Walter Shuffain

Looking Ahead: Accounting Standards on the Horizon in 2026 for Nonpublic Entities

wsadvisors — Mon, 16 Mar 2026 13:24:28 +0000

Written By: Danielle MacKenzie, CPA, MSA

Key Points

Several additional Accounting Standards Updates will affect nonpublic entities in 2026 and beyond
Upcoming changes include updates related to credit losses, internal use software, and tax disclosures
Early planning and evaluation can help reduce implementation challenges

Preparing for What Is Next in Financial Reporting

With 2025 reporting underway, nonpublic entities should begin preparing for additional Accounting Standards Updates that will take effect in 2026 and beyond. While broad accounting overhauls have slowed, targeted amendments continue to refine recognition, measurement, and disclosure under U.S. GAAP.

These updates address share-based considerations payable to customers, credit losses, refinements to the derivative scope, and purchased loans. Though narrower than prior major standards, they may affect earnings patterns, transaction price estimates, capitalization timing, and financial statement presentation.

Early evaluation allows management to determine scope applicability, assess policy elections, and plan implementation before the year of adoption.

ASU 2025-04: Clarifications to Share-Based Consideration Payable to a Customer

Summary

ASU 2025-04 clarifies the accounting for share-based consideration payable to a customer under Topics 718 and 606 to provide more consistent outcomes. The ASU revises the definition of a performance condition to include purchase-based metrics and eliminates the policy election that permits forfeitures to be recognized as they occur (unless granted in exchange for a distinct good or service). The update also clarifies that the constraint guidance in Topic 606 does not apply to share-based consideration payable to a customer.

Effective Date for Nonpublic Entities

Fiscal years beginning after December 15, 2026. Early adoption is permitted.

What Changed

The revised definition of performance conditions broadens the definition to explicitly include conditions based on volume or monetary amount of purchases, which may result in fewer awards being classified as having service conditions. The ASU eliminates the policy election to recognize forfeitures as incurred for share-based consideration granted to customers with service conditions and requires nonpublic entities to estimate forfeitures as a reduction of revenue. The ASU also clarifies that Topic 718 applies when assessing vesting probability rather than the variable consideration constraint guidance in Topic 606. The share-based consideration is measured and classified under Topic 718 and then recognized as a reduction of revenue in the same manner as if the payment were made in cash.

Financial Statement Presentation Impact

Income statement: Changes in forfeiture estimates and vesting assessments may affect revenue.
Footnotes: Additional disclosure may be required to explain significant judgments, as it will still require judgment to determine whether share-based consideration to a customer has a performance or a service condition.

Transition

The ASU may be applied using either a modified retrospective or full retrospective approach. Nonpublic entities must use the actual outcomes of a performance or service condition, if known as of the beginning of the annual period of adoption, for all prior-period estimates when electing full retrospective adoption.

ASU 2025-05: Measurement of Credit Losses for Accounts Receivable and Contract Assets

Summary

ASU 2025-05 simplifies the application of the current expected credit losses model for accounts receivable and contract assets arising from revenue transactions. The ASU provides a practical expedient and accounting policy election related to the estimation of expected credit losses. The practical expedient permits a nonpublic entity to assume that current conditions as of the balance sheet date do not change the asset's remaining life when developing reasonable and supportable forecasts used to estimate expected credit losses. A nonpublic entity that elects the practical expedient is permitted to make an accounting policy election to consider collection activity occurring after the balance sheet date when estimating expected credit losses.

Effective Date for Nonpublic Entities

Fiscal years beginning after December 15, 2025.

What Changed

The amendments reduce the need for detailed forward-looking forecasts for current accounts receivable and contract assets. Nonpublic entities electing the policy option may consider collections received after the balance sheet date but before issuance of the financial statements when estimating the allowance for credit losses.

Financial Statement Presentation Impact

Balance sheet: The allowance for credit losses will allow a nonpublic entity to reflect its actual collection experience in its estimate of the allowance for credit losses at year-end.
Income statement: Credit loss expense may fluctuate depending on the estimation approach
Footnotes: Disclosure is required if a nonpublic entity has applied the practical expedient and the accounting policy election. The date through which subsequent cash collections were evaluated must also be disclosed.

