What Windows Server 2016’s January 2027 Deadline Means for You

Microsoft’s extended support for Windows Server 2016 ends on January 12, 2027. If any part of your infrastructure still runs on it, that date marks the last day Microsoft ships security patches, bug fixes, or technical support for the platform. After more than 40 years helping Michigan organizations navigate exactly this kind of technology transition, we want you to have plenty of runway on this one.

What Changes When Support Ends

Your servers do not stop working on January 12, 2027. What stops is the flow of protection behind them. Every vulnerability discovered in Windows Server 2016 after that date goes permanently unpatched, with no fix or update to follow. Threat actors track these end-of-life dates closely because unsupported systems make easy, predictable targets.

Why It Matters

• Regulatory exposure: Healthcare organizations answer to HIPAA, financial institutions carry their own compliance obligations, and government entities face public accountability standards. Running an unsupported server underneath any of that puts audits and certifications at risk.
• Continuity for students and constituents: Schools and government offices rely on technology to deliver essential services. When critical systems become unavailable due to a preventable cyber incident, the people who depend on those services feel the impact.
• Production uptime: Manufacturers depend on infrastructure to stay up during production runs, and an unpatched server going down due to a preventable exploit can halt a line.
• Rising cost of waiting: The later a migration starts, the more it costs in labor, downtime, and rushed hardware purchases.

Your Options Before January 2027

There is more than one way to move off Windows Server 2016, and the right one depends on what that server runs:

• Upgrade to Windows Server 2022 or 2025: The direct path for organizations that want to keep infrastructure on-premises on a modern, supported foundation.
• Move eligible workloads to the cloud: For organizations with multiple buildings or locations, shifting select workloads off aging on-premises hardware can reduce both cost and single points of failure.
• Blend the two: Keep what needs to stay local and move what does not. Most YYTECH clients land somewhere in this middle ground.

Use Extended Security Updates (ESUs) as a short bridge, not a destination. ESUs buy time for critical patches after the cutoff, but the price climbs every year you renew, and they do not include new features or performance gains.

Start With a Real Picture of Your Environment

Every path above takes lead time. Before making any decisions, you need to understand exactly what is still running on Windows Server 2016, which applications depend on it, and which compliance or operational requirements could be affected by a migration.

January 2027 may seem a long way off, but technology projects often take longer than expected. Starting now gives you time to evaluate your options, budget appropriately, and transition on your schedule, rather than in response to an urgent security issue or compliance concern.

YYTECH can help assess your current environment, identify any systems affected by the end-of-support deadline, and develop a practical roadmap for what’s next. Contact us.

Frequently Asked Questions

When does Windows Server 2016 support end?

Extended support ends January 12, 2027. Mainstream support ended back in January 2022, so the platform has already gone years without new features.

Will our servers stop working on that date?

No. They will keep running. What ends is Microsoft’s flow of security patches and technical support, which means new vulnerabilities stay open indefinitely.

Can we just buy Extended Security Updates and stay put?

You can, but ESUs are meant as a bridge, not a long-term plan. They cover only critical security patches, get more expensive each year, and leave you without performance or feature improvements.

How long does a migration like this usually take?

It depends on the environment, but a properly planned migration, including assessment, testing, and cutover, typically runs several months. That is why starting the assessment early matters more than the cutover date itself.

What should we do first?

Start by identifying every server still running Windows Server 2016 and understanding what applications, users, and business processes rely on it. Once you have a complete inventory, you can evaluate upgrade, replacement, or cloud migration options and build a realistic timeline before support ends in January 2027.

Most business owners know they need cash reserves. The harder question is how much.

Rules of thumb like “three to six months of expenses” can be useful as a starting point, but they are too simplified for many established businesses. Two companies with the same revenue can have very different liquidity needs depending on their margins, customer mix, debt, seasonality, growth plans, and access to capital.

A better way to think about cash is to separate your bank balance into the different jobs that money needs to do. 

Start with the operating floor

Every business needs a minimum level of cash to operate without creating unnecessary stress. That floor should reflect the obligations that continue even when revenue slows. Payroll, rent, debt service, insurance, software, and other fixed commitments all matter.

The operating floor is not just a multiple of monthly expenses. Timing matters too. If your customers generally pay within ten days, you may need less liquidity than a company that routinely waits 60 or 90 days. A seasonal business may need to build cash for months before its busiest period. If you carry inventory, cash may leave the business well before the related sale occurs.

Your cash target should reflect how money actually moves through your business, not just what appears on the income statement.

Separate cash on hand from cash that is already committed

A large bank balance can create a false sense of flexibility if some of that cash already has a job.

You may be holding money for quarterly tax payments, bonuses, equipment purchases, debt reduction, expansion, or an upcoming acquisition. Customer deposits can also make the balance look stronger even though you still have an obligation to perform the related work.

That distinction can sound obvious, but it’s easy to look at a healthy bank balance and mentally treat all of it as available. One practical way to avoid that is to track committed cash separately from operating cash. Depending on how you manage the business, that could mean separate bank accounts for certain purposes or simply clearer internal reporting that shows which portion of the balance is already spoken for.

For example, if you have $1 million in the bank but $300,000 is reserved for taxes, equipment, and planned bonuses, your actual flexibility is much lower than the headline balance suggests. Decisions about distributions, hiring, debt repayment, or investment should be based on the cash that is truly available after those commitments are considered.

Build for stress, not just the normal month

Another layer is contingency liquidity. Your reserve should reflect the risks that could disrupt the business, not only what the company normally spends.

If one customer represents a large share of your revenue, you have a different liquidity risk than a company with hundreds of smaller accounts. If you depend heavily on one supplier, an interruption may require you to carry more inventory or source materials at a higher cost. A highly leveraged company also has less room for error because debt payments continue even when revenue falls.

This is where scenario planning becomes more useful than a generic reserve formula. Instead of asking only, “Do we have enough cash?” ask what happens if a major customer pays 30 days late, revenue declines for a quarter, or you have to replace an important piece of equipment unexpectedly.

You don’t need to model every possible crisis. You do need to understand which disruptions would put real pressure on the business and how much liquidity would give you enough time to respond without making rushed decisions.

Treat credit as backup liquidity, not cash

Access to a line of credit can reduce the amount of cash you need to hold, but credit should not be treated as a perfect substitute for cash.

Borrowing capacity can change. Lenders may tighten terms, ask for updated financial information, or become more cautious when the business is already under pressure. The moment when you most want additional borrowing flexibility may also be the moment when a lender is looking more closely at your financial condition.

A strong banking relationship can still be an important part of your liquidity plan. For some companies, the right answer is a combination of cash reserves and unused borrowing capacity rather than simply holding the largest possible cash balance. The important distinction is between liquidity you control directly and liquidity that still depends on someone else extending credit.

Know when cash truly becomes excess

Once your operating needs, upcoming commitments, and contingency reserves are covered, you can begin asking a different question: how much of the remaining cash is actually excess?

That’s where capital allocation becomes relevant. Excess cash could be used to reduce debt, fund growth, make distributions, purchase equipment, acquire another company, or invest outside the operating business. But “excess” should be evaluated with a forward-looking view, not simply based on what is sitting in the account today.

A business may look overcapitalized now but have a major hiring plan, tax obligation, debt maturity, or expansion project coming within the next year. On the other hand, you may continue accumulating cash long after the major risks and planned uses are adequately covered.

Holding too little cash creates fragility. Holding too much can also carry an opportunity cost if capital remains idle when it could be used more productively elsewhere.

Use ranges and triggers instead of one magic number

For an established business, it can be more useful to define a liquidity range than a single target.

You might identify a minimum level that should rarely be crossed, a target level that supports normal operations and expected volatility, and a higher level where you begin evaluating whether some cash can be put to another use.

The value of that framework is not the exact numbers themselves. It’s the decisions attached to them. If cash falls below your minimum, you might pause distributions or discretionary spending. If cash rises materially above your target, that may prompt a discussion about debt reduction, reinvestment, distributions, or other uses of capital.

That gives you a clearer system for managing liquidity instead of reacting to whatever the bank balance happens to be on a given day.

Put cash balance in context

There is no universal answer to how much cash your business should keep. The more useful approach is to understand what each portion of that cash is expected to do.

Start with what you need to operate. Account for money that is already committed. Add enough contingency liquidity to address the risks that could realistically disrupt the business. Then consider how reliable your outside financing would be if conditions changed.

Only after those layers are accounted for can you begin to identify true excess cash and decide whether that capital belongs in the operating business, should be used to reduce obligations, or can be deployed elsewhere.

For many established businesses, this is also where an outside advisor can be helpful. Liquidity does not exist in isolation. Cash decisions often intersect with taxes, debt, owner distributions, growth plans, capital spending, and the broader financial position of both the business and its owners. For more personalized guidance, please contact our office. 

Planning employee benefits for another year can feel a little like trying to hit a moving target.

Healthcare costs are rising, and employees have different expectations than they did a few years ago. At the same time, employers are trying to offer a competitive package without simply passing every additional cost on to employees.

As we look toward 2027, here are some of the areas employers should have on their radar.

1. Healthcare costs will continue to put pressure on employers

This is probably the biggest issue employers will be talking about as they head into 2027.

According to Mercer, employers expect health benefit costs to increase an average of 8.2% next year, even after planned cost-saving measures. Without changes to their plans, employers estimated the increase would be closer to 11%.

For employers, the question becomes: How do you manage those increases without simply shifting more costs to employees?

There are several strategies worth considering, including:

• Reviewing your health plan design and contribution strategy
• Evaluating whether employees are getting good value from the providers and networks available to them
• Looking closely at pharmacy costs and prescription utilization
• Helping employees better understand how to use their healthcare benefits
• Comparing your current plan and vendor arrangements rather than automatically renewing them year after year

A high-deductible health plan paired with a health savings account may also make sense for some employers. These plans can offer lower premiums and tax advantages, but they aren’t the right answer for every workforce.

The important thing is to look at the whole picture. Cutting the employer’s cost isn’t necessarily a win if it creates an unaffordable plan for employees or leaves them struggling to understand how to use it.

2. GLP-1 medications will require some difficult decisions

GLP-1 medications have quickly become one of the biggest conversations in employee benefits. For employers that cover these medications for weight management, the cost can be significant. Business Group on Health found that 67% of surveyed employers currently cover GLP-1s for weight management, but only 72% said they were likely to continue that coverage in 2027.

Some employers are considering eligibility requirements, weight-management programs, specific prescribing requirements, or other utilization-management strategies to manage costs.

3. Mental health benefits need to be useful, not just available

Mental health has become an established part of the benefits conversation. The next step is making sure employees can actually use the resources an employer provides.

An employee assistance program is valuable, but it may not be enough on its own. Employers are looking at additional resources such as virtual mental health care, coaching, stress-management programs, and manager education.

The bigger issue is utilization.

If you have a benefit that employees don’t understand, don’t know how to access, or don’t feel comfortable using, it isn’t providing much value. Communication and education are just as important as selecting the program itself.

