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Employee Spotlight: Jaycie Hilaski

This month, we’re excited to spotlight Jaycie Hilaski, who joined DBC as a Manager in January 2026. Since joining the firm, Jaycie has brought a thoughtful, client-focused approach to her work and has quickly become a valued member of the team. One of Jaycie’s favorite aspects of her role is working with not-for-profit organizations. …

This month, we’re excited to spotlight Jaycie Hilaski, who joined DBC as a Manager in January 2026. Since joining the firm, Jaycie has brought a thoughtful, client-focused approach to her work and has quickly become a valued member of the team.

One of Jaycie’s favorite aspects of her role is working with not-for-profit organizations. She enjoys helping clients navigate tax, assurance, and compliance requirements so they can stay focused on serving their communities. The variety of work and the opportunity to build meaningful client relationships make this area especially special to her.

Outside of the office, Jaycie enjoys spending time with her husband, Brett, and their two young children. Their son, who recently turned three, keeps the family busy with his energy, curiosity, and nonstop conversation, while their daughter, who will soon celebrate her first birthday, loves watching and learning from her big brother. Jaycie says that seeing their personalities develop and their sibling relationship grow has been one of the most rewarding parts of parenthood.

In the summertime, Jaycie and her family spend much of their free time at their seasonal campsite. Whether they’re taking golf cart rides to the campground store, visiting the park, grilling dinner at the campsite, or enjoying an afternoon on the boat, it’s a place where they can relax, spend quality time together, and make lasting family memories.

We’re grateful to have Jaycie on the DBC team and appreciate the knowledge, dedication, and positive attitude she brings to both her clients and colleagues. We look forward to seeing all she accomplishes in the years ahead!

Rising Land Values Are Creating New Challenges for Farm Estate Planning

Strong farmland values have been a positive development for many agricultural operations, but they are also creating new challenges for farm families planning for the future.As land values continue to reach record levels in many areas, producers face a difficult question: How can assets be distributed fairly among heirs without creating an unsustainable financial …

Strong farmland values have been a positive development for many agricultural operations, but they are also creating new challenges for farm families planning for the future.

As land values continue to reach record levels in many areas, producers face a difficult question: How can assets be distributed fairly among heirs without creating an unsustainable financial burden for the next generation of farmers?

While every family’s situation is different, focusing solely on current market value may not always lead to the best outcome for the long-term success of the farm.

Below are several important considerations when evaluating farmland as part of an estate and transition plan.

Fair Does Not Always Mean Equal

Many farm families want to treat all heirs fairly. However, fairness and equality are not always the same thing.

When farmland represents the majority of a family’s wealth, dividing assets equally can create significant challenges for the heir who intends to continue farming.

If a farming heir is required to purchase land from siblings at full market value, the resulting debt load can dramatically affect profitability, cash flow, and the future viability of the operation.

Estate planning discussions should consider not only today’s asset values, but also whether future generations can realistically support the financial obligations created by those decisions.

Consider the Long-Term Future of the Farm

One of the most important questions in any transition discussion is whether the family wants to keep the farm together.

If preserving the operation is a priority, then the focus should extend beyond simply determining what the land is worth today. Families should also consider what ownership structure will allow the operation to remain successful after the transition occurs.

In some situations, shared ownership among siblings may work well. In others, it may create operational challenges or differing expectations that become difficult to manage over time.

Evaluating these possibilities early can help families avoid future conflicts and create a smoother transition process.

Affordability Matters

Current land values may not reflect what a farming operation can realistically support.

When estate plans require a farming heir to buy out siblings at full market value, annual debt payments can quickly become substantial. Even highly successful operations may struggle to absorb large buyout obligations while continuing to invest in equipment, inputs, labor, and growth opportunities.

A transition plan should consider the operation’s projected cash flow, profitability, and long-term sustainability. The goal is not simply transferring ownership. The goal is ensuring the farm remains financially healthy after the transfer occurs.

Other Assets May Help Balance the Plan

Many farm families use a combination of assets to create a more balanced estate plan.

Life insurance, retirement accounts, investment assets, and other nonfarm property can sometimes help offset differences in farmland distribution. This approach may reduce the financial burden placed on the farming heir while still providing meaningful value to nonfarming heirs.

Every family situation is unique, but exploring multiple options often creates greater flexibility and better outcomes for all parties involved.

Communication Is Critical

Conversations about estate planning are not always easy, but delaying them often creates more challenges later.

Open discussions about family goals, financial realities, and expectations can help reduce misunderstandings and create a stronger foundation for future decision-making. When family members understand both the emotional and financial considerations involved, they are often better positioned to work toward solutions that support both family relationships and business continuity.

Planning Beyond Today’s Land Values

Record land prices can make estate planning decisions more complicated, but they should not dictate the entire conversation.

