADP, or Paychex, but their retirement plan is managed by a separate third-party administrator (TPA). If your payroll isn’t fully integrated with your retirement plan, there’s a real risk that catch-up contributions might be misclassified, resulting in incorrect tax withholding and reporting.

Why Does This Matter?

If Roth catch-up contributions are processed incorrectly (for example, as pre-tax), employees could face tax headaches later—including amended returns or penalties.
The IRS is tightening the rules, so compliance will be even more critical starting in 2027.

What Should You Do?

Check your payroll setup: If your payroll provider and plan administrator are different, confirm that after-tax Roth catch-up contributions can be accurately tracked and reported.
Best practice: Have your tax professional review your payroll and retirement plan setup. We can help ensure your system is ready and avoid surprises down the road.
Communicate with your team: Make sure high-earning employees know these contributions will be after-tax and may affect their take-home pay and tax situation.
Plan for tax impact: Understand that you and your employees will not get a tax deduction for these catch-up contributions—review your tax plan accordingly.

Bottom line:

If your 401(k) or SIMPLE plan isn’t seamlessly linked with payroll, you will want to review your systems with a tax or payroll professional. Avoid costly mistakes and keep your retirement plan compliant as these new rules take effect.

Questions or need a payroll review? Contact us —we’re here to help you stay ahead of the changes.

Proven Cash Flow Strategies Every Texas Restaurant Owner Needs to Know

Thu, 25 Sep 2025 21:55:25 GMT

Many restaurant owners get into business because they love food, not finances. Without good finances, however, running your dream business becomes stressful and painful.

Imagine running out of cash before payroll clears the bank on Friday. If you’ve had this happen, or if you are scared of this happening, you’re not alone: 60% of restaurants face this problem every month. You don’t have to be one of them.

It doesn’t mean you have to undergo a complete overhaul of your processes or spend hours analyzing your finances. Implementing a few simple steps can go a long way to keeping your restaurant's cash flow positive.

For example, you could:

Regularly negotiate prices and payment terms with suppliers

So often we see restaurant owners who don’t have the time or energy to negotiate with suppliers. But this simple step is essential to keeping costs low and funds more accessible.

Offer limited-time specials to boost slow days

On weeks when you anticipate the cash to be tight, could you offer a limited-time special to boost traffic and sales? And piggybacking off the first step, can you communicate with your suppliers to see what they might be able to offer at a lower cost to make your special more profitable? Planning is crucial to make slow days great days.

Use tech tools for real-time financial visibility

The more tools you can use to automate daily tasks, the more time you can save. We love using programs like MarginEdge that sync and capture data automatically and help you pinpoint areas that need to be addressed quickly. Using tools like this is like having a digital personal assistant keeping an eye on things when you don’t have the time.

Let’s be honest, taking these steps won’t solve all of your problems, but they can be the bite-sized, manageable steps you can take to start to turn the ship around. Are you already taking these steps and still stressing about your cash flow? Are you ready for the intermediate or advanced steps to get your restaurant ship-shape? Are you tired of the ship references? Contact us for a free cheat sheet with additional steps!

Do you have a question you want us to write about? Please contact us today! Also, be sure to check out Margin Edge!

Case Study: How One Texas Eatery Turned a 1% Loss Into a 4% Gain—In Just Four Months

Thu, 25 Sep 2025 16:46:15 GMT

For many years a family-owned restaurant in Texas had been a cherished destination for both locals and travelers. But after the pandemic, everything changed. Food prices soared, labor costs rose, and fewer customers came through the door. Month after month, the owners watched their net margin slip into the red, losing 1% on every dollar. With each shift, uncertainty grew: not just for the owners, but for everyone on the team.

In the restaurant world, when business suffers, everyone feels it, from the kitchen to the dining room. Fewer guests can mean quieter nights, fewer shifts, and smaller tips. But when the restaurant thrives, so do the people who make every meal and every guest experience memorable.

That’s when the owners turned to our KAC advisory team for a new way forward

A Story of Small Changes, Big Impact

When we began working together, the restaurant’s challenges were clear: razor-thin margins meant that every penny mattered. Instead of promising dramatic overhauls (no, we didn’t tell them to put avocado toast on the menu), we focused on a simple philosophy: tiny gains in multiple places can add up to major results. And when the numbers increase, the whole team benefits.

What We Did: Step by Step Recovery

Know the Numbers:
We helped the owners dig deep into their financials, closer than a line cook eyeing the last slice of pie. Together, we tracked food and labor costs, delivery fees, insurance, and reviewed even the smallest line items. By reviewing these numbers line by line, we revealed where small, strategic cuts could be made. More importantly, we emphasized knowing the true cost of each plate (not just a gut feeling, but real, comforting data). Suddenly, decisions about what to promote or adjust became a lot less stressful—and a lot more profitable.

