Category Archives: Uncategorized

How Archer Lewis Empowers Startups and Early-Stage Companies to Thrive

Starting a business is exhilarating, but it comes with its fair share of challenges, especially when it comes to managing finances. At Archer Lewis, we understand the unique needs of startups and early-stage companies. Our tailored financial and accounting services are designed to help founders focus on growth while we handle the numbers. Here’s how we can support your startup’s journey to success.

1. Streamlined Bookkeeping for Clarity and Control

Accurate bookkeeping is the backbone of any successful business. Our team ensures your financial records are up-to-date, organized, and compliant. From tracking daily transactions to managing accounts payable and receivable, we use cutting-edge tools like QuickBooks, NetSuite, and Xero to give you real-time insights into your financial health. Say goodbye to late-night spreadsheet struggles and hello to clarity.

2. Strategic Financial Planning to Fuel Growth

Cash flow is king for startups, and running out of runway is not an option. We work with you to create robust budgets, cash flow forecasts, and financial projections that align with your business goals. Whether you’re preparing for a funding round or scaling operations, our financial planning services help you make informed decisions and stay ahead of the curve.

3. Tax Compliance and Optimization

Navigating tax regulations can be daunting, but we’ve got you covered. Our experts handle federal, state, and local tax filings, ensuring compliance while maximizing deductions. From income and payroll taxes to sales tax obligations, we help you avoid costly penalties and keep more money in your business.

4. Seamless Payroll Management

Your team is your greatest asset, and paying them shouldn’t be a headache. We offer comprehensive payroll services, including salary processing, tax withholdings, and benefits management. By leveraging platforms like Gusto, we ensure your employees are paid on time and your business stays compliant with labor laws.

5. Professional Employer Organization (PEO) Services

Scaling your team comes with HR complexities, but our PEO services simplify the process. As your co-employer, we handle payroll, benefits administration, workers’ compensation, and HR compliance, allowing you to attract top talent while reducing administrative burdens. Our PEO solutions are flexible and cost-effective, tailored to your startup’s needs.

6. Investor-Ready Financial Reporting

Impressing investors requires more than a great pitch—it demands solid financials. We prepare professional balance sheets, income statements, and cash flow reports that tell your startup’s story in numbers. Our reports are clear, accurate, and tailored to meet the expectations of angel investors, VCs, or lenders.

7. Fundraising Support to Secure Capital

Raising capital is a critical milestone for startups, and our deep knowledge of fundraising sets us apart. Our team assists with financial modeling, pitch deck preparation, and due diligence, ensuring your business stands out to investors. Whether you’re seeking seed funding or a Series A round, we help you showcase your growth potential and build trust with stakeholders.

8. Equity and Cap Table Management

As your startup grows, so does the complexity of your ownership structure. We provide cap table management services to track equity, stock options, and grants.  We ensure your equity records are accurate and transparent, giving you peace of mind as you scale.

9. Fractional CFO Expertise for Big-Picture Strategy

Not ready for a full-time CFO? Our fractional CFO services offer strategic financial guidance without the hefty price tag. From managing your burn rate to optimizing your cash runway, we provide the high-level insights you need to make bold, confident decisions.

10. Financial Planning & Analysis (FP&A) for Data-Driven Decisions

To stay competitive, startups need more than just historical data; they need forward-looking insights. Our FP&A services deliver detailed analysis of your financial performance, including variance analysis, scenario planning, and key performance indicator (KPI) tracking. We help you identify trends, optimize resource allocation, and drive profitability, empowering you to make data-driven decisions with confidence.

Why Choose Archer Lewis?

At Archer Lewis, we’re more than just accountants; we’re your partners in growth. Our team combines deep industry expertise with a passion for helping startups succeed. We offer flexible, scalable services that evolve with your business, so you get the support you need at every stage.

Ready to take your startup to the next level?

Contact us today to discover how Archer Lewis can streamline your finances and drive your growth. Let’s build your success story together.

Why Choose Archer Lewis: Your Local Accounting Firm with Nationwide Expertise

At Archer Lewis, we’re your local accounting team with serious backup when you need it. We combine deep personal relationships with the resources of a national firm—because we believe that’s how businesses get the best support. As a local accounting firm, we’re deeply rooted in our community, offering the personalized service and presence our clients value, backed by the diverse expertise of our nationwide team.

A Local Partner You Can Trust

When you work with Archer Lewis, you’re not just a client, you’re a valued partner. We take pride in being there when you need us, whether it’s for a quick consultation, tax planning, or navigating complex financial decisions. Each one of our clients is very important to us, and our 70-year legacy with our clients is a testament to the special relationships we build. Our local presence means we understand the unique challenges and opportunities businesses in our area face. We don’t just work in your community—we’re part of it. When local businesses thrive, we all do.

  • Face-to-Face Support: We’re here for in-person meetings, site visits, or just a coffee to discuss your goals.
  • Community Focus: As a local firm, we prioritize building long-term relationships based on trust and mutual success.
  • Responsive Service: Need answers fast? Our team is just a call or visit away, ready to provide tailored solutions.

Nationwide Expertise, Local Delivery

While we’re proud of our hometown roots, our reach extends far beyond. Archer Lewis brings together nationwide professionals with specialized skills and industry backgrounds. With hundreds of specialists and enterprise-grade technology in our corner, we can tackle even the most complex challenges, no matter your industry or business size.

  • Diverse Skill Sets: From tax strategy to financial forecasting, our team brings specialized expertise to meet your needs.
  • Industry Experience: Whether you’re in manufacturing, construction, tech, healthcare, or one of the creative industries, our nationwide team has deep knowledge of your sector.
  • Scalable Solutions: As your business grows, we tap into our broader resources to provide the support you need, when you need it.

The Archer Lewis Difference

If it matters to your business (even if it’s just organizing a shoebox full of receipts), it matters to us. Whether you need help with day-to-day bookkeeping or a complex tax strategy, we’re equally invested in your success. Our team works right alongside you, blending the personal touch of a local firm with the resources of a national network. We stay on top of local, state, federal, and international regulatory changes that can impact your business, ensuring you’re always compliant and positioned for success. We get that every decision matters when you’re running a small business. That’s why we take time to really understand your goals and vision. We’re not just keeping your books—we’re helping build your future.

  • Personalized Relationships: We earn your trust in one conversation at a time, understanding your business and its unique needs.
  • Access to Specialists: Our nationwide team includes experts in auditing, compliance, and business advisory services, supported by cutting-edge technology.
  • Seamless Collaboration: Our local and national teams work together to deliver comprehensive, cohesive support.

Partner with Archer Lewis Today

Whether you’re just starting out or ready to scale up, Archer Lewis is here to help. We’re more than just accountants; we’re your partners in success, committed to helping you achieve your goals. Visit us at archerlewis.com to learn more about how we combine local presence with nationwide capabilities to support your business.

One Big Beautiful Bill Act Brings Notable Updates to U.S. Tax Policy

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, represents a significant change in U.S. tax policy. This legislation introduces new tax benefits and adjustments that impact individuals, families, and businesses. This article dives deeper into the OBBBA’s key provisions:

  • Permanent TCJA individual tax rates,
  • Increased standard deductions,
  • Expanded SALT deduction cap,
  • Temporary deductions for tips and overtime income

At Archer Lewis, we understand how overwhelming major tax changes can be. That’s why we’re breaking down what you need to know about the OBBBA so you can focus on what really matters to you.

Permanent Extension of TCJA Individual Tax Rates

The OBBBA solidifies the TCJA’s individual income tax rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—preventing their scheduled expiration at the end of 2025.

What It Means for You

This permanence provides long-term certainty for taxpayers across income brackets, ensuring continued tax relief. According to Deloitte’s tax policy analysis, this move stabilizes financial planning for individuals and families, as the lower rates encourage consumer spending and investment, potentially boosting economic growth

For businesses, the permanence of these rates indirectly supports pass-through entities (e.g., S corporations, partnerships), as owners benefit from lower individual tax rates on business income. Taxpayers should work with advisors to optimize their tax strategies, especially for those with complex income sources.

Note: We recommend that individuals review their income projections for 2025 and beyond to leverage these stable rates. For example, accelerating income into lower-tax years or deferring deductions could maximize savings. Businesses structured as pass-through entities should consult with their CPAs to align their income allocation strategies with the permanent rates.

Increased Standard Deduction

The TCJA nearly doubled the standard deduction, and the OBBBA makes this increase permanent while further raising it to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly, with annual inflation adjustments starting in 2026. Additionally, a temporary $6,000 “senior bonus” deduction for taxpayers aged 65 and older is available through 2028, phasing out for single filers with modified adjusted gross income (MAGI) over $75,000 or joint filers over $150,000.

What It Means for You

The increased standard deduction simplifies tax filing for millions, as fewer taxpayers need to itemize—only about 9% did so in 2018 compared to 30% pre-TCJA. The bonus deduction offers significant relief for retirees, particularly those reliant on fixed incomes like Social Security, but its temporary nature requires proactive planning before 2028. Seniors with MAGI near the phase-out thresholds should consider bunching charitable contributions or other deductions into years where their income is lower to maximize this benefit.

