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How to Make Your Farm the Employer of Choice

Finding and retaining good help for today’s farms and ranches is no easy task. Rural community depopulation, fewer amenities like schools and hospitals, consolidating operations, slim financial margins, long hours, physically demanding and sometimes dangerous work—all in remote locations—can make recruitment seem impossible.Yet family-owned farms and ranches have unique strengths that can help them …

Finding and retaining good help for today’s farms and ranches is no easy task. Rural community depopulation, fewer amenities like schools and hospitals, consolidating operations, slim financial margins, long hours, physically demanding and sometimes dangerous work—all in remote locations—can make recruitment seem impossible.

Yet family-owned farms and ranches have unique strengths that can help them rise above these challenges. At De Boer, Baumann & Company, we believe that with the right strategies, your family business can not only attract quality employees but also retain them for the long haul.

Tap Into Your Rural Network

Rural communities are often built on deep social and historical ties. People know each other, attend the same churches, participate in local events, and compete in or cheer for school sports. These relationships create a natural recruiting network.

Even those who have moved away to pursue education or careers in bigger cities often maintain strong connections to their hometown. Many young people who left return once they start families, looking for the safety and community that small-town life provides.

Consider staying connected through social media or informal outreach to people who grew up in your area. A well-timed conversation might inspire a talented local to return home and join your team.

Highlight Your Family Business Culture

Family businesses offer something larger operations can’t: a unique, people-first culture. They can often provide more flexibility in work arrangements and respond quickly to an employee’s family needs.

When an employee or a family member faces a health challenge or family event, a family-run business can adapt and support them in ways larger organizations can’t. Family operations also tend to plan with the long term in mind, focusing on generational continuity rather than short-term profits.

This stability fosters loyalty. Many employees stay for decades, becoming part of the “extended family.” That kind of job security is rare—and it’s something only family businesses can authentically offer.

Get Creative with Benefits

Family businesses have the freedom to customize benefits that meet employees’ unique goals and circumstances. Some examples we’ve seen include:

  • Helping employees purchase land or a home

  • Allowing employees to run a small side operation alongside the main business

  • Offering remote workspaces in nearby cities to attract administrative or accounting talent

  • Providing opportunities for ownership or “phantom stock” so employees can build long-term wealth

  • Assisting with childcare or contributing to in-state college tuition for employees’ children

  • Providing housing or contributing to housing as a retirement benefit

  • Offering deferred compensation, such as cash or life insurance with cash value upon retirement

While you’ll need to follow applicable employment and tax laws, small family-run operations are often better positioned to think outside the box and create tailored, meaningful benefits packages.

Building Your Future Team

Attracting and retaining the right team members is challenging, but not impossible. By tapping into local networks, showcasing your family business culture, and offering creative benefits, you can stand out as an employer of choice—even in a competitive labor market.

At DBC, we understand the unique dynamics of family-run operations and can help you design strategies and structures that make your farm or ranch a place where people want to work—and stay.

To read the full original article by Lance Woodbury, visit How You Can Become the Employer of Choice.

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How Effective Internal Controls Can Safeguard Your Farm’s Finances 

Running a successful farm in today’s economic landscape requires more than a strong harvest. With fluctuating market prices, rising costs, and increasing regulatory demands, financial stability is key to long-term sustainability—and it starts with strong internal controls.  At De Boer, Baumann & Company, we understand the unique needs of the agricultural industry. Whether you …

Running a successful farm in today’s economic landscape requires more than a strong harvest. With fluctuating market prices, rising costs, and increasing regulatory demands, financial stability is key to long-term sustainability—and it starts with strong internal controls. 

At De Boer, Baumann & Company, we understand the unique needs of the agricultural industry. Whether you run a multigenerational farm, manage seasonal workers, or operate a complex mix of crop and livestock production, having structured internal processes can help protect your assets, reduce risk, and position your operation for growth. 

 

What Are Internal Controls? 

Internal controls are the policies and procedures an organization puts in place to:

  • Safeguard assets 
  • Ensure accurate and reliable financial records 
  • Promote operational efficiency 
  • Prevent errors, fraud, and misuse of resources 

For farms, which often involve multiple revenue streams, fluctuating inventory, and a variety of labor arrangements, internal controls are essential to keeping financial operations transparent and on track. 

 

Why Farms Are Especially Vulnerable 

Farms are unique businesses, and their structure often creates blind spots: 

  • Seasonal staffing means frequent onboarding and less familiarity with procedures. 
  • Cash transactions at farm stands or local markets may go unrecorded or mismanaged. 
  • Family-run operations can lack separation of duties, increasing the risk of unintentional errors or fraud. 
  • Inventory—whether livestock, equipment, or crops—is hard to track without the right systems in place. 

These factors make internal controls more than just best practice—they’re a form of risk management. 

 

Key Internal Controls Every Farm Should Consider 
  1. Segregation of Duties – No single person should handle all aspects of a financial transaction. For example, the person approving payments should not be the one reconciling the bank account. 
  2. Inventory Controls – Track inventory throughout its lifecycle—from planting to harvest, from hatchling to processing. This ensures accurate reporting and helps spot potential losses. 
  3. Cash Handling Procedures – Establish written processes for handling cash, making deposits, and issuing receipts. This is especially important for U-pick operations or roadside stands. 
  4. Bank Reconciliations – Reconcile bank accounts regularly (at least monthly) to catch discrepancies early. 
  5. Technology & Cybersecurity – If you use accounting software or online banking, protect it with strong passwords, two-factor authentication, and regular system backups. 
  6. Documented Policies – Write down your financial procedures—whether for payroll, purchasing, or reimbursements—so expectations are clear for everyone, especially temporary or seasonal workers. 
  7. Succession Planning Controls – As many farms transition between generations, internal controls can provide structure, clarity, and continuity—especially when financial responsibilities are shifting. 