4. Financial wellness is becoming part of the employee benefits conversation

While retirement plans remain a cornerstone of most benefits packages, employers are broadening the financial wellness conversation. Concerns about debt, inflation, saving for major life events, and long-term financial security are influencing how employees view their overall compensation package.

At the same time, employers are becoming more engaged in understanding the plans they already offer. They’re asking more questions about investment options, participant outcomes, fees, and employee engagement.

The shift isn’t necessarily toward offering more financial benefits. It’s toward ensuring existing programs are delivering the support employees actually need.

5. Employees will continue to look for benefits that fit their lives

There is no such thing as an average employee.

An employee with young children may have very different priorities than someone caring for an aging parent. A recent college graduate may be focused on student loans, while another employee may be thinking about retirement.

Thus, we’re seeing more specialized benefits emerge around specific employee needs. There are companies, for example, developing benefits specifically for areas such as menopause and women’s health.

Some of these offerings will prove valuable. Others may not be a fit for a particular workforce. The key is not to chase every new benefit. It is to understand your employees and determine where your benefits package has gaps.

6. AI will make employee benefits information easier to access, but it won’t replace people

AI is already changing how employees find information and how benefits are administered. We can expect to see more tools that help employees compare options, answer basic benefits questions, navigate enrollment, and receive more personalized information.

That can be a good thing.

I remember when I joined Ford Motor Company, and there were dedicated benefits representatives available to answer questions in person. Technology has certainly come a long way since then. But I don’t think the personal touch is going away.

Benefits can be complicated, and sometimes an employee doesn’t need a chatbot. They need someone who understands their situation and can help them work through a question. AI should complement good benefits communication and human guidance, not replace it.

7. Leave and caregiver benefits will continue to evolve

Parental leave has received a lot of attention in recent years, and some employers are offering increasingly generous programs. But employers are also thinking more broadly about what happens when employees need time away to care for a parent, spouse, or other family member.

That may mean expanded caregiver leave, bereavement benefits, eldercare resources, family-building benefits, or greater flexibility around where and when employees work.

Not every organization can offer six months of parental leave or an extensive list of caregiver benefits. And that’s okay. The goal isn’t to match the most generous employer in the market. It’s to understand what is realistic for your organization and what will have the greatest value for your employees.

For many small and midsize employers, flexibility can be just as meaningful as adding another formal benefit.

Looking ahead to 2027

The goal for 2027 should not be to offer more employee benefits.

It should be to offer the right benefits for your employees and your organization.

That may mean changing your health plan. It may mean taking a closer look at your retirement plan. It may mean adding a benefit that addresses a real need among your employees. Or it may simply mean doing a better job of communicating and educating employees about the benefits you already provide.

The employers that do this well will be the ones that look at benefits from both sides of the equation: What does this mean for our employees, and what does it mean for our business?

That balance is going to be increasingly important as we head into 2027.

Interested in what these trends could mean for your organization? Join us for our upcoming webinar, where we’ll discuss practical strategies for navigating benefits, workforce, and compliance changes in 2027. Register now.

Each fall, the IRS updates its special per diem rates for business travel. Companies that miss the changes can end up applying outdated rates once the year-end transition period ends, and run into problems substantiating deductions. The 2026-2027 update is a good reason to check your rates and review how your travel expense program works.

The IRS released Notice 2026-60 on September 24, announcing rates for October 1, 2026, through September 30, 2027. Under the high-low substantiation method, the daily rate for high-cost localities rises from $319 to $329. The rate for other locations in the continental United States increases from $225 to $230. An extra $10 or $5 a day may seem small, but it adds up for businesses whose employees travel often, especially to high-cost destinations. Those increases can affect both reimbursement costs and tax deductions.

How per diem works

Per diem rates are fixed daily allowances for lodging, meals, and incidental expenses when employees travel away from home on business. They reduce the need to track and document each actual expense while satisfying the substantiation requirements under Section 274(d) of the Internal Revenue Code.

Employers generally choose between two methods. The standard federal per diem method uses location-specific rates published by the General Services Administration (GSA). The high-low substantiation method, a popular choice among private-sector employers, uses one rate for IRS-designated high-cost localities and another for all other locations in the continental United States. For companies with employees traveling to many destinations, having two rates makes administration easier.

Businesses can also reimburse actual expenses if employees keep adequate records and documentation. Per diem is optional, but for most organizations it reduces paperwork, makes costs more predictable for employers and employees, and helps support reimbursements during an audit.

What changed for 2026-2027

Although the total high-low rates increase to $329 and $230, the meals and incidental expenses (M&IE) portions remain at $86 for high-cost localities and $74 for other continental U.S. localities. These amounts matter when applying the meals deduction limitation under Section 274(n).

The transportation industry’s special M&IE rates also stay the same: $80 for travel within the continental United States and $86 for travel outside it. These rates apply to employees and self-employed individuals whose work directly involves moving people or goods by airplane, barge, bus, ship, train, or truck, and regularly requires travel away from home that usually involves travel to localities with differing federal M&IE rates. The rates in this category are unchanged from last year.

The incidental expenses-only deduction rate remains $5 per day for travel both within and outside the continental United States. The high-cost locality list has also changed. These localities have a federal per diem rate of at least $280, and the IRS updates the list annually to reflect local market conditions. Four locations join the list for 2026-2027, though only one qualifies year-round:

• Tucson, Arizona (January 1 – March 31)
• San Mateo/Foster City/Belmont, California (year-round)
• Albuquerque, New Mexico (October 1 – March 31)
• Cody, Wyoming (June 1 – September 30)

Outside those periods, travel to these locations uses the $230 rate. Panama City, Florida, has been removed. Fifteen localities also have changes to the months in which they qualify as high-cost. Those locations include Aspen, Colorado; New York City; Philadelphia; and Hilton Head, South Carolina. If your employees travel to these areas, check the qualifying dates and the destination.

Does your reimbursement policy still fit your business?

Updating the rates is also a chance to revisit the reimbursement method you use. Many businesses set up a per diem policy years ago and have continued using it even as their workforce, clients, and travel patterns have changed.

If most of your employees’ travel is concentrated in a few markets, the federal method may offer more precise and potentially more favorable reimbursement amounts for those destinations. If employees travel throughout the country, the high-low method is usually easier to manage. Reassess that choice periodically to make sure it still suits your business. Keep in mind that the choice can’t be switched freely mid-year: an employer that uses the high-low method for an employee generally must use it for all of that employee’s travel within the continental United States for the rest of the calendar year.

CFOs and controllers should also compare their reimbursement rates with the applicable IRS limits. Amounts paid above the per diem limit that employees don’t substantiate or return are taxable wages, which creates additional payroll tax obligations for employers. Paying too little can affect morale and retention, particularly as business travel has rebounded and travel costs in high-cost cities continue to rise.

Administration matters too. A per diem program provides the intended substantiation benefits only when the business applies the correct rate to the correct locality and travel dates. Employees still need to document the time, place, and business purpose of their travel. Missing records or inconsistent application of the rules may lead the IRS to treat reimbursements as ordinary employee income, leaving the business exposed to penalties and back taxes.

What finance teams should review now

The new rate period began on October 1st. Finance and accounting teams should check their policies and expense systems against the applicable rates and transition rules.

Start with your expense management system and policy documentation. Update the high-low rates to $329 and $230, and check that the system uses the high-cost locality list in Notice 2026-60. Pay particular attention to newly added locations and changes in qualifying months, which are common sources of errors during the transition.

Next, tell employees and managers who submit or approve expense reports what has changed. Travelers heading to Tucson, Albuquerque, or Cody during those cities’ high-cost months, or to San Mateo at any time, may see different allowances. Explain when the changes apply, and distribute an updated travel policy if your company maintains one. Clear instructions can prevent reimbursement disputes and save time for everyone handling the reports.

Finally, review the transition provisions under Rev. Proc. 2019-48 for October 1 through December 31, 2026. An employer that used the high-low method for an employee earlier in 2026 must continue using it for that employee through December 31. For those last three months, the employer may apply either the prior year’s rates and locality list or the new ones, as long as it applies its choice consistently. Understanding these rules helps avoid errors during the changeover.

Make annual updates easier

Because the meals and incidental portions are unchanged, the increases of $10 for high-cost localities and $5 for other localities fall entirely on the lodging portion of the rates, reflecting continued growth in hotel costs. Build enough flexibility into your policy to adjust rates each year without rewriting the entire program.

That also means reviewing your expense software, policy documentation, and employee training. The IRS revises its high-cost locality list annually, and the rules are unlikely to become simpler. Clear processes that staff can follow and update will make future changes easier to manage.

Whether you have a few traveling employees or manage travel across many cities, check how your business is handling the new rate period. Our advisors can help you review the updated rates, assess your reimbursement method, and develop a travel expense policy that supports compliance and works for your employees. Contact our firm to discuss your current policy and the changes your business may need.

When organizations think about cybersecurity investments, they often focus on firewalls, antivirus software, multifactor authentication, and employee training.

Those are all important pieces of a strong security strategy. But if you asked me where most organizations can get the greatest return on their security investment, my answer might surprise you: Backups.

In fact, if I had to generalize across industries and organization sizes, I’d say that backups and disaster recovery planning remain among the best investments a business can make. That might not be the most exciting answer, but after years of working with organizations across Michigan, I’ve seen firsthand how the right backup strategy can be the difference between a manageable disruption and a prolonged business interruption.

Why Backups Matter More Than Ever

Cybersecurity threats continue to evolve, and so do the tactics used by attackers.

Years ago, a backup was often viewed as insurance against hardware failure, accidental deletion, or natural disasters. Today, threat actors frequently target backup systems as part of a ransomware attack or other compromise. They know that if they can eliminate your ability to recover, they gain leverage.

That’s why simply having a backup isn’t enough anymore.

Organizations need to know:

• Where backups are stored
• How often they’re being completed
• Whether they’re protected from compromise
• How quickly systems can be restored when needed

Too often, businesses assume they’re protected simply because they have backups. The reality is that many organizations don’t fully understand their recovery capabilities until they’re forced to test them during an emergency.

Understanding the 3-2-1 Rule

One of the most widely accepted backup strategies in the industry is the 3-2-1 backup rule:

• Maintain three copies of your data
• Store those copies on two different types of media
• Keep one copy offsite or offline

The goal is redundancy. If one system fails, another copy is available. If a cyberattack impacts production systems, recovery options remain.

This approach has stood the test of time because it reduces risk and improves resilience. A single backup location creates a single point of failure. Multiple copies stored in multiple locations provide far greater protection.

A Backup Is Only as Good as Your Ability to Restore It

One of the most important conversations I have with clients isn’t about backups. It’s about recovery. Having backup files is one thing. Successfully restoring critical systems under pressure is another.

I’ve worked with organizations that believed they had a solid backup strategy in place, only to discover challenges when it came time to recover data quickly. In many cases, the issue wasn’t the backup itself. It was the lack of testing.

