Small Business

What the One Big Beautiful Bill Means for Your Business

November 7, 2025 by Nick Magone, CPA, CGMA, CFP®

The One Big Beautiful Bill (OBBB) legislation represents an overhaul of the federal tax landscape, introducing dramatic changes to taxes, credits and deductions that will impact taxpayers across all income levels. And everyone from entry-level employees to Fortune 500 CEOs will be affected.

The good news is that once you wrap your head around these changes, your business may benefit from opportunities to optimize your tax strategy. Here’s what you need to know:

Paid family and medical leave credit. Now a permanent credit, employers can choose between two methods for calculating the credit: a percentage of wages paid to qualifying employees during family and medical leave, or a percentage of premiums paid for insurance policies providing paid family and medical leave. Additionally, employers may now elect to include employees with at least six months of service (reduced from one year).
Employer-provided childcare credit. Effective in 2026, the OBBB increases the credit percentage for “qualified childcare expenditures” from 25% to 40% for regular businesses and 50% for eligible small businesses. The maximum credit is $500,000 ($600,000 for eligible small businesses). Beginning in 2027, all amounts are subject to annual inflation adjustments.
Employee exclusion for employer-paid student loans. The OBBB permanently extends the employee exclusion for qualifying employer student loan payments. Starting in 2026, the current $5,250 maximum exclusion amount will be adjusted annually for inflation.

What’s next?

Stay in the know as additional guidance and regulations are released, and reach out to the tax planning experts at Magone & Company to get your questions answered.

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your business situation.

Why Cyber Criminals Love Small Businesses (And How to Make Them Think Twice)

October 10, 2025 by Nick Magone, CPA, CGMA, CFP®

Remember the big Target data breach a few years ago?

Hackers didn’t just wake up one day and decide to attack the retail giant directly. Instead, they strategically planned and infiltrated a small HVAC contractor that serviced Target’s stores, using that access point to compromise over 41 million customer records.

Cybercriminals continue to view small businesses as stepping stones to bigger prizes — and your sensitive data makes your small business an attractive entry point.

The small business cybersecurity gap

Forty-seven percent of businesses with fewer than 50 employees have no cybersecurity budget. Even more alarming, 51% have no cybersecurity measures in place at all.

Small business owners wear many hats, juggling multiple responsibilities and often lacking the resources to stay on top of evolving security threats. Small businesses typically store valuable financial information — including tax records, employee data and customer payment details — while maintaining fewer security protocols than larger corporations.

When small businesses suffer breaches, the consequences ripple through the economy and impact countless livelihoods. Beyond the immediate financial losses, these attacks can force business closures, eliminate jobs and erode customer trust.

The good news? You don’t need a Fortune 500 budget to build a strong defense against cybercriminals. Check out 10 ways to help protect the sensitive data that your business needs to operate:

Maintain current software. Regular software updates are your first line of defense. Configure devices and applications to update automatically, ensuring you have the most updated security measures in place.
Implement strong authentication practices. Replace simple passwords with memorable passphrases that combine multiple unrelated words and symbols. Layer this protection with multi-factor authentication to make it as secure as possible.
Deploy anti-malware protection. Invest in reputable antivirus software and ad-blocking tools. These solutions actively scan for and neutralize threats before they can compromise your data.
Establish secure network connections. Utilize Virtual Private Network (VPN) services to encrypt your internet traffic, especially when accessing financial data remotely. This encryption makes intercepted data virtually unreadable to attackers.
Have backup systems in place. Maintain and secure backups of all critical documents and financial records. Store these backups on separate devices or in a cloud service that remains walled off from your primary systems.
Secure email communications. Since data often travels via email, implement encryption protocols and consider using secure file-sharing platforms for sensitive document transmission.
Limit access and permissions. Grant employees access only to the sensitive information necessary for their specific roles. Regularly audit these permissions, especially as employees move into new roles or leave the company.
Develop an incident response plan. In advance of a possible breach, make sure you have detailed procedures nailed down, including steps for containing threats and notifying impacted parties.

Turning knowledge into protection

Protecting your tax data is essential for small business survival. Be proactive in preparing your business for whatever the future may bring. Questions about how we protect our clients’ data? Don’t hesitate to reach out.

Breaking Down The One Big Beautiful Bill for Businesses

July 30, 2025 by Nick Magone, CPA, CGMA, CFP®

Recently enacted tax legislation known as The One Big Beautiful Bill was passed by Congress and signed into law on July 4, 2025.

This new legislation brings immediate relief in several key areas while creating strategic decisions that require prompt attention. Here’s a summary of the most critical provisions that may impact your business:

Research and Development (R&D) expensing. Businesses can once again fully deduct domestic R&D expenses in the year they’re incurred. Small businesses can amend 2022-2024 tax returns to claim immediate R&D deductions previously capitalized which may generate refunds and improve cash flow.

Large corporations cannot amend prior years but can take the full remaining deduction in 2025 or split it between 2025 and 2026.

Research credit coordination. New rules require choosing between claiming the full R&D tax credit or taking the full expense deduction, as you can no longer maximize both.