 

The Payoff: Greater Control, Less Risk 

Strong internal controls won’t remove all the unpredictability from farming, but they can bring peace of mind where it matters most. With clearer oversight, accurate records, and secure systems, farmers can make more informed decisions, strengthen lender relationships, and reduce vulnerability to fraud or financial mismanagement. 

Agriculture is a demanding business, and every dollar counts. By taking time to assess and improve your farm’s internal controls, you’re investing in the future stability and success of your operation. 

 

DBC’s Approach to Internal Controls in Agriculture 

At DBC, our team of agriculture specialists takes the time to understand the full picture of your operation. We don’t just offer one-size-fits-all solutions—we partner with you to design practical, tailored controls that align with the scale, seasonality, and structure of your farm. 

Whether you need a risk assessment, help developing written procedures, or advice on strengthening your existing controls, our experts are here to help you make confident, informed decisions. 

 

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Understanding Costing Systems for Agricultural Operations

Running a successful agricultural operation means knowing exactly how much it costs to produce your crops or livestock. Costing systems help you break down expenses, identify inefficiencies, and price your products appropriately—ultimately safeguarding profitability in a volatile market. Because farming often involves seasonal cycles, multiple product lines, and fluctuating input costs, a good costing system …

Running a successful agricultural operation means knowing exactly how much it costs to produce your crops or livestock. Costing systems help you break down expenses, identify inefficiencies, and price your products appropriately—ultimately safeguarding profitability in a volatile market. 

Because farming often involves seasonal cycles, multiple product lines, and fluctuating input costs, a good costing system is crucial for informed decision-making. 

 

Why Are Costing Systems Important? 

A well-designed costing system allows you to: 

  • Understand the true cost per unit of production 
  • Compare profitability across different crops or livestock 
  • Identify areas where costs can be reduced without sacrificing quality 
  • Prepare accurate budgets and financial forecasts 
  • Support loan applications and tax planning with precise data 

Without accurate cost data, it’s difficult to know which parts of your operation are thriving and which may be draining resources. 

 

Common Costing Approaches in Agriculture 

There’s no one-size-fits-all solution, but here are some of the most relevant costing methods for farms: 

  1. Standard Costing
    This method sets predetermined costs for inputs and compares actual expenses against them. It highlights variances, so you can quickly identify where prices or usage differ from expectations.
  2. Activity-Based Costing (ABC)
    ABC assigns costs to specific activities, such as planting, irrigation, or harvesting. This helps pinpoint which tasks are most expensive and may benefit from efficiency improvements.
  3. Job Order Costing
    For farms handling specific projects or batches—like custom growing or specialty products—job order costing tracks expenses per job, offering detailed insights.
  4. Process Costing
    Ideal for continuous operations like dairies or grain farms, process costing averages costs across all units produced, simplifying cost per unit calculations.

 

Key Costs to Track 

To get the most from any costing system, pay attention to these cost categories: 

  • Direct Costs: Inputs like seed, feed, fertilizer, chemicals, labor, and veterinary care. These directly affect your production. 
  • Indirect Costs (Overhead): Expenses such as equipment depreciation, utilities, insurance, property taxes, and interest payments. These support overall operations but don’t link to a specific product. 
  • Fixed vs. Variable Costs: Fixed costs remain constant regardless of production volume (e.g., property taxes), while variable costs change with production (e.g., seed or feed). Understanding this difference helps with budgeting and pricing decisions. 

 

How to Choose the Right Costing System for Your Farm 

Choosing a costing method depends on your farm’s size, complexity, and goals. Smaller operations might start with simpler cash-based tracking, while larger or diversified farms benefit from detailed systems like ABC or job order costing. 

Consider these questions to guide your choice: 

  • Do you need to track costs by individual crops, livestock, or projects? 
  • How important is it for you to identify inefficiencies by activity? 
  • Will detailed costing support your loan applications or tax reporting? 

Answering these can help determine if you need a basic or more advanced costing system. 

 

The Bottom Line 

Accurate costing is more than just accounting—it’s a powerful management tool. With the right approach, you’ll improve profitability, streamline operations, and make confident, data-driven decisions that support your farm’s growth and longevity. 

 

Partnering With You for Financial Clarity 

At De Boer, Baumann & Company, we work with Western Michigan farms to develop practical costing systems tailored to your operation’s unique needs. Whether setting up a new system or reviewing your existing process, our agriculture specialists can provide the insights and guidance you need. 

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Tax Planning Strategies for Family-Owned Farms 

Family farms are the backbone of American agriculture—and like any business, they face complex financial decisions that can impact long-term success. With fluctuating commodity prices, rising input costs, and generational transitions to consider, proactive tax planning is one of the most powerful tools available to protect your farm’s legacy.  Effective tax planning isn’t just …

Family farms are the backbone of American agriculture—and like any business, they face complex financial decisions that can impact long-term success. With fluctuating commodity prices, rising input costs, and generational transitions to consider, proactive tax planning is one of the most powerful tools available to protect your farm’s legacy. 