A backup that has never been tested shouldn’t be considered a recovery plan.

That’s why disaster recovery testing is so important. It helps answer questions such as:

• How long will recovery take?
• Which systems should be restored first?
• Who is responsible for the recovery process?
• Can the organization continue operating during restoration?

The time to answer those questions is before an incident happens, not during one.

Recovery Time Matters

When a business experiences a major outage, every hour matters.

Employees lose access to systems. Operations slow down. Customers experience delays. Leadership teams are forced to make decisions quickly.

What separates an organization that recovers in hours from one that struggles for days or even weeks often comes down to planning, testing, and preparation.

A well-designed backup and disaster recovery strategy doesn’t eliminate risk, but it significantly improves an organization’s ability to recover and continue serving customers, students, patients, or constituents.

Questions Every Organization Should Ask

Even if you already have backups in place, it’s worth taking a step back and evaluating your current strategy.

Ask yourself:

• Do we know where all of our backups are stored?
• Do we have backups in multiple locations?
• Is at least one backup protected from ransomware and other threats?
• How often do we test recovery procedures?
• How long would it take us to recover from a major disruption?

If those answers aren’t clear, there may be opportunities to strengthen your strategy.

Looking Beyond Technology

At the end of the day, backup and disaster recovery planning isn’t really about technology. It’s about:

• keeping your organization operational
• protecting the information your team relies on every day
• And ensuring that when the unexpected happens, you have a path forward.

Cybersecurity tools, monitoring solutions, and employee training all play important roles in reducing risk. But when it comes to protecting your ability to recover, backups remain one of the smartest investments an organization can make.

Want to understand your backup and disaster recovery readiness better? The Yeo & Yeo Technology team can help evaluate your current environment, identify gaps, and develop a recovery strategy designed to support your organization long term. Contact us.

Nonprofit boards make decisions every year about compensation, vendors, contracts, and relationships with affiliated organizations. Most of those decisions are routine. But when someone with influence over your nonprofit stands to benefit, you need to look more closely. 

The issue isn’t simply whether the transaction is allowed. It’s whether the terms are reasonable, the relationship was disclosed, and the documentation supports what happened. 

Those questions matter from a governance perspective, and they can also affect tax reporting, including Form 990. So when you’re evaluating compensation, conflicts, or related-party transactions, there are a few important questions to ask.  

Who has influence over the organization?

First, you need to know who has influence over the organization. And the analysis doesn’t depend only on someone’s job title. An employee may have significant authority over the organization even if their title doesn’t include “president,” “treasurer,” or “chief financial officer.” Likewise, certain individuals may be treated as “disqualified persons” under federal tax rules because they are, or were, in a position to exercise substantial influence over the organization. 

Depending on the facts, that can include officers, directors, and trustees. It can also include senior executives, certain family members, and businesses those people control.

That matters because when someone with substantial influence stands to benefit from a transaction, you generally need to apply more scrutiny to the arrangement and the approval process. 

Is the organization receiving fair value?

A related-party transaction isn’t automatically improper. The key question is whether your nonprofit is receiving appropriate value in return. 

Let’s say your organization wants to hire a company owned by an executive’s family member for a $250,000 consulting engagement. 

That arrangement may be completely legitimate. But you should be able to show that the services were needed and the price was reasonable. You should also be able to show the relationship was disclosed, and that people without a financial interest made the decision. Comparable market data can be especially important.

The same concern can arise in other situations, like paying rent to a board member, approving executive compensation, or hiring a relative to provide professional services. 

These arrangements may all be appropriate. The risk comes when you pay more than fair value, give someone an unusually favorable benefit, or can’t demonstrate how the terms were evaluated.

In some situations, that can create what the tax rules call an excess-benefit transaction. That can have real consequences. The person who received the excess benefit may owe an excise tax, and certain managers who approved the transaction may also face tax. If the excess benefit isn’t corrected within the required period, the tax on the recipient can increase substantially. And in some cases, the IRS can also consider whether your organization’s tax-exempt status should be revoked.

Was the decision independently reviewed?

You also need to ensure decisions are independently reviewed. This is where good governance practices become especially important. A conflict-of-interest policy is useful, but it doesn’t accomplish much if it exists only on paper. 

Potential conflicts should be identified before the decision is made. The people evaluating the transaction should understand the relationship involved, and anyone with a financial interest generally shouldn’t be driving the approval process. 

For significant arrangements, your board or committee may also want to review alternative vendors or market pricing to help show the terms are reasonable.

And don’t assume that an unpaid director is automatically independent. Certain business, compensation, or family financial relationships can still affect the analysis. 

Is the process documented?

Independent review is only part of the process. You also want a clear record of how the decision was made. 

A sound decision-making process is much easier to defend when the organization can show what actually happened. The board or committee minutes should reflect the substance of the review.

Good documentation answers a few basic questions. Was the relationship disclosed? What information was considered? Did you review comparable prices or compensation data? Who took part in the discussion, and who abstained? And what did the board ultimately approve?

This helps demonstrate that the board acted thoughtfully and independently. It can also be important later when the organization is preparing Form 990, responding to an auditor, or answering questions from a regulator, donor, or other stakeholder.

Ask better conflict questions

One reason conflicts are missed is that organizations sometimes ask questions that are too general. For example, simply asking if someone has a conflict of interest, often isn’t enough. 

Someone may honestly answer “no” because they don’t think of a particular relationship as a conflict. But more specific questions can produce better information. 

Instead, ask whether the individual or an immediate family member has an ownership, employment, or referral relationship with the vendor. Ask if they recommended or helped negotiate the arrangement. Also, ask if they or a family member could receive a direct or indirect financial benefit. 

The goal isn’t to assume wrongdoing. It’s to surface relationships early enough that you can evaluate them properly.

Related organizations deserve attention too

These issues aren’t limited to transactions with individuals. Your nonprofit may also have relationships with affiliated charities, subsidiaries, or other entities, such as supporting organizations, partnerships, and joint ventures.  

Those arrangements can create their own governance and reporting questions. For example, these organizations may share employees, office space, or directors.

One practical step is to maintain an updated legal-entity chart. It should show ownership, overlapping directors, and major transactions between the organizations. That can help leadership understand where potential conflict, compensation issues, or reporting obligations may exist.  

Where Form 990 comes into the picture

Many of these governance decisions eventually show up on Form 990. The return asks about governance practices, compensation, and board independence. It also asks about transactions with interested persons and related organizations.

An issue that wasn’t carefully handled during the year can become much harder to address when preparing the return. Form 990 is also generally a public document, so these disclosures may be reviewed by donors, grantmakers, regulators, and others outside your organization. 

That’s another reason to treat these matters as year-round governance issues rather than filing-season questions.

Ask the questions early

Before approving a transaction involving someone with influence over your organization, focus on a few core questions. 

Who benefits? Is the organization receiving fair value? Was the decision made independently? And is there documentation showing how the board reached its conclusion?

Those questions can help protect your organization, strengthen governance, and reduce surprises when tax reporting begins.

If your nonprofit is considering executive compensation, or a transaction involving a related person or organization, contact our office before the decision is finalized. We can help you review the tax and reporting implications, and identify documentation that may be needed.

If you operate a cannabis business, Section 280E has probably shaped your federal tax planning for years.

The rule generally prevents a business from deducting expenses and claiming credits tied to trafficking Schedule I or Schedule II controlled substances. For cannabis companies, that has often meant paying federal tax on an amount much higher than book profit.

That landscape changed in 2026, but not for every cannabis business.

A federal final rule moved FDA-approved marijuana products and marijuana subject to state medical marijuana licenses to Schedule III. The final rule appears to remove qualifying state-licensed medical marijuana activities from Section 280E. However, Treasury and the IRS have announced that additional guidance will be issued regarding implementation, including expense allocation and treatment of businesses conducting both medical and adult-use activities. The rule itself cautions that it does not determine any specific taxpayer’s federal liability.

So your 280E analysis may now depend on the products you sell, the licenses you hold, and the activities you conduct. If you operate in both medical and adult-use markets, this distinction can affect far more than your tax return. It can change your estimated tax payments, cash flow forecasts, expense classifications, and year-end planning.

Ultimately, you need to know which parts of the business may fall outside 280E before you can plan around the rest.

What Section 280E does to taxable income

The simplest way to understand 280E is to compare book income with taxable income.

Let’s say your dispensary has $2 million of revenue, $1 million of cost of goods sold (COGS), and $700,000 of operating expenses.

Without 280E, a simplified calculation would leave you with $300,000 of business income before other adjustments. However, if the full $700,000 of operating expenses were disallowed under 280E, taxable income could instead be closer to $1 million.

You could therefore show $300,000 of accounting profit while paying federal tax based on a much larger amount. That difference can create a real cash flow problem. A business may look profitable on its financial statements but still struggle to cover its tax payments.

Once you know which activities remain subject to 280E, build that difference into your tax forecast instead of waiting until the return is prepared.

COGS still requires careful classification

Section 280E restricts deductions and credits, but cost of goods sold, or COGS, is treated differently.

That does not mean every expense related to your products belongs in inventory.

For a reseller, COGS can generally include the purchase price of inventory and certain costs necessary to acquire it, such as transportation charges. IRS guidance has distinguished those costs from ordinary business expenses that would otherwise be deductible. Producers may have a different set of inventoriable costs under the tax accounting rules that apply to production.

For example, assume you operate a dispensary and buy finished cannabis products for resale. The amount you pay your supplier may generally be part of inventory cost. Freight needed to get that inventory to your location may also qualify under the applicable rules. Your advertising campaign is different. So is general administrative payroll. Those costs do not become COGS simply because they help you sell inventory.

The details can vary based on whether you are a producer, reseller, or vertically integrated business. Your accounting method also matters.

Review your chart of accounts with those distinctions in mind. If an expense is classified as COGS, you should be able to explain why it belongs there under the applicable inventory rules, not just why the classification produces a better tax result.

A separate business needs more than a separate name

Cannabis businesses often operate more than one line of business. You might sell cannabis, branded apparel, accessories, consulting services, or other products through the same company or through related entities. In some cases, a genuinely separate trade or business may receive different tax treatment.

But the separation has to exist in practice.

Suppose you sell branded T-shirts at the same retail counter where you sell cannabis. The same employees handle the sales, the same managers run the operation, the same lease covers the space, and the same accounting system tracks the activity. Calling the apparel operation a separate business does not automatically make it one for tax purposes.

The same issue comes up with related entities.

Moving an employee’s paycheck to another company does not change the work that employee performs. Charging a management fee between related businesses does not automatically convert a disallowed expense into a deductible one. Creating a new legal entity does not guarantee that its activities will be treated as a separate trade or business.

Your records should support what is actually happening.

If employees divide their time between businesses, document it. If businesses share space, support the allocation. If separate operations have their own revenue, employees, management, books, or customers, preserve records that show those differences.

The Treasury has said it expects to address how expenses are apportioned when a business has multiple activities, but that guidance has not been issued. Until it is, document your allocation as if it will be tested. The cleaner the operational separation, the easier it is to support the tax treatment. 