Note: We are advising taxpayers to compare the standard deduction against potential itemized deductions annually, especially with the new SALT cap changes (discussed below). Seniors should work with advisors to strategize income timing, such as deferring IRA distributions, to stay below the phase-out thresholds for the $6,000 deduction.

Individual State and Local Tax (SALT) Deduction

The OBBBA temporarily raises the SALT deduction cap from $10,000 to $40,000 for taxpayers with MAGI below $500,000 ($250,000 for married filing separately), with a 1% annual increase through 2029, after which it reverts to $10,000. For taxpayers with MAGI above $500,000, the deduction phases down by 30% of the excess income, but never below $10,000. This change, effective for 2025–2028, addresses concerns from high-tax state residents, particularly in states like New York and California.

What It Means for You

This increase provides substantial relief for homeowners and high earners in high-tax jurisdictions, potentially saving them thousands annually. Taking the time to model your SALT deductions under various income scenarios can help optimize your tax positions.

Note: We recommend that taxpayers in high-tax states consult with a CPA to evaluate whether itemizing deductions with the higher SALT cap outweighs the

standard deduction. Businesses using PTET workarounds should confirm state-specific compliance with advisors to ensure continued SALT benefits.

No Tax on Tips and Overtime

The OBBBA introduces temporary deductions for 2025–2028, allowing workers in tipped occupations to deduct up to $25,000 in tip income and overtime workers to deduct up to $12,500 ($25,000 for joint filers), subject to phase-outs for MAGI above $150,000 (single) or $300,000 (joint). These provisions, reported separately on W-2 or 1099 forms, aim to support service and labor-intensive industries.

What It Means for You

These deductions significantly reduce tax burdens for workers in hospitality, retail, and manufacturing, but the phase-out limits mean high earners may see reduced benefits. The administrative burden of tracking and reporting qualified tips and overtime can be a challenge for smaller businesses, requiring robust payroll systems.

Note: We are suggesting that tipped workers and overtime earners maintain detailed income records and CPA to ensure proper reporting. Employers should partner with payroll specialists to comply with IRS guidance, which may expand to hundreds of pages given the complexity of these provisions, as noted by the Tax Foundation.

Conclusion

The One Big Beautiful Bill Act reshapes the tax landscape by cementing TCJA provisions, enhancing deductions, and introducing targeted relief for tipped and overtime workers. While these changes offer opportunities for tax savings, their temporary elements and income phase-outs require careful planning. At Archer Lewis, we encourage taxpayers and businesses to collaborate with trusted advisors to tailor strategies to their unique financial situations. By staying informed and proactive, you can navigate the OBBBA’s complexities and maximize its benefits.

Reach out to Archer Lewis to discover how your business can leverage these new changes and develop a customized plan to optimize your tax benefits. Even if you’re partnered with another accounting firm, we can collaborate with you and your current firm to adapt to the new tax landscape.

For personalized advice, contact our team to discuss how the 2025 Reconciliation Bill can impact your business’s financial strategy.

Understanding Additional Key Business Focused Provisions from the Big Beautiful Tax Act: What It Means for Your Business 

The Big Beautiful Tax Act (BBTA), formally known as the 2025 Budget Reconciliation Act or One Big Beautiful Bipartisan Act (OBBBA), introduces significant changes to the U.S. tax code, impacting small businesses, corporations, and multinationals alike. Signed into law in 2025, this legislation refines existing tax provisions and introduces new rules to balance economic growth, competitiveness, and fiscal responsibility. In this blog post, we’ll dive into the details of five key provisions—Qualified Business Income (QBI) Deduction, Section 179 Expensing, Business Interest Deduction, Allocation of Deductions to Foreign Source Net CFC Tested Income, and the Corporate Charitable Contributions Floor—along with the clean energy and international tax changes. Let’s explore what these could mean for you and your business.

1. Qualified Business Income (QBI) Deduction: A Permanent Boost for Small Businesses 

The QBI deduction, under Section 199A, has been a lifeline for owners of pass-through entities like sole proprietorships, partnerships, S corporations, and certain LLCs. The BBTA makes this deduction permanent at 20%. This means eligible businesses can deduct 20% of their qualified business income from their taxable income, reducing their tax liability without expiration.

What It Means for You

  • Who Benefits: Small businesses, freelancers, and partnerships in industries like retail, consulting, or professional services (e.g., doctors, lawyers) benefit most, provided they meet income thresholds and business type restrictions (SSTBs).
  • Limitations: The Act increases the phase-in threshold for single filers from $50,000 to $75,000 and the joint filer threshold from $100,000 to $150,000. Inflation adjustments apply to the new minimum amounts for tax years beginning after 2026.
  • Impact: Permanency provides long-term tax planning certainty. For example, a partnership with $100,000 in QBI could reduce taxable income by $20,000.

 

Note: This section takes effect for tax years beginning after December 31, 2025. (Act Sec. 70105, amends Code Sec. 199A) potentially saving thousands in taxes annually, depending on the tax bracket.

2. Section 179 Expensing: Bigger Deductions for Business Investments 

Section 179 allows businesses to deduct the full cost of qualifying depreciable assets (e.g., equipment, vehicles, or software) in the year of purchase, rather than depreciating them over time. The BBTA increases the expense cap to $2.5 million (up from $1.29 million in 2024) with a phase-out threshold of $4 million, effective for 2025 and indexed for inflation thereafter.

What It Means for You

  • Who Benefits: Small and medium-sized businesses investing in new equipment, such as manufacturing firms buying machinery or restaurants upgrading kitchen appliances, will see significant tax savings. Certain commercial building improvements may also qualify (extensions, roofs, HVAC, fire, and security).
  • How It Works: If your business purchases $3 million in qualifying assets, you can deduct up to $2.5 million, but the deduction reduces dollar-for-dollar once purchases exceed $4 million. For example, $4.5 million in purchases would reduce the deduction to $2 million ($2.5M – ($4.5M – $4M)).
  • Impact: The higher cap encourages capital investment, especially for growing businesses. A construction company buying a $500,000 excavator could deduct the full cost in 2025, lowering taxable income significantly.

Note: Pair Section 179 with bonus depreciation (if available) for maximum savings, but verify asset eligibility (e.g., used equipment qualifies, but land does not).

3. Business Interest Deduction: More Flexibility with EBITDA 

The BBTA modifies the business interest limitation under Section 163(j), allowing businesses to calculate their deduction limit using EBITDA (earnings before interest, taxes, depreciation, and amortization) through 2029. Previously, the limit was based on adjusted taxable income (ATI), which excluded depreciation and amortization, often restricting deductions for capital-intensive businesses.

What It Means for You

  • Who Benefits: Businesses with significant debt, such as real estate developers or manufacturers, gain more flexibility. The EBITDA-based calculation allows higher interest deductions, especially for firms with large depreciation expenses.
  • How It Works: The deduction is capped at 30% of EBITDA plus business interest income. For example, a company with $10 million in EBITDA could deduct up to $3 million in interest, even if depreciation reduces ATI significantly.
  • Impact: This change supports industries reliant on borrowing, like construction or hospitality, by reducing tax burdens during expansion.

 

Note: review your debt structure with a tax advisor to maximize. Consider restructuring loans if interest expenses are high.

4. Allocation of Deductions to Foreign Source Net CFC Tested Income: Boosting Multinational Competitiveness 

The BBTA refines the treatment of foreign source net Controlled Foreign Corporation (CFC) tested income, formerly known as Global Intangible Low-Taxed Income (GILTI). It introduces a 50% deduction for this income, increasing to 60% after 2027, for foreign tax credit (FTC) purposes. This reduces the effective tax rate on CFC income, making U.S. multinationals more competitive globally.

What It Means for You

  • Who Benefits: U.S.-based multinationals with foreign subsidiaries, such as tech or pharmaceutical companies, benefit by lowering taxes on foreign earnings.
  • How It Works: The deduction applies to income from CFCs (foreign entities controlled by U.S. shareholders). For example, if a CFC generates $1 million in tested income, a 50% deduction reduces the taxable amount to $500,000, with foreign tax credits further offsetting the U.S. tax liability.
  • Impact: The change enhances FTC utilization, reducing double taxation. For instance, a company paying 15% tax abroad could offset more U.S. tax with the 50% deduction, lowering the effective rate below the 10.5% GILTI minimum. Post-2027, the 60% deduction further sweetens the deal.

 

Note: Work with an international tax specialist to optimize your global tax strategy and FTC, especially if your CFCs operate in high-tax jurisdictions.  

5. Corporate Charitable Contributions: New 1% Floor 

The BBTA introduces a 1% floor for corporate charitable contributions, effective for contributions made after December 31, 2024. Corporations can only deduct contributions exceeding 1% of their adjusted taxable income (ATI), a shift from the prior 10% cap with no floor.