Adjustments for smart wins:
One surprising discovery: letting guests swap fries for other vegetables—without an upcharge—was quietly draining profits. The solution? A reasonable upcharge for those substitutions. It was like fixing a leaky faucet; a simple change that finally plugged a slow, steady drip from their margins.
We also spotted another culprit: inconsistent portion sizes. Those “generous” extra handfuls were costing more than anyone realized. So, we encouraged the team to “wow” guests with exceptional service and ambiance, not just more fries. And for those on the floor, we supported server training to help boost check averages and promote higher-margin items—after all, bigger checks can mean bigger tips, making every upsell a win-win.

Consistency:
Monthly advisory meetings kept everyone focused and accountable, ensuring those small victories didn’t get lost in the daily rush or the usual kitchen chaos. Instead of drowning in details, the owners could finally breathe and keep an eye on the big picture.

The Results

After four months of close collaboration, the numbers told a new story:

Before advisory services: 1% monthly net loss

After 4 months: 4% monthly net gain

That’s a 5% positive swing in net margin, a monumental difference in an industry where a single percentage point can mean the difference between closing and surviving. This turnaround gave the owners the breathing room, stability, and hope they needed to keep the doors open. The best part? When the business does better, everyone—from the kitchen to the dining room—gets to share in the success.

We’re still working with them, aiming for even bigger wins (and maybe a little more sleep at night).

How much money are you leaving on the table?

Step 1: Book a free advisory session today and get ready to reignite your restaurant’s profits.

Step 2: Download our Menu Cost and Profit Analysis tool

The Most Common Bookkeeping Mistakes Restaurants Make (And How to Avoid Them)

Thu, 21 Aug 2025 20:24:03 GMT

What you don’t know about your books can hurt you—badly.

Bookkeeping mistakes might seem small in the moment—but they can come with big consequences. Inaccurate categorization, overlooked transactions, or missing documentation can inflate income, understate expenses, or trigger compliance issues. For many restaurant owners, bookkeeping is an afterthought—pushed aside in the rush of daily operations or handed off without clear oversight. But neglecting the books doesn’t just mean missing a few tax deductions. It can lead to audits, penalties, and long-term cash flow problems that quietly eat away at profitability.

In this post, we’ll cover the 5 most common bookkeeping mistakes restaurants make —and how to avoid them with a few simple fixes.

Mistake #1: Failing to Track Inventory Accurately

Because restaurants deal with perishable goods and fast-moving stock, keeping a precise record of inventory can be difficult. Items can be lost to spoilage, theft, or simple counting errors, and many restaurants neglect to perform regular physical counts or reconcile actual inventory with theoretical levels based on sales and purchases. When inventory tracking is inaccurate, the cost of goods sold (COGS) becomes unreliable, leading to misleading profit margins. This can cause menu items to be priced incorrectly and may result in either excessive waste or stock shortages that hurt cash flow and customer satisfaction.

How to avoid it:

Implement robust inventory management practices that include regular physical counts and real-time tracking of waste and theft. Integrating inventory management software (like Margin Edge) with POS(point of sale) systems helps ensure data accuracy and improves cost control.

Mistake #2: Mixing Personal and Business Expenses

Blurring the lines between personal and business spending is one of the most common and risky mistakes restaurant owners make. Using the same bank account or credit card for both types of expenses creates messy records and makes it difficult to track true business performance. It also increases the chance of missing legitimate deductions or drawing unwanted attention during an audit.

How to avoid it:
Keep separate bank accounts and credit cards for business use only. If you accidentally use a personal account for a business expense, document it immediately and reimburse yourself properly. On the other hand, if you inadvertently use the business card for a personal charge, reimburse the business from your personal account. If this is happening because your business doesn’t have enough profit to pay you a reasonable salary, and you have trouble covering personal expenses without using the business accounts, talk to your accountant, bookkeeper or advisor about using a system like Profit First to get a handle on where the money goes.

Mistake #3: Poor Payroll Tip Tracking

Tips are a major component of compensation in the hospitality industry, but they can also be a major compliance risk if not tracked properly. Failing to report tips accurately may result in underpaid payroll taxes, incorrect W-2s, or even audits from the IRS or Department of Labor. Poor tracking can also lead to tension with employees when their reported earnings don't match what they received. Accurate tip tracking protects both your business and your team.