The most successful transition plans balance current asset values with long-term business sustainability, family objectives, and the future needs of the next generation. By focusing on affordability and operational success rather than simply maximizing asset values, families can often create plans that better support both the farm and the people involved.

At DBC, we work closely with agricultural families to navigate farm succession planning, ownership transitions, estate considerations, and long-term financial strategies. Thoughtful planning today can help preserve both family relationships and the future success of the operation for generations to come.

To read the original article by Myron Friesen, please visit https://www.agriculture.com/don-t-let-record-land-prices-derail-your-farm-estate-plan-11940991

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Federal Energy Grant Uncertainty Creates Challenges for Michigan Agricultural Businesses

Federal grant and incentive programs often play an important role in helping agricultural operations invest in efficiency improvements, renewable energy projects, and long-term sustainability initiatives. When producers commit to these projects, they typically do so based on the expectation that approved funding will be available as promised.Recent discussions surrounding the Rural Energy for America …

Federal grant and incentive programs often play an important role in helping agricultural operations invest in efficiency improvements, renewable energy projects, and long-term sustainability initiatives. When producers commit to these projects, they typically do so based on the expectation that approved funding will be available as promised.

Recent discussions surrounding the Rural Energy for America Program (REAP) highlight how changes to federal funding programs can create financial uncertainty for farms and rural businesses that have already made significant investments.

As agricultural businesses continue evaluating capital improvement opportunities, this situation serves as a reminder of the importance of planning for both opportunity and risk when government programs are involved.

Understanding the Rural Energy for America Program

The Rural Energy for America Program, commonly known as REAP, provides grants and loan funding to farmers and rural businesses pursuing energy efficiency improvements and renewable energy projects.

The program has helped support investments such as:

  • Solar energy systems
  • Energy-efficient equipment upgrades
  • Building improvements
  • Renewable energy infrastructure
  • Other projects designed to reduce long-term operating costs

In many cases, approved grants can cover a significant portion of project costs, making major investments more financially feasible for producers.

Because of this support, many agricultural businesses move forward with projects after receiving confirmation that funding has been obligated by the federal government.

When Funding Expectations Change

Recent testimony before the Michigan Senate Energy and Environment Committee highlighted concerns from businesses and producers who moved forward with renewable energy projects based on previously approved REAP funding.

Several project participants reported completing projects, securing financing, and paying contractors with the expectation that grant reimbursements would follow. However, changes to federal funding administration have left some businesses uncertain about whether they will ultimately receive the funds they anticipated.

For producers, situations like this can create difficult financial challenges. Projects are often completed using borrowed funds or internal capital while reimbursement is pending. If expected funding is delayed or unavailable, cash flow projections and debt repayment plans can quickly change.

The Importance of Financial Flexibility

Agricultural operations regularly navigate changing commodity prices, weather conditions, input costs, and interest rates. Funding uncertainty adds another layer of complexity.

When evaluating major capital investments, producers may benefit from considering:

  • Alternative financing scenarios
  • Cash reserve requirements
  • Debt service capacity
  • Project payback timelines
  • Contingency planning if incentives change

Government grants and incentives can create valuable opportunities, but long-term project viability should ideally be evaluated under multiple financial scenarios.

Operations that build flexibility into their planning process are often better positioned to adapt when circumstances change.

Renewable Energy Investments Continue to Grow

Despite uncertainty surrounding individual programs, interest in renewable energy projects remains strong across agriculture.

Many producers continue to explore solar energy systems and energy-efficiency upgrades as a way to reduce operating expenses, improve sustainability, and strengthen long-term profitability.

For some operations, energy projects can provide predictable cost savings over time and reduce exposure to rising utility expenses. Others view these investments as part of broader succession, sustainability, or operational efficiency goals.

As technology continues to improve and energy costs evolve, renewable energy projects will likely remain an area of interest for many agricultural businesses.

Evaluating Risk Alongside Opportunity

Every major investment carries some degree of uncertainty. The recent REAP funding concerns illustrate why it is important to evaluate both the potential benefits and risks associated with any project.

Before moving forward with significant capital expenditures, producers should consider:

  • How dependent the project is on outside funding
  • The impact of delayed reimbursement
  • Financing alternatives
  • Long-term return on investment
  • Effects on working capital and cash flow

Careful planning can help operations make informed decisions while reducing the financial impact of unexpected changes.

Looking Ahead

The situation surrounding REAP funding continues to develop, and many producers and rural businesses are waiting for additional guidance regarding approved projects.

While the outcome remains uncertain, the broader lesson is clear. Agricultural businesses should continue evaluating opportunities for efficiency and growth while maintaining a disciplined approach to risk management and financial planning.

Strong decision-making often requires balancing optimism about future opportunities with preparation for changing circumstances.

At DBC, we help agricultural producers evaluate capital investments, assess financing strategies, and understand the long-term financial implications of major business decisions. Thoughtful planning can help position your operation for success regardless of changes in the economic or regulatory environment.