What It Means for You

  • Who’s Affected: Corporations making charitable donations, such as to nonprofits or community programs, face a new hurdle.
  • How It Works: If a corporation has $10 million in ATI, only contributions above $100,000 (1% of ATI) are deductible, up to the existing 10% cap ($1 million). A $150,000 donation would yield a $50,000 deduction ($150,000 – $100,000).
  • Impact: This provision may discourage smaller donations, as only contributions exceeding the 1% threshold qualify for deductions. Large corporations with significant giving programs will need to adjust their charitable budgets.

 

Note: Plan your corporate giving to exceed the 1% floor while staying within the 10% total cap. Document contributions meticulously to substantiate deductions.

6. Clean Energy and International Tax Changes 

The BBTA reshapes clean energy and international tax provisions

  • Clean Energy Credits: The Act phases out certain Inflation Reduction Act credits, such as those for electric vehicles (EVs) and charging stations, while extending biofuel credits through 2031.
  • Commercial Building Deductions: The Act terminates the energy efficiency commercial building deductions for buildings that begin construction after June 30, 2026.
  • 1% Remittance Tax: A new 1% tax on remittances (e.g., payments to foreign entities) could increase costs for businesses with international operations.
  • GILTI and FDII Modifications: Beyond the CFC deduction, the BBTA tweaks GILTI and Foreign-Derived Intangible Income (FDII) rules to encourage domestic investment while maintaining global competitiveness.
  • International Taxes: The remittance tax and GILTI/FDII changes require multinationals to reassess cross-border transactions. For example, a 1% tax on a $10 million remittance adds $100,000 in costs.

 

Note: Evaluate your exposure to the remittance tax and consult a tax advisor to adjust your international payment structures.

Conclusion 

The Big Beautiful Tax Act (BBTA) introduces sweeping changes with far-reaching implications for businesses of all sizes. By making the Qualified Business Income deduction permanent, raising expensing limits, and adjusting interest deduction rules, the Act aims to foster long-term growth and provide greater certainty for business planning. The refined treatment of foreign income and the introduction of a 1% floor on corporate charitable contributions reflect a balance between competitiveness, fiscal responsibility, and evolving policy priorities.

However, these benefits come with new complexities, particularly for businesses navigating international operations, charitable giving, and the phase-out of certain clean energy incentives. To fully leverage the opportunities and minimize risks, business owners should:

  • Review their current tax strategies, considering the new provisions.
  • Consult with tax professionals to address technical nuances and compliance.
  • Monitor how federal changes may interact with state tax laws and transition rules.

Reach out to Archer Lewis to discover how your business can leverage these new changes and develop a customized plan to optimize your tax benefits. Even if you’re partnered with another accounting firm, we can collaborate with you and your current firm to adapt to the new tax landscape.

For personalized advice, contact our team to discuss how the 2025 Reconciliation Bill can impact your business’s financial strategy.

2025 Budget Reconciliation Act: 100% Bonus Depreciation and R&D Tax Benefits for Businesses

The Big Beautiful Tax Act (BBTA), formally known as the 2025 Budget Reconciliation Act or One Big Beautiful Bipartisan Act (OBBBA), introduces significant changes to the U.S. tax code, impacting small businesses, corporations, and multinationals alike. Signed into law in 2025, this legislation refines existing tax provisions and introduces new rules to balance economic growth, competitiveness, and fiscal responsibility. In this blog post, we’ll dive into the details that reshape how businesses approach capital investments and innovation. Key provisions for business owners include the reinstatement of 100% bonus depreciation for qualifying assets placed in service from January 19, 2025, through December 31, 2029, and the restoration of immediate expensing for domestic Research and Development (R&D) expenses. These powerful tax incentives allow businesses to immediately deduct the full cost of eligible assets and R&D expenses in the year they are incurred, rather than spreading deductions over several years. Here’s what you need to know about these game-changing opportunities.

What is 100% Bonus Depreciation?

Bonus depreciation allows businesses to deduct a substantial portion of the cost of qualifying assets in the year they are placed in service. Under the 2025 Reconciliation Act, this deduction has been restored to 100% for assets acquired and placed in service after January 19, 2025, and before January 1, 2030. This applies to a wide range of assets, including machinery, equipment, and certain real property improvements like driveways, sidewalks, landscaping, and fences, as well as building components with a useful life of less than 20 years.

This provision is a significant shift from the previous phase-down schedule, which had reduced bonus depreciation to 40% for 2025 under the Tax Cuts and Jobs Act (TCJA). The reinstatement of 100% bonus depreciation is a major win for businesses looking to optimize cash flow and invest in growth.

R&D Tax Benefits

The 2025 Reconciliation Act also restores immediate expensing for domestic R&D expenses under a new Section 174A, effective for tax years beginning after December 31, 2024, through December 31, 2029. This reverses the TCJA’s requirement to amortize domestic R&D expenses over five years, which had been in place since 2022. Key details include:

  • Retroactive Relief for Small Businesses: Businesses with average annual gross receipts of $31 million or less can retroactively apply immediate expensing to R&D expenses from tax years beginning after December 31, 2021, allowing amendments to prior returns (2022–2024) for immediate deductions.
  • Catch-Up Deduction: All taxpayers can elect to deduct the remaining basis of previously capitalized domestic R&D expenses from 2022–2024 over one or two years starting in 2025, boosting cash flow.
  • Foreign R&D: Amortization over 15 years for foreign R&D expenses remains unchanged.
  • R&D Tax Credit (Section 41): The Act does not alter the R&D tax credit’s structure, which provides approximately $0.13 per dollar spent on qualified research. However, adjustments to Section 280C prevent duplicate benefits when claiming the credit alongside immediate expensing, ensuring compliance. The IRS’s proposed changes to Form 6765 may increase documentation requirements for credit claims.

 

These R&D provisions encourage innovation, particularly in industries like technology and manufacturing, with the National Association of Manufacturers noting that every $1 billion in R&D spending supports 17,000 jobs.

Key Benefits for Businesses

The 2025 Reconciliation Act offers several advantages for businesses:

  • Immediate Cash Flow Boost: Immediate deductions for both qualifying assets and R&D expenses reduce taxable income, freeing up capital for reinvestment or operational needs.
  • Encourages Investment and Innovation: The ability to write off the full cost of assets and R&D expenses upfront incentivizes businesses to invest in new equipment, technology, infrastructure, and research, enhancing productivity and competitiveness.
  • Cost Segregation Opportunities: For real estate investors, cost segregation studies can maximize benefits by identifying property components eligible for bonus depreciation, potentially yielding significant first-year deductions.

 

Qualifying Assets for Bonus Depreciation

To take advantage of the 100% bonus depreciation, assets must meet specific criteria:

  • Eligible Property: Includes tangible personal property with a recovery period of 20 years or less, such as machinery, equipment, and certain improvements to nonresidential real property.
  • Placed in Service: The property must be acquired and placed in service (ready and available for its intended use) between January 19, 2025, and December 31, 2029. For certain longer-production-period property and aircraft, the deadline extends to January 1, 2031.
  • Qualified Production Property (QPP): The Act introduces a 100% depreciation allowance for QPP, including nonresidential real property used in manufacturing, production, or refining of tangible personal property in the U.S., with construction or acquisition after January 19, 2025.

 

Strategic Considerations

To maximize these opportunities, business owners should:

  • Plan Acquisitions and R&D Investments: Time asset purchases and R&D spending to fall within the bonus depreciation and Section 174A windows to maximize tax savings. Consider accelerating planned investments to leverage the 2025 start date.
  • Conduct Cost Segregation Studies: For real estate, a cost segregation study can identify components eligible for bonus depreciation, potentially increasing first-year deductions significantly. For example, a $400,000 depreciable basis on a rental property could yield a $150,000 deduction with proper segregation.
  • Enhance R&D Documentation: With potential IRS scrutiny on R&D tax credit claims, maintain detailed records of qualified research activities and expenses to substantiate claims under Section 41.
  • Consult Tax Professionals: Work with a tax advisor to ensure compliance with IRS requirements and optimize your depreciation and R&D strategies. The Act’s provisions are complex, and professional guidance is critical.

 

Limitations and Caveats

While these provisions are powerful, there are limitations to consider:

  • No Retroactive Relief for Bonus Depreciation: The 100% bonus depreciation does not apply to assets placed in service before January 19, 2025. Assets from 2023 and 2024 remain subject to prior rates of 80% and 60%, respectively.
  • R&D Retroactivity Limited to Small Businesses: Only businesses with $31 million or less in gross receipts qualify for retroactive R&D expensing for 2022–2024.
  • State Conformity: Some states may not conform to federal bonus depreciation or R&D expensing rules, affecting state tax obligations. Check with your tax advisor for state-specific policies.

 

  • Section 179 Alternative: The Act increases the Section 179 expensing limit to $2.5 million with a $4 million phase-out threshold for 2025, adjusted for inflation. However, Section 179’s limitations, such as not creating a loss for certain entities, may make bonus depreciation or R&D expensing more attractive. We will cover this in more detail in our next blog post.