How to avoid it:
Use a payroll system that supports tip tracking (like Gusto or Paychex) and integrates with your POS system. Train staff on their legal obligation to report all cash and non-cash tips received in excess of $20 per month as required the the IRS. Require employees to report tips at the end of each shift. If you use tip pooling or sharing arrangements, first make sure that the arrangement complies with IRS and state requirements and then clearly document the policy. Reconcile employee tip reports with POS data to ensure accuracy and completeness. Include all reported tips in payroll calculations to ensure the correct withholding of FICA taxes and federal income tax. Accurately reflect tips on form W-2 boxes 1 and 7 as required by the IRS. If you have 10 or more employees, file the annual tip form 8027 by Febuary 28th. Document everything and keep records for at least four years.

Mistake #4: Not Budgeting for Seasonal Changes

Restaurants with seasonal business often fail to adjust labor budgets or schedules according to peak or slow periods, which can cause labor cost overruns during busy seasons or inefficiencies when business slows down. Without careful planning, restaurants risk cash flow problems that can jeopardize their financial stability.

How to avoid it:
Analyze historical data (this is where accurate record keeping is important) to identify peak and slow periods. Use POS reports to spot trends in customer counts, and sales volume. Create separate labor budgets for peak and off-peak seasons. Factor in anticipated changes in menu, hours of operation or special events. Include buffers in your budget to cover unforeseen spikes in demand (e.g. weather events, local festivals). Use forecasting tools to create dynamic schedules that match expected customer flow. Communicate seasonality to staff so they know in advance about potential changes in hours. Cross train employees to fill multiple roles, improving flexibility and reducing the need for hiring seasonal staff. Schedule a weekly or monthly review of labor costs and actual vs. Budgeted figures. Adjust staffing plans quickly if you notice discrepancies between forecasted and actual business activity.

Mistake #5: Not Using Restaurant-Specific Accounting Software

Generic accounting tools or spreadsheets typically lack integrations with point-of-sale (POS), payroll, and inventory management systems—essential components for the fast-paced restaurant environment. These tools often don’t support key functions like recipe costing, daily sales tracking, or labor cost monitoring, forcing restaurants to rely on manual data entry that is time-consuming and error-prone. Without these capabilities, restaurants lose visibility into item-level profitability and miss opportunities to optimize pricing or control expenses.

How to avoid it:

Leverage technology. Both Xero and QuickBooks can be enhanced by integrating with restaurant-focused solutions such as Margin Edge for inventory and recipe costing and payroll providers like Gusto or Paychex. For seamless sales tracking, QuickBooks and Xero connect efficiently with leading POS systems including Toast, Square, Clover, and Union. This integrated technology stack streamlines bookkeeping, eliminates manual data entry, and ensures real-time visibility into sales, costs, and payroll. By embracing these tools, restaurants can automate daily financial tasks, optimize pricing and labor, and ultimately make more informed business decisions. Technology is your friend—using the right software integrations not only saves time but also drives profitability and long-term success.

Conclusion: Clean Books = Peace of Mind + Profit

Bookkeeping might not feel urgent—until it is. Avoiding these common mistakes won’t just save you from stress at tax time; it will help you run a more efficient, profitable restaurant. When your numbers are clean, your decisions get sharper—and your business gets stronger.

✅ Want to be sure your books are in order? Use the list below: top 10 Bookkeeping Mistakes Restaurants Make (And How to Avoid Them)

�� 1. Not Tracking Inventory Costs Accurately

Why It’s a Problem: Inaccurate COGS and misleading profit numbers.
Fix It: Use tools or spreadsheets to track inventory consistently.

�� 2. Mixing Personal and Business Expenses

Why It’s a Problem: Messy records, missed deductions, audit red flags.
Fix It: Keep separate bank accounts and credit cards for business use only.

�� 3. Poor Payroll Tip Tracking

Why It’s a Problem: Risk of payroll tax errors, employee disputes, and non-compliance.
Fix It: Use a payroll system with built-in tip tracking; train staff to report daily.

�� 4. Misclassifying Expenses

Why It’s a Problem: Skews profit margins and leads to reporting errors.
Fix It: Create a clear chart of accounts and categorize consistently.

��‍♂️ 5. Doing Everything Yourself

Why It’s a Problem: Leads to errors, delays, and burnout.
Fix It: Delegate to a bookkeeper or review with a professional quarterly.

�� 6. Not Budgeting for Seasonal Changes

Why It’s a Problem: Labor cost overruns during busy seasons or inefficiencies with business is slow.
Fix It: Labor schedules should be adjusted periodically based on trends to maintain efficiency.