Transition

The amendments are applied prospectively. Nonpublic entities should document policy elections and consistently apply the selected approach.

ASU 2025-07: Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract

Summary

ASU 2025-07 refines derivative scope guidance under Topic 815 and clarifies accounting for share-based noncash consideration received from a customer under Topic 606. Particular non-exchange-traded contracts based on operations and activities specific to one of the parties to the contract may now qualify for a scope exception from derivative accounting. Contracts based on certain underlyings would not qualify for the scope exception. The amendments also clarify how share-based noncash consideration should be measured in a revenue contract.

Effective Date for Nonpublic Entities

Fiscal years beginning after December 15, 2026. Early adoption is permitted.

What Changed

The derivative scope refinements expand the existing exception, potentially excluding additional contracts and embedded features from derivative accounting. For share-based noncash consideration, entities must apply the measurement guidance in Topic 606. Other advice, including Topic 815 and Topic 321, is not applied unless and until the right to receive or retain the share-based noncash consideration becomes unconditional under Topic 606.

Financial Statement Presentation Impact

Balance sheet: Certain contracts may no longer be recorded as derivatives
Income statement: Revenue patterns may change for contracts involving share-based noncash consideration
Footnotes: Disclosure of scope judgments may be necessary

Transition

The ASU may be applied prospectively or on a modified retrospective basis. It is permitted to elect different transition methods for the derivatives scope refinement and scope clarification for share-based noncash consideration. Nonpublic entities should evaluate existing contracts and determine the most practical approach.

ASU 2025-08: Financial Instruments – Credit Losses (Purchased Loans)

Summary

ASU 2025-08 improves accounting for purchased loans by expanding the population of acquired financial assets subject to the gross-up approach in Topic 326. Loans acquired without credit deterioration, other than credit cards, debt securities, or trade receivables arising from transactions accounted for under Topic 606, are treated as purchased seasoned loans and accounted for using the gross-up approach at acquisition.

Effective Date for Nonpublic Entities

Annual reporting periods beginning after December 15, 2026. Early adoption is permitted.

What Changed

The amendments require a consistent gross-up approach for qualifying purchased loans, eliminating prior differences in accounting treatment. This reduces subjectivity and improves comparability in recognizing expected credit losses at acquisition.

Financial Statement Presentation Impact

Balance sheet: Acquired loans may reflect grossed-up balances at acquisition
Income statement: Subsequent credit loss expense may differ due to the revised initial measurement
Footnotes: Additional disclosures may be required

Transition

The amendments are applied prospectively to loans acquired on or after the initial application date. Nonpublic entities should evaluate anticipated acquisition activity before adoption.

Bringing These Standards into Your Future Reporting Process

With additional standards scheduled to take effect in the coming years, now is an appropriate time for nonpublic entities to assess applicability and prepare for implementation. Even targeted amendments can influence earnings patterns, capitalization timing, and disclosure requirements.

If questions arise as you evaluate these upcoming requirements, our team can help you assess what applies to your organization and guide you on how to address the changes within your reporting timeline. Our goal is to help you navigate these updates with clarity and confidence, so your financial statements continue to reflect accurate and compliant reporting.

Frequently Asked Questions (FAQ’s)

How do I know if ASU 2025-05 will significantly impact my organization?

If you maintain material accounts receivable or contract assets, and your current method to estimate expected credit losses is complex and time-consuming, evaluate whether the available practical expedient and policy election simplifies your estimation process.

2) Will the internal use software update allow more costs to be capitalized?

Not necessarily. While timing may change under the revised threshold, eligible costs remain largely consistent with existing guidance.

3) What steps should nonpublic entities take now?

Review effective dates, evaluate scope applicability, discuss potential impacts with your advisors, and confirm that systems and processes can support new requirements.

The post Looking Ahead: Accounting Standards on the Horizon in 2026 for Nonpublic Entities appeared first on Walter Shuffain.