Effective tax planning isn’t just about minimizing liability for the current year. It’s about creating long-term strategies that align with your operational goals, succession plans, and personal financial future. 

 

Why Tax Planning Is Critical for Farms 

Family-owned farms face unique tax considerations that differ from traditional businesses: 

  • High-value assets like land, equipment, and livestock 
  • Variable income streams depending on market conditions or crop cycles 
  • Intergenerational ownership and succession planning 
  • Eligibility for agricultural-specific credits, deductions, and deferrals 

A well-structured tax plan can help farm owners take full advantage of available opportunities while avoiding unnecessary tax burdens. 

 

7 Tax Planning Strategies for Family-Owned Farms 

  1. Income Averaging
    Farmers may qualify for income averaging, allowing them to spread current-year income over the previous three years. This can help smooth out the effects of a particularly profitable year and reduce exposure to higher tax brackets.
  2. Section 179 Expensing & Bonus Depreciation
    Purchasing equipment or other qualifying property? Section 179 allows you to deduct the full purchase price (up to a limit), while bonus depreciation lets you write off 100% of new or used eligible assets. These can be powerful tools for managing taxable income.
  3. Prepaying Expenses
    Cash-basis farmers can prepay certain expenses (feed, seed, fertilizer) for the next year and deduct them in the current tax year—helping reduce current-year taxable income when managed properly.
  4. Establishing a Retirement Plan
    Setting up a SEP IRA, SIMPLE IRA, or other retirement plan for yourself and any employees allows for tax-deferred savings while also reducing taxable income. This is particularly important for long-term planning, especially in family operations without formal benefits.
  5. Managing Inventory Accounting Methods
    How you value your crops and livestock (cash vs. accrual accounting, unit-livestock-price method, etc.) can significantly impact taxable income. Choosing the right method—and making timely elections—is essential for accurate reporting.
  6. Gifting and Estate Planning
    Gifting portions of the farm, equipment, or income-producing assets to heirs during your lifetime can reduce the size of your taxable estate and aid in succession. Coordinating these gifts with a long-term estate plan ensures a smooth transfer across generations.
  7. Taking Advantage of Agricultural Tax Credits
    Federal and state programs may offer tax credits for conservation practices, fuel usage, environmental compliance, and more. Staying informed on available incentives can create significant savings.

 

Start Planning Early, Reap the Benefits Later 

Tax planning is most effective when it’s proactive—not reactive. Waiting until year-end limits your options, especially if your income or expenses fluctuate. Meeting with a qualified advisor throughout the year can help you adjust to market changes, maximize deductions, and stay aligned with your long-term goals. 

 

How DBC Helps Family Farms Plan for the Future 

At De Boer, Baumann & Company, we work with farms of all sizes across Western Michigan, helping family-owned operations create custom tax strategies that support both today’s profitability and tomorrow’s legacy. 

From equipment purchases to succession planning, our advisors understand the full picture—and we’re here to help you make confident, informed decisions. 

 

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Rethinking Expectations for Nonprofit Board Members

Nonprofit boards play a critical role in guiding organizations, but unrealistic expectations for volunteers can create challenges. Excessive pressure around high-level giving and fundraising often results in boards dominated by donors who may lack the expertise, time, or capacity to govern effectively. This dynamic can discourage qualified individuals from joining or continuing to serve, …

Nonprofit boards play a critical role in guiding organizations, but unrealistic expectations for volunteers can create challenges. Excessive pressure around high-level giving and fundraising often results in boards dominated by donors who may lack the expertise, time, or capacity to govern effectively. This dynamic can discourage qualified individuals from joining or continuing to serve, ultimately affecting the organization’s stability and impact.

Key Responsibilities of Nonprofit Boards
While responsibilities can vary, nonprofit boards are generally tasked with ensuring legal compliance, sound governance, and mission fulfillment. The National Center for Nonprofit Boards identifies ten core duties:

  1. Define the organization’s mission and purpose.

  2. Select and evaluate the executive director.

  3. Support the executive director while reviewing performance.

  4. Ensure effective organizational planning.

  5. Secure adequate resources.

  6. Manage resources responsibly.

  7. Oversee programs and services.

  8. Enhance the organization’s public image.

  9. Serve as a court of appeal when necessary.

  10. Assess board performance.

Other experts highlight additional practices that help boards function effectively, including maintaining regular meetings and communication, documenting decisions, establishing committees, providing ongoing education, and ensuring diversity and representation.

Balancing Realistic Expectations
Despite extensive guidance, the sheer volume of responsibilities can overwhelm volunteer board members. Advocates like Vu Le and Michael Bobbitt have questioned traditional board structures, suggesting more inclusive and flexible models that reflect the community and reduce unnecessary burdens, such as mandatory financial contributions.

However, many experts emphasize that boards remain essential. Anne Wallestad, former CEO of BoardSource, notes that boards help nonprofits:

  • Maintain public trust through shared accountability.

  • Ensure strong organizational leadership.

  • Navigate CEO transitions effectively.

 

Amy Eisenstein, CEO of Capital Campaign Pro, recommends practical, realistic expectations for board members, including:

  • Making personal contributions.

  • Sharing professional networks.

  • Advocating for the organization.