Your state may not follow the federal result

Federal tax treatment is only part of the calculation. States have taken different approaches to Section 280E. Some tie their income tax calculations closely to federal taxable income. Others allow adjustments for cannabis expenses that are disallowed federally.

That can produce very different federal and state taxable income. For example, you may have $500,000 of operating expenses disallowed under 280E for federal purposes, but your state may allow an adjustment for those expenses. 

You also shouldn’t assume that a federal scheduling change automatically produces the same result at the state level.

Review the rules in every state where you file. If you operate in several jurisdictions, include the state differences in your year-end forecast rather than applying one tax treatment across the board.

Broader rescheduling is still something to model, not assume

The 2026 final rule did not move all marijuana to Schedule III.

A separate federal proceeding is considering a broader move from Schedule I to Schedule III. DEA held formal hearings on that proposal in 2026, and that process is separate from the final rule covering FDA-approved products and state-licensed medical marijuana. A recommended decision from the administrative law judge and a final DEA determination are still pending. 

If broader rescheduling eventually takes effect, the impact on 280E could be significant because the statute applies to trafficking in Schedule I and Schedule II controlled substances.

While the exact outcome is uncertain, you can still model it. For example, prepare one forecast using the law that applies to your business today. Then prepare a second showing what taxable income and cash flow could look like if more of your operations later fall outside 280E.

That gives you useful planning information without treating a possible future rule as current law.

Build the tax forecast before year-end

The most useful 280E planning happens before the return is due.

A year-end forecast can separate your business into four areas:

1. Revenue and COGS from activities still subject to 280E.
2. Operating expenses that may be disallowed for those activities.
3. Revenue and expenses from activities that may fall outside 280E.
4. State adjustments that differ from the federal calculation.

Then compare your projected taxable income with your cash on hand, estimated payments already made, and upcoming tax deadlines.

That process can uncover more than a tax problem. You may find that an expense needs better support, that a shared cost needs a clearer allocation, or that your accounting system is not separating medical and adult-use activity well enough for tax planning.

Fixing those issues before year-end is much easier than reconstructing them during return preparation or after an audit begins. If you’d like more personalized guidance, please contact our office. 

This article is for general informational purposes only and is not tax, legal, or accounting advice. Cannabis tax law is changing quickly, and this content reflects developments known as of September 28, 2026. How Section 280E applies to you depends on your facts, licenses, activities, and state law, and federal guidance is still pending. Please consult a qualified tax professional before acting.

For many physicians, value-based care feels like one more thing added to an already full plate.

Between seeing patients, managing staffing challenges, keeping up with compliance requirements, and maintaining financial performance, finding time to think about new reimbursement models isn’t always realistic. Yet payers continue to place greater emphasis on quality outcomes, patient engagement, and cost efficiency, making value-based care an increasingly important consideration for independent practices.

The good news? You don’t need to completely reinvent your practice to prepare. In fact, many of the same operational fundamentals that support a healthy, profitable practice are also the ones that position you for success in value-based care arrangements.

If you’re evaluating value-based opportunities now or simply preparing for what’s ahead, here are five areas worth paying attention to.

1. Strong Documentation Is More Important Than Ever

Most physicians think of documentation as a compliance requirement. In value-based care, it’s also a key part of accurately reflecting the complexity of the patients you treat.

When chronic conditions, care needs, or patient risk factors aren’t consistently documented, your practice may not receive appropriate reimbursement, and quality performance can become harder to measure. On the other hand, complete, timely documentation helps ensure you’re telling the full story of the care you’re providing.

The goal isn’t creating more work for providers. It’s creating processes and workflows that make documentation easier, more accurate, and less disruptive to patient care.

2. Don’t Overlook Your Revenue Cycle

Even as reimbursement models evolve, the financial health of your practice still depends on getting the basics right.

Clean claims, accurate coding, timely billing, and effective follow-up remain essential. In fact, practices facing revenue cycle challenges often struggle to participate successfully in value-based programs because they are already operating on tighter margins and with limited resources.

Before adding new initiatives, it’s worth asking a simple question: Is your current revenue cycle operating as efficiently as it could be? A strong financial foundation gives your practice flexibility to invest in future growth opportunities and new care models.

3. Take a More Proactive Approach to Patient Care

Value-based care rewards practices that focus on keeping patients healthy, not simply treating them when problems arise.

That means identifying patients who may need additional follow-up, encouraging preventive care, closing care gaps, and helping patients stay engaged between visits. Many practices are already doing pieces of this work today, but often in an informal way.

Creating more consistent processes for outreach, follow-up care, and patient communication can improve outcomes while strengthening your readiness for value-based arrangements.

4. Use Your Data to Make Better Decisions

Most practices have access to more information than ever before. The challenge is knowing what to do with it.

Patient trends, quality measures, reimbursement data, scheduling patterns, and provider performance metrics can all provide valuable insights. But data only becomes useful when it’s translated into action.

The most successful practices use reporting not just to look backward, but to identify opportunities for improvement before small issues become larger problems. Whether it’s reducing no-shows, improving patient satisfaction, or addressing quality measures, having visibility into the right information can make decision-making much easier.

5. Make Sure Your Systems Work Together

Technology should make your practice more efficient, not create additional work.

Unfortunately, many practices find themselves juggling disconnected systems, duplicate data entry, and manual processes, creating frustration for providers and staff.

As value-based care requirements continue to grow, having systems that communicate effectively becomes increasingly important. Streamlined workflows help reduce administrative burden, improve reporting accuracy, and free up time for patient care.

You don’t necessarily need more technology. Often, you simply need your existing technology to work better.

Start with the Fundamentals

While value-based care can seem complex, preparing for it doesn’t have to be.

Practices that focus on strong documentation, efficient billing processes, proactive patient engagement, meaningful data insights, and streamlined operations are already building the foundation for long-term success. At Yeo & Yeo, we help physician practices evaluate their operational readiness, optimize revenue cycle performance, and identify growth opportunities. If you’re considering value-based care initiatives or want to strengthen your practice’s foundation, our team is here to help. Get in touch.

According to the Department of Labor’s Employee Benefits Security Administration (EBSA), a 2023 study found that nearly 30% of employee benefit plan (EBP) audits contained major deficiencies. Among the most prevalent problem areas: participant data accuracy (cited in 15.6% of audits) and eligibility errors. For plan administrators and fiduciaries, understanding what drives these issues and how to prevent them is a core compliance responsibility. The encouraging news is that most deficiencies are preventable with the right controls, procedures, and partners in place.

Understanding EBP Audit Requirements

Under ERISA reporting rules, plans generally become subject to the annual audit requirement when they are considered large plans for Form 5500 purposes. For plan years beginning on or after January 1, 2023, large-plan status is determined based on the number of participants with account balances at the beginning of the plan year, with the 80-120 participant rule providing transition relief for certain plans.

These audits verify that the plan is operating in accordance with its governing documents, that participant data is accurate, and that the plan meets applicable regulatory requirements. When deficiencies are found, the consequences can be significant: DOL scrutiny, costly penalties, corrective filings, and damaged participant trust are all on the table.

Why Participant Data and Eligibility Errors Occur

Most deficiencies do not stem from intentional wrongdoing. They reflect the operational complexity of administering a retirement plan when systems and people are out of sync. Common contributing factors include:

• Manual processes and disconnected systems. Reliance on manual data entry increases the risk of human error. When HR platforms, payroll systems, and recordkeeper databases do not communicate automatically, discrepancies are almost inevitable, especially during service provider transitions.
• Inadequate management oversight. Staff turnover creates knowledge gaps. Without regular internal reviews and documented procedures, errors can accumulate undetected.
• Lack of segregation of duties. When a single individual controls multiple aspects of plan administration without independent review, the plan lacks the checks and balances needed to catch mistakes before they become findings.

Common Participant Data Deficiencies

Basic data accuracy issues are among the most frequent findings. Incorrect hire dates, termination dates, and dates of birth can cascade into errors in eligibility determinations, contribution calculations, vesting schedules, and benefit payments. Compensation amounts that do not reconcile to payroll records and inconsistently tracked hours of service create further complications. Documentation gaps compound the problem: missing enrollment forms, outdated beneficiary designations, and absent participant elections all surface during audits.

Common Eligibility and Enrollment Deficiencies

Timing errors are another recurring theme. Employees enrolled too early or too late, missed auto-enrollment windows, and delayed enrollment opportunities are all common findings. Consider a straightforward example: an employee becomes eligible in April but is not offered enrollment until August. That four-month gap may trigger corrective contributions that could have been avoided with a reliable tracking system.

Plan provision misinterpretation also generates significant findings. Confusion over the distinction between “immediate eligibility” and various entry-date provisions, inconsistent application of eligibility rules across employee groups, and failures to properly track long-term part-time (LTPT) employees under the new SECURE Act rules all contribute to audit deficiencies.

Related Common Audit Findings

Participant data errors rarely exist in isolation. Late remittance of contributions often stems from inaccurate records that delay proper calculations, leading to supplemental payroll runs that are frequently missed or delayed. Incorrect contribution calculations commonly stem from payroll coding issues where pay codes are misaligned with the plan document’s definition of eligible compensation. Distribution and loan errors also connect directly to inaccurate participant data, leading to incorrect benefit calculations and missing documentation.

Prevention Strategies: Building Strong Internal Controls

• Conduct periodic internal reviews. Quarterly or semi-annual reconciliations between HR, payroll, and recordkeeper systems are essential. An annual internal “pre-audit” that tests data accuracy and key controls before the CPA arrives can surface issues while there is still time to address them.
• Invest in adequate training. Every person involved in plan administration should understand eligibility rules, compensation definitions, and their specific responsibilities. Document standard operating procedures and create compliance calendars to standardize key tasks throughout the year.
• Leverage technology and automation. Automated data feeds between systems reduce manual entry errors, and a centralized document management system creates consistent, retrievable records.
• Foster cross-functional collaboration. Clear communication across HR, payroll, finance, and third-party administrators, with a single point of responsibility for tracking eligibility dates, goes a long way toward preventing errors.

Preparing for a Successful Audit

Starting early is one of the most important things a plan administrator can do. Aim to have your payroll census completed by January 31 to stay ahead of testing timelines and Form 5500 deadlines. Reconcile annual contributions from payroll to custodian trust reports in advance and confirm that plan documents are current and reflect all recent amendments, including SECURE 2.0 provisions. During fieldwork, be responsive. Timely answers to auditor questions reduce delays and help resolve issues before they escalate. When findings do occur, take advantage of IRS and DOL self-correction programs (EPCRS and VFCP) and document all corrective actions taken.

The Importance of Experienced Audit Partners

Not all EBP auditors are created equal. EBSA’s research shows a strong correlation between audit quality and the volume of EBP audits a firm performs annually. Firms performing five or fewer EBP audits per year show significantly higher deficiency rates. AICPA Employee Benefit Plan Audit Quality Center members reported a deficiency rate of approximately 30%, compared to 71% for non-members. Choosing a CPA firm with deep, specialized experience in employee benefit plan audits is one of the most impactful decisions a plan sponsor can make.