 

Conclusion

The 2025 Reconciliation Act’s reinstatement of 100% bonus depreciation and immediate R&D expensing offers significant opportunities for businesses to enhance cash flow, accelerate growth, and drive innovation. By allowing full deductions for qualifying asset costs and domestic R&D expenses in the year they are incurred, these provisions encourage investment in equipment, technology, real estate improvements, and research. To maximize benefits, businesses should strategically plan acquisitions and R&D spending, consider cost segregation studies, maintain robust R&D documentation, and consult tax professionals to ensure compliance and optimize savings.

Reach out to Archer Lewis to discover how your business can leverage these new changes and develop a customized plan to optimize your tax benefits. Even if you’re partnered with another accounting firm, we can collaborate with you and your current firm to secure these Tax Credits for you.

Stay informed about the latest tax strategies and updates by subscribing to our blog at Archer Lewis. For personalized advice, contact our team to discuss how the 2025 Reconciliation Act can impact your business’s financial strategy.

Financial Statements: List of Types and How to Read Them

Running a small business means juggling plenty of paperwork—receipts, invoices, bank statements, payroll records—you name it. 

However, among all the documents, your financial statements are the ones that truly tell the story of your organization’s economic health. These statements are based on Generally Accepted Accounting Principles (GAAP), providing you with consistent and reliable insights.

What are financial statements? Simply put, they’re the formal reports that show how money flows through a business. There are different types of financial statements (which we’ll discuss in a moment), and each contributes to managing cash flow, attracting investors, securing loans, and planning for growth.

That’s not all: they’re also mission-critical during your most important financial moments, like tax season, audits, and financing applications.

If you want to ensure you have enough cash flow for your operations, are eager to attract a new investor or secure a loan, or you simply want to take control of your business’ finances, here’s everything you need to know about financial statements, so you can keep things in order and prepare for growth.

The 4 primary financial statements (and how to read them)

Before you can use financial reports to guide decisions, you need to understand what each one actually tells you. These four statements form the foundation of good accounting—and when reviewed together, they paint a full picture of your business’s health.

Income statement (Profit & Loss)

First up is your income statement, also known as the profit and loss statement. It’s one of the most commonly used financial reports, providing a snapshot of revenue, expenses, and net profit or loss over a specified period (such as a quarter or a year). It gives a clear view of your company’s financial performance over a specified period.

Key line items on your P&L include:

  • Gross profit: Revenue minus cost of goods sold (COGS).
  • Operating expenses: Day-to-day costs like rent, salaries, marketing, and utilities.
  • Net income: What’s left after all of the expenses—your bottom line, including non-cash expenses and taxes earnings.

What should you look for in your P&L? It helps you answer big questions like whether you’re profitable, or if you’re overspending (and where). For example, are operating expenses creeping up faster than revenue?

Pro tip: Many business owners misunderstand “net profit” vs. “cash in the bank,” but they’re not the same. Your income statement shows profitability, not liquidity. 

For example, you may show a profit on paper, but still struggle with cash flow if customers haven’t paid their invoices. That’s why it’s critical to view income statements alongside other reports (like the cash flow statement).

Balance sheet

Your balance sheet is a snapshot of your business’s financial position at a specific point in time. Unlike the income statement (which covers a span of time), the balance sheet shows what your business owns (assets), what it owes (liabilities), and what’s left over for the owner (equity) at that exact moment. It helps you evaluate your company’s financial position and solvency.

Here’s an important equation for balance sheets: Assets = Liabilities + Owner’s Equity

Let’s break it down:

  • Assets include items such as cash, inventory, equipment, and accounts receivable. These reflect what the company owns.
  • Liabilities are what you owe (like loans, credit card balances, or unpaid bills), including accounts payable and both current and non-current liabilities.
  • Owner’s Equity is the value that remains for you as the business owner after liabilities are subtracted from assets. This reflects your company’s assets on paper.

What should you look for in your balance sheet? Use this financial statement to assess financial stability. Are your liabilities growing faster than your assets? This could signal financial trouble. Reviewing your company’s balance sheet regularly can prevent surprises.

Cash flow statement

The cash flow statement tracks the movement of cash in and out of your business over a specified reporting period. It categorizes cash based on business activities, including daily operations, investments, and financing.

It follows three main categories:

  • Operating activities: Cash generated from day-to-day business (like customer payments and supplier expenses).
  • Investing activities: Cash used for or earned from buying and selling assets (like equipment or property).
  • Financing activities: Cash from loans, investor funding, or owner contributions.

While your income statement shows profitability, the cash flow statement shows liquidity, or how much actual cash your business has on hand. Free cash is key here. 

And that’s a big deal, because even a profitable business can run out of cash if payments are delayed, expenses spike, or too much money is tied up in inventory. Studies show that most small businesses report at least some cash flow issues.

What should you look for in your cash flow statement? Look for patterns in cash gaps or seasonality. Are there times of the year when you consistently dip into the red? Are there significant gaps between when you invoice customers and when cash comes in? Recognizing these trends can help you plan ahead and stay in control.

Statement of retained earnings

When your business makes money, where is that money going? That’s what the statement of retained earnings seeks to answer—it shows how your business’s profits are either reinvested or distributed over time. 

After covering expenses and taxes, your net income doesn’t just disappear. It either stays in the business to fund future growth or gets distributed to owners or shareholders.

These reinvested earnings appear in shareholders’ equity and indicate how profits are utilized. For corporations and public companies, retained earnings can also influence decisions about issuing dividends or repurchasing the company’s stock.

This report is especially important for partnerships and S Corporations, where profits pass through owners and distribution decisions impact both tax planning and capital reserves.

What should you look for in your statement of retained earnings? Pay attention to growth in retained earnings over time, large distributions, and alignment with your financial goals

If you’re investing heavily, are you seeing a return—such as improved revenue, productivity, or market reach? If not, it may be time to re-evaluate where profits are going.

Keep in mind, this statement can be rolled into the equity section of the balance sheet, but for service businesses reinvesting into growth, it’s often worth it to address it separately, so you can understand how profits are fueling your business.

Additional financial reports you should know

Did you get all that? While those are the core financial statements you need to know about, there are a few more to keep on your radar. These aren’t GAAP-required, but they can provide valuable insights for both day-to-day decision-making and long-term planning.

Some additional reports include:

  • Accounts receivable aging report: Shows which customers owe you money and how long their invoices have been outstanding. It helps you stay on top of collections and spot cash flow risks early.
  • Budget vs. actual report: Compares your projected income and expenses to what actually happened. This helps identify where you’re overspending, underperforming, or exceeding expectations.
  • Profitability by service line or location: Breaks down which parts of your business are most (or least) profitable. Useful for companies with multiple offerings or branches, allowing you to allocate resources strategically.

Each report highlights a few key components that matter to daily decisions. While not part of the core financial statements, these other financial statements can enhance visibility.

How often should you review your financial statements?

How often should you review your financial statements, really? A monthly accounting overview helps you stay on top of your finances, catch potential issues early, and plan ahead. 

It helps keep you close to your finances, allows you to catch red flags early, and gives you the information you need to make proactive decisions (instead of just scrambling at tax time).

Adding more financial tasks to your docket might sound intense. Studies show that business owners spend a significant amount of time and money on tax preparation, and many say that bookkeeping and taxes are the most challenging aspects of owning a business. 

But don’t worry, we have good news: you don’t need to “do it all,” or go at it alone. You just need to make sure these tasks are being done, whether you’re working with a bookkeeper, a CPA, or using accounting software.

What financial statements reveal about your business’s health

Financial statements are more than just paperwork. They’re powerful tools that help you answer critical questions about your business’s stability, performance, and readiness for growth. They offer a window into your company’s financial health and operations.

For example, they can help you understand the answers to real-world questions like:

  • Are we profitable? Your income statement can show whether your business is generating more revenue than it’s spending. A positive net income over time means you’re profitable—but if profits are inconsistent or shrinking, it may be time to revisit your pricing strategy or cost structure. This is where total revenue becomes a key indicator.
  • Can we cover our short-term obligations? Your balance sheet holds the answers. By comparing current assets (like cash and receivables) to current liabilities (like bills and loan payments), you’ll know if you can pay what’s due soon.
  • Do we have sufficient funds to pay our contractors and employees? The cash flow statement shows whether you have money on hand, instead of just profit on paper. It highlights gaps between billing and actual cash received, which is essential for making payroll, paying vendors, or taking on new projects.
  • Are we financially ready to expand? Review your retained earnings statement and cash flow trends. Are profits being reinvested (and are those investments paying off)? Do you have a suitable buffer to cover expansion costs? Financial data provides quantifiable value when tracking results over time, supporting future projections and informed decisions.

Ultimately, when you connect your financial statements to day-to-day operations, you’re able to move forward with confidence—whether you’re adjusting pricing, planning for growth, or simply trying to stay ahead.

Common mistakes small business owners make with financials

Managing your financial statements can be overwhelming, and it’s easy to fall into some common traps that can truly hold you back. Reviewing historical data and spotting historical trends helps you avoid repeating past mistakes.