�� 7. Not Reconciling Bank Accounts Monthly

Why It’s a Problem: Leads to inaccurate financials and missed transactions.
Fix It: Reconcile all accounts monthly in your bookkeeping software.

�� 8. Ignoring Cash Flow Statements

Why It’s a Problem: Can be profitable on paper but cash-poor in reality.
Fix It: Monitor cash flow monthly—know what’s coming in and going out.

�� 9. Missing Sales Tax Payments or Filings

Why It’s a Problem: Late fees, penalties, and legal trouble.
Fix It: Automate filings or set calendar reminders for deadlines.

�� 10. Not Using Restaurant-Specific Accounting Software

Why It’s a Problem: Loss of visibility into item-level profitability and missed opportunities to optimize pricing or control expenses.

Fix It: Use systems to reduce manual errors and provide actionable financial insights.

✅ Pro Tip: Clean books = better decisions, higher profits, and peace of mind.

Don’t wait until mistakes turn into costly problems— contact us today for expert support, tailored solutions, and the peace of mind that comes from having your books in order. Let’s help your restaurant thrive!

The Hidden Dangers of Using Financial Software

Thu, 21 Aug 2025 20:06:11 GMT

Accounting tools like QuickBooks and Xero can be incredibly helpful, streamlining tasks such as transaction imports, invoicing, and reconciliation. But blindly relying on them is a risky move. Software can generate duplicate entries, misinterpret transaction data, or misclassify items, leading to inaccurate financials if not regularly reviewed.

Jamie made this mistake. She owned a cozy little coffee shop called Bean There . After months of juggling spreadsheets, Jamie decided it was time to streamline things. She signed up for a slick-looking bookkeeping software that promised automation, tax readiness, and "zero stress accounting."

Jamie signed up online and read through a couple of “How-To” articles on getting started with the program. It seemed self-explanatory, so she didn’t pay for any training. She connected her bank, set up a few processes, created some automations and let the program do its work.

At first everything seemed great. Jamie assumed the automation meant she didn’t need to check anything manually. She trusted in the software. The only problem was that she didn’t know enough about how the software operated, and what was happening behind the scenes, to be able to spot errors.

What Jamie found at the end of the year caused stress and extra time to clean up.

Misclassified Expenses: The software auto-categorized purchases — but it mistook wholesale bean orders for office supplies. This threw off budgeting and Cost of Goods Sold.
Sales Tax Confusion: Jamie set up the software to file sales tax reports monthly. The only problem was she didn’t understand the process, and she classified some items as non-taxable that should have been taxable. When tax time came, she realized there were mistakes, and she got hit with penalties.
Bank Sync Errors: Midway through the year, a bank integration failed silently. The software stopped pulling transactions for three weeks. Jamie didn’t notice because everything looked fine. In reality, expenses and income were missing from the books.

What can you do to avoid these same issues? Take the time to learn how your software works, and how the actions you take may be tied to your financial statements. This will help reduce accidental mistakes.

How to Get Empowered with Knowledge:

Read the Help Articles and Updates
Familiarize yourself with how your tools categorize transactions, learn about logic flows, and examine auto-matching rules. If Jamie had taken some of the training courses offered when she signed up for her software she would have been able to catch her misclassified expenses sooner. I appreciate that Xero has not just help articles, but it includes discussions from other members of the Xero community sharing tips and ideas.
Adopt Spot Checks, Not Just Routines
Set aside time—weekly or monthly—to manually review your financial entries. Cross-check software entries against receipts, invoices, and bank statements to catch duplicates or missed items early. Pick random transactions each month for verification: did the purchase exist? Is the invoice real? If Jamie had this system in place those missing bank transactions would have been noticed.
Train Yourself and Your Team
Don’t just rely on software—understand how it works. Schedule training sessions and keep up to date with changes made in each software update. Regularly train staff on daily tasks, spot checks and common errors.
Ask For Help
When setting up her software to file sales tax reports, Jamie just used the steps she found on Google. But, you can’t believe everything you read, especially when it comes to your business’ finances. If Jamie had asked for some professional help she could have avoided penalties.

In the end, Jamie learned that bookkeeping software is a tool, not a solution. Automation helps, but without someone reviewing the numbers, even the smartest tech can create costly problems. Regular oversight, understanding, and well-structured workflows are essential. It’s the difference between blind trust and empowered financial control .

Don’t just trust automation—invest in your own understanding!

You have worked hard, so protect your profits and peace of mind. Schedule a training session or a check-in with a professional today , and turn your bookkeeping software into a true asset, not a hidden risk.