Mastering Cash Flow Cycles: How to Predict and Smooth Cash Flow Fluctuations

wsadvisors — Mon, 02 Mar 2026 20:42:26 +0000

Written by: Courtney Fraser, CPA, MBA

Key Takeaways

Use cash flow analysis and forecasting together to identify pressure points early.
Maintain both short-term and long-term forecasts to support payroll and operating decisions.
Strengthen predictability by updating assumptions and reviewing actual results regularly.

Cash flow problems often come from timing gaps between when income is earned and when cash is available to pay employees, vendors, and lenders. For business owners, understanding cash flow cycles is one of the most effective ways to reduce uncertainty, protect liquidity, and make more confident decisions year-round.

What Are Cash Flow Cycles and Why Do They Matter?

Cash flow cycles describe how money consistently moves into and out of your business. Managing a company’s cash flow is important because profitability does not guarantee liquidity. A company can be growing and still struggle to meet short-term obligations if cash inflows and outflows are misaligned.

When you analyze cash movement over time, patterns begin to surface. These patterns are often tied to seasonality, customer payment behavior, inventory timing, or investment activity. Recognizing them lets you plan rather than react when cash is already tight.

How Does Cash Flow Analysis Improve Decision Making?

A cash flow analysis shows whether your operations are generating enough cash to sustain the business. It organizes activity into operating, investing, and financing categories so owners can understand what is driving changes in cash.

This view helps clarify whether a cash dip is operational, strategic, or temporary. When owners understand the source, they can make informed decisions about spending, pricing, and financing rather than relying solely on bank balances.

Metrics That Make Cash Flow Easier to Manage

Below are a few measures which can turn cash flow analysis into a practical management tool. These measures help translate financial statements into operational insight.

Free cash flow shows how much cash remains after investments.
Operating cash flow margin shows how efficiently sales generate cash.
Cash coverage measures indicate how comfortably obligations can be met.

An example of a tool used is a 13-week cash flow that is used when projecting a cash flow over a period of time because tracking trends across multiple periods is far more helpful than focusing on a single month.

How Does Forecasting Help Predict Cash Fluctuations?

Forecasting helps you anticipate shortfalls before they disrupt operations. By using historical cash patterns alongside expected activity, forecasts estimate where your cash position is heading.

When forecasting is paired with regular cash flow analysis, owners gain visibility into upcoming risks and fluctuations. This gives you time to adjust collections, delay discretionary spending, or reconsider investment timing before liquidity becomes a concern.

Forecasting Methods That Work for Business Owners In 2026

Different planning horizons require different approaches. Short-term needs, such as payroll and vendor payments, benefit from detailed forecasts, while longer-range planning benefits from broader projections tied to financial statements.

Most businesses rely on a mix of methods, including direct forecasting for near-term cash needs, indirect forecasting for longer-term planning, and rolling forecasts that update as new results come in. Scenario planning adds resilience by helping owners prepare for delayed payments or rising costs.

Internal Controls That Improve Cash Predictability

Strong internal controls support forecasting accuracy by improving consistency and accountability. Forecasts lose value when assumptions are outdated or when departments operate in silos.

One of the most effective controls is reviewing the forecast against the actual results. This comparison highlights where assumptions need refinement and which parts of the business introduce volatility. Coordination between sales, operations, and finance further improves reliability because each team sees timing risks differently.

It is also important that the business has updated and accurate financial statements to use in analyzing patterns and forecasting the cash flow. Performing a monthly close strengthens internal controls over financial reporting.

How Can Forecasts Be Used to Smooth Cash Flow Year-Round?

Forecasts create value only when they drive action. If projections show a dip coming, owners can respond early by adjusting spending, accelerating collections, or rethinking the timing of major purchases before cash pressure builds.

Over time, forecasting becomes part of normal operations rather than a reactive exercise. This supports steadier payroll planning, stronger vendor relationships, and better risk decisions throughout the year. For many business owners, the most significant gains come from reviewing cash flow trends and forecasts with their CPA, who can help perform analysis, interpret results, challenge assumptions, and align cash planning with broader business goals. That collaboration turns forecasting into a strategic tool rather than just a financial report.