To read the original article by Kyle Davidson, please visit https://www.agriculture.com/partners-michigan-senate-panel-mulls-financial-catch-22-for-farms-pledged-federal-clean-energy-funding-11992855

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Proposed Changes to Animal Welfare Laws Could Affect Livestock Producers Nationwide

Animal welfare regulations are once again at the center of discussions in Washington as Congress considers changes to the federal farm bill. One proposal receiving significant attention is the Save Our Bacon Act, which would limit the ability of individual states to establish certain livestock production standards. The proposal is aimed largely at California’s …

Animal welfare regulations are once again at the center of discussions in Washington as Congress considers changes to the federal farm bill. One proposal receiving significant attention is the Save Our Bacon Act, which would limit the ability of individual states to establish certain livestock production standards.

The proposal is aimed largely at California’s Proposition 12, a law that established minimum confinement standards for breeding pigs and other livestock products sold within the state. While the legislation remains under debate, its potential impact extends far beyond California and could affect producers across the country.

Below are several key considerations livestock producers should be monitoring as the discussion continues.

The Debate Over State Versus Federal Authority

A major component of the debate centers on who should have the authority to regulate livestock production standards.

Supporters of the proposed legislation argue that individual state requirements create a patchwork of regulations that can be difficult and costly for producers to navigate. They believe production standards should be addressed through a consistent federal framework rather than varying state-by-state requirements.

Opponents argue that states should retain the ability to establish standards that reflect the priorities of their residents and consumers. They also point out that producers can choose whether to sell products into markets that require specific production practices.

The discussion mirrors broader national conversations about the balance between federal oversight and state autonomy in regulating industries and commerce.

Existing Investments Could Be Affected

Many producers have already made substantial investments to comply with animal welfare requirements such as Proposition 12.

Facility renovations, housing modifications, and operational changes often require significant capital expenditures. Producers who invested in these improvements did so with the expectation that the standards would remain in place and continue influencing market access.

If federal legislation changes the regulatory landscape, those investments could become more difficult to evaluate from a financial standpoint. For some operations, this creates additional uncertainty around future capital planning and long-term business decisions.

Consumer Demand Continues to Influence Production Practices

Regardless of regulatory outcomes, consumer preferences continue to shape livestock production.

Many retailers, restaurants, and food manufacturers have adopted sourcing standards that emphasize animal welfare. Demand for products marketed as cage-free, crate-free, or humanely raised has increased over time, creating new market opportunities for producers who choose to pursue those segments.

For some operations, investments in animal welfare standards are driven as much by customer expectations as regulatory requirements. Understanding consumer demand remains an important component of long-term planning.

Regulatory Uncertainty Creates Planning Challenges

Periods of regulatory change can make it difficult for producers to make confident business decisions.

Questions surrounding future requirements can influence facility investments, financing decisions, profitability projections, and market strategies. Producers may find it beneficial to revisit their assumptions and evaluate how potential policy changes could affect future operations.

Areas worth reviewing include:

  • Capital improvement plans
  • Cash flow projections
  • Financing arrangements
  • Market access opportunities
  • Risk management strategies
  • Long-term growth objectives

Proactive planning can help producers remain flexible while regulations and market conditions continue to evolve.

Looking Ahead

The outcome of the current farm bill negotiations remains uncertain, and it is unclear whether the proposed legislation will ultimately become law. However, the discussion highlights the growing intersection of regulation, consumer expectations, animal welfare standards, and agricultural business planning.

As the situation develops, livestock producers should continue monitoring legislative activity and evaluating how potential changes could affect both current operations and future investments.

At DBC, we work with agricultural producers to evaluate the financial implications of major business decisions, assess long-term profitability, and develop strategies that support sustainable growth. Understanding how regulatory changes may affect your operation can help position your business for continued success regardless of the outcome.

To read the original article by Kevin Hardy, please visit https://www.agriculture.com/partners-farm-animal-welfare-rules-might-be-rolled-back-by-congress-11990404

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

When Does a Hospitality Business Need More Than Just Basic Bookkeeping?

For many hospitality businesses, bookkeeping is where financial management begins.Recording transactions, reconciling accounts, and generating financial statements are all important functions. However, as a business grows, basic bookkeeping may no longer provide the information needed to make strategic decisions.The question is not whether bookkeeping is important. The question is whether it is providing the …

For many hospitality businesses, bookkeeping is where financial management begins.

Recording transactions, reconciling accounts, and generating financial statements are all important functions. However, as a business grows, basic bookkeeping may no longer provide the information needed to make strategic decisions.

The question is not whether bookkeeping is important. The question is whether it is providing the insights needed to manage a more complex operation.

Bookkeeping Records What Happened

Bookkeeping serves an essential purpose.

It helps track:

  • Revenue
  • Expenses
  • Payroll
  • Accounts payable
  • Bank activity

This information creates the foundation for financial reporting and tax compliance.