Where’s My Money? The Restaurant Owner’s Guide to Truly Understanding Cash Flow

Thu, 21 Aug 2025 18:29:38 GMT

The Tax-Time Gut Punch: Maria’s Story

Maria, like many Texas restaurant owners, worked tirelessly to make her Houston bistro a neighborhood favorite. Every Friday, she celebrated a week of busy tables, loyal regulars, and sometimes, even a little leftover brisket. When her accountant called at tax time and said, “Maria, you made a great profit this year!” her heart leapt. Finally, all that sweat and sacrifice had paid off.

But then she looked at her operating account—and saw only enough cash to cover a week of payroll. Worse, now she owed taxes on "profit" she’d never actually seen. “How could I owe taxes when my bank account is empty?” Maria asked, exhausted and confused.

If this sounds familiar, you’re not alone. This article will show you why cash flow is the real measure of your business’s health , and how, with just a few simple habits (and an easy-to-use cash flow spreadsheet), you can avoid Maria’s panic forever.

Profit Isn’t Cash: The Hidden Leaks in Your Bank Account

Profit and Loss (P&L) statements tell a part of your business story—but not the whole thing. Here’s why:

Profit is your sales minus expenses—on paper.
Cash flow is the actual amount of money moving in and out of your bank account.

Why’s there a difference? Where does the cash go?

Let’s break it down with examples every restaurant owner faces:

Key Takeaway:

You can show a healthy profit but have an empty bank account if these cash sinks aren’t monitored weekly.

The Emotional Cost: Why Restaurant Owners Lose Sleep

The real pain isn’t just the numbers—it’s what they do to you:

Stress: Can you cover payroll this week? Will you bounce a vendor check?
Fear: What if a slow weekend leaves you short?
Frustration: Why do you keep owing taxes when you never feel "profitable"?
Guilt or Shame: Afraid to admit you don’t have a handle on your finances?

You’re not bad at business. You simply need a better way to see where your money goes—giving you back control, peace of mind, and the confidence to make decisions.

Shifting from Rear-View to Real-Time: Why Weekly Tracking is Essential

Most restaurant owners get financial information too late—at tax time, or maybe monthly when the bookkeeper catches up. That’s like driving while looking only in the rearview mirror.

The solution? Track cash every week.

Here's what happens when you do:

You spot shortfalls before they hurt.
You build a cushion for slow seasons.
You make smarter decisions about hiring, marketing, and purchasing.
You stop fearing tax time because it never surprises you.

The Cash Flow Assistant: Your Restaurant’s Financial Copilot

To make this easy, we’ve created a practical, customizable tool: The Cash Flow Assistant.
It allows you to see, every week, exactly where your money is, where it should go, and how much is left in each important category.

How It Works: Step-by-Step Walkthrough

1. Customize Your Categories and Percentages

At the top of the tool, you’ll see categories such as:

Savings
Inventory
Fully Costed Payroll
CAM (Common Area Maintenance)
Advertising
Overhead
Debt Payments

Each category has a percentage.
These percentages represent how much of every deposit you want to allocate to each need. For example, if your weekly deposits are $10,000 and your “Payroll” percentage is 27.5%, the tool will set aside $2,750 for payroll automatically. Remember, your payroll as an owner should be included in this number. You are your most valuable employee.

Tip: Review your last year’s numbers and adjust the percentages to reflect your business needs. The sheet will warn you if the total exceeds 100%

2. Enter Your Daily Deposits

Every day (or at least every week), enter the total amount of money that hit your bank account from sales, catering, and other sources.

The tool will instantly allocate each deposit into the categories based on your chosen percentages.

3. Track Your Actual Expenses

As you pay bills—whether it’s to Sysco for groceries, payroll for staff, or rent to your landlord—enter each payment in the appropriate category for that day.

This running balance gives you immediate feedback on:

How much cash you have left overall.
How much is available in each category before you overspend.

4. Watch Your Running Totals

The far-right column always shows you your true cash position—updated live with every entry.

At the bottom of the sheet, you’ll see category-by-category totals, telling you exactly how much money you have left to spend in each category for the week.

Why This System Works

Visibility: Know at a glance if you can afford that extra produce order or need to hold off on marketing.
Discipline: Forces you to “pay yourself first” in savings, and to set aside for taxes before you spend a dime.
Customization: Adjust categories and percentages as your business evolves.
Simplicity: No advanced accounting degree required—just daily or weekly habit.