Here are a few common mistakes many small business owners make:

  • Relying only on the bank balance: Your bank account shows cash on hand, but it doesn’t tell the whole story. Without reviewing your financial statements, you might miss out on underlying issues that affect profitability (like outstanding invoices or upcoming bills).
  • Not reviewing financials regularly: Waiting until tax season or year-end to look at your numbers means missing opportunities to catch problems early or make proactive decisions. Regular reviews help you stay on top of cash flow, expenses, and growth.
  • Ignoring accrual vs. cash basis: Confusing these methods can lead to misinterpreting your financial position. Accrual accounting records income and expenses when they’re earned or incurred (not necessarily when cash changes hands) so it offers a clearer picture of your business’s true health.
  • Misclassifying expenses: Incorrectly categorizing costs can distort your reports, affect tax filings, and lead to poor budgeting decisions. Accurate classification helps you understand where your money is going and identify areas for savings. This is where understanding accounting principles and accounting rules matters most.
  • Skipping or delaying adjusting entries in accounting: These ensure your books reflect the true timing of income and expenses, especially when using accrual accounting.
  • Forgetting to track accrued expenses: These can distort your reports if not accounted for properly.

At Archer Lewis, we specialize not only in being your accounting partner but also in bringing clarity and structure to your financials. Our team helps you avoid these pitfalls by providing services such as accurate bookkeeping, insightful financial reporting, and expert guidance—all with a bespoke, personalized touch. 

For many, outsourced accounting for small businesses is the simplest way to stay organized without adding to your workload.

Frequently asked questions

Let’s wrap up with a few questions we hear often from small business owners. If you’re still unsure about what reports you need or how to use them, this section’s for you.

What’s the difference between a bookkeeper, an accountant, and a CPA?

Understanding the differences between bookkeeper vs accountant vs CPA is essential for small business owners. Bookkeepers handle day-to-day transaction recording, accountants interpret financial data and prepare reports, and CPAs (Certified Public Accountants) are licensed professionals who offer strategic advice, audit support, and tax planning.

What’s the difference between cash flow and profit? 

Profit is the amount of money your business earns after subtracting expenses (as shown on your income statement). It indicates whether your business is financially successful over a specified period.

Cash flow tracks the actual movement of cash in and out of your business (when the money is received or paid), regardless of when sales are made or expenses are recorded.

Can I skip the retained earnings statement? 

The retained earnings statement isn’t always a required separate report, as the information often appears in the equity section of the balance sheet. However, it remains a valuable tool, especially for partnerships, S Corporations, or service businesses that reinvest profits into growth.

Do I need all four reports if I’m a small business? 

It depends on your business needs, but generally, having all four key financial statements provides the most complete picture of your financial health. Even for small businesses, these reports serve different purposes. 

Some very small or sole-proprietor companies might start with just the first three, but as you grow, the retained earnings statement often becomes more important. Each one plays a role in comprehensive financial statement preparation

Following accounting standards, such as GAAP or International Financial Reporting Standards, ensures accuracy and compliance with the requirements set by regulatory bodies, like the Securities and Exchange Commission.

Know your numbers, grow your business

Financial statements aren’t just paperwork for accountants or something you glance at during tax season—they’re essential tools for running, growing, and protecting your business. When you understand your income statement, balance sheet, cash flow statement, and retained earnings, you’re better equipped to make smart, confident decisions.

Are financial statements giving you a headache, or a neglected back-burner task? Allow us to assist you. Here at Archer Lewis, we’re more than just an accounting firm: we tackle your financial reports and use those insights to help you grow and succeed.

Whether you’re expanding locations, hiring new team members, launching new products, or simply want to get a better handle on your financial health, let us help you with your financial reporting. 

Your financials help provide investors with confidence in your business strategy. Whether tracking total income or managing equity financing, we’re here to help. We’ll help connect your financials to your company’s activities in real time.

Connect with a trusted Archer Lewis advisor today. We’ll help you turn your financial reports into actionable insights.

Financial Statement Example and Breakdown for Growing Businesses

If you’re running a business and you have your sights set on growth, hiring, or expansion, you’re already making strategic decisions. But here’s the thing: in order to scale smart, you need to understand the full story of what your small business financial reports are telling you. Your company’s financial health depends on it.

This guide is designed for leaders like you—business owners who don’t need an accounting degree, but who do want financial clarity and understanding. We’ll walk you through financial statement examples, so you can understand what these key documents are really telling you, including how to read them and what to look for. You’ll also learn why financial statements are important for financial planning and decision-making.

Let’s demystify the numbers and turn your financials into a powerhouse business tool, together.

Why financial statements matter during business growth

Financial statements (like your income statement, balance sheet, and cash flow statement) are like X-Ray machines, which reveal what’s really going on inside your business, financially speaking. 

Built on Generally Accepted Accounting Principles (GAAP) and sometimes aligned with international financial reporting standards, they give your company’s finances the structure and consistency needed to plan and grow.

While they’re critical cornerstones of day-to-day operations and decision-making, they’re even more essential during times of growth. They offer a clear view into your company’s liquidity, your business’s financial performance, and your overall financial position.

Why? As your business scales, things get more complicated—and fast. 

You’ll likely find yourself suddenly juggling more small business expenses, staff, accountants, and high-stakes decisions. Suddenly, that mental math or gut check that used to (maybe) work doesn’t cut it anymore.

That’s where financial reports for small businesses come into the picture. These reports give you clarity on your most pressing questions regarding profitability, cash flow, and future readiness. 

Are you profitable—or just busy? Do you have the cash flow necessary to support those new hires you’re eyeing? Are your margins holding up as you grow, or are things becoming shaky?

Ultimately, these statements help you spot financial trends, compare past performance, avoid surprises, and plan for the future with laser-focused precision. Track results across multiple periods, and you’ll begin to understand your complete picture.

Studies show that small businesses today are struggling with financial challenges, including inflation, taxes, and competition. Financial statements give you the valuable insights and leverage you need to overcome financial hurdles, improve resilience, and take your business to new heights.

A real-world example: Service-based business with 10 employees

Let’s bring the numbers to life with a realistic financial statement example, using a fictional small business. Meet Coastal HVAC Services, a growing business that has 10 employees, two trucks, and they’re booked out two weeks in advance. Business is great, but as they eye a third truck and additional hires, the owner wants to ensure they’re financially ready for the next step.

Here’s a snapshot of their monthly accounting overview

  • Monthly revenue: $100,000 
  • Cost of goods sold (COGS): $35,000 
  • Operating expenses: $50,000 
  • Net income: $15,000

Whether you’re reviewing a business report or using a personal financial statement template for your own goals, this gives the owner a complete picture of income, expenses, and what they can confidently spend.

As we continue through this article, we’ll walk through how these numbers show up—and what they reveal—across each financial statement example.

Income statement (P&L) breakdown

The income statement—also called the profit and loss statement (P&L)—shows how much money your business made (or lost) over a specific period of time. It’s one of the clearest ways to assess your company’s financial performance.

In our financial statement example with Coastal HVAC Services, it serves as the go-to report for understanding profitability and monitoring margins.

Here’s a simplified version of Coastal HVAC’s monthly income statement: 

  • Revenue (sales): $100,000—from completed jobs. 
  • COGS → Gross profit: $35,000 → $65,000—includes HVAC parts, subcontractor labor, tools. 
  • Operating expenses: $50,000—salaries, rent, truck fuel, advertising, admin software. 
  • Net income: $15,000—your actual profit after everything’s been paid.

You can also calculate operating income by subtracting operating expenses from gross profit. And remember, income statements don’t reflect unrealized gains or delays in accounts receivable. Pay close attention to the line items here, especially as you scale.

Balance sheet highlights

The balance sheet in accounting is a snapshot of your business’s financial position at a specific point in time. It shows what the company owns (assets), what it owes (liabilities), and what’s left over (equity). Simply put, it shows your company’s financial position.

Here’s what a simple balance sheet might look like for Coastal HVAC: 

  • Assets (equipment & vehicles): $150,000 
  • Long-term liabilities (truck loan + line of credit): $50,000 
  • Equity (retained earnings): $100,000

What does this balance sheet show us? Most of HVAC’s assets are tied up in items such as raw materials, trucks, and HVAC equipment. These assets can’t always be quickly converted into cash, so it’s essential to check your cash-on-hand against upcoming obligations.

Examine closely the relationship between long-term debt and asset value, as well as accounts payable growth. If debt approaches the value of the company’s assets, lenders (and you) may hesitate. Retained earnings and stockholders’ equity help determine your business’s net worth.

Cash flow statement: What’s really coming in and out

Cash flow is often a challenge for small businesses—even profitable ones—with nearly a quarter saying they’re not comfortable with their cash flow. That’s why cash flow statements are so valuable: the cash flow statement shows the actual movement of money in and out of your business, which is vital for both day-to-day operations and future planning.

Here’s what Coastal HVAC Services’ cash flow looks like: 

  • Operating activities: $20K in, $18K out → $2K net increase 
  • Financing activities: $1,000 truck loan payment

These figures reflect cash inflows from customers and cash spent on payroll, rent, and loan repayment. This cash flow is tight but positive.

One common mistake is assuming a profitable income statement equals cash in the bank. If accounts receivable or unearned revenue are high, you may look healthy on paper but feel squeezed in reality.