How Yeo & Yeo Supports Successful EBP Audits

At Yeo & Yeo, our EBP audit team brings specialized expertise and a proactive approach that goes far beyond checking boxes. We work closely with plan administrators throughout the year, not just during audit season, to identify potential issues before they become findings. Our comprehensive audit process focuses on participant data accuracy, eligibility compliance, and operational alignment with plan documents.

We collaborate with your third-party administrators, recordkeepers, and retirement plan advisors to ensure everyone is working from the same information. Because we believe in clear communication and education, we help plan administrators understand what we find and why it matters, so the same issues do not recur. Whether you are preparing for an upcoming audit, looking to strengthen your internal controls, or working through a specific compliance concern, contact Yeo & Yeo to start the conversation.

How long should a business laptop realistically last?


Most businesses replace laptops every 4 to 5 years to balance performance, reliability, and security.

What’s the difference between backing up files and syncing files?

Syncing copies changes between devices. Backups protect you if files are deleted, corrupted, or encrypted by ransomware. Never forget backups.

What happens to our data if we change IT providers?

Your data always remains yours. A good handover process should give you a smooth transition with minimal disruption. If you need help, though, get in touch.

Information used in this article was provided by our partners at MSP Marketing Edge.

Yeo & Yeo is pleased to announce that Amy Cell, President of Yeo & Yeo HR Advisory Solutions, has been recognized as one of Corp! Magazine’s 2026 Inspiring Leaders. The annual recognition celebrates leaders who demonstrate exceptional vision, influence, and commitment to empowering others to succeed.

Cell has spent her career helping organizations build stronger workplaces through strategic recruiting, talent development, leadership consulting, and HR solutions. Known for her collaborative leadership style and commitment to continuous learning, she has guided organizations through growth and change while cultivating high-performing teams and inclusive workplace cultures.

“Amy understands that successful organizations start with their people,” said Dave Youngstrom, President & CEO of Yeo & Yeo. “She brings that belief to everything she does, and we’re proud to see her recognized as an Inspiring Leader.”

Under Cell’s leadership, Yeo & Yeo HR Advisory Solutions works with organizations across Michigan and beyond to address their most pressing people and workplace challenges. The team provides a comprehensive range of HR services, including recruiting, leadership development, HR consulting, workforce planning, training, and organizational development.

Beyond her professional achievements, Cell is deeply committed to her community and the advancement of future leaders. She serves and supports numerous organizations throughout southeast Michigan, including the Washtenaw Community College Foundation, Desai Accelerator, University of Michigan College of Engineering Center for Entrepreneurship, and Washtenaw 2030. She is also a frequent speaker, mentor, and advisor, sharing her expertise with business leaders, entrepreneurs, and organizations across Michigan. In 2024, she received the Washtenaw Community College Foundation Women’s Council Sheroe Award, which recognizes those whose leadership, innovation, and dedication have made a lasting impact on the Washtenaw County community.

“I’ve been fortunate to build a career focused on helping organizations and their people succeed,” said Cell. “I’m grateful for the many leaders and teams who have trusted me to be part of that work and for the experiences that have shaped my journey.”

October is Cybersecurity Awareness Month, and this year’s theme, “Building a Cyber Strong America,” is a reminder that cybersecurity is not just a concern for large corporations. The organizations that keep our communities running, from nonprofits and schools to manufacturers, financial institutions, local governments, and businesses, are increasingly finding themselves in the crosshairs of cybercriminals.

At Yeo & Yeo Technology, we work with organizations across a variety of industries. While their missions and operations may look very different, the cybersecurity challenges they face are remarkably similar.

People Continue to Be the Biggest Security Risk

When many people think about cybersecurity, they picture sophisticated hackers breaking through technical defenses. In reality, attackers often take a much simpler approach: they target people.

According to Verizon’s 2026 Data Breach Investigations Report, the human element was present in 62 percent of breaches, and mobile-based phishing is succeeding roughly 40 percent more often than email phishing tests.

That’s why employee awareness and training remain some of the most important investments an organization can make. Technology plays a critical role, but employees are often the first line of defense.

Cybercriminals Are Moving Faster

Organizations today are managing more software, devices, and cloud applications than ever before. Every system requires updates, and cybercriminals are quick to exploit known vulnerabilities when those updates are delayed.

We’re seeing attacks occur much sooner after vulnerabilities are publicly disclosed, leaving organizations with less time to respond. Having a process to identify, prioritize, and apply critical security updates is no longer optional. It’s an essential part of reducing risk.

Multifactor Authentication is Still Important

Multifactor authentication (MFA) remains one of the most effective ways to protect accounts. However, attackers continue to adapt their tactics, finding new ways to trick users into approving fraudulent login requests or granting access to fake applications.

That doesn’t mean MFA has lost its value. It means organizations should pair MFA with employee awareness, access controls, and ongoing monitoring to better protect sensitive information.

Focus on Fundamentals Before Chasing Trends

Cybersecurity headlines often focus on the latest threats or emerging technologies. While staying informed is important, the organizations that are best positioned to reduce risk are usually the ones that consistently execute the fundamentals.

Consider these questions:

• Are critical security updates being applied promptly?
• Is multifactor authentication enabled wherever possible?
• Do employees know how to recognize phishing attempts?
• Are backups tested regularly?
• Does your organization have a plan for responding to a cybersecurity incident?

If the answer to any of these questions is “I’m not sure,” Cybersecurity Awareness Month is a good time to revisit them.

Start with Understanding Your Risk

Every organization faces different risks depending on its industry, technology environment, and business goals. The most effective cybersecurity strategies begin with understanding where your vulnerabilities exist and prioritizing improvements accordingly.

This Cybersecurity Awareness Month, don’t focus on doing everything. Focus on doing the right things consistently. Strong cybersecurity is not built through a single investment or technology. It’s built through good habits, informed employees, and a commitment to continuous improvement.

A cybersecurity risk assessment can help identify gaps, evaluate current controls, and provide a practical roadmap for strengthening your organization’s security posture. Contact us to get started.

 

When cannabis operators talk about growth, the conversation typically centers around revenue. How do we increase sales? Add products? Expand into new markets? Capture more market share?

Those are important questions, but there may be a more important one to answer first: Where is your business actually making money?

I’ve seen cannabis businesses generate strong revenue while struggling to maintain healthy cash flow. I’ve also worked with operators whose revenue growth was more modest, but whose profitability consistently outperformed their peers. The difference often comes down to how well they understand their costs and margins.

For cultivators, that means looking beyond yield and production volume to understand the true cost and profitability of different strains and products. For retailers, it means looking beyond sales to understand which products and categories are actually contributing to the bottom line.

If you’re looking for ways to improve profitability, here are five places to start.

1. Know the true cost of what you sell

It’s difficult to improve margins if you don’t know what it actually costs to produce or sell a product.

For cultivators, the cost of a crop can extend well beyond the cost of seeds or clones. Labor, utilities, nutrients, materials, testing, packaging, facility costs, waste, and other production expenses all affect the economics of a product. Looking at those costs by strain or product can reveal that some of your highest-volume products aren’t necessarily your most profitable.

Retailers face a similar issue. The wholesale cost of a product is only part of the equation. Discounts, promotions, shrinkage, inventory carrying costs, and other selling expenses can affect the margin you ultimately realize.

Action to take: Review your costs at the product or category level and identify where you’re making the strongest and weakest margins. If you can’t get to that level of detail, that’s a sign your accounting and operational data may need to be better connected.

2. Don’t confuse sales with profitability

A product that sells quickly isn’t automatically profitable.

A cultivator may have a high-demand strain that requires more labor, longer production time, or more resources than other products. A retailer may have a best-selling brand that consistently requires heavy discounting to move volume.

That doesn’t mean those products should be eliminated. It means you need enough information to understand the tradeoff.

Product-level profitability can help inform decisions about pricing, promotions, production schedules, purchasing, and inventory. It can also help operators identify products that deserve more attention because they generate stronger margins with fewer resources.

Action to take: Rank your products by both revenue and gross margin. Look for products that generate significant sales but relatively little profit, as well as products with lower sales that produce stronger margins.

3. Find where your cash is getting stuck

Profitability and cash flow are closely connected, but they’re not the same thing.

Inventory is one of the clearest examples. Products that sit too long tie up working capital, take up valuable space, and may eventually require discounting. For retailers, slow-moving inventory can indicate purchasing decisions that aren’t aligned with customer demand. For cultivators, producing more inventory than the market can absorb can create similar problems.

Labor and production capacity can also consume cash without producing the expected return. Inefficient processes, excessive overtime, avoidable waste, or underutilized capacity can gradually reduce margins.

Action to take: Look at your inventory aging, production schedules, and labor costs alongside sales. Identify where cash is being committed without generating a corresponding return.

4. Measure waste, not just output

For cultivators in particular, production metrics can create a misleading sense of performance if they aren’t connected to profitability.

A high yield is valuable, but only if the resulting product can be sold at a price that covers its production costs. Similarly, minimizing waste isn’t simply about reducing the amount of material discarded. It’s about understanding why waste occurs and what it costs the business.

Retailers can apply the same thinking to shrinkage, damaged products, expired inventory, and other losses.

Action to take: Track the financial impact of waste and loss, not just the quantity. Look for recurring causes and determine whether changes in production, purchasing, storage, or processes could reduce them.

5. Use your numbers to make decisions, not just reports

Most operators have access to plenty of financial and operational data. The challenge is turning that information into decisions.

Your reporting should help answer questions such as:

• Which products generate the strongest margins?
• Which products or categories are tying up cash?
• Where are costs increasing faster than revenue?
• Which customers, channels, or locations are most profitable?
• Where are discounts or promotions eroding margin?
• What changes would have the greatest impact on profitability?

If answering those questions requires pulling information from multiple spreadsheets and systems every month, you may have data, but you don’t necessarily have visibility.

The first step is identifying the information that matters most to your business and building a reporting process that delivers it consistently. In some cases, that may mean refining existing reports. In others, it may mean integrating systems, improving dashboards, or evaluating whether your current technology can support your decision-making needs.

The goal isn’t more reports. It’s having the right information in a format that helps you act on it.

Don’t let growth hide a margin problem.

It’s tempting to assume that selling more will solve profitability challenges. But if a product is priced incorrectly, inventory is turning too slowly, or production costs are too high, increasing volume may simply make the problem bigger.

That’s why understanding your margins should be part of your growth strategy, not something you revisit after growth occurs.

For cannabis operators, this is particularly important given the industry’s pricing pressure, regulatory requirements, and limitations on deductible expenses under IRC Section 280E. Accurate cost tracking and allocation can affect not only operational decisions, but also tax planning and cash flow.

The good news is that margin improvement doesn’t always require a major change to the business. Sometimes the opportunity is already there. You just need to know where to look.