Case Study: Turning the Tide With Weekly Cash Flow Tracking

Let’s return to Maria. After adopting this system, she:

Realized payroll needs were higher in summer than winter, and adjusted percentages accordingly.
Found she was overspending on advertising some months and could cut back without hurting sales.
Built a small cash savings buffer for emergencies, which saved her during a surprise equipment failure.
Walked into tax time knowing exactly how much she owed, with cash already set aside.

The result? Maria slept better, felt proud instead of panicked, and finally enjoyed the fruits of her labor.

Your Weekly Cash Flow Checklist

(Use with the Cash Flow Assistant Sheet Format to create your own spreadsheet)

Each week:

Enter all sales deposits.
Update your actual spending in each category.
Review running totals to see what’s left.
Adjust category percentages as needed.
Look for trends: Is one category always running dry? Are you consistently under- or over-budget?
Transfer surplus (if any) to savings, or use it strategically (pay down debt, invest in marketing, etc.).
Celebrate your clarity—and take a deep breath!

Ready for Calm Instead of Chaos? Free Cash Flow Analysis for Texas Restaurants

If you’re tired of not knowing where your money goes, and want the same calm confidence Maria found, we’re here to help.

Book a FREE, one-on-one Zoom cash flow analysis.
We’ll walk you through your numbers, help you set up your Cash Flow Assistant, and give you tailored feedback on your unique business.

No pressure. No jargon. Just actionable insights.
Bring your questions, your fears, your stacks of receipts—let’s turn confusion into confidence.

Book your free analysis now! Click here to set up a meeting!

Don’t Wait for Tax Season. Take Control Today.

Every week you track cash is a week closer to full command of your business’s destiny. Imagine opening your bank app and knowing exactly:

Why every dollar is there
What it’s been assigned to
How safe your business really is

You deserve that peace of mind. Your employees, family, and customers are counting on your success.

Create your Cash Flow Assistant Spreadsheet, start your weekly habit, and let us show you how powerful clarity can feel.

Profit is great. But cash is king—and now you’re wearing the crown.

You’ve got this. And we’ve got your back.

The One Big Beautiful Bill Act (OBBB): What It Means for You and Your Business in 2025 and Beyond

Thu, 14 Aug 2025 22:29:47 GMT

OBBB at a Glance

Signed into law: July 4, 2025
Effective: Most changes roll out starting January 1, 2026 (with a few exceptions and temporary provisions for 2025-2028).

If you’ve been keeping one eye on the news and the other on your bank account, you might have heard about the One Big Beautiful Bill Act (OBBB)—Washington’s latest, and (dare we say) most headline-grabbing tax overhaul since the Tax Cuts and Jobs Act. If you’re wondering, “What does this mean for my wallet or my business?”—relax! We’re here to break it all down for you, with an eye for the details that matter most to individuals and small business owners.

Major OBBB Provisions: What Clients Need to Know

1. Tax Cuts for Individuals and Families

Tax Rates Stay Low : The TCJA individual tax brackets are now permanent.
Bigger Standard Deduction : The higher standard deduction isn’t going anywhere. If you hate keeping receipts, this is good news.
SALT Deduction Cap : If you do itemize, the State and Local Tax deduction jumps from $10,000 to $40,000 through 2029, which is especially good news for folks in high-tax states.

2. No Tax on Tips, Overtime, or Car Loan Interest (2025–2028)

No Tax on Tips : Beware – “No Tax on Tips” doesn’t really mean “no tax.” Servers, bartenders, valets—if your job comes with a tip jar, you can deduct up to $25,000 in tips received each year (phased out at higher incomes), for tax years 2025–2028. Heads up: You still have to report those tips on your W-2 —employers will now report both cash tips and your occupation. Social Security and Medicare tax still applies to all tips.
No Tax on Overtime : Employees can deduct up to $12,500 ($25,000 joint) in qualified overtime compensation. This is the overtime premium only (half-time pay). Must show your Social Security Number, and the deduction phases out for higher incomes. Again, Social Security and Medicare tax still applies.
No Tax on Car Loan Interest : Deduct up to $10,000 in interest per year for personal-use car loans (new vehicles only). This only applies to certain vehicles with final assembly in the US – so don’t go run out and buy a car without doing the research! Does not apply to business vehicles (those are still deductible as a business expense).
Note : These are temporary “freebies”—unless Congress acts again, they end after 2028.

3. Business Owners: Bonus Depreciation & Expensing

Full 100% Bonus Depreciation is Back—Permanently : Buy new or used business equipment? You can write off the full cost in the first year. No more phase-out, no more hair-pulling over depreciation tables. (But beware, this is for assets placed in service after January 19th, 2025 – why the arbitrary date….we don’t know.)
Section 179 Expensing : Maximum deductions raised to $2.5 million (now indexed for inflation).