How to use these numbers to make smarter decisions

Financial statements aren’t just dense documents for your bookkeeper or tax preparer—they’re powerful tools for running and growing your business.

Here’s how to use them strategically:

  • Spot underperforming services: Use COGS and margin data to assess team and service performance.
  • Time your debt repayment or equipment purchase: If cash is tight, delay large purchases. Reviewing capital expenditures (capex) versus operational expenditures (opex)—such as equipment versus rent—can help you prioritize spending more effectively.
  • Plan for taxes: Steady net income means you’ll owe taxes—plan ahead.
  • Apply for financing: Lenders require proof of stability, and your financial records help make the case.
  • Raise capital: If you’re issuing stock or tracking the value of the company’s stock, accurate financials are critical.

Even if you’re not in the stock market, these financial benchmarks still matter.

When to get help from a CPA or bookkeeper

At some point, DIY isn’t enough. Bring in a pro when:

  • You’re hiring or scaling locations
  • You’re financing large purchases
  • You need investor reporting
  • You’re blending personal assets and business capital

They’ll help with everything from reporting period accuracy to separating business vs. personal decisions.

Turning financial statements into business confidence

These financial statement examples are meant to show you how critical these reports are to your business’s success. They’re more than just paperwork: they’re roadmaps that show you where your business stands today, and where it’s heading next.

Want a head start? Ask about our free financial statement templates or have us design a financial statement template tailored to your needs.

Here at Archer Lewis, our team of accounting experts provides bespoke support reviewing or setting up reporting systems aligned with your growth goals.

Start a conversation with our team today—we’ll help you turn your financial statements into strategic insights.

2024-2025 Federal Tax Brackets & Income Rates

Tax season probably isn’t your favorite time of the year (unless you’re also an accountant). But understanding where you stand in terms of the federal tax brackets can make a big difference in your total tax liability—how much you owe or get back.

You might be wondering: I paid taxes last year, why do I need to stay up-to-date on tax brackets?

The answer? The Internal Revenue Service (IRS) makes adjustments to tax brackets every year by modifying tax provisions that also impact deductions. Yep—that means for your 2025 tax year, things will likely change.

Ultimately, understanding the federal tax brackets is crucial for determining what you owe and for effective business planning. Like, what should you do if you’re near a bracket cutoff? Should you defer a purchase until next year?

Here’s everything you need to know about federal tax brackets for 2024-2025, including savvy planning tips to optimize your finances.

Why tax brackets matter for small business owners

If you’re a small business owner, taxes are more than just a line item or something on your “to-do” list—they’re a key part of your financials that impact everything from your cash flow to your growth strategy. And one of the most crucial (and misunderstood) concepts in this process is federal individual income tax brackets.

Let’s break it down simply. One of the first things you need to know is the difference between marginal and effective tax rates. 

Different parts of your income are actually taxed at different rates, and as the income increases, so does the tax rate:

  • Your marginal tax rate is the highest rate that applies to your last dollar of income.
  • Your effective tax rate is the average percentage you pay across every portion of your income.

Think of it like a set of tiered water buckets. As you pour in income, each bucket (or bracket) fills up and overflows into the next. Only the water in the top bucket is where the highest rates apply, not everything you’ve poured in (phew).

This means:

  • Myth: “If I move into a higher bracket, all my income is taxed at that rate.”
  • Reality: Only the income within that bracket is taxed at that level.

Understanding federal tax brackets is crucial for two major parts of small business finances—estimated quarterly payments and year-end planning. 

  • Estimated quarterly payments: The IRS expects taxpayers, including the self-employed, to pay taxes throughout the year, on a quarterly basis. Your filing status—whether you’re filing single, jointly, or head of household—determines how much of your income is taxed at each level. Knowing your bracket helps you more accurately estimate how much to pay each quarter, avoiding both underpayment penalties and overpayment cash drains.
  • Year-end tax planning: As you approach year-end, knowing your projected tax bracket can help you make smart financial decisions, like when to make an investment in equipment or sell a business asset, pay bonuses, or defer income. Moves like these can help you optimize your overall tax liability and improve year-end cash flow.

2024 federal income tax brackets

Here are the official federal tax brackets for the 2024 year, according to the IRS (meaning income earned in 2024, filed by April 15, 2025. These brackets apply to taxable income, meaning your entire income after deductions. Brackets differ depending on your filing status—whether you’re a single filer, married individual, filing separate returns, or married couple filing jointly.

Keep in mind that while you might be a small business owner, most owners actually file as individuals or through pass-through entities. If that’s you, then this table directly affects your taxes. 

Single filers:

Tax Rate Taxable Income Range
10% $0 to $11,600
12% $11,601 to $47,150
22% $47,151 to $100,525
24% $100,526 to $191,950
32% $191,951 to $243,725
35% $243,726 to $609,350
37% Over $609,350

Married couples filing jointly:

Tax Rate Taxable Income Range
10% $0 to $23,200
12% $23,201 to $94,300
22% $94,301 to $201,050
24% $201,051 to $383,900
32% $383,901 to $487,450
35% $487,451 to $731,200
37% Over $731,200

Married individuals filing separate returns:

Tax Rate Taxable Income Range
10% $0 to $11,600
12% $11,601 to $47,150
22% $47,151 to $100,525
24% $100,526 to $191,950
32% $191,951 to $243,725
35% $243,726 to $365,600
37% Over $365,600

Head of household:

Tax Rate Taxable Income Range
10% $0 to $16,550
12% $16,551 to $63,100
22% $63,101 to $100,500
24% $100,501 to $191,950
32% $191,951 to $243,700
35% $243,701 to $609,350
37% Over $609,350

 

2025 federal income tax brackets (projected)

Each year, the IRS adjusts the brackets based on inflation. These projections are for the 2025 year, according to the IRS (meaning income filed in April 2026), and are based on current inflation adjustments and IRS indexing. 

As of this time, the 2025 federal income tax rates remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, based on current tax rates and the IRS’s inflation adjustments. These annual shifts help reduce the effect of bracket creep, where inflation pushes you into a higher tax bracket without a real increase in purchasing power.

Single filers:

Tax Rate Projected Income Range
10% $0 to $11,950
12% $11,951 to $48,700
22% $48,701 to $103,400
24% $103,401 to $197,900
32% $197,901 to $251,600
35% $251,601 to $628,300
37% Over $628,300

Married couples filing jointly:

Tax Rate Projected Income Range
10% $0 to $23,900
12% $23,901 to $97,400
22% $97,401 to $206,800
24% $206,801 to $395,800
32% $395,801 to $503,200
35% $503,201 to $770,300
37% Over $770,300

Married filing separately:

Tax Rate Projected Income Range
10% $0 to $11,950
12% $11,951 to $48,700
22% $48,701 to $103,400
24% $103,401 to $197,900
32% $197,901 to $251,600
35% $251,601 to $385,150
37% Over $385,150

Head of household:

Tax Rate Projected Income Range
10% $0 to $17,100
12% $17,101 to $65,400
22% $65,401 to $103,350
24% $103,351 to $197,900
32% $197,901 to $251,600
35% $251,601 to $628,300
37% Over $628,300

 

While next year’s tax bill might seem a world away, keeping these estimates in mind can help with your 2025 tax planning. For example, you can decide whether to accelerate (i.e., invoicing) or defer income (push off bonuses) to optimize your tax liabilities. 

Self-employed or run a small business? Here’s what to know

Self-employed? We salute you—we know you’re swamped with the day-to-day of running your business. But keeping your business afloat (and ahead) isn’t enough—you also need to know how self-employment income is taxed.

First, self-employment income is taxed as ordinary income. It flows through the same federal income tax brackets as wages or salary, but keep in mind that long-term capital gains may be taxed differently depending on the type of gain. Your income may fall into different brackets based on how it’s earned.

But here’s the kicker: you’re also responsible for the self-employment tax, which is used to fund government programs like Medicare and Social Security. 

Regardless of your business’s structure, your personal tax bracket applies. 

However, how your income passes through that personal return varies based on your business structure: 

  • Schedule C: Used to report net profit based on your income and expenses, typically used by sole proprietors and single-member LLCs. Then, that final calculation is used to complete your personal tax return and determines how much you pay.
  • S Corporation: Pass income through via Schedule K-1, and only salary is subject to self-employment tax (distributions are not).
  • LLCs: Typically also pass through income to the owner(s), showing up on a Schedule C or K-1.

Keep in mind, your entity doesn’t change your tax bracket, but it does affect how much income is reported, how much of your income is subject to self-employment tax, and how taxes are withheld or paid.

Tax planning tips based on your bracket

No matter where you fall on the federal tax bracket spectrum, understanding your position allows you to unlock smarter, more strategic planning. You know those stories about financially savvy folks who have less tax liability? You can be one of them. 

Here are some tax tips to keep in mind, based on your bracket, which can help reduce tax surprises and lower your liability.

If you’re near a bracket cutoff…

If you’re hovering near the edge of a higher tax bracket, and you don’t want to spill over into the next “bucket,” one way to potentially reduce your taxable income is through your retirement contributions. 