However, bookkeeping is primarily focused on recording historical activity. It tells you what happened, but not always why it happened or what actions should be taken next.

Signs Your Business May Need More Financial Support

As hospitality businesses grow, owners often need deeper financial analysis and planning.

Common indicators include:

Multiple Revenue Streams

Restaurants, hotels, breweries, event venues, and entertainment businesses often generate revenue from multiple sources.

Understanding profitability by department, service line, or location becomes increasingly important as operations become more complex.

Expansion Plans

If you are considering:

  • Opening a new location
  • Renovating existing facilities
  • Adding services
  • Purchasing significant equipment

You may benefit from financial forecasting and cash flow analysis beyond traditional bookkeeping.

Cash Flow Challenges

A business can be profitable and still experience cash flow pressure.

If cash balances seem inconsistent despite strong revenue, additional financial analysis may be needed to identify the cause and develop solutions.

Limited Visibility Into Key Metrics

Many owners know their total revenue but have less visibility into operational performance indicators.

Understanding labor percentages, food costs, occupancy trends, and profit margins often requires more detailed reporting and analysis.

Financial Reporting Should Support Decision-Making

As a hospitality business grows, financial information should help answer questions such as:

  • Which services generate the strongest margins?
  • Are labor costs increasing faster than revenue?
  • Is a new location financially feasible?
  • How much cash is available for future investments?
  • What should be expected at year-end from a tax perspective?

These conversations move beyond bookkeeping and into financial advisory and planning.

The Value of Regular Financial Reviews

Many hospitality owners review financial statements only when preparing taxes or meeting with lenders.

More frequent reviews can provide valuable insights throughout the year.

Regular financial discussions can help identify:

  • Profitability trends
  • Cost increases
  • Cash flow concerns
  • Growth opportunities
  • Tax-planning considerations

Having accurate information available throughout the year often leads to better business decisions.

Building a Stronger Financial Function

Moving beyond basic bookkeeping does not necessarily mean hiring a full internal finance department.

Many hospitality businesses benefit from additional support such as:

  • Financial statement analysis
  • Cash flow forecasting
  • Budget development
  • Tax planning
  • Strategic business advisory services

The right level of support depends on the size, complexity, and goals of the business.

Looking Ahead

Bookkeeping remains an important part of financial management. However, growing hospitality businesses often reach a point where recording transactions is no longer enough.

Owners need information that helps them evaluate performance, plan for the future, and make informed decisions.

At DBC, we work with hospitality businesses to provide financial insights that go beyond basic bookkeeping. From reporting and forecasting to tax planning and strategic advisory services, we help owners better understand the financial side of their operations so they can focus on serving their guests and growing their businesses.

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Preparing Your Hospitality Business for Long-Term Growth

Growth can be exciting for hospitality business owners. Strong occupancy rates, increasing reservations, and positive customer feedback often create opportunities to expand.However, sustainable growth requires more than demand. It requires planning.Whether you’re considering adding a new location, renovating existing facilities, expanding services, or increasing staffing levels, preparing for growth can help reduce risk and …

Growth can be exciting for hospitality business owners. Strong occupancy rates, increasing reservations, and positive customer feedback often create opportunities to expand.

However, sustainable growth requires more than demand. It requires planning.

Whether you’re considering adding a new location, renovating existing facilities, expanding services, or increasing staffing levels, preparing for growth can help reduce risk and improve long-term success.

Start With Your Financial Foundation

Before making significant investments, it is important to understand your current financial position.

Key areas to evaluate include:

  • Cash flow trends
  • Profit margins
  • Debt obligations
  • Working capital availability
  • Seasonal revenue fluctuations

Growth initiatives often require substantial upfront costs before they begin generating additional revenue. Understanding your financial capacity helps determine what the business can realistically support.

Understand What Is Driving Growth

Not all growth opportunities create the same value.

For example, increasing occupancy rates at a hotel may require a different strategy than expanding banquet services or adding a second restaurant location.

Before investing, consider:

  • Which services are generating the strongest margins
  • Where customer demand is increasing
  • Which operational areas have room for expansion
  • Whether current demand is sustainable

Growth decisions should be based on data rather than assumptions.

Evaluate Staffing Needs Early

Labor remains one of the largest expenses in hospitality.

As businesses grow, staffing needs often increase before additional revenue fully materializes. Recruiting, onboarding, and training new employees takes time and resources.

Owners should evaluate:

  • Current staffing capacity
  • Management bandwidth
  • Training requirements
  • Employee retention trends

A growth strategy is only as strong as the team supporting it.

Plan for Capital Investments

Many growth initiatives require capital expenditures.

Examples may include:

  • Property renovations
  • Equipment purchases
  • Technology upgrades
  • New locations
  • Facility expansions

Each investment should be evaluated based on expected return, financing requirements, and long-term business objectives.