Frequently Asked Questions (FAQ’s)

How Often Should Business Owners Review Cash Flow?
Monthly reviews are a strong baseline for most businesses, with more frequent reviews during periods of change. Reviewing cash flow regularly helps keep assumptions current and forecasts useful.
Can Cash Flow Analysis Predict Financial Trouble?
Cash flow analysis reflects past activity, but when using the patterns from the past to forecast future cash flow, it can surface warning signs. Declining operating cash flow or shrinking free cash flow often signals the need for closer review.
Is Cash Flow Forecasting Only Useful for Larger Businesses?
No. Smaller businesses often benefit even more because they have less margin for error with the timing of their cash flows.
Do Forecasting Tools Replace Professional Guidance?
Tools improve visibility, but interpretation remains critical. A CPA or outsourced accounting provider helps translate forecasts to decisions around pricing, spending, and risk management. They also ensure forecasts stay accurate and relevant by updating models and analyses as part of the monthly close process.

The post Mastering Cash Flow Cycles: How to Predict and Smooth Cash Flow Fluctuations appeared first on Walter Shuffain.

How Plan Sponsors Can Address Roth Catch-up Regulations

wsadvisors — Sun, 01 Mar 2026 21:13:44 +0000

Written By: Jon Hitter, CPA, MST, CGMA

Highlights From the Roth Catch-up Contribution Regulations

Key Dates
9/16/2025	IRS released the final regulations on Roth catch-up contributions under SECURE 2.0. Note: SIMPLE IRA plans are not subject to the Roth catch-up regulations.
1/1/2026	New SECURE 2.0 catch-up rules took effect on January 1, 2024, but the IRS delayed compliance until January 1, 2026.
12/31/2026	Plan amendment deadline for qualified plans.
12/31/2028	Plan amendment deadline for union plans and those under collective bargaining agreements.
12/31/2029	Plan amendment deadline for governmental plans and 403(b) plans sponsored by public schools.

Eligible Plans and Participants
401(k), 403(b), governmental 457(b)	New Roth catch-up regulations affect these retirement plans.
50+	Participants age 50 or older can contribute more than the plan limits.
60, 61, 62, 63	Ages at which participants are eligible to make super catch-up contributions
$150,000	Employees age 50 or older that earn $150,000 or more in 2025 Social Security wages (Box 3 of Form W-2) (i.e., “highly paid participants” or HPPs) are required to make any catch-up contributions as Roth contributions (after-tax instead of pre-tax).

Contribution Limits
$24,500 (2026)	General limit on salary deferrals for 2026.
$72,000 (2026)	Annual defined contribution limit.
$8,000 (2026)	Standard catch-up contribution limit.
$11,250 (2026)	Contribution limit for super catch-up contributions.

The final Roth catch-up regulations the IRS issued on Sept. 16 are in effect, detailing SECURE 2.0’s requirements and deadlines for most ERISA-based retirement plans. However, it is important to note that SIMPLE IRA plans and self-employed individuals are not subject to these regulations. Plan sponsors should act now to determine how the new regulations affect their plans and take steps to comply.

The IRS will allow 2026 to be a “gap year,” allowing plan sponsors time to adjust to the new catch-up requirements, since the IRS did not extend the non-enforcement transition period that ends on December 31, 2025. During 2026, plan sponsors will be required to demonstrate a reasonable, good faith interpretation of the SECURE 2.0 changes, but stricter compliance enforcement begins on January 1, 2027.

Most plans must be amended to comply with the new requirements by December 31, 2026, regardless of whether the plan operates on a fiscal year or calendar year basis. The 12-month runway to the new amendment date may seem long, but most plan sponsors will need to coordinate with third parties — such as payroll providers, advisors, legal counsel, or recordkeepers — each with their own priorities and timelines. Additionally, plan sponsors must not only understand how the rules affect their plans but also explain these changes effectively to plan participants.

This article offers five steps for plan sponsors to consider as they implement Roth catch-up contribution requirements. For more information about these regulations, please review IRS Final Catch-Up Contribution Regulations for Salary Deferrals in Retirement Plans: What Employers Need to Know.