When you make contributions to accounts like your SEP IRA and solo 401(k), you lower your amount of taxable income. You can also look into tax credits, which directly reduce what you owe—these credits can be especially valuable if you’re near a bracket cutoff.

Each type of plan has its own rules: for example, with a tax-deferred 401(k), you’ll be taxed on the money you withdraw in your retirement years, but likely at a lower rate.

If you’re in a higher-income tax bracket…

If you’re in a higher tax bracket, the qualified business income (QBI) deduction allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income. 

There are income thresholds and rules, especially if your business is a specified service trade or business (SSTB), so proper structuring is key. The current bracket structure came from the 2017 Tax Cuts and Jobs Act, which is set to sunset in the near future.

Also, donating to qualified nonprofits can significantly reduce taxable income. The limits are based on your adjusted gross income. According to the IRS, your deductions can’t generally be more than 60% of your AGI, but in some cases, 20%, 30%, or 50% limits may apply. 

For married taxpayers, some deductions phase out more quickly, so timing matters.

If your income is uneven or seasonal…

If your income is uneven or seasonal, consider using quarterly estimated tax adjustments to closely match estimated tax payments with actual earnings. This approach can help you avoid penalties and improve cash flow. 

The goal with these strategies isn’t to avoid taxes—it’s to plan them with intention. When you do so, you can reduce stress, make taxes a breeze, and keep more of your hard-earned money working for you and your business. 

Frequently asked questions (FAQs)

Taxes touch just about every part of your business—and it’s normal to have questions. Below are a few of the most common questions we hear from small business owners seeking clarity on brackets, filings, and their impact on the bottom line.

What’s the difference between marginal and effective tax rate?

Your marginal tax rate is the highest rate that applies to your last dollar of income, while your effective tax rate is the average you pay across all of your income. 

Let’s say you earned $120,000. That puts your marginal tax rate at 24%, but only your income over the lower bracket threshold is taxed at that rate. Once you tie all of the tiers together, your effective tax rate (what you pay on average) might be closer to 18%.

Do business owners pay more in taxes than employees?

It depends. Self-employed individuals, certain remote workers, and businesses might have higher rates due to the self-employment tax. 

However, they typically have access to many tax deductions that employees don’t (like home office expenses, equipment, and business travel) and have more control over how and when their income is received (which allows for strategic planning that can lower overall tax liability). 

Should I change my business structure based on my bracket?

Not necessarily. Your federal tax bracket alone shouldn’t be the sole factor in your decision. Choosing the right business structure depends on factors such as net income, payroll, and growth plans. 

For example, switching to an S corp might save on self-employment tax, but it also comes with stricter rules around payroll, compliance, and profit distribution. That’s why it’s best to speak with a qualified CPA or tax expert for guidance. 

Plan Ahead With Archer Lewis

Understanding your federal tax bracket is a smart starting point for making your most important financial decisions and is the cornerstone of a well-structured business financial strategy. 

The key is timing: many business owners wait until tax season to consider their bracket positioning, when most planning opportunities are already off the table.

Instead, review your bracket positioning before year-end, when there’s still time to make moves that move the needle in your finances. Whether it’s adjusting income, contributing to retirement plans, or changing your business structure, a proactive conversation can help you plan with purpose.

If you’re to take control of your taxes, start a conversation with our team today. We’ll help you use your tax bracket as a tool, not a surprise.

Navigating the One Big Beautiful Bill Act: A Sweeping Overhaul of Tax Policy for Individuals and Businesses

The recently passed “2025 Reconciliation Bill,” officially titled “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” or the “One Big Beautiful Bill Act” (OBBBA), and signed into law on July 4, 2025, marked a significant transformation of the U.S. tax code. This comprehensive legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing a host of new tax policies that impact both individuals and businesses.

Running a business is challenging enough without having to decode complex tax legislation. But when sweeping changes like the “One Big Beautiful Bill Act” (OBBBA) become law, understanding their impact on your operations isn’t optional—it’s essential for protecting your bottom line and positioning your business for growth.

At Archer Lewis, we understand how overwhelming major tax changes can be. That’s why we’re breaking down what business owners need to know about the OBBBA—so you can focus on what really matters: running and growing your business.

Key Changes for Individuals

The OBBBA introduces several provisions aimed at delivering tax relief to individuals, particularly middle-class families, while also implementing measures that affect high-income earners and specific groups:

  • Permanent Extension of TCJA Individual Tax Rates: The bill solidifies the lower individual income tax rates from the 2017 TCJA, preventing their scheduled expiration at the end of 2025. This ensures continued tax relief across income brackets.
  • Increased Standard Deduction: The standard deduction, significantly increased under the TCJA, is now permanent and further raised to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly, with annual inflation adjustments. A temporary $6,000 bonus deduction for seniors over 65 is available through 2028, phasing out for higher earners.
  • Individual State and Local Tax (SALT) Deduction: The SALT deduction cap is raised from $10,000 to $40,000 for taxpayers earning less than $500,000, with a 1% cap increase till 2029.
  • No Tax on Tips and Overtime: Through 2028, workers in tipped occupations can deduct up to $25,000 in tip income, and overtime workers can deduct up to $12,500, subject to income limits ($150,000 for single filers, $300,000 for joint filers).
  • Trump Accounts: A new tax-deferred savings vehicle for children under 18, allowing annual contributions up to $5,000, with a one-time $1,000 government deposit for newborns born between 2025 and 2028. These accounts support education, small business investments, or first-home purchases.
  • Charitable Deductions: Non-itemizers can claim a charitable deduction of up to $1,000 (single) or $2,000 (joint).
  • Child Tax Credit and Other Family Benefits: The child tax credit is permanently increased by $200, with inflation adjustments. Enhancements to employer-provided childcare credits and adoption credits also support families.
  • Adoption Tax Credit: The OBBBA enhances the adoption tax credit, increasing the maximum credit to $16,810 per child (up from $14,890 in 2024) for qualified adoption expenses, with inflation adjustments. The credit is now fully refundable for families with incomes below $250,000 (single) or $500,000 (joint), phasing out thereafter.
  • Car Loan Interest Deduction: A new provision allows taxpayers to deduct up to $10,000 in interest on car loans for vehicles purchased after January 1, 2025, provided the vehicle is used primarily for personal purposes. This deduction is capped at $150,000 in loan principal and phases out for incomes above $100,000 (single) or $200,000 (joint).
  • 529 Plan Enhancements: The bill expands 529 plan benefits, allowing tax-free withdrawals of up to $15,000 annually for private K-12 education (previously $10,000) and introducing a new provision for up to $10,000 in rollovers to Roth IRAs without penalty, provided the account has been open for at least 15 years.

Key Changes for Businesses

The OBBBA includes significant tax incentives for businesses, particularly small businesses and manufacturers, while also introducing new complexities:

  • 100% Bonus Depreciation Restored: Businesses can immediately expense qualifying assets placed in service after January 19, 2025, with permanent provisions for capital investments and specific benefits for manufacturing through 2032.
  • R&D Expensing: Immediate expensing of domestic research and development (R&D) costs is restored and made permanent for tax years beginning after December 31, 2024 (retroactive to 2022 for eligible small businesses)
  • Qualified Business Income (QBI) Deduction: The Section 199A deduction for pass-through entities is made permanent at 20% (the House proposed 23%, but the Senate retained the original rate). This benefits small businesses and partnerships.
  • Section 179 Expensing: The expense cap for depreciable business assets is increased to $2.5 million, with a phase-out threshold of $4 million, effective for 2025 and adjusted for inflation thereafter.
  • Business Interest Deduction: The business interest limitation under Section 163(j) is modified to use EBITDA (including depreciation and amortization) for calculations, allowing greater deductions through 2029.
  • Allocation of Deductions to Foreign Source Net CFC Tested Income (Formerly Known as GILTI): For foreign tax credit purposes, the OBBBA modifies the allocation of deductions to foreign source net Controlled Foreign Corporation (CFC) tested income, previously referred to as Global Intangible Low-Taxed Income (GILTI). The bill allows a 50% deduction for foreign source net CFC tested income, increasing to 60% for tax years after 2027, reducing the effective tax rate on such income. This change aims to enhance the competitiveness of U.S. multinationals by improving foreign tax credit utilization.
  • One Percent Floor for Corporate Charitable Contributions: The OBBBA introduces a 1% floor for deductions of corporate charitable contributions, meaning corporations can only deduct charitable contributions exceeding 1% of their adjusted taxable income. This provision, effective for contributions made after December 31, 2024.
  • Clean Energy and Other Provisions: The bill phases out certain clean energy tax credits from the Inflation Reduction Act, such as electric vehicle and charging credits, while extending biofuel credits to 2031. It also introduces a 1% tax on remittances and modifies international tax rules, including GILTI and FDII.