4. R&D Tax Credit & Immediate Expensing

Section 174 “Fix” : You can now fully expense domestic R&D costs in the year incurred. No more five-year amortization headaches. This is a huge win for innovative small businesses.
Small Business R&D Credit : Expanded and simplified—don’t miss out if you’re developing new products, processes, or software.

5. Employee Benefits: Big (and Some Tricky) Changes

Paid Family Leave Credit : Now permanent. If you offer paid leave, you may qualify for a healthy business tax credit.
Employer-Provided Childcare Credit : Increased to 40% of qualified expenses (50% for small businesses), with a higher annual cap.
Flexible Spending Accounts (FSA) : The employee contribution limit jumps to $7,500.
Health Savings Accounts (HSA) : Now available with Bronze/Catastrophic plans from the health insurance exchange. This is a BIG deal.
Employee Fringe Benefits : If you’re an S-Corp owner, not all employee benefits apply to you. This is a great time to review your compensation and benefit structure. Some fringe benefits (like FSA/HSA) are still not available to S-Corp shareholder-employees above the 2% threshold. Plan accordingly—or let us help you plan!

6. Energy-Efficiency Credits: What’s Still Here?

Many clean energy credits (solar, electric vehicles, etc.) are being phased out or eliminated sooner than expected (some as early as September 30, 2025 – NEXT MONTH)
If you’re planning green upgrades or purchases, double-check the new rules (or ask us!).

7. Charitable Giving – Now for Non-Itemizers!

You can now deduct up to $1,000 ($2,000 joint) for charitable cash donations—even if you don’t itemize. Don’t forget to keep your receipts!

8. Depreciation, 1099s, and Reporting: Don’t Get Tripped Up

Depreciation : Many clients have already asked: “Can I still write off my new van in year one?” Yes! 100% expensing is back.
1099 Reporting : The $600 reporting threshold for 1099-NEC/MISC is still in effect for 2025. The new $2,000 threshold starts in 2026 for payments made after December 31, 2025. Don’t let rumors fool you—keep collecting those W-9s and issue 1099s for $600+ payments this year.

OBBB Frequently Asked Questions (FAQ)

Q: Will my taxes go up?
For most individuals and small businesses, OBBB extends or improves tax cuts, so your tax bill may go down—or at least, won’t go up due to expiring TCJA provisions.

Q: Is the SALT deduction cap gone?
Not gone, but raised to $40,000 through 2029. In 2030, it drops back to $10,000 unless Congress makes another change.

Q: Can I stop issuing so many 1099s now?
Not yet! The old $600 rule still holds for 2025. The higher $2,000 threshold doesn’t start until 2026.

Q: Can I deduct my business car loan interest?
Business vehicle interest is still deductible as a business expense. The new “no tax on car loan interest” is a personal deduction for new personal-use vehicles only, and only for 2025–2028.

Q: I own an S-Corp. Can I max out my FSA and HSA like my employees?
Not always. Special rules apply to S-Corp owner-employees (those owning more than 2%). Consult us before you set up new fringe benefits.

Final Thoughts: OBBB is Big, Bold, and…Complicated

The OBBB brings a mix of exciting opportunities and new complexity for both individuals and small businesses. Some provisions are permanent, others are short-lived. Some benefits are obvious, others come with strings attached (looking at you, S-Corp rules and reporting requirements).

Take Action: Let’s Make Your 2025–2026 Tax Plan a Big, Beautiful Success

Tax planning is more important than ever with the OBBB’s sweeping changes. Whether you want to optimize your business deductions, avoid 1099 surprises, or make the most of new benefits, our experienced team is here to guide you.

Schedule a tax planning appointment today and let’s build your roadmap to maximum tax savings and peace of mind.

(P.S. Know someone confused by tax law changes? Share this article or send them our way—because sharing knowledge is always deductible...at least, in spirit!)

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IRS Says I Owe Over $50,000 — What Happens Next?

A Guide for Business Owners Facing Serious Tax Debt

NOTICE: USPS Implements New Procedures That Can Affect Postmark Dates

You may have heard the buzz about some changes taking place in the United States Postal Service. On December 24, 2025, adjustments were implemented that could affect whether time sensitive items are considered to be mailed “on time”.

Why Waiting Until Tax Time Is Too Late

Have you ever said, or thought, “I will deal with the books at tax time”?

Year-End Financial Health Check: 5 Steps Every Small Business Should Take

Are you so glad the year is over? Are you completely burnt out, and you don’t even want to look at your P&L?