Identifying Eligible Participants

Are any of the company’s employees eligible for Roth catch-ups or super catch-ups?

Eligibility may not be immediately apparent, and several considerations are at play:

Age: Employees age 50 or older can make additional deferrals to their retirement plans beyond the typical contribution limit. Super catch-ups are available to employees in the calendar year they reach age 60, 61, 62, or 63.
Prior-year wages: Employees whose 2025 Social Security wages exceed $150,000 are considered highly paid participants (HPPs). This is not simply another name for highly compensated employees (HCEs): it’s a completely new classification. In addition, the HPP prior-year Social Security wage limit is a new data point that employers never had to track before. The HPP Social Security wage limit ($150,000) is lower than the 2025 Social Security wage base ($176,100). Thus, employers cannot simply assume that everyone who hits the Social Security wage base cap is an HPP, because others below that level could also be HPPs.
Owners with self-employment income are exempt. The new mandatory Roth “age and wage” catch-up rules apply only to W-2 employees and do not apply to self-employed individuals, including partners and LLC profits or capital interest owners who receive K-1s instead of W-2s.

It’s important for employers to identify employees whose age and salary meet the IRS requirements for mandatory Roth (after-tax) deferrals. As employees reach these milestones, plan sponsors must direct deferrals to the appropriate pre-tax and after-tax funds.

Updating Payroll and Plan Systems

What steps should employers take to comply with the new Roth catch-up contribution regulations?

Employers should immediately discuss the new IRS guidance with payroll providers, recordkeepers, and any other critical stakeholders. To help verify compliance with SECURE 2.0 Roth catch-up deferral regulations, employers can take the following steps:

Evaluate the payroll system to determine if it can track employee eligibility.
Establish procedures to accurately process Roth catch-up contributions.
Monitor contribution limits, participant ages, and participant salaries continuously.
Communicate regularly with payroll providers and third-party administrators to assess the efficiency and accuracy of the new processes.

Plan participants may be unaware of changes to their retirement plans. It’s critical to inform participants about how the Roth catch-up provisions may affect them.

Communicating with Participants

Do employers need to notify participants of the new Roth catch-up regulations?

Employees who prefer to make pre-tax rather than after-tax contributions to their retirement plan may find the new SECURE 2.0 regulations an unwelcome surprise. Employers are strongly encouraged to inform participants that, based on their age and Social Security wages, their catch-up contributions may automatically be treated as Roth (after-tax) contributions. Communications to plan participants should provide them the opportunity to make an informed decision about their deferral elections.

Amending Plan Documents

When should employers amend plan documents?

Conversations about plan amendments should begin immediately. A thorough review of plan provisions will reveal the extent of any changes needed, including those related to the Roth catch-up regulations. For example, what if a company’s current plan doesn’t offer Roth contributions as an option? To allow HPPs to make catch-up contributions, the plan sponsor must amend the plan document to allow Roth contributions from all eligible employees.

Typically, amending an ERISA retirement plan may involve coordinating with other entities, including third-party administrators and payroll providers. Adapting to another organization’s timelines and priorities can extend the process — another good reason to start reviewing your company’s plan now. Doing so can help plan sponsors comply before deadlines approach and reduce errors that may occur if amendments are rushed at the last minute.

Remaining Up to Date

How can the company continue to maintain compliance with Roth catch-up regulations?

As these rules evolve, administrative burdens on employers and plan sponsors could shift. It’s important to monitor new guidance or updates from the IRS, as these may require employers and plan administrators to take additional action.

For guidance on navigating the Roth catch-up regulations, coordinating plan amendments, and strengthening compliance processes, Walter Shuffain can assist through our Benefit Plan Audit and Agreed Upon Procedures Services.

The post How Plan Sponsors Can Address Roth Catch-up Regulations appeared first on Walter Shuffain.