The goal is not simply to spend money on growth. The goal is to invest in areas that strengthen profitability and guest experience.

Monitor Performance as You Grow

Growth should be measured continuously.

Regular financial reviews help identify whether growth initiatives are producing the expected results. Key performance indicators may include:

  • Revenue growth
  • Profit margins
  • Labor efficiency metrics
  • Customer acquisition and retention rates
  • Operational performance and utilization measures

Monitoring performance allows owners to make adjustments before small issues become larger challenges.

Think Beyond the Next Season

Hospitality businesses often focus on immediate operational demands. Long-term growth planning requires a broader perspective.

Questions worth considering include:

  • Where do you want the business to be in three to five years?
  • What investments will support that vision?
  • How will market conditions affect future growth opportunities?

The most successful growth strategies align short-term decisions with long-term goals.

Growing with DBC

Long-term growth rarely happens by accident. It requires thoughtful planning, disciplined financial management, and ongoing evaluation.

At DBC, we work with hospitality businesses to assess growth opportunities, evaluate financial impacts, and develop strategies that support sustainable expansion. Whether you’re considering a renovation, a new location, or broader operational changes, our team can help you make informed decisions that support long-term success.

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Red Flags That Might Trigger a Construction Audit

An audit rarely arrives at a convenient time, and for construction companies, the stakes can feel especially high. Large contracts, fluctuating job costs, and complex billing structures mean that even small inconsistencies can draw unwanted attention. Many contractors are surprised to learn that the issues most likely to trigger an audit often start with …

An audit rarely arrives at a convenient time, and for construction companies, the stakes can feel especially high. Large contracts, fluctuating job costs, and complex billing structures mean that even small inconsistencies can draw unwanted attention. Many contractors are surprised to learn that the issues most likely to trigger an audit often start with everyday processes that slip out of alignment long before tax season arrives.

Understanding these red flags allows contractors to address problems early, strengthen internal systems, and reduce the likelihood of an audit disrupting their workflow or slowing down a busy season.

Inconsistent or Incomplete Job Costing

Job costing is the foundation of construction accounting. When costs such as labor, materials, equipment, or subcontractor payments are not recorded accurately, it raises questions about how revenue and expenses are being tracked. Missing or inconsistent records can signal deeper issues with financial controls.

Strong job costing practices provide clarity and show auditors that your financial reporting reflects actual project activity.

Large Fluctuations in Revenue or Profit

Construction revenue often fluctuates based on project timing, but dramatic swings without documentation attract attention. An auditor may review records closely if income appears unusually high or low compared to the previous year.

Contractors can reduce this risk by reviewing:

  • The percentage of work completed
  • Timing differences between project starts and finishes
  • Shifts in the types of projects accepted
  • Unusual cost patterns or billing cycles

Clear explanations help demonstrate that the changes are part of normal business operations.

Misclassification of Workers

Classifying workers as subcontractors instead of employees is a common issue in construction. Because payroll taxes and benefits differ, regulators examine these classifications carefully.

Red flags include:

  • Subcontractors performing the same tasks as employees
  • Workers who rely solely on your business for income
  • Missing or incomplete subcontractor documentation

Correct classification protects both your business and your workers.

Issues With Sales Tax or Use Tax

Sales and use tax rules vary widely across states. Multi-state contractors, in particular, face challenges when materials are purchased in one state and used in another, or when exempt purchases are not documented properly.

Potential triggers include:

  • Missing records for tax-exempt purchases
  • Incorrect application of rates
  • Underreported use tax obligations
  • Inconsistent documentation of material usage

Reliable tracking helps avoid compliance issues.

Poor Documentation for Subcontractor Payments

Subcontractor payments draw scrutiny when documentation is incomplete. Auditors expect to see W-9s, signed contracts, payment records, certificates of insurance, and accurate 1099 filings.

When this documentation is organized and consistent, contractors can demonstrate compliance quickly and confidently.

Inaccurate or Delayed Revenue Recognition

Construction revenue recognition is complex because projects span multiple reporting periods. Errors in applying the percentage-of-completion method or failure to update estimates can create discrepancies in reported income.

Strong WIP reporting supports accurate revenue recognition and reduces the risk of audit adjustments.

Cash-Intensive Transactions

Large or frequent cash transactions can raise questions for auditors, especially when documentation is limited. Cash payments without clear project assignments or receipts may lead to deeper investigation.

Detailed tracking helps show that all transactions are legitimate and properly recorded.

Weak Internal Controls

Internal controls play a significant role in preventing errors. Auditors often look closely at businesses with inconsistent financial practices or limited oversight. Warning signs include:

  • Unreconciled accounts
  • Missing approval processes
  • Lack of separation between financial duties
  • Irregular review of financial reports

Stronger controls reduce both mistakes and audit risk.

Preparing for a More Confident Future

Audits are far less disruptive when contractors maintain clear, consistent financial practices. By understanding what triggers auditor attention, construction companies can strengthen internal systems, reduce risk, and build a financial foundation that supports long-term stability.