  • Encouraging others to contribute.

  • Expressing gratitude to supporters.

  • Actively participating in meetings.

 

By setting achievable expectations, nonprofits can attract a more diverse and engaged board, improve governance, and foster long-term public trust. While donors are vital, balancing fundraising with effective board leadership helps create a stronger, healthier nonprofit sector.

At DBC, our nonprofit specialists assist organizations in structuring boards and governance practices that promote engagement, accountability, and sustainable impact.

To read the original article by Timothy McClimon, please visit Forbes.

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How Recurring Gifts from Donor-Advised Funds Can Strengthen Your Nonprofit

Recurring gifts are increasingly recognized as a critical component of sustainable fundraising. Donor-advised fund (DAF) participants who set up recurring grants in 2024 — whether automatically or manually elected each year — contributed more than three times the amount of donors making one-time donations. This reliable support helps nonprofits maintain programs and plan for …

Recurring gifts are increasingly recognized as a critical component of sustainable fundraising. Donor-advised fund (DAF) participants who set up recurring grants in 2024 — whether automatically or manually elected each year — contributed more than three times the amount of donors making one-time donations. This reliable support helps nonprofits maintain programs and plan for the future, even during periods that traditionally see lower giving.

The Advantages of Automatic Recurring Gifts
Automatic recurring contributions provide dependable revenue streams that can smooth out seasonal fluctuations in donations. For example, research found that automatic gifts accounted for 25% of contributions during July 2024, a month typically associated with lower giving.

Beyond the financial benefit, recurring donors often become more engaged with the organizations they support. They are more likely to volunteer, interact with board members, attend events, and, on average, increase their donations by 8% annually.

Encouraging Donors to Choose Automatic Giving
Despite these benefits, many recurring gifts are still manually scheduled. According to Vanguard Charitable, only 24% of recurring gifts are automatic, while the remainder are set manually by the donor. Frequency preferences vary: 50% of recurring grants are annual, 20% monthly, 19% quarterly, and 11% twice per year. Younger or less-wealthy philanthropists often favor monthly contributions.

Nonprofits can guide donors by clearly communicating their preferred timing and frequency. Because DAF grants are not tied to traditional year-end deadlines, organizations have the flexibility to request contributions throughout the year.

Building a Stronger Revenue Foundation
Incorporating recurring giving into your fundraising strategy strengthens financial stability while deepening donor relationships. Encouraging both automatic and manual recurring contributions helps create a more predictable revenue base and fosters long-term engagement with supporters.

At DBC, our nonprofit specialists work with organizations to design and implement recurring giving strategies that maximize donor impact and provide sustained support for your mission.

To read the original article, visit The NonProfit Times and the research from Vanguard Charitable.

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Four Ways to Engage the Next Generation of Donors

Successful nonprofits strike a balance between honoring long-time supporters and engaging new donors. Loyal contributors have sustained your mission and fueled meaningful impact over the years — but securing the future of your organization also requires reaching the next generation of givers. Generational change is constant: while new potential donors are entering adulthood every …

Successful nonprofits strike a balance between honoring long-time supporters and engaging new donors. Loyal contributors have sustained your mission and fueled meaningful impact over the years — but securing the future of your organization also requires reaching the next generation of givers.

Generational change is constant: while new potential donors are entering adulthood every day, long-time supporters will eventually step back. The challenge for nonprofits is twofold — maintaining strong relationships with current donors while cultivating the next wave of philanthropists.

Here are four strategies to help your organization attract and retain younger donors:

1. Analyze Your Data to Understand Younger Supporters
Many nonprofits are surprised to discover that younger donors often respond to traditional outreach — just not in traditional ways. For example, a direct mail campaign may prompt a younger recipient to visit your website and donate online rather than sending a check by mail. Without tracking this cross-channel behavior, these gifts may go unnoticed, leading to the mistaken belief that younger audiences aren’t engaging.

By using integrated data analysis across mail, digital, and other channels, nonprofits can more accurately measure results and make informed decisions about how to reach younger donors. The right analytics partner can help identify multi-channel giving trends and create acquisition strategies that appeal to younger audiences without losing sight of older donor preferences.

2. Explore New Outreach Channels
To reach younger demographics, nonprofits should consider expanding beyond traditional mail and phone campaigns. Alternative channels can include:

  • Face-to-face fundraising: Street campaigns and in-person events can be particularly effective, often leading to recurring gifts from supporters in their 30s and 40s.

  • Text messaging: Broadcast fundraising texts can achieve high engagement rates with younger audiences, generating click-through rates as high as 30–40%.

  • Connected TV (CTV): Many individuals under 50 no longer subscribe to cable, but they still stream video content. CTV campaigns can deliver mission-focused messages, build awareness, and drive donations among younger viewers.

3. Broaden Your Data Sources
Many organizations rely heavily on transactional history — such as years of giving and number of gifts — to guide their outreach. While this is useful, it can unintentionally favor older donors who have longer giving histories.

To identify and attract younger supporters, nonprofits should blend transactional data with other behavioral and demographic insights. AI-powered modeling can incorporate thousands of variables, providing a more complete picture of potential donors’ values, interests, and giving potential — regardless of age or donation history.

4. Build Awareness Before Asking for Support
Donating is rarely the first interaction someone has with a nonprofit. Younger audiences often need to connect with your mission in meaningful ways before making a financial commitment. That means starting with awareness-driven marketing campaigns and engaging them with relatable, accessible entry points.