New IRS Digital Asset Reporting: What the First Year of Implementation Means for Businesses

wsadvisors — Sat, 28 Feb 2026 19:17:21 +0000

Key Takeaways

New IRS rules affect more businesses than many owners expect, even those that do not accept crypto
Digital asset exposure often comes from systems and platforms, not customer payments
Working with a CPA can help business owners understand risk and build a clear strategy

Digital asset reporting rules took effect in 2025, representing a significant shift in how the IRS tracks certain business activities. Many owners assume these rules apply only to businesses that accept cryptocurrency as a form of payment. In reality, many non-crypto companies are already exposed through the tools they use and the way transactions are handled behind the scenes.

What makes this first year different is not just new forms or paperwork. It is the level of detail the IRS now expects. Businesses that have never considered themselves connected to digital assets may now face reporting responsibilities without realizing it. This is where proactive planning becomes essential.

What Changed with IRS Digital Asset Reporting in 2025?

The most significant change is that the IRS now receives more detailed and more consistent information about digital asset activity. This data comes not only from taxpayers, but also from platforms and service providers.

From a business perspective, three changes matter most:

Certain transactions must now be tracked with more detail, even if crypto is not accepted as payment
Some platforms are required to issue Form 1099 DA reporting gross proceeds
Taxable activity still requires gain or loss reporting, including stablecoin-related transactions

These changes increase the IRS's visibility. Businesses that rely on third-party platforms may be affected even if they never intended to hold or use digital assets.

Compliance-Driven Cost Pressure on Profitability

For non-crypto business owners, the risk is often indirect. Reporting responsibilities can arise unexpectedly through longer reviews, new software requirements, or inquiries from accountants or advisors.

These costs do not usually appear all at once. They build over time as records are reviewed, reconciled, and corrected. When pricing and planning do not account for this work, profitability can slowly erode.

This is why understanding exposure early matters. It gives business owners time to plan rather than react.

How Does Cost Basis Tracking Affect Pricing Decisions?

More detailed tracking requirements create extra work, but they also provide valuable insights. Business owners can better see which activities create value and which introduce complexity without a clear return.

This information supports smarter decisions about pricing and service offerings. Instead of treating all transactions the same, businesses can align pricing with the effort and risk associated with each transaction. Your accountant can help interpret this information and translate it into a practical strategy.

Aligning Pricing with Reporting Risk and Audit Exposure

With improved data, the IRS can more easily identify inconsistencies. Even businesses that do not accept crypto can face questions if records do not align with platform reporting.

Pricing should reflect not just the work of tracking transactions, but also the systems and controls that reduce exposure. These include:

Time spent maintaining accurate records
The cost of fixing errors after filing
Controls that reduce the chance of audits or penalties

Support from a CPA can help ensure these risks are addressed before they become costly problems.

Strategic Pricing Adjustments for 2025 and Beyond

The first year of implementation creates an opportunity to step back and reassess. Businesses that act now can make thoughtful adjustments instead of rushed changes later.

This is where a CPA can add value. They can help evaluate exposure, model costs, and build pricing or operational strategies that support long-term stability. Precise planning also makes it easier to explain changes to stakeholders.

Preparing for Long-Term Pricing Stability

Digital asset reporting will continue to evolve as the IRS gathers more data and increases its enforcement efforts. Many non-crypto businesses assume these rules do not apply to them, which can lead to unexpected compliance issues and added costs later.

Now is the right time to speak with an accountant or advisor. A CPA can help identify hidden exposure, assess reporting risk, and develop a strategy that aligns pricing, processes, and controls before problems arise. A proactive conversation today can help protect profitability and provide long-term stability.

Frequently Asked Questions (FAQ’s)

Do these rules apply if my business does not accept crypto?
Yes. Exposure can originate from various sources, including platforms, payment processors, or internal transaction handling procedures.
Do new IRS forms eliminate my reporting responsibility?
No. Third-party forms assist the IRS, but businesses remain responsible for accurate reporting.
Should I be concerned if my digital asset activity is limited?
Yes. Even limited activity can create reporting obligations, and a financial advisor can help assess the materiality and risk associated with these obligations.
What is the best first step for my business?
The best first step is speaking with a financial advisor who understands these rules and can help you develop a clear strategy.

The post New IRS Digital Asset Reporting: What the First Year of Implementation Means for Businesses appeared first on Walter Shuffain.