At DBC, we help construction companies improve job costing, documentation, and financial controls so they can approach each year with greater confidence. If you would like support reviewing your processes or preparing for an audit, our team is ready to help.

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Tax Strategies for Managing Subcontractor Payments

Subcontractors play a central role in most construction projects. Their work influences schedules, budgets, and overall project performance. They also create specific tax responsibilities that contractors must manage carefully. When subcontractor payments are handled inconsistently or without proper documentation, it can lead to compliance issues, unexpected tax liabilities, or delays at year-end.With the right …

Subcontractors play a central role in most construction projects. Their work influences schedules, budgets, and overall project performance. They also create specific tax responsibilities that contractors must manage carefully. When subcontractor payments are handled inconsistently or without proper documentation, it can lead to compliance issues, unexpected tax liabilities, or delays at year-end.

With the right systems in place, managing subcontractor payments becomes more efficient, predictable, and aligned with tax requirements. Strong processes help contractors stay organized while building a clearer financial picture for each project.

Confirm Proper Worker Classification

One of the most important tax considerations is determining whether individuals are truly subcontractors or should be classified as employees. Misclassification is a common challenge in construction and can lead to significant penalties if not addressed.

Contractors should review whether the worker:

  • Controls their own schedule
  • Provides their own tools and equipment
  • Works for multiple clients
  • Has autonomy over how work is completed

If the contractor controls most aspects of the work, the individual may need to be classified as an employee. Accurate classification protects the business and supports tax compliance.

Collect and Maintain Proper Documentation

Before issuing any payments, contractors should collect the subcontractor’s W-9 form. This ensures that taxpayer identification information is correct and establishes whether year-end 1099 reporting is required.

A strong documentation process typically includes:

  • W-9 forms on file before work begins
  • Signed contracts outlining scope, payment terms, and responsibilities
  • Proof of insurance and licensing when required
  • Organized payment records for each subcontractor

Consistent documentation reduces risk and makes year-end reporting much smoother.

Track Subcontractor Costs by Job

Subcontractor payments must align with job costing to reflect the true cost of each project. When payments are not assigned accurately, job profitability becomes difficult to track, and tax deductions may not align with actual project expenses.

Tracking costs by project helps contractors:

  • Monitor subcontractor spending against the budget
  • Identify variances early
  • Maintain accurate WIP reporting
  • Strengthen future estimating

Clear costing improves financial visibility across the entire project portfolio.

Review Contract Terms With Tax Implications in Mind

Subcontractor agreements often include specific billing structures, retainage rules, and payment schedules. These terms influence when payments are recognized and how they appear on financial statements.

For example, retainage amounts may delay when expenses are recorded, and milestone-based billing can impact cash flow forecasting. Reviewing these terms before the project begins helps contractors plan accordingly.

Ensure Timely and Accurate 1099 Reporting

Most subcontractors require a 1099-NEC at year-end if total payments meet reporting thresholds. Missing or inaccurate 1099 filings can create penalties and additional administrative work.

To streamline compliance, contractors should:

  • Review payment totals for each subcontractor
  • Confirm taxpayer information matches W-9 forms
  • Issue 1099s before IRS deadlines
  • Maintain organized electronic and physical records

Preparing throughout the year reduces the stress of year-end reporting.

Understand When Withholding May Be Required

In rare cases, contractors may need to withhold taxes from subcontractor payments if the subcontractor does not provide valid taxpayer identification information. This is known as backup withholding. Although not common, contractors should be aware of this requirement to avoid IRS issues.

Plan Ahead for Tax Deductions

Subcontractor payments are generally deductible as project-related expenses. However, the timing of these deductions depends on the business’s accounting method.

  • Under the cash method, deductions occur when payments are made.
  • Under the accrual method, deductions occur when expenses are incurred.

Understanding how your accounting method impacts subcontractor deductions can improve tax planning and forecasting.

Strengthen Communication Between Accounting and Project Teams

Field teams often know when subcontractors complete work, submit invoices, or encounter delays. Accounting teams manage payment timing and reporting. When these groups communicate effectively, subcontractor payments become more accurate, organized, and aligned with financial goals.

Regular updates help ensure that subcontractor activity is captured correctly in both job costing and tax reporting.

Bringing Clarity to Subcontractor Management

Managing subcontractor payments effectively requires structure, communication, and a clear understanding of tax rules. With strong documentation, consistent job costing, and thoughtful planning, contractors can reduce tax risk and maintain a more accurate financial picture.

At DBC, we help construction companies strengthen their subcontractor management processes, improve compliance, and build financial systems that support confident decision making. If you would like guidance on organizing subcontractor payments or reviewing your tax strategy, our team is here to help.