Examples include social media influencer partnerships, mission-related challenges, or downloadable resources tied to your cause. These initiatives can generate qualified leads and build trust, paving the way for long-term donor relationships.

The Bottom Line
Connecting with younger donors doesn’t mean replacing your current supporters — it means building a broader, more resilient community. By applying data-driven insights, diversifying outreach channels, and building awareness early, nonprofits can inspire a new generation to give while continuing to honor and serve those who already do.

At DBC, our nonprofit specialists understand the unique challenges of fundraising in a changing donor landscape. We work with organizations to develop strategies that attract, retain, and engage supporters of all ages. 

To read the full article “4 Ideas for Finding Your Next Generation of Donors” by Greg Fox, please visit 4 Ideas For Finding Your Next Generation Of Donors – The NonProfit Times

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Summer Hiring? How to Manage Seasonal Workers, Interns, and Payroll Compliance Without the Stress

Planning to hire seasonal staff this summer? It’s an exciting time for your business—but the complexities of payroll and compliance can quickly turn that excitement into headaches. Whether you’re onboarding interns or part-time employees, summer hires are one of the most frequent sources of payroll classification errors for small businesses.Even a single mistake—like treating …

Planning to hire seasonal staff this summer? It’s an exciting time for your business—but the complexities of payroll and compliance can quickly turn that excitement into headaches. Whether you’re onboarding interns or part-time employees, summer hires are one of the most frequent sources of payroll classification errors for small businesses.

Even a single mistake—like treating a W-2 employee as an independent contractor just because it’s temporary—can lead to costly penalties.

Employee or Contractor? The IRS Wants Clarity

Many employers assume that paying a flat fee or hiring someone for a short summer stint means they can classify the worker as a contractor. You might have thought:

  • “It’s easier to pay them a fixed amount.”

  • “They’re only here for a few weeks.”

  • “They’re students, so it’s not really a ‘job.’”

The reality? If you control the when, where, and how of their work, the IRS will likely consider them an employee—and require you to handle payroll taxes accordingly.

IRS guidelines on worker classification make no exceptions based on hours worked, seasonality, or whether the work is freelance. If the worker looks like an employee, that’s how they’ll be treated.

Interns Usually Count as Employees, Too

Some employers believe unpaid internships fall outside payroll rules. However, unless the internship is part of a formal educational program and does not expect compensation, the Department of Labor often views interns as employees. This means:

  • Minimum wage laws apply

  • Payroll taxes may be due

  • Workers’ compensation coverage could be necessary

If an intern contributes meaningful work to your business, chances are they should be on your payroll.

Take Advantage of the Work Opportunity Tax Credit (WOTC)

Here’s some good news: hiring from specific groups—such as veterans, long-term unemployed individuals, or summer youth workers—may make your business eligible for the Work Opportunity Tax Credit. This credit can reduce your federal income tax by up to $2,400 for each qualifying hire.

Keep in mind:

  • You must apply before hiring

  • Paperwork must be submitted to your state agency

  • Many businesses overlook this valuable credit

For more details, visit the official WOTC program website.

Other Must-Dos Before Your First Payroll

To stay compliant when bringing on seasonal or intern help, make sure to:

  • Set up proper federal and state tax withholdings

  • Use an active payroll system—manual payments often miss required filings

  • Collect and securely store Forms I-9 and W-4

  • Verify any local labor laws that apply, such as mandatory sick leave or special reporting for part-time workers

  • Know your overtime pay obligations—even if the work is temporary or seasonal

Why Proper Payroll Matters

Your priority is running and growing your business—not wrestling with payroll complications. But ignoring payroll compliance, even briefly, can lead to:

  • Costly penalties for worker misclassification

  • Missing out on tax credits like the WOTC

  • Risk of state audits

  • Potential claims from former workers

Need Help? Talk to the Payroll Experts Before You Hire

We’ve guided countless small businesses through summer hiring—helping them set up payroll correctly and avoid compliance pitfalls. If you’re bringing on seasonal, part-time, or intern workers soon, contact DeBoer, Baumann & Company.

We’ll assist you in navigating payroll rules, reducing tax risk, and maximizing potential credits—so you can focus on what matters most: your business.

Reach out today before your first paycheck runs, and let us help you get it right from the start.

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Unlocking Business Tax Credits: A Comprehensive Guide 

Tax credits offer businesses significant opportunities to reduce their tax liabilities while simultaneously incentivizing certain beneficial activities. By understanding and utilizing these credits, businesses can not only save money but also contribute positively to community well-being and innovation. Here’s an in-depth look at several key business tax credits.  The Work Opportunity Credit  The Work …

Tax credits offer businesses significant opportunities to reduce their tax liabilities while simultaneously incentivizing certain beneficial activities. By understanding and utilizing these credits, businesses can not only save money but also contribute positively to community well-being and innovation. Here’s an in-depth look at several key business tax credits. 

The Work Opportunity Credit 

The Work Opportunity Tax Credit (WOTC) serves as a powerful incentive for business owners to hire individuals from specific targeted groups who face significant barriers to employment. By leveraging this federal tax credit, employers not only contribute to the economic empowerment of disadvantaged communities but can also enhance their workforce diversity and talent pool. This article explores the intricacies of the WOTC program, including the eligible targeted groups, certification process, qualifications, and its relationship to the general business credit. 