If you claim the Section 41 research credit, you must reduce your R&D deductions by the same amount. Alternatively, you can elect a smaller credit to preserve your full deduction.

Business interest limitation. The bill’s business interest deduction now limits returns to the more favorable 30% of EBITDA calculation, reversing the restrictive EBIT-based rules that had been in effect since 2022. This change is permanent, eliminating previous uncertainty about future policy shifts.

The key improvement is that depreciation and amortization are back in the calculation base, increasing the threshold for allowable interest deductions. This benefits manufacturers and other capital-intensive businesses that were hit hard by the previous rules.

But there’s one important clarification: Capitalized interest (interest added to asset costs rather than immediately deducted) must now be included in the limitation calculation, with the 30% cap applied to capitalized interest first before current deductible interest.

Foreign-derived income changes. The foreign-derived income deduction is being scaled back in two phases. The deduction rate drops permanently from 37.5% to 33.34% for tax years beginning after 2025. And starting mid-2025, income from selling intangible property and depreciable assets won’t qualify for the deduction, and only expenses directly tied to qualifying foreign income can reduce the benefit.

The 100% bonus depreciation is back for all qualifying equipment and property purchased after that date. This reverses the phase-down schedule that reduced the benefit to 60% in 2024 and 40% in early 2025. The reinstatement applies to plant, equipment and tangible personal property, including both new and used assets. There’s also a special elective provision for manufacturing and refinery property placed in service through 2031, giving these businesses additional flexibility in timing their depreciation benefits.

International tax changes. Starting in 2026, Global Intangible Low-Taxed Income (GILTI) rules are being renamed Net CFC Tested Income (NCTI), affecting businesses with foreign operations.

The deduction rate drops from 50% to 40%, which increases the effective tax rate from approximately 13.1% to 12.6% (around 14% when factoring in foreign tax credits). The previous exclusion for tangible asset investments is eliminated, meaning all foreign income is now subject to tax under these rules.

In addition, the foreign tax credit rate increases from 80% to 90%, and rules for allocating deductions against this income are being tightened to exclude interest and R&D expenses from the calculation base.

Next steps for your business

The One Big Beautiful Bill offers substantial tax relief, but maximizing these benefits requires proactive planning and strategic decision-making now. The professionals at Magone & Co can help. Reach out to our knowledgeable team or give us a call today at (973) 301-2300.

W-2 or 1099? Navigating Worker Classification with Confidence

July 4, 2025 by Nick Magone, CPA, CGMA, CFP®

Are you classifying your workers correctly as W-2 employees or 1099 independent contractors? This distinction carries costly legal implications and tax consequences that impact both your business and your workers.

Here’s a breakdown of the differences and why they matter to your bottom line.

The basics: W-2 vs. 1099

A W-2 employee works directly for your company under your control and direction. You determine when, where and how they perform their duties. On the other hand, a 1099 contractor operates as their own business entity, providing services to your company while maintaining autonomy over how they complete their work.

But how does the IRS determine worker status? When evaluating whether someone is an employee or independent contractor, the IRS analyzes three critical categories:

Behavioral control. Who directs how work is performed, including instructions, training methods and supervision requirements?
Financial control. Who controls the economic elements of the work relationship, examining factors like the worker’s investment, opportunity for profit or loss and payment structure?
Type of relationship. How do both parties view their connection, considering factors like relationship permanency and provision of traditional employee benefits such as insurance and paid time off?

The business-wide impact of worker classification

Each classification carries its own distinct set of requirements and implications that directly impact your bottom line, compliance status, management approach and more.

Taxes. As an employer of W-2 employees, you withhold income taxes, Social Security and Medicare from their paychecks and contribute the employer’s portion of these taxes. You pay federal and state unemployment taxes and must issue a W-2 form by January 31 showing annual wages and tax withholdings.

In comparison, 1099 employees are responsible for their own tax obligations, including self-employment taxes. There are no FICA or unemployment tax requirements.

Cost. While hiring independent contractors might seem less expensive no benefits costs, reduced payroll taxes), the calculation isn’t always straightforward.

Contractors typically charge higher rates to cover their self-employment taxes and benefits. However, the flexibility of scaling contractor relationships up or down based on business needs can be a valuable perk.

Control and legal protection. With W-2 employees, you maintain greater control over work processes, schedules and training. But this control comes with additional legal protections under employment laws.

Independent contractors, however, offer expertise without requiring the same level of day-to-day management.

Business planning. W-2 employee relationships typically create more stable, consistent teams but require longer-term financial commitments. Independent contractor relationships provide greater flexibility and specialized expertise that can be brought in precisely when needed.

When developing both short and long-term business plans, understanding the appropriate mix of employment relationships becomes a strategic advantage for resource allocation and organizational agility.

The right choice for your business

When it comes to worker classification, getting it right the first time is always less expensive than fixing it after an audit. Ask your CPA for clarity, or give us a call at (973) 301-2300 to see how our business advisory services can help you remain compliant with employment regulations.

Financial Reporting 101 for Small Business Owners

June 6, 2025 by Nick Magone, CPA, CGMA, CFP®

New to running a business? While passion and hard work are crucial, financial reporting is integral to your company’s success.