Impacts and Considerations

The OBBBA is one of the most significant tax reforms since the TCJA, with far-reaching implications. Its impact on business cash flows and individual wealth planning is significant. Taxpayers should model scenarios for effective tax strategies. Businesses should consult advisors to navigate retroactive provisions and new opportunities, such as bonus depreciation and R&D expense. Businesses can file amended returns to claim refunds for previously paid taxes, while high-net-worth individuals should reassess estate planning due to the increased estate tax exemption to $15 million per individual.

Why business owners & individuals choose Archer Lewis

At Archer Lewis, we offer integrated tax and financial solutions specifically designed for growing businesses. Our team provides clear, proactive guidance whether you’re a small business owner or managing complex operations across multiple locations.

We combine deep tax expertise with practical business understanding to deliver results that matter.

Our services include:

  • Strategic tax planning for business owners navigating complex legislation
  • Comprehensive business accounting that captures all available deductions and credits
  • Fractional CFO services for growth planning and cash flow optimization
  • Integrated personal and business tax preparation that maximizes overall benefits
  • Ongoing compliance support that keeps you focused on business operations

With Archer Lewis, you gain a dedicated team that understands both tax law and business success, and works with you to turn complex legislation into competitive advantages.

Contact us today for a free consultation. We’ll help you build integrated tax strategies that support your growth goals—and give you confidence that you’re making the most of every available opportunity.

Looking Ahead: A Series of In-Depth Blog Posts

Given the complexity and breadth of the OBBBA, we will break down its provisions in a series of blog posts to provide clarity and actionable insights. Upcoming topics include:

  • Individual Tax Strategies: Exploring deductions for tips, overtime, and SALT, as well as Trump Accounts and charitable giving.
  • Business Tax Opportunities: Detailing bonus depreciation, R&D expense, and QBI deductions for small businesses and manufacturers.
  • Payroll: The payroll changes aim to provide tax relief for workers in specific sectors while incentivizing employer-provided benefits like childcare. However, they introduce significant administrative complexity.
  • Estate and Wealth Planning: Analyzing the increased estate tax exemption and its implications for high-net-worth individuals.
  • Industry-Specific Impacts: Examining how sectors like manufacturing, real estate, and technology are affected.
  • International and Energy Tax Changes: Covering modifications to GILTI, FDII, and the phase-out of clean energy credits.

Stay tuned for these detailed analyses to help you navigate the opportunities and challenges presented by the One Big Beautiful Bill Act. For personalized advice, consult with a tax professional to align these changes with your financial goals.

Why Manufacturers Need Fractional CFO, Controller, Bookkeeping, Tax, and HR PEO Services

Running a manufacturing business is demanding, but it’s also incredibly complex from a financial and operational standpoint. You’re managing production lines, optimizing supply chains, and staying competitive while navigating intricate cost structures, regulatory compliance, and workforce challenges that are unique to your industry.

At Archer Lewis, we understand how overwhelming that can be. That’s why we offer fractional CFO, controller, bookkeeping, tax, and HR PEO services designed specifically for manufacturers. We help you streamline operations, maximize profitability, and ensure compliance—so you can focus on what really matters: building great products.

Without the right financial and operational structure, it’s easy to miss cost-saving opportunities or make expensive mistakes that affect your cash flow, regulatory standing, or long-term growth potential.

This guide breaks down what manufacturers need to know about building smart, integrated financial and HR systems that keep operations running smoothly and position your business for sustainable success.

What manufacturers need from financial and HR services

Manufacturing businesses require specialized financial and operational support that addresses the unique complexities of production-based operations. These businesses face challenges that service companies typically don’t encounter—inventory management, cost of goods sold calculations, complex payroll structures, and regulatory compliance across multiple jurisdictions.

Because manufacturers handle both production operations and complex business requirements, they need integrated support that addresses:

  • Accurate cost accounting and inventory tracking across production cycles
  • Strategic financial planning for capital-intensive equipment purchases
  • Complex payroll management, including union contracts and overtime calculations
  • Multi-state tax compliance and manufacturing-specific deductions
  • HR compliance for high-risk manufacturing environments

Comprehensive financial and operational management ensures regulatory compliance and provides instant access to critical data that drives smarter business decisions.

If you’re in the early stages of growth, partnering with specialists who understand manufacturing may be the first step to building a solid operational foundation.

Key operational components in manufacturing businesses

Manufacturing is a massive economic driver: the sector contributes over $2.3 trillion to the U.S. economy annually and employs more than 12 million Americans across diverse industries.

Building a manufacturing operation can require anywhere from hundreds of thousands to tens of millions of dollars in capital investment. A robust financial and operational framework is vital, as manufacturing businesses have unique cost structures and regulatory requirements.

Understanding how each affects your operations and bottom line is critical:

Complex cost accounting: Raw materials, labor, overhead, and finished goods tracking that requires sophisticated accounting methods and real-time visibility.

Capital-intensive investments: Equipment purchases, facility expansions, and technology upgrades that demand strategic financial planning and cash flow management.

Regulatory compliance: OSHA safety requirements, environmental regulations, and industry-specific standards that require ongoing monitoring and documentation.

Workforce management: Complex payroll structures, benefits administration, and compliance requirements that vary significantly from other industries.

Without a firm grasp on how these affect your financial statements and operational efficiency, it’s easy to make errors that compound over time.

Why integrated financial and HR management matters

Financial and operational management for manufacturers isn’t just about keeping accurate books. It’s about optimizing production costs, ensuring regulatory compliance, and building sustainable growth despite industry volatility.

Key systems to build into your manufacturing operations include:

  • Real-time cost accounting that tracks materials, labor, and overhead across production runs
  • Cash flow management systems that handle the capital intensity of manufacturing operations
  • Strategic financial planning that supports equipment investments and facility expansion
  • Comprehensive HR systems that ensure compliance and support workforce scaling

This isn’t administrative overhead. These systems support smarter operational decisions and help you build competitive advantages in demanding markets.

Common manufacturing, finance, and HR mistakes

Getting manufacturing operations wrong isn’t just inefficient—it’s expensive and potentially dangerous.

Here are the top mistakes we see manufacturers make:

Inadequate cost tracking: Without accurate cost accounting, you can’t properly price products or identify inefficiencies in your production processes.

Poor cash flow planning: Manufacturing’s capital requirements and seasonal fluctuations demand sophisticated cash flow management to avoid funding crises.

Compliance oversights: Missing OSHA requirements, tax obligations, or labor law compliance can result in significant penalties and operational disruptions.

Generic financial systems: Tools not designed for manufacturing often mishandle inventory accounting, cost allocation, or regulatory reporting requirements.

Working with professionals who understand manufacturing operations can help you avoid these costly pitfalls while building systems that support growth.

How integrated financial and HR systems support manufacturing growth

Well-structured financial and operational systems do more than meet compliance requirements. They create the foundation for competitive advantage and sustainable expansion.

Here’s what you need:

  • Sophisticated cost accounting that provides real-time visibility into production costs, material usage, and labor efficiency across all operations.
  • Strategic financial planning that supports equipment investments, facility expansion, and market development initiatives.
  • Comprehensive HR systems that ensure compliance while supporting workforce development and operational scaling.
  • Integrated reporting that connects financial performance with operational metrics, providing actionable insights for decision-making.

All of this creates streamlined operations that improve profitability, support strategic planning, and keep you focused on manufacturing excellence.

If you’re evaluating financial and operational partners, it’s important to choose professionals who understand manufacturing’s unique requirements and growth patterns.

When to bring in manufacturing specialists

You may be ready for specialized financial and operational support if:

  • You’re planning significant equipment investments or facility expansion
  • You’re struggling with cost accounting or inventory management complexity
  • You need better insight into production costs and operational efficiency
  • You spend more time on administrative tasks than on manufacturing operations

Partnering with fractional CFOs, controllers, and HR specialists who understand manufacturing helps you reduce administrative burden, ensure compliance, and improve operational visibility.

Why manufacturers choose Archer Lewis

At Archer Lewis, we offer integrated financial and operational solutions specifically designed for manufacturers. Our team provides clear, proactive support whether you’re a growing operation or managing multiple facilities across different markets.

We combine the best of both worlds: deep manufacturing expertise and cutting-edge financial technology.

Our services include:

  • Specialized bookkeeping and manufacturing cost accounting for production operations
  • Fractional controller services for operational oversight
  • Strategic CFO guidance for growth planning and capital allocation
  • Comprehensive tax planning, including manufacturing-specific credits and deductions
  • HR PEO services are designed for manufacturing environments

With Archer Lewis, you gain a dedicated team that understands your industry and works with you to optimize costs, ensure compliance, and build sustainable competitive advantages.

Let’s streamline your manufacturing operations

Whether you’re launching a new facility or optimizing existing operations, financial and operational complexity shouldn’t hold you back. If you’re tired of wrestling with cost accounting, managing compliance requirements, or planning for capital investments, you’re not alone—and you don’t have to handle it alone.

At Archer Lewis, we offer specialized support that helps you optimize operations, improve profitability, and get more strategic value from your financial data. No generic solutions. No unreturned calls. Just clear guidance from people who understand how manufacturing businesses succeed.

Contact us today for a free consultation. We’ll help you build integrated systems that support your operational goals—and give you time back to focus on what you do best: manufacturing excellence.