The Work Opportunity Credit targets several distinct groups that include Veterans, Recipients of Temporary Assistance for Needy Families (TANF), Long-Term Family Assistance (TANF) Recipients, Long-term unemployed individuals, Vocational rehabilitation referrals, Supplemental Nutrition Assistance Program (SNAP) recipients, Summer Youth Employees, SSI recipients, and certain residents of a Designated Community (empowerment zones and specified rural renewal counties). 

  • Certification Process –The certification process for the Work Opportunity Tax Credit is critical to ensure compliance and determine eligibility. Here’s how the system operates: 
     
    1.    Pre-Screening Notice: Employers must complete IRS Form 8850, the Pre-Screening Notice, and Certification Request for the Work Opportunity Credit. It must be filled out on or before the day the job offer is made. 
     
    2.    Submission: This form must be submitted to the respective State Workforce Agency (SWA) within 28 days of the employee’s start date. 
     
    3.    Certification by SWA: The SWA reviews the application to determine if the employee belongs to a targeted group and meets the necessary qualifications. 
     
    4.    Receiving Certification: Once certified, the employer may claim the tax credit in their tax return by completing IRS Form 5884. 
     
  • Qualifications and Credit Determination – To qualify for the WOTC, the following general criteria must be met: 
      
    o    Employment Duration and Hours Worked: The employee must work at least 120 hours to qualify for the credit. If they work over 400 hours, the potential credit increases. For instance, if the employee works a minimum of 120 hours but fewer than 400, the credit equals 25% of the first $6,000 in wages ($1,500). For over 400 hours, it equals 40% ($2,400). 
     
    o    Percentage of Wages: The employee must receive at least 50% of their wages from the employer for work performed in the employer’s business. 
     
    o   Relation Restrictions: The employee cannot be a relative of the employer or have previously worked for the employer. 
     
    o    Specific Qualification Criteria: Each targeted group has particular qualifications specified in IRS Form 8850’s instructions. 
     
  • Integration with the General Business Credit - The WOTC is part of the general business credit. 
     
  • Cannabis Businesses Excluded – The credit is unavailable for wages paid in carrying on a cannabis business. 

Employer-Provided Childcare Credit 

In today’s complex economic landscape, where dual-income households are increasingly the norm, access to affordable childcare remains a cornerstone issue for many working parents. Recognizing this pressing need, the Employer-Provided Childcare Credit, delineated under IRC Section 45F, emerges as a vital economic incentive designed to encourage businesses to offer childcare services to their employees. This tax provision aims not only to support the workforce but also to provide significant tax savings to participating employers. As of recently, Congress has been contemplating legislation to potentially expand this credit, signifying its growing importance in public policy discussions. 

The Employer-Provided Childcare Credit allows businesses that furnish childcare facilities and services to reclaim a portion of their expenses through tax credits. Specifically, businesses can claim a credit worth 25% of qualified childcare expenses and an additional 10% of childcare resource and referral expenditures. The aggregate limit for any given tax year is capped at $150,000, making it an attractive, albeit capped, option for firms looking to invest in their workforce. 

Eligibility for the credit encompasses a wide range of expenses. Qualifying businesses include corporations, partnerships, and sole proprietorships that incur costs in providing childcare services. Expenses associated with the acquisition, construction, rehabilitation, or expansion of property used as part of a qualified childcare facility qualify under this credit. Moreover, operational costs, such as employee training, scholarship programs, and enhanced compensation for staff with advanced childcare training, also are eligible expenses. Critically, qualified childcare facilities must primarily provide childcare assistance, comply with relevant state and local regulations, and not be provided in the principal residence of the operator. Non-discriminatory policies regarding employee eligibility also apply. 

The advantages of this credit extend beyond mere financial reimbursements for employers. By offering employer-subsidized childcare services, firms can significantly alleviate the childcare burden on their employees, fostering a more productive, loyal, and satisfied workforce. Employees with access to these facilities benefit from reduced stress and greater work-life balance, enhancing job performance and retention rates. Moreover, these benefits can frequently translate into tax savings for employees, assuming the benefits align with IRC Section 129’s guidelines for a Qualified Dependent Care Assistance Program (DCAP). 

Nevertheless, the credit involves intricate compliance conditions. Employers must navigate the nuances of IRS Form 8882 (for calculating the credit) and Form 3800 (to report the credit under the general business credit). Notably, if a qualified childcare facility ceases operation or changes ownership, firms may face recapture issues, increasing their tax liability. Thus, businesses must ensure that all childcare benefits are structured to meet the exclusion requirements, maintaining vigilance over licensing and operational standards to avoid potential recapture events. 

As legislative discussions about expanding the Employer-Provided Childcare Credit gain traction, businesses of all sizes may soon find greater incentives to offer childcare solutions. Whether through on-site facilities, partnerships with local childcare providers, or resource referral services, the expanded credit holds promise for transforming workplace dynamics, ultimately supporting working families while enabling businesses to thrive. The broader economic implications of such a shift, encompassing increased workforce participation and economic productivity, underline the Employer-Provided Childcare Credit as not just a financial instrument, but a pivotal socio-economic catalyst in modern times. 

Research Credit 

The research credit is a tax incentive designed to encourage businesses to invest in research and development (R&D) in the United States. It provides a credit for increasing research activities, allowing qualifying businesses to reduce their tax liability based on expenditures related to R&D. 