Start by identifying your most profitable products, your biggest sources of cost, and where cash is getting tied up. Then use that information to make decisions about pricing, production, purchasing, and inventory.

Those insights can help you protect the margin you’re already generating and find opportunities to create more of it.

At Yeo & Yeo, we help cannabis operators gain greater visibility into profitability through strategic advisory services, cost accounting analysis, operational assessments, and guidance related to IRC Section 280E. By helping businesses understand the financial story behind their operations, we provide the insight needed to make informed decisions, protect margins, and support long-term growth.

A contractor can have a full backlog, crews working overtime, and plenty of invoices going out while profitability quietly gets worse.

That is one of the challenges of running a construction business. Revenue, costs, and cash rarely move in a clean sequence. You may incur labor and material costs weeks before you can bill for them. A project manager may authorize extra work while the customer is still reviewing the price. A job that looked like a 20% gross-margin project at kickoff may be headed toward 12% by the time anyone notices.

Good construction accounting should make those problems visible early. For established contractors, three disciplines are especially important: job costing, change-order management and work-in-progress reporting. When those systems work together, management gets a much clearer picture of the business.

Start with job costs you can actually trust

Every useful construction report starts with accurate job costing. At a basic level, that means assigning costs to the project that created them. But you’ll usually need more detail than one expense bucket for each job.

You may track field labor, materials, subcontractors, equipment and other direct costs separately. You may also break them down by phase or cost code. That detail matters because knowing that a project is $80,000 over budget does not tell you what went wrong.

Suppose a $2 million mechanical project was estimated to produce a $400,000 gross profit. Halfway through the job, labor is $70,000 over budget while materials and subcontractor costs remain close to plan. That points management toward labor productivity, overtime, or an estimating problem. 

Timing matters too. A job can appear more profitable than it really is when vendor invoices, payroll, or subcontractor commitments have not reached the system yet. 

So the goal is not just detailed job costing; you want complete and timely job costing. Review your cost codes and reporting process with project managers. The categories you track should be detailed enough to explain why a job is gaining or losing margin, not merely whether it is.

Make the estimate to complete a management responsibility

Historical cost tells you what happened, but management also needs to know what’s likely to happen next. That’s where the estimated cost to complete becomes critical.

Consider a project with $1 million of costs incurred so far. The original budget called for another $500,000 of cost. But the project manager now expects the remaining work to cost $700,000. If accounting continues using the old estimate, the job may appear more profitable than the operating team expects it to be. That can distort WIP reporting and delay recognition of deteriorating performance.

Project managers usually know first when productivity is slipping, material requirements have changed, or a subcontractor issue is likely to increase costs. Finance needs that information on a regular schedule. 

For many contractors, a monthly review is a practical way to do that. Project managers can update costs to complete and explain significant changes in labor assumptions, subcontractor commitments, unrecorded costs, or expected gross margin.

Pay particular attention to margin fade. If a job begins at an expected 18% margin, falls to 15%, and then drops to 12%, management should understand why. The issue may be estimating, execution, scope control, or several factors at once.

Require meaningful changes in projected cost or gross profit to be explained while there is still time to respond.

Keep change orders from becoming invisible work

Change orders sit directly between project operations, billing, and accounting. That makes them a common source of financial surprises.

The problem is easy to recognize: a customer asks for additional work; the field team needs to keep the project moving, so the contractor performs it. Pricing gets worked out later. Meanwhile, labor, materials, and subcontractor costs start accumulating.

If those costs reach the job-cost system but the potential contract adjustment is not tracked properly, the project can appear to be deteriorating. If the change is never approved or billed, the contractor may end up funding work it cannot fully recover.

A disciplined process keeps that work visible. One change-order log used by both operations and accounting can show whether an item is proposed, submitted, approved, rejected, or still being negotiated. It can also track expected revenue and cost, the responsible person, and how long the item has been outstanding.

That gives management a clearer view of how much work is being performed without final approval and whether unresolved changes are creating billing or collection problems.

The accounting treatment of pending or disputed changes may depend on the facts of the contract and the applicable revenue-recognition guidance. But the operating objective is simpler: do not let added scope disappear between the jobsite, project management, and accounting.

Use the WIP report to connect the pieces

The WIP schedule is where job costs, current estimates, revenue, and billing come together.

Suppose a contractor has completed roughly half the work on a $1 million project. Based on current estimates, the company has earned about $500,000 of revenue.

If it has billed $425,000, there is a $75,000 gap between earned revenue and billing. If it has billed $575,000, the gap runs in the other direction.

Those differences are commonly described as underbilling and overbilling. The calculation matters, but the more useful question is why the difference exists.

Underbilling can point to a cash-flow problem

An underbilling does not automatically mean a job is in trouble. There may be a reasonable timing difference between when work is performed and when the contract allows billing.

But management should understand the cause. A billing milestone may have been missed. Work may be proceeding under an unapproved change order. Costs may have been recorded faster than expected. The current forecast may also be too optimistic.

Sustained underbilling can create cash pressure because the contractor may be funding work before collecting for it.

For significant underbillings, identify the reason, who owns the next step, and when the amount is expected to become an invoice and then cash.

Overbilling is not the same as profit

Billing ahead can improve cash flow, but the extra cash does not necessarily represent profit. Suppose a job is $200,000 overbilled. That cash may help fund current operations. But if the projected cost to finish the job increases materially, part of that apparent cushion may already be spoken for.

Large overbillings therefore need context. They may reflect favorable billing terms and good cash management. They can also create a false sense of available cash if management is not considering the remaining cost to finish the job.

A WIP review should ask what is driving each position and whether it points to a billing issue, forecasting problem, change-order problem, or genuine cash advantage.

Make WIP review an operating meeting, not an accounting task

A useful WIP process requires people outside the accounting department. Accounting knows what has been recorded and billed. Project managers know what is happening in the field. Estimators know the assumptions behind the original budget. Leadership understands cash requirements and portfolio risk. Those perspectives need to come together.

A monthly WIP meeting does not have to give every project equal attention. Focus on jobs with the largest exposure, biggest change in projected margin, significant underbilling or overbilling, or large amounts of unresolved change-order work.

For those jobs, management should ask:

• Has the estimated cost to complete changed?
• Is projected gross margin moving?
• Are material costs or commitments missing?
• Are there unresolved change orders?
• What is driving the billing position?
• Does the current forecast still make sense to the project manager?

The point is not to make accounting responsible for predicting construction outcomes. It’s to ensure information from the field reaches the financial reporting process while there is still time to act.

Make sure all three systems tell the same story

Job costing, change-order controls, and WIP reporting solve different parts of the same problem: understanding what a job is really worth before it ends.

Job costing shows where the money is going. Updated forecasts show where the job appears to be headed. Change-order controls keep changes in scope and price visible. WIP reporting shows how those developments affect revenue, billing, expected profit, and cash.

When one piece is weak, the others become less reliable.

A well-prepared WIP schedule cannot compensate for incomplete job costs. Accurate job costs cannot compensate for a six-month-old estimate to complete. And neither will protect your margin if significant extra work is being performed without a disciplined change-order process.

One useful test is to take your five largest active projects and compare the job-cost report, change-order log, current estimate to complete, and WIP schedule side by side. If they do not tell the same story, the differences are worth investigating.

Your CPA can help you evaluate whether your construction accounting and WIP process are giving management a reliable view of job performance. The best time to have that conversation is during the year, while you still have time to address margin erosion, billing issues, and forecasting problems before they become year-end surprises.

For more personalized guidance, please contact our office. 

For many nonprofits, Form 990 can feel like one more administrative task competing for attention. Lean teams are often balancing programs, fundraising, governance, and daily operations, so an annual tax filing may not receive the focus it deserves.

But Form 990 isn’t just an annual return. It’s also a public document that donors, grantmakers, regulators, and others may use to evaluate your organization. Inaccurate or incomplete reporting can create compliance problems and raise broader questions about financial stewardship, while repeated failure to meet annual filing requirements can ultimately result in revocation of tax-exempt status. 

Here are several common filing and reporting mistakes that can affect the accuracy, completeness, and credibility of Form 990. 

Assuming last year’s filing approach still applies

It’s easy to assume that your organization should file the same return it filed last year. That may be correct, but it shouldn’t be automatic.

The appropriate Form 990-series filing depends on factors such as the organization’s classification, normal gross receipts, year-end assets, and activities. For example, many small exempt organizations whose annual gross receipts are normally $50,000 or less may satisfy their annual filing requirement with Form 990-N. An organization with gross receipts below $200,000 and total assets below $500,000 may be eligible to file Form 990-EZ instead of the full Form 990. These thresholds are useful starting points, but they aren’t substitutes for reviewing the current rules and the organization’s circumstances.

Also, keep in mind that limited activity doesn’t necessarily eliminate the filing requirement. An organization may still need to file even if it had little revenue, paused most programs, or was largely dormant during the year.

Failing to file a required annual return or notice for three consecutive years results in automatic revocation of tax-exempt status. Correcting an automatic revocation requires a new application for recognition of exemption and the applicable IRS user fee. Depending on the organization and the reinstatement procedure, it may also require delinquent returns, reasonable-cause statements, and professional assistance – potentially consuming substantial time and money. 

A safer process begins by confirming the organization’s classification, receipts, assets, and filing requirements each year. Set an internal deadline before the legal deadline, and verify that the IRS accepted the electronic filing. A rejected return generally must be corrected promptly to preserve the original filing date. 

Filing numbers that haven’t been reconciled

Every material number on Form 990 should be traceable to reliable records. The challenge is that nonprofit financial information often comes from several different systems.

The general ledger and donor database may report contribution revenue differently. Payroll records may not align neatly with Form 990 compensation categories. Audited financial statements may classify certain revenue and expenses differently from the return. These differences aren’t automatically errors; the problem is being unable to explain them.

Common trouble spots include contribution revenue that doesn’t agree with donor records, grants reported inconsistently across the return, compensation that cannot be reconciled to applicable Forms W-2 and 1099, and beginning net assets that don’t match the prior-year filing. 

Meaningful differences should be identified and explained before the filing reaches final review. A written reconciliation helps the preparer understand where the figures came from, gives leadership a clearer view of the filing, and provides support if anyone questions an amount later.

Treating narratives as boilerplate

Some of Form 990’s most important sections don’t involve calculations. Part III asks the organization to describe its mission and major program accomplishments, yet these descriptions are often reused even when programs, priorities, and results have changed.

A statement such as “provided educational and charitable services” tells readers very little. A stronger description might say: “Held 25 workforce-training workshops for 1,200 participants, 85% of whom completed the certification program.”

The second version shows scale and results, provided the figures are supported by the organization’s records. Program leadership should review these descriptions annually and confirm that they accurately reflect the services delivered, people served, and outcomes the organization can substantiate.

Read the return as an outside stakeholder

Most of Form 990 and its schedules are subject to public disclosure. Compensation, governance responses, financial information, program narratives, and unusual transactions may be reviewed by people who don’t have the background available to staff and board members.