Strengthening Internal Controls for Small Businesses

wsadvisors — Fri, 27 Feb 2026 20:38:40 +0000

Key Takeaways

Internal controls help prevent errors, deter fraud, and improve the reliability of your financial reporting.
Focus first on cash, inventory, receivables, and disbursements because those areas carry the highest day-to-day risk.
Testing controls helps you confirm they’re working, so your cash flow decisions and forecasts are based on dependable numbers.

Small and mid-size businesses face many of the same financial risks as larger organizations, but with fewer layers of oversight and fewer specialized roles. That’s why internal controls matter. When controls are straightforward, documented, and consistently followed, they protect assets, support compliance, and reduce operational surprises while giving owners more confidence in the numbers they use to run the business.

Just as important, internal controls become more valuable as a company grows. The goal isn’t bureaucracy. It’s building enough structure that your financial processes remain consistent as you add staff, customers, vendors, and systems.

What Are Internal Controls in a Small and Mid-Size Business?

Internal controls are the policies and procedures that help you safeguard assets, produce reliable financial reporting, and operate within legal and regulatory requirements. In everyday terms, they’re the checks, approvals, and documentation standards that keep money moving through your business in a consistent, accountable way.

For many growing companies, controls are also what enable delegation. When the business no longer runs entirely through the owner, controls help ensure financial work is done correctly, even when responsibilities are shared.

Why Do Internal Controls Matter for Cash Flow and Forecasting?

Internal controls matter because better inputs lead to better decisions. If receivables are misstated, deposits aren’t reconciled, or disbursements aren’t reviewed, you can end up planning based on numbers that don’t reflect reality. Over time, that can affect staffing, purchasing, and pricing decisions.

As a business scales, even small process gaps can become expensive. Controls help you maintain stable, trustworthy numbers, which improves both forecasting and profitability planning.

The Core Elements Behind Effective Controls

A strong control framework is usually described in five categories, and small and mid-size businesses can apply them without creating unnecessary complexity.

These categories are:

Control environment: expectations, ethics, and accountability set by leadership
Risk assessment: identifying where error or fraud is most likely and most costly
Control activities: reconciliations, approvals, access limits, and documentation
Information and communication: getting the correct financial info to the right people
Monitoring: reviewing and testing controls so problems are caught early

What Internal Controls Should Owners Prioritize First?

Start with cash, inventory, receivables, and disbursements, since these areas directly affect liquidity and are vulnerable to both errors and misuse. A simple way to think about control design is to ensure no single person can initiate, approve, and record the same transaction without oversight.

This becomes more important as your business grows. When responsibilities expand across multiple people, precise controls reduce confusion and prevent minor errors from becoming recurring issues.

Standard high-impact controls include:

Segregation of duties, or owner review when staffing is limited
Regular bank reconciliations with documented review
Approval limits for larger purchases, refunds, and write-offs
Access controls for accounting systems, including audit trails and logs

How Do You Strengthen Controls Over Receivables?

You strengthen receivables controls by tightening the path from credit decisions to invoicing, collections, and reconciliation. Receivables represent cash you’re counting on, so weak controls can show up as slow collections, higher write-offs, or misleading revenue and cash flow projections.

Practical steps include setting clear credit policies, issuing invoices promptly, reviewing ageing reports regularly, and requiring approval and documentation for adjustments such as credit memos and write-offs. As your business grows, these controls also help you maintain consistent customer treatment and avoid collection issues that can damage relationships.

When billing, collections, and reconciliation are separated, it becomes harder for errors or manipulation to go unnoticed.

What Does Internal Control Testing Mean in Practice?

Internal control testing is how you confirm your controls are designed to address risk and are actually being performed. Testing generally looks at two things: whether a control makes sense on paper and whether it’s operating consistently in real life.

Typical testing methods include reviewing documentation, interviewing the person responsible, observing the process, and re-performing the control to confirm the results. For growing businesses, testing also helps demonstrate that processes remain effective as transaction volume increases.

How Can Small and Mid-Size Teams Test Controls Without Slowing Operations?