  • Qualified Research: Qualified research refers to activities that meet specific criteria defined by the Internal Revenue Code. Generally, it must involve a process of experimentation aimed at improving a product or process, and it must encompass elements of technological uncertainty and be intended for discovering information that is technological in nature. 
     
  • Regular and Simplified Methods: 
     
    o    Regular Method: This calculates the credit as a percentage of the qualified research expenses above a base amount. 
     
    o    Simplified Method: 14% of the qualified research expenses over 50% of the average annual qualified research expenses in the three immediately preceding tax years. If no such expenses were incurred in the prior years, it may be 6% of the current year’s qualified research expenses. This method is often preferred by taxpayers with incomplete records or complications from mergers and acquisitions. 
     
  • Qualified Small Business Payroll Election: A qualified small business (QSB) may elect to apply a portion of its research credit against its payroll tax liability, specifically the employer’s share of FICA withholding. To qualify, the business must be a corporation whose stock is not publicly traded, partnership, or sole proprietorship with gross receipts of less than $5 million for the credit year and must not have gross receipts before the fourth preceding year. 

Disabled Access Credit 

The disabled access credit, under Section 44 of the Internal Revenue Code, aims to assist small businesses in accommodating individuals with disabilities. This credit allows eligible small businesses to claim up to 50% of the expenditures incurred for compliant accessibility improvements, up to a maximum credit of $5,000 annually. The expenditures can include physical changes to the business premises or interpreting services, making facilities more accessible to employees and customers with disabilities. 

Eligible expenses for this credit include: 

  1. Removing barriers that hinder access for individuals with disabilities. 
  1. Providing interpreters or audio materials for hearing-impaired individuals. 
  1. Offering readers or taped texts for visually impaired individuals. 
  1. Acquiring or modifying equipment for individuals with disabilities. 

Importantly, expenses claimed for this credit cannot be used for other deductions or credits. 

Pension Startup Credit 

The Pension Start-Up Credit is a benefit for small employers starting new retirement plans. It allows eligible employers to claim a credit for costs related to establishing and administering a new pension plan. The credit is part of the general business credit and includes a one-year carryback and a 20-year carryforward for any unused credits. In addition, there is a specific credit for companies incorporating automatic enrollment in their plans, providing up to $500 per year for the first three years. The credit is designed to support small businesses in setting up retirement plans for their employees and applies to entities with 100 or fewer employees who earn more than $5,000 annually. 

Business Energy Credit 

To promote the use of renewable energy, the business energy investment credit encourages investing in energy-efficient technologies and sustainable practices. Activities such as solar, wind, and geothermal installations can qualify for this credit under Section 46. The business energy investment credit is significant because it reflects the broader intent to move towards sustainable energy sources. The credit varies depending on the technology and can greatly reduce the overall costs of energy projects. 

General Business Credit 

The general business credit is a comprehensive tax credit that combines several specific individual credits. This includes the credits mentioned above and others such as the Indian employment credit, the small employer health insurance premiums credit, and the clean vehicle credit. The general business credit allows business taxpayers to utilize tax credits against not only their regular income taxes but sometimes their alternative minimum tax as well. Limitation rules apply to ensure these credits do not exceed the taxpayer’s net income tax liabilities. 

Educational Assistance Programs 

Although not a tax credit, educational assistance programs offered by employers can be advantageous for both employers and employees when it comes to taxes. Under Section 127 of the Internal Revenue Code, businesses can provide employees with up to $5,250 annually for educational assistance without the amount being taxable to the employee. This tax-exempt status encourages employers to invest in their workforce’s education and skills development, fostering a learning culture and competitive edge in the industry. 

A program must not favor highly compensated employees and no more than 5% of the benefits during the year can be provided to shareholders or owners (or their spouses or dependents). 

In conclusion, understanding and effectively utilizing these various business tax credits can serve as a vital part of a company’s financial strategy. From supporting employment of diverse groups and providing employee benefits to fostering sustainable and innovative practices, these credits offer significant opportunities for financial savings and positive societal impacts. 

Contact our office to efficiently navigate and apply these credits for optimal benefit. 

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Foreign Reporting Requirements: Navigating Harsh Penalties and Complex Compliance Rules

In today’s increasingly global financial environment, it’s common for U.S. taxpayers to hold accounts or receive income from foreign sources—whether that’s through overseas investments, inherited accounts, or rental income deposited in a foreign bank. But with this global reach comes a critical responsibility: complying with foreign reporting rules. Two key reporting obligations include the …

In today’s increasingly global financial environment, it’s common for U.S. taxpayers to hold accounts or receive income from foreign sources—whether that’s through overseas investments, inherited accounts, or rental income deposited in a foreign bank. But with this global reach comes a critical responsibility: complying with foreign reporting rules.

Two key reporting obligations include the Foreign Bank Account Report (FBAR) and IRS Form 8938, part of the Foreign Account Tax Compliance Act (FATCA). Understanding when these forms apply—and the steep penalties for getting it wrong—is essential for taxpayers with international financial ties.

What Is the FBAR (FinCEN Form 114)?

U.S. persons—including individuals, corporations, partnerships, trusts, and estates—must file an FBAR if they have a financial interest in or signature authority over one or more foreign financial accounts and the total value exceeds $10,000 at any point during the calendar year.