If you don’t want the coming year to mirror this last year, if you want to end next year feeling revived and excited instead of being worn out and generally disinterested then let’s go through this year end checklist together.

Let’s start a new habit.

The Truth About “Pennies on the Dollar” IRS Settlements

Budgeting for Slow Season: How to Survive the Slump

The Truth Behind ‘Zero Tax’: Strategy, Myth or Bad Math?

Is Your Menu Putting You Out of Business?

Before You Spend a Dime— Why Return on Investment Matters

Lock the Gate! Why Multi-Factor Authentication is Your Secret Weapon Against Hackers

When Bad Bookkeeping Triggers an IRS Audit: Lessons from US Tax Court

The W-9 Lesson: How One Business Owner Learned the Hard Way

Simplify Payroll with Gusto and Our Expert Support

Managing payroll can feel overwhelming for small business owners. Between tracking hours, filing taxes, and staying compliant, it’s easy to lose valuable time. That’s why we partner with Gusto, a modern payroll platform designed to make the process simple and stress-free.

KAC Consulting, Inc: The Founder’s Story

Choosing the Right Tax Preparer: Are all Tax Preparers the Same?

What to Watch Out For When Choosing a Tax Preparer

Tax Planning for Restaurants: Don’t Leave Money on the Table – How the FICA Tip Credit and Other Strategies Save You Thousands

In this guide, we’ll break down what every restaurant owner needs to know about two key tax credits you may be missing. Read on to make sure you’re not leaving money on the table.

IRS to End Paper Refund Checks—Here’s What You Should Know

You probably have been receiving your refund by direct deposit; but just in case you have not, please read on!

Overcoming Common QuickBooks and Xero Mistakes

You finally clicked the box to reconcile your bank account in your bookkeeping software when the dreaded alert shows up: “The ending balance does not match.” What do you do?

Navigating accounting software, such as QuickBooks and Xero, can be challenging, especially for small business owners who juggle multiple responsibilities. Here are some of the most common mistakes and practical steps you can take to avoid them.

1. Not Reconciling Accounts Regularly

2. Incorrect Categorization of Transactions

3. Duplication Errors in Accounting Software

Recent Tax Court Case: Business Losses Denied—What Business Owners Can Learn

New Catch-Up Contribution Rules: Why Payroll Setup Matters

If you or your employees are over age 50, you may be making “catch-up” contributions to boost retirement savings. But a key change is coming: for certain employees, those extra contributions will soon be Roth only—and that brings new payroll and tax planning considerations.

What’s Changing?

The Payroll Integration Issue ﻿

Why Does This Matter?

What Should You Do?

Bottom line:

Proven Cash Flow Strategies Every Texas Restaurant Owner Needs to Know

Many restaurant owners get into business because they love food, not finances. Without good finances, however, running your dream business becomes stressful and painful.

Case Study: How One Texas Eatery Turned a 1% Loss Into a 4% Gain—In Just Four Months

A Story of Small Changes, Big Impact

What We Did: Step by Step Recovery

The Results

How much money are you leaving on the table?

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The Most Common Bookkeeping Mistakes Restaurants Make (And How to Avoid Them)

What you don’t know about your books can hurt you—badly.

✅ Pro Tip: Clean books = better decisions, higher profits, and peace of mind.

The Hidden Dangers of Using Financial Software

Where’s My Money? The Restaurant Owner’s Guide to Truly Understanding Cash Flow

The Tax-Time Gut Punch: Maria’s Story

Profit Isn’t Cash: The Hidden Leaks in Your Bank Account

Key Takeaway:

The Emotional Cost: Why Restaurant Owners Lose Sleep

Shifting from Rear-View to Real-Time: Why Weekly Tracking is Essential

The solution? Track cash every week.

The Cash Flow Assistant: Your Restaurant’s Financial Copilot

Why This System Works

Case Study: Turning the Tide With Weekly Cash Flow Tracking

Your Weekly Cash Flow Checklist

Ready for Calm Instead of Chaos? Free Cash Flow Analysis for Texas Restaurants

The One Big Beautiful Bill Act (OBBB): What It Means for You and Your Business in 2025 and Beyond

OBBB at a Glance

Major OBBB Provisions: What Clients Need to Know

OBBB Frequently Asked Questions (FAQ)

Final Thoughts: OBBB is Big, Bold, and…Complicated

Take Action: Let’s Make Your 2025–2026 Tax Plan a Big, Beautiful Success

KAC Consulting Inc. – Small Firm, Big Expertise, Beautiful Results

The Payroll Integration Issue