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

How Monthly Financial Reviews Can Improve Year-End Tax Outcomes for Agriculture Businesses

For many agricultural businesses, tax planning becomes a year-end conversation.By then, most of the year’s decisions have already been made. Revenue has been received, expenses have been paid, equipment may have been purchased, and cash flow has already moved through the business.Year-end planning still matters, but the best tax outcomes are often shaped much …

For many agricultural businesses, tax planning becomes a year-end conversation.

By then, most of the year’s decisions have already been made. Revenue has been received, expenses have been paid, equipment may have been purchased, and cash flow has already moved through the business.

Year-end planning still matters, but the best tax outcomes are often shaped much earlier. Monthly financial reviews give farmers and agribusiness owners a better view of where the year is heading, making it easier to make informed decisions before December arrives.

Tax Planning Starts With Good Information

Strong tax planning depends on accurate, timely financial information.

When books are only reviewed once or twice a year, it becomes harder to understand true profitability, cash flow, and taxable income. That can lead to rushed decisions at year-end, especially when trying to reduce income or manage deductions.

Monthly reviews help answer important questions throughout the year:

  • Is income tracking higher or lower than expected?
  • Are expenses increasing in certain areas?
  • Is cash flow strong enough to support new purchases?
  • Are estimated tax payments still appropriate?
  • Are there upcoming decisions that could affect taxable income?

These questions are easier to address when there is time to plan.

Better Visibility Into Income and Expenses

Agricultural operations often face fluctuating income and expenses. Commodity prices, input costs, weather, equipment repairs, and timing of payments can all affect financial results.

Monthly financial reviews help identify changes early.

For example, if income is trending higher than expected, there may be time to evaluate options before year-end. That could include reviewing prepaid expenses, retirement plan contributions, capital purchases, or income deferral opportunities.

If income is lower than expected, the focus may shift toward preserving cash, adjusting estimated tax payments, or delaying certain expenses.

Either way, the business is making decisions based on current financial information rather than a year-end estimate.

Avoiding Rushed Year-End Decisions

When tax planning waits until the end of the year, decisions can become reactive.

This is especially common with capital purchases. A farm may consider buying equipment to reduce taxable income, but the purchase still needs to make sense operationally and financially.

Monthly reviews create more room to evaluate whether a purchase fits the business. Owners can consider cash flow, financing, equipment needs, and long-term value before making a decision.

The tax benefit may be helpful, but it should support a sound business decision rather than drive it.

Managing Cash Flow Alongside Tax Strategy

Tax planning and cash flow planning should work together.

A strategy that reduces taxable income may not be the right choice if it creates unnecessary pressure on cash flow. Similarly, delaying income or accelerating expenses may help in one year but create challenges in the next.

Monthly reviews help business owners see the full picture. They can evaluate how tax decisions may affect loan payments, operating expenses, payroll, input purchases, and future liquidity.

This is especially important in agriculture, where timing and seasonality can make cash flow uneven throughout the year.

Improving Estimated Tax Planning

Monthly reviews can also help improve estimated tax planning.

When income changes significantly during the year, estimated tax payments may need to be adjusted. Waiting until year-end can result in underpayment, overpayment, or missed planning opportunities.

Regular financial review allows owners and advisors to monitor taxable income throughout the year and make more informed adjustments as needed.

Building a Stronger Year-End Planning Process

Monthly financial reviews do not replace year-end tax planning. They make it more effective.

By the time year-end arrives, the business should already have a reasonable understanding of income, expenses, cash flow, and potential tax exposure. That makes the final planning conversation more focused and practical.

Instead of trying to solve everything in December, the business can confirm the plan, review remaining opportunities, and make final adjustments with more confidence.

A Better Rhythm for Decision-Making

Agricultural businesses operate in a changing environment. Monthly financial reviews provide a regular rhythm for evaluating performance and making decisions with better information.

This process can help owners:

  • Track profitability throughout the year
  • Identify tax-planning opportunities earlier
  • Make stronger capital-purchase decisions
  • Manage cash flow more effectively
  • Reduce surprises at year-end

The goal is not to create more administrative work. The goal is to make financial information more useful.

A Final Thought

Year-end tax outcomes are rarely shaped by one decision. They are usually the result of many decisions made throughout the year.

Monthly financial reviews help agricultural businesses stay ahead of those decisions. With timely information and regular conversations, owners can better align tax planning, cash flow, and long-term business goals.

At DBC, we work with agricultural businesses to review financial performance, evaluate tax-planning opportunities, and prepare for year-end with a more complete understanding of the business. If you want to strengthen your planning process, monthly financial reviews are a practical place to start.