Accounts that may require FBAR reporting include:

  • Checking, savings, or brokerage accounts held outside the U.S.

  • Accounts associated with foreign rental income

  • Online gambling accounts maintained by foreign platforms

  • Accounts inherited from a non-U.S. resident

  • Joint accounts held with relatives abroad

Importantly, FBAR filings are submitted directly to FinCEN, not included with the taxpayer’s income tax return.

Who Must File?

FBAR filing isn’t limited to those who own accounts directly. You may also have a filing obligation if:

  • You own or benefit from a foreign account

  • You have signature or other authority over a foreign account, even if not in your name

  • You are listed on a foreign relative’s account, even without contributing funds

  • You inherited a foreign account with a balance over the threshold

  • You maintain a foreign rental property and deposit income into a local bank

The $10,000 threshold applies to the total value of all foreign accounts combined—not individually. If the combined value exceeds $10,000 for even a single day during the year, you’re required to file.

Common FBAR Exceptions

While FBAR requirements are extensive, a few exceptions exist:

  • Accounts at foreign branches of U.S. banks located in the U.S.

  • Accounts held on U.S. military banking facilities abroad

  • Jointly held spousal accounts, if reported by one spouse with proper documentation (Form 114a)

Even with these exceptions, it’s important to evaluate all accounts carefully to avoid underreporting.

FBAR Penalties: What’s at Stake?

Penalties for noncompliance can be severe:

  • Non-willful violations may result in civil penalties up to $10,000 per violation
    (Adjusted to $16,536 as of January 17, 2025)

  • Willful violations carry a penalty of the greater of $100,000 or 50% of the account balance
    (Adjusted to $165,353 as of January 17, 2025)

In cases of willful neglect, criminal charges and imprisonment are also possible. The statute of limitations for FBAR enforcement extends for several years, making it possible for past violations to surface during audits or investigations.

How Does Form 8938 Differ from the FBAR?

In addition to the FBAR, certain taxpayers may also need to file Form 8938, the IRS’s Statement of Specified Foreign Financial Assets under FATCA. While both forms address foreign holdings, they differ in how they are filed, what they include, and their thresholds.

Unlike the FBAR, Form 8938 is filed as part of your federal income tax return.

Thresholds for Filing Form 8938

The value of your foreign financial assets must exceed the following thresholds to trigger filing:

Filing Status Living in the U.S. Living Abroad
Married Filing Jointly $100,000 (end of year) / $150,000 (any time) $400,000 / $600,000
All Others $50,000 / $75,000 $200,000 / $300,000

To qualify as living abroad, a U.S. person must either be a bona fide resident of a foreign country for the entire year, or be physically present abroad for at least 330 full days in any 12-month period ending in the reporting year.

What Assets Are Reported on Form 8938?

Form 8938 captures a broad range of foreign assets, including:

  • Foreign checking, savings, and brokerage accounts

  • Investments in foreign stocks, bonds, or securities

  • Interests in foreign partnerships or mutual funds

  • Foreign retirement accounts or annuities

  • Other financial instruments with exposure to foreign markets

Although many of these assets may also appear on the FBAR, the definitions and thresholds differ—which is why both forms may be required.

Penalties for Failing to File Form 8938

The IRS can impose significant penalties for failing to file Form 8938:

  • $10,000 for failure to file when required

  • Up to an additional $50,000 for continued noncompliance (if not filed within 90 days of IRS notification)

These are in addition to any FBAR-related penalties and are not adjusted for inflation.

Where Do FBAR and Form 8938 Overlap?

Many taxpayers are surprised to learn they must file both the FBAR and Form 8938 for the same accounts or assets. For example:

  • A foreign bank account may need to be reported on both forms if the combined balance exceeds $10,000 (FBAR threshold) and also surpasses the FATCA threshold for Form 8938.

  • Foreign stocks, securities, or investment funds held in a foreign account may also fall under both reporting rules.

Because the definitions and thresholds are not identical, it’s important to review both sets of requirements closely.

Best Practices for Compliance

Given the complexity of foreign reporting, taxpayers should take a proactive approach:

Conduct a Full Review of All Foreign Assets

Evaluate all bank accounts, investments, and other assets held abroad—including those inherited or jointly held.

Understand the Different Thresholds

Keep in mind that FBAR uses a flat $10,000 threshold, while Form 8938’s limits depend on filing status and residency.

Monitor Foreign Currency Fluctuations

Because valuations are based on U.S. dollar equivalents, shifts in exchange rates can impact whether a filing is required.

Maintain Complete Documentation

Both FinCEN and the IRS recommend keeping supporting records for at least five years—including statements, ownership documents, and balances.

Seek Professional Guidance

Due to the penalties involved, working with a tax advisor who understands international reporting is often the best way to ensure accuracy and peace of mind.

Final Thoughts

For U.S. taxpayers with overseas financial interests, compliance with FBAR and FATCA (Form 8938) reporting is critical. These rules apply in a variety of scenarios—from receiving rental income abroad, to holding signature authority over a family member’s account, to participating in online gambling platforms hosted overseas.

Given the significant risks—including steep civil penalties and potential criminal exposure—taxpayers should take foreign reporting obligations seriously. If you’re unsure about your filing responsibilities, the team at DeBoer, Baumann & Company is here to help you navigate the complexities and stay in compliance.

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.