For most organizations filing Form 990 or 990-EZ, contributor names and addresses reported on Schedule B aren’t required to be included in the public-inspection copy. Different rules apply to private foundations filing Form 990-PF and section 527 political organizations, whose Schedule B information is generally open to public inspection. Don’t assume that information can (or must) be redacted without checking the applicable disclosure rules, and take care not to publish a copy containing information that isn’t required to be publicly disclosed. 

Before filing, compare the return with the audited financial statements, website, annual report, board minutes, and approved compensation arrangements. Material differences may be entirely legitimate, but they should be understood and, where appropriate, reconciled or explained. Where the form or instructions call for additional explanation, Schedule O can provide useful context clearly and accurately. 

Build a repeatable filing process

Many Form 990 errors occur because relevant information is spread among people who don’t realize the preparer needs it. A lean nonprofit may not have a compliance department, but it can still create a repeatable process.

After the books close, reconcile relevant amounts among the accounting records, financial statements, payroll reports, donor records, investment statements, and prior-year return. During preparation, involve the employees who understand the underlying activities. Before filing, complete the organization’s review process, read the return as an outside stakeholder, and confirm that the electronic filing was accepted.

No single employee needs to know every Form 990 rule. The organization does need a system that surfaces important changes, assigns responsibility, and gives the preparer complete information.

Get guidance tailored to your organization

Form 990 filing requirements depend on your organization’s classification, financial activity, and specific circumstances. If you’re preparing an upcoming return or have questions about which filing applies, reconciliations, disclosures, or the review process, contact our office. We can help identify issues before the return is filed and work with you to develop a more reliable year-over-year process.

I’ve worked with organizations of all sizes, and I’ve noticed a common challenge: most leaders know where they want to go, but they struggle to get everyone moving in the same direction.

A strategic plan might outline ambitious goals and clear priorities, but execution often becomes more difficult once the realities of daily business take over. Competing demands emerge, priorities shift, and progress can be hard to measure.

That’s why strategic planning isn’t just about creating a plan. It’s about creating alignment. When leaders, employees, and priorities are aligned, organizations are far more likely to turn good ideas into results.

If your organization is struggling to translate strategy into action, these six steps can help.

1. Start With an Honest Assessment

It is easy to get caught up working in the business instead of stepping back to work on the business. Before deciding where you want to go, take an honest look at where you are today.

What is working well? Where are you struggling? What has changed in your organization or your market? What are your people seeing that leadership may not be seeing?

A SWOT analysis can be a useful starting point, but don’t stop there. Employee feedback, customer feedback, financial and operational data, turnover trends, and other measures can all help paint a more complete picture.

I also like a simple “keep, start, and stop” exercise. Ask your leadership team and employees:

• What should we keep doing?
• What should we start doing?
• What should we stop doing?

You may be surprised by how quickly patterns emerge.

2. Get Clear About Where You’re Going

Once you understand the current state, get clear about the future.

You should be able to answer some basic questions about your organization, such as: What is our purpose? Where are we going? What matters most? What do we want to be known for?

You can call it your mission, vision, purpose, values, north star, or something else. The terminology matters less than having clarity. Once defined, it shouldn’t live only in a strategic plan. Leaders need to reinforce it consistently, and employees need to understand what it means for their work. And here is the HR part of me talking: your people systems should support it, too.

If you say collaboration is a core value but reward only individual performance, there is a disconnect. If you say people are your greatest asset but don’t hold leaders accountable for how they lead, there is a disconnect.

Culture is shaped by what an organization actually does, not just what it says.

3. Decide What Matters Most

One of the hardest things for a leadership team to do is prioritize.

There will always be more good ideas than there is time, money, and capacity to pursue them. That means strategy is partly about deciding what not to do.

Most organizations can identify four to six areas that are truly critical to their success. These might include growth, people, operational excellence, innovation, or community impact.

The specific priorities will differ for each organization. The important thing is that your leadership team agrees on them. If everything is a priority, nothing is.

4. Turn Priorities Into Goals

Once you know what matters most, translate those priorities into specific goals.

This is where strategic plans often become disconnected from day-to-day work. A leadership team may have a three-year goal, but employees don’t necessarily know what needs to happen this quarter—or even this week—to move toward it.

Break bigger initiatives into manageable pieces. Establish annual goals and shorter-term milestones. Make sure the goals are measurable and realistic. And most importantly, assign ownership. A goal without an owner is really just an idea.

5. Make Progress Visible

Let’s be honest: one of the biggest problems with strategic planning is that the plan ends up sitting on a shelf.

Strategic planning shouldn’t be something you revisit once a year. Leadership teams need a regular cadence for asking: What have we accomplished? What isn’t moving? What has changed? Do we need to adjust?

That might happen during weekly leadership meetings, quarterly strategy sessions, or through dashboards and other regular reporting. The format matters less than the consistency.

6. Make execution someone’s job

Ultimately, strategy comes down to execution.

For each initiative, ask:

• Who is responsible?
• What needs to happen?
• By when?
• How will we know we’re making progress?

A strategic plan can provide clarity and direction, but execution happens through people. That’s why alignment matters.

When employees understand the organization’s priorities, leaders reinforce a consistent message, and accountability is built into the process, strategic goals become more than ideas on paper. They become part of how the organization operates every day.

At Yeo & Yeo HR Advisory Solutions, our ASPIRE framework helps organizations connect strategy, people, and execution:

Assess. Set Direction. Prioritize. Identify. Review. Execute.

By examining each of these areas, organizations can identify what’s hindering progress and create a roadmap for moving forward.

Because the strongest organizations don’t just have a plan. They have people who understand it, support it, and execute it.

You’ve built a successful business and offered employees a solid retirement plan. Your workforce is growing, participation is strong, and everything seems to be running smoothly. Then you receive a notice from your third-party administrator: your plan now has enough eligible participants to require an independent audit. If this is news to you, you’re not alone.

Understanding when your retirement plan crosses the threshold that triggers an Employee Retirement Income Security Act (ERISA) audit requirement is critical for plan sponsors. Missing this requirement can result in rejected Form 5500 filings, Department of Labor (DOL) penalties, and increased regulatory scrutiny.

What is an Employee Benefit Audit?

An employee benefit plan audit is an independent examination of your retirement plan’s financial statements and operations, performed by a qualified CPA with no conflicts of interest. The audit is tied directly to your annual Form 5500 filing, which discloses your plan’s financial condition and compliance information to federal regulators. When your plan qualifies as a “large plan,” you must include audited financial statements with that filing.

During an audit, the independent CPA reviews participant data, contribution and distribution accuracy, internal controls, and compliance with plan documents. Many large plans qualify for a limited-scope audit under ERISA section 103(a)(3)(C), in which investment information certified by a qualified custodian is excluded from the auditor’s examination, reducing cost and complexity.

When is an Audit Required?

Prior to 2023, plan size for Form 5500 reporting purposes was generally based on all eligible participants, including employees who were eligible but had never enrolled in the plan. Beginning with plan years starting on or after January 1, 2023, the Department of Labor changed the methodology to count only participants with account balances when determining whether a plan is considered a small or large plan.

How Participant Counts Are Determined Today

For plan years beginning on or after January 1, 2023, plan sponsors determine large-plan status by counting only participants with account balances as of the first day of the plan year. This count includes:

• Active employees with account balances
• Terminated employees with account balances
• Retired participants with account balances
• Beneficiaries with account balances

Employees who are eligible to participate but have not enrolled and do not have an account balance are not included in the count.

As a result, some plans that previously required audits may now qualify as small plans and be exempt from the annual audit requirement. Plan sponsors should work with their recordkeeper or advisor to confirm their participant count each year.

The 80-120 Participant Rule

ERISA provides a transition rule that offers limited flexibility for plans. If your plan’s participant count is between 80 and 120 participants at the beginning of the plan year, you may file Form 5500 in the same category you used in the prior year.

For example, if you filed as a small plan last year and now have 105 participants with account balances, you may continue filing as a small plan this year. Conversely, if you filed as a large plan last year and now have 95 participants with account balances, you may still be required to file as a large plan.

Because the rule depends on prior-year filing status, maintaining accurate historical records matters.

Why Audits Matter

While an audit requirement may feel like a regulatory hurdle, it serves an important purpose. Your retirement plan holds your employees’ hard-earned money. An independent audit provides assurance that contributions are calculated and deposited correctly, that account balances are accurate, that distributions comply with plan terms, and that internal controls are functioning. It also helps you fulfill your fiduciary duty under ERISA and can identify opportunities to strengthen plan operations before small issues become costly problems.

How Yeo & Yeo Can Help

If you’re unsure whether your plan requires an audit or you’re looking for a more experienced audit partner, our Employee Benefit Plan audit team can help. We’ll review your participant count, explain which exceptions may apply to your situation, and coordinate the audit process to minimize disruption to your HR and accounting teams. Early conversations make the entire process smoother and help ensure your Form 5500 filing stays on track.

Contact Yeo & Yeo today to discuss your plan’s audit requirements and how we can help you meet them with confidence.

SECURE 2.0 introduced significant changes to retirement plans, many of which have already taken effect. However, for most qualified retirement plans, an important compliance milestone still lies ahead: plan amendments reflecting those changes generally must be adopted by December 31, 2026.

While that deadline may seem distant, plan sponsors who start preparing now will be better positioned to avoid a last-minute compliance scramble and ensure their plan documents accurately reflect current operations.

The amendment requirement applies broadly. Even if your organization implemented only the mandatory SECURE 2.0 provisions and did not adopt any optional plan features, formal plan amendments may still be required. Most qualified retirement plans must meet the December 31, 2026, deadline.

Planning Now Beats Year-End Scrambling

Retirement plan compliance projects often involve multiple parties, including third-party administrators, recordkeepers, attorneys, and internal stakeholders. Waiting until late 2026 could create unnecessary delays, particularly as service providers work through amendment requests from many clients facing the same deadline.

It’s also important to remember that plan operations and plan documents must align. Many organizations have already begun administering SECURE 2.0 changes as they became effective. If your plan documents have not been updated to reflect those changes, that disconnect could create compliance concerns during an audit or regulatory review. Addressing amendments early helps reduce risk and demonstrates prudent oversight of the plan.

What Changes Should Plan Sponsors Think About?

SECURE 2.0 introduced a wide range of retirement plan changes that may affect your organization, including updates to required minimum distributions, catch-up contribution rules, automatic enrollment requirements for certain plans, and eligibility provisions for long-term part-time employees.

The specific requirements vary based on your plan’s design and features. That’s why now is a good time to work with your retirement plan advisor, third-party administrator, and legal counsel to determine which provisions apply to your organization and whether your plan documents accurately reflect current plan operations.

Even if your plan has already implemented the required changes, formal amendments are still necessary to document those provisions and maintain compliance.

Don’t Forget Participant Communications

The amendment process doesn’t end with the execution of revised plan documents. ERISA plans must provide participants with a Summary of Material Modifications within 210 days after the close of the plan year in which amendments are adopted. For calendar-year plans amending in 2026, this means participant communications are due by July 29, 2027. Building this communication timeline into your amendment strategy ensures you meet not just the technical documentation deadline but the equally important transparency requirements that keep participants informed.

What Plan Sponsors Should Do Now

With the December 31, 2026, deadline approaching, now is a good time to:

• Confirm which SECURE 2.0 provisions apply to your plan.
• Review whether your plan documents reflect how the plan is currently operating.
• Coordinate with your retirement plan advisor, third-party administrator, and legal counsel on amendment responsibilities and timelines.
• Plan for required participant communications after amendments are adopted.
• Avoid waiting until late 2026, when service providers may be managing a surge of amendment requests.

Taking action now can help reduce administrative stress, support audit readiness, and ensure your plan remains compliant.

How Yeo & Yeo Can Help

Navigating retirement plan compliance requirements can be complex, but plan sponsors do not have to manage the process alone. Yeo & Yeo works alongside organizations to evaluate compliance obligations, identify potential gaps, coordinate with service providers, and support audit readiness efforts.

Whether you’re beginning your SECURE 2.0 review or looking to finalize amendment plans before the deadline, our team can help you move forward with confidence. Contact us to learn more.

One of the most common frustrations I hear from practice leaders is, “We’re busy, we’re seeing patients, but it still feels like we’re waiting too long to get paid.” In most cases, claim denials are a major part of that challenge.

Every denied claim creates extra work, delays revenue, and pulls your team away from activities that support patients and practice growth. As denial rates continue to rise across healthcare, practices that focus on prevention rather than recovery are putting themselves in a much stronger financial position.

The good news? Most denials are preventable.

I’ve found that the most successful practices are not necessarily the largest or the ones with the most resources. They’re the organizations that have built consistent processes to catch problems before a claim is submitted. By understanding where denials occur and addressing the most common causes, practices can improve cash flow, reduce administrative burden, and create a more predictable revenue cycle.

Denials Usually Start Earlier Than You Think

One misconception I often encounter is that denials are strictly a billing department problem.

In reality, denials often begin much earlier in the patient journey. A missed eligibility check, outdated demographic information, missing authorization, a credentialing issue, or incomplete documentation can all create problems that eventually lead to delayed or denied payment.

These issues typically fall into two categories.

The first is clearinghouse rejections. These occur before a claim ever reaches the payer and are often tied to technical errors such as formatting issues, invalid codes, or missing information. While frustrating, these rejections are usually easier to identify and correct.

The second category is payer denials. In these cases, the insurance company receives the claim but denies payment during processing. Common reasons include eligibility issues, authorization requirements, medical-necessity concerns, or credentialing discrepancies.

What these denials have in common is that many of them can be prevented with the right processes and controls in place.

Start With the Fundamentals

In my experience, practices with the lowest denial rates consistently execute the fundamentals well. It starts at the front desk.

Verifying patient demographics and insurance eligibility before services are provided remains one of the most effective ways to prevent denials. While it may sound simple, busy schedules, staffing challenges, and inconsistent workflows can lead teams to skip steps, ultimately creating costly problems.

Front-office staff play a larger role in revenue cycle performance than many organizations realize. They need more than basic registration training. They need to know how to navigate payer portals, understand benefit verification requirements, identify potential coverage issues, and recognize when additional information is needed before a patient is seen.

When staff understand how their work impacts reimbursement, accuracy improves, and denials decrease.

Provider credentialing is another area that deserves close attention. I’ve worked with practices that were surprised to learn that outdated or incomplete credentialing information was delaying reimbursement. Ensuring providers are properly credentialed with each payer and keeping those records current can prevent a significant amount of revenue disruption.

Don’t Overlook Coding and Documentation

Coding and documentation requirements continue to evolve, which means even experienced teams can struggle to keep up.

One issue I frequently encounter is a disconnect between clinical documentation and billing. Providers may perform and document services appropriately, but if documentation doesn’t fully support the submitted codes, claims may be delayed, denied, or require additional review.

Staying current on coding updates is important, but documentation quality is equally critical. Clean claims rely on both components working together.

Technology can also play an important role in reducing denials. Most modern practice management systems include tools such as claim scrubbing, automated edits, and eligibility verification. However, simply having these tools isn’t enough.

The practices that achieve the best results are those that make technology part of their standard workflow. Their teams review alerts, investigate issues before claims are submitted, and consistently follow established processes. Often, the opportunity isn’t investing in new technology. It’s maximizing the capabilities of the systems already in place.

Focus on Patterns, Not Individual Denials

When we work with practices, we rarely find a denial problem caused by a single issue.

More often, denials stem from a series of small breakdowns that compound over time. That’s why I encourage practice leaders to look beyond individual denials and focus on trends.

• Are eligibility-related denials increasing?
• Are authorization issues concentrated within specific service lines?
• Do certain payers consistently return claims for coding concerns?

Understanding denial patterns helps practices identify root causes and implement meaningful improvements rather than repeatedly correcting the same problems.

The benefits extend well beyond faster reimbursement. Organizations that build strong denial prevention processes often experience healthier cash flow, lower accounts receivable balances, reduced administrative workload, and greater confidence in their financial performance.

My Advice to Practice Leaders

If there’s one takeaway I’d leave you with, it’s this: don’t accept denials as a normal cost of doing business.

While some denials are inevitable, many stem from process gaps that can be identified and corrected. Small improvements in eligibility verification, documentation, coding accuracy, credentialing, and staff training can have a measurable impact on revenue and operational efficiency.

The most successful practices aren’t spending all of their time chasing payments. They’re building systems that help them get claims right the first time.

At Yeo & Yeo Medical Billing & Consulting, we work alongside independent medical practices to identify revenue cycle challenges, strengthen processes, and reduce avoidable denials. From medical billing and provider credentialing to staff training and operational assessments, our team helps practices create more efficient systems that support stronger financial performance and long-term success.

If you usually file and pay your taxes on time but miss a deadline once, getting penalty relief may soon become much easier.

The IRS is replacing its long-standing First Time Abate program with a new Automatic Exemption from Penalty, or AEP. Under the new system, eligible taxpayers will receive relief automatically. You will no longer need to call the IRS or submit a separate request in many cases.

The change begins with eligible 2025 tax year returns and 2026 quarterly returns. It will apply to future periods as well.

For business owners and individuals with a solid filing history, this could remove one more administrative headache after an occasional late filing or payment.

AEP can prevent certain penalties before they are assessed

First Time Abate generally required you to receive a penalty and then ask the IRS to remove it. AEP changes that process.

If you qualify, the IRS will identify your compliance history when it processes your original return. It will then avoid assessing certain penalties in the first place. You do not need to file an application or make a separate request. The IRS will send you a notice confirming that relief was applied.

AEP may cover three common penalties:

• Failure to file
• Failure to pay
• Failure to deposit

For example, assume your business has filed its payroll tax returns and made its required deposits on time for the past several years. A one-time deposit problem in 2026 could potentially qualify for automatic relief if all AEP requirements are met.

So if you receive an IRS notice after a late filing, payment, or deposit, read it carefully before assuming you owe a penalty. The IRS may have already applied AEP.

Your prior compliance history is the key

The main requirement is a history of timely compliance.

For annual returns, the IRS generally looks at the prior three years. For quarterly returns, it looks at the prior 12 consecutive quarters. The same return type generally must have been filed on time during that period.

The rules also consider your prior penalty history. According to current IRS guidance, you may still qualify if a prior penalty was later removed because of reasonable cause or an IRS error. Estimated tax penalties generally do not count against you for this purpose.

Business taxpayers have additional requirements involving prior failure-to-deposit penalties.

Consider a corporation that files Form 1120 every year. If its 2022, 2023, and 2024 returns were filed timely and it otherwise satisfies the AEP rules, a late eligible 2025 return may qualify for automatic penalty relief.

The practical move is simple: maintain clean filing and payment records. A strong compliance history now has an additional benefit if you make an occasional mistake.

Many common business and individual returns are eligible

Current IRS guidance lists several return series that may qualify for AEP, including:

• Forms 1040, 1065, and 1120
• Forms 940, 941, 943, 944, and 945
• Form CT-1

But AEP does not apply to every return or every penalty. Returns filed only occasionally because of a specific event generally do not qualify. The IRS specifically notes that information returns and certain event-based filings, such as a Form 709 Gift Tax Return, are outside the program.

AEP also does not generally cover penalties such as accuracy-related penalties or daily delinquency penalties.

Before assuming a penalty will disappear automatically, confirm that both the return and the penalty are covered.

First Time Abate is being phased out, not disappearing overnight

The transition creates an important timing issue.

First Time Abate remains available for certain older returns and returns processed before AEP becomes operational. Current IRS guidance says it may still apply to eligible 2024 returns, 2025 quarterly returns, and certain 2025 tax year and 2026 quarterly returns processed before AEP begins. In those cases, you may need to contact the IRS to request relief.

For eligible original returns with due dates on or after January 1, 2027, AEP will replace First Time Abate.

That means you should not ignore a penalty notice simply because you think AEP applies. During the transition, the timing of the return and IRS processing may determine whether relief is automatic or whether you still need to request First Time Abate.

If you receive a penalty notice for a 2025 or 2026 period, have your CPA review it before paying it.

Penalty relief does not erase the underlying tax or interest

AEP is penalty relief. It is not forgiveness of the tax itself.

You still owe any unpaid tax. You may also owe interest and any penalties that are not covered by AEP. The IRS also makes clear that taxpayers should continue filing returns, paying taxes, and making required deposits by their normal deadlines.

For example, suppose you owe $40,000 of tax and qualify to have a failure-to-pay penalty prevented under AEP. The $40,000 tax liability does not disappear. Interest on the unpaid tax can still apply.

So treat AEP as a safety net for an occasional compliance problem, not as a reason to delay filing or payment.

Reasonable cause relief is still available

Failing the AEP requirements does not necessarily mean you are out of options.

The IRS continues to allow taxpayers to request penalty relief based on reasonable cause. That relief depends on your facts and circumstances and generally requires showing that you exercised ordinary business care and prudence but were unable to meet the requirement.

A serious illness, casualty, natural disaster, or another circumstance outside your control may support a reasonable cause request depending on the facts.

If you receive a significant penalty and AEP does not apply, gather the records that explain what happened before responding to the IRS.

What this change means for taxpayers

AEP should make routine penalty relief easier for taxpayers who have consistently met their obligations.

But automatic does not mean universal. Eligibility still depends on the return involved, your prior compliance history, the type of penalty, and the timing of the filing.

If you receive an IRS penalty notice, do not assume the amount is final. Review your prior filing and payment history first. You may qualify for AEP, First Time Abate during the transition period, or reasonable cause relief.

Your CPA can also help determine which form of relief applies and whether the IRS processed the penalty correctly. For more personalized guidance regarding IRS penalties and potential relief, please contact our office.