This article provides general tax and accounting insights and is not intended as advice specific to your organization or a substitute for personal consultation. We do not provide legal advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

Understanding Michigan Sales and Use Tax Rules for Not-for-Profits

Many not-for-profit organizations assume that tax-exempt status automatically means exemption from sales and use tax. In reality, Michigan’s sales and use tax rules are more nuanced, and misunderstanding them can lead to unexpected liabilities, compliance issues, or missed opportunities for exemption.Understanding when exemptions apply and when taxes must still be paid is an important …

Many not-for-profit organizations assume that tax-exempt status automatically means exemption from sales and use tax. In reality, Michigan’s sales and use tax rules are more nuanced, and misunderstanding them can lead to unexpected liabilities, compliance issues, or missed opportunities for exemption.

Understanding when exemptions apply and when taxes must still be paid is an important part of maintaining compliance and protecting organizational resources.

Understanding Sales Tax vs. Use Tax

Before exploring exemptions, it is helpful to understand the difference between sales tax and use tax.

Sales tax is generally charged on taxable purchases made within Michigan.

Use tax applies when sales tax was not collected at the time of purchase, often involving online, out-of-state, or remote vendors. In these situations, the purchaser may be responsible for remitting the tax directly.

For many not-for-profits, use tax compliance is frequently overlooked because the obligation is less visible than sales tax charged at checkout.

Are Not-for-Profits Automatically Exempt?

One of the most common misconceptions is that federal tax-exempt status automatically exempts an organization from Michigan sales and use tax.

In most cases, this is not true.

While certain qualifying organizations may be eligible for exemptions under Michigan law, exemption from federal income tax under Section 501(c)(3) does not automatically eliminate sales or use tax obligations.

Organizations should evaluate their specific activities, purchases, and fundraising efforts to determine whether exemptions apply.

Common Areas of Confusion

Purchases Made by the Organization

Some purchases made directly by qualifying not-for-profit organizations may be exempt from Michigan sales and use tax. However, exemptions often depend on factors such as:

  • The organization’s exempt status
  • How the item will be used
  • Whether the purchase is made directly by the organization
  • Proper documentation provided to the vendor

If an employee or volunteer makes a purchase personally and later seeks reimbursement, the transaction may not qualify for exemption even if the item is ultimately used for organizational purposes.

Fundraising Sales

Many not-for-profits generate revenue through fundraising events, merchandise sales, auctions, or special campaigns.

These activities can create sales tax obligations depending on the nature and frequency of the event and the items being sold.

Organizations should carefully evaluate:

  • Merchandise sales
  • Ticketed events
  • Silent and live auctions
  • Online fundraising stores
  • Sales conducted through third-party platforms

Assuming that all fundraising revenue is automatically exempt can create compliance risks.

Online and Out-of-State Purchases

As organizations increasingly purchase software, supplies, equipment, and services online, use tax becomes more relevant.

If a vendor does not collect Michigan sales tax, the organization may still owe use tax on the purchase.

Regular reviews of accounts payable records can help identify transactions where use tax may apply.

Best Practices for Maintaining Compliance

Establish Clear Purchasing Procedures

Organizations should develop policies that identify:

  • Who may make tax-exempt purchases
  • Required exemption documentation
  • Approval processes for purchases
  • Procedures for tracking taxable transactions

Clear policies reduce confusion and help ensure consistent treatment of purchases.

Review Fundraising Activities Annually

Fundraising methods often evolve over time. A review of planned events, merchandise sales, and online fundraising activities can help identify potential sales tax considerations before issues arise.

Monitor Use Tax Exposure

Many organizations focus heavily on sales tax while overlooking use tax obligations.

Periodic reviews of vendor invoices and online purchases can help identify areas where use tax may need to be accrued and remitted.

Maintain Supporting Documentation

Organizations should retain exemption certificates, vendor documentation, invoices, and records supporting tax-exempt purchases.

Good recordkeeping can simplify audits and help substantiate exemption claims if questions arise.

Why This Matters

Sales and use tax compliance may not receive the same attention as financial reporting or annual filings, but it remains an important part of sound financial management.

Even small errors can accumulate over time, particularly for organizations making frequent purchases or conducting multiple fundraising activities throughout the year.

Understanding the rules helps not-for-profits avoid unexpected liabilities, strengthen internal controls, and ensure resources remain focused on advancing their mission.

How DBC Can Help

At DBC, we work with not-for-profit organizations to navigate complex tax and compliance requirements, including sales and use tax considerations.

Whether your organization is evaluating exemption eligibility, reviewing fundraising activities, or assessing use tax exposure, our team can help identify potential risks and develop practical compliance strategies.

Proactive planning today can help prevent costly surprises tomorrow while allowing your organization to remain focused on serving its mission and community.

This article is intended for informational purposes only and should not be construed as legal, tax, or accounting advice. Because every organization’s circumstances are unique, we encourage you to consult with your legal, tax, or accounting advisor regarding your specific situation.

About us

De Boer, Baumann & Company provides professional accounting, tax, and business advisory services to individuals and businesses in West Michigan and the surrounding areas. With expertise in a variety of industries, DBC specializes in comprehensive and innovative solutions to help clients achieve their financial goals.