Small and mid-size teams can test controls by focusing on the highest risk processes and using compensating controls when complete segregation isn’t realistic. For example, an owner or senior leader can review bank reconciliations, approve vendor setup changes, and spot check receivables adjustments on a consistent cadence.

Many businesses use a rolling schedule, testing one area each quarter to keep controls current without overwhelming the team. This approach also helps controls evolve gradually as the company adds staff and complexity.

Keeping Controls Effective Over Time

Internal controls aren’t a one-time setup. As you add staff, vendors, customers, and technology, risks shift, and controls need to be updated, retrained, and tested. The most effective approach is to keep controls practical and scalable, so they support growth rather than slow it down.

If you’d like help strengthening controls or setting up a realistic testing approach, reach out to your CPA. With a few targeted improvements, you can improve financial accuracy, reduce avoidable risk, and support more confident decision-making.

Frequently Asked Questions (FAQ’s)

What’s the difference between internal controls and bookkeeping?
Bookkeeping records transactions, while internal controls help ensure those transactions are accurate, authorized, and complete. Controls make your bookkeeping more reliable and more useful for decision-making.
How often should a small and mid-size business test internal controls?
Testing works best on a rolling basis throughout the year. Higher-risk areas such as cash, receivables, and disbursements typically warrant more frequent review.
What if we can’t segregate duties because our team is small?
Use compensating controls such as owner review, documented approvals, and periodic spot checks. The goal is to prevent a single person from controlling a transaction end to end without oversight.
Where should owners start if they’re building controls from scratch?
Start with cash handling and bank reconciliations, then move to receivables and disbursements. Those areas most directly affect liquidity and fraud risk, and they scale well as the business grows.

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Walter Shuffain Hires David O’Neil as Chief Growth Officer

wsadvisors — Mon, 23 Feb 2026 15:43:53 +0000

BOSTON, MASSACHUSETTS – January 19, 2026 Walter Shuffain announced today that David O’Neil has joined the firm as Chief Growth Officer.

In this role, David serves on the firm’s executive leadership team and is responsible for shaping and executing Walter Shuffain’s strategic growth agenda. He will help guide firmwide strategy, lead growth and merger and acquisition initiatives, and advance key operational and organizational priorities that support the firm’s continued expansion while maintaining its high standards of client service.

David brings more than a decade of experience spanning strategy, operations, and value creation. Prior to joining Walter Shuffain, he held leadership roles at one of the leading global management consulting firms, where he advised private equity firms and middle-market businesses on growth strategy, post-acquisition integration, and operational transformation initiatives. In this role, he led cross-functional teams through complex strategic engagements, partnering directly with executive leadership to translate strategic vision into measurable business outcomes.

David holds a Master of Business Administration from the Tuck School of Business at Dartmouth College and a Bachelor of Science in Business Administration from Florida Southern College.

“David’s appointment strengthens our executive leadership team and supports the firm’s continued growth,” said Jonathan Yorks, Managing Partner at Walter Shuffain. “His background in strategy and execution aligns with our focus on disciplined expansion and operational excellence.”

For questions, contact Jonathan Yorks, jyorks@wsadvisors.com

About Walter Shuffain Advisors Inc.

A Boston-based accounting and business advisory firm, Walter Shuffain is known for its commitment to helping private businesses and accomplished individuals reach their ideals. They provide comprehensive consulting, advisory, and tax services through technical prowess and meaningful relationships. The firm specializes in construction, distribution, health care, manufacturing, private equity, professional services, real estate, technology, and wholesale. Walter Shuffain is a partner firm on the Ascend platform, backed by people-focused private equity firm Alpine Investors. For more information, visit wsadvisors.com

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Meals and Entertainment Deductions: What Changed for Employer-Provided Meals in 2026

wsadvisors — Mon, 16 Feb 2026 16:14:52 +0000

Key Takeaways

Meals at employer-operated eating facilities and meals provided for the convenience of the employer are now nondeductible.
This change increases the after-tax cost of employee meal programs, which can affect overhead and pricing assumptions.
Better tracking and a measured pricing review can help you maintain profitability without overcorrecting.

The One Big Beautiful Bill Act (OBBBA) made several significant updates to meals