Financial reports are detailed documents that provide a thorough overview of your company’s financial performance and position. They can help you:

Make strategic decisions
Ensure compliance with tax and legal requirements
Attract and secure potential investors or loans
Cut unnecessary expenses
Understand your business’s financial trends

Take control of your business’s financial health. These six financial reports that can help transform how you manage and grow your business.

Income statement. Is your revenue growing? Are expenses creeping up unexpectedly? An income statement generally reveals your business’s cost of goods sold, operating expenses, net profit or loss and other metrics that are indicative of whether you’re making or losing money. By regularly reviewing your income statement, you can also identify areas of high spending and gain a broader understanding of your business’s profitability.
Balance sheet. A balance sheet captures your business’s financial position at a specific moment, breaking down your assets, liabilities and your equity. It offers insights into your business’s net worth, helps track long-term financial stability and is essential for securing loans. That’s why it’s important to verify all entries monthly, ensure accuracy of asset valuations and check for outdated or irrelevant entries to proactively manage your business’s finances.
Cash flow statement. Is your core business financially sustainable? What is your company’s overall operational efficiency? Positive revenue doesn’t always mean positive cash flow. That’s why tracking your cash flow is so important. This statement displays how cash moves in and out of your business, which can help predict cash shortages, manage day-to-day operations and make more strategic financial decisions.
Inventory valuation report. An inventory valuation reports help manage your business’s physical assets, tracking current inventory levels, cost of inventory, value of existing stock and inventory turnover rates. It can be very beneficial in helping to track performance metrics like inventory turnover rate and in optimizing your inventory purchasing decisions
Accounts receivable aging report. This report is like your financial watchdog, tracking outstanding customer invoices, how long invoices have been unpaid and which customers are slow to pay up. Use this report to follow up on late payments and improve your cash collection process.
Accounts payable aging report. While an accounts receivable aging report manages what you’re owed, an accounts payable aging report helps you manage what you owe. This report provides a rundown of delinquent bills and expenses and payment due dates. Having a handle on your upcoming payments can help prevent late fees and penalties, and assist in your business’s cash flow planning.

Knowledge is power when it comes to your business’s financial health. That’s why the tax experts at Magone & Company can help you best understand your financial reports, interpret them and use the data to make informed decisions.

Reach out to our collaborative team or give us a call today at (973) 301-2300.

The Business Owner’s Accounting Glossary

March 14, 2025 by Nick Magone, CPA, CGMA, CFP®

Understanding accounting terminology isn’t just for accountants — it’s a critical skill for every entrepreneur. By becoming more familiar with key financial terms, you can more clearly communicate with financial professionals (think lenders and bankers as well as your CPA) as you strategically manage your financials.

Here’s a list of 12 accounting terms you should know:

Assets. One of the most basic accounting terms, assets are any resources owned by your business that carry economic value. This can include cash, equipment, inventory or intellectual property. Your assets are part of your business’s overall valuation, so you want to clearly identify what they are and how much they’re worth.

Liabilities. These are the financial obligations or debts owed by your business, such as mortgage loans, lease agreements or pension obligations. They represent financial commitments that can influence your credit ratings and borrowing capacity.

Working capital. Working capital is the difference between current assets and current liabilities. It’s indicative of your company’s short-term financial health and operational efficiency. Knowing your working capital can help you asses your business’s ability to meet short-term obligations and fund operations.

Accounts receivable. This refers to the money that is owed and paid to your business by clients and customers for services or products received. It’s a key metric for understanding your cash flow and customer payment patterns.

Accounts payable. On the other hand, accounts payable is money that your business owes to suppliers or vendors, including outstanding bills and short-term debts. It’s important for managing business relationships and credit.

Balance sheet. This comprehensive financial statement is s snapshot your company’s financial position at a specific point in time. It includes your assets, labilities and any shareholders’ equity.

General ledger. A general ledger is your business’s accounting record containing all financial transactions and company financial activities. It’s typically organized into different account categories, including assets, liabilities, equity, revenue and expenses.

Trial balance. A trial balance is an internal accounting report that lists all general ledger accounts and their balances to ensure accounting records are mathematically correct. This report verifies that total debts equal total credits before financial statements are prepared.

Gross margin. This measures the percentage of revenue retained after direct production costs. A critical indicator of production efficiency and pricing strategy, a higher gross margin generally correlates with better profitability and operational efficiency.

Diversification. Diversification is a strategic approach to spreading investments across different assets or business areas. It reduces financial risk and helps protect against a volatile market by not concentrating resources in a single investment.

Depreciation. Depreciation is a strategic approach to allocate the cost of your tangible assets over their lifespan. It reflects the reduction in value of business assets, including gradual wear and tear.

Break-even point. This financial calculation determines when total revenue equals total expenses. In other words, it indicates the point where your business becomes profitable, helping to understand the minimum sales required to cover costs.

Turning financial language into business strategy

By speaking the language of finance, you can transform financial complexity into actionable insights. Apply these terms to your business, and use these concepts to guide your strategic and tax planning.

The CPAs at Magone & Company can support you in making the most informed financial decisions for your business. Give us a call today at (973) 301-2300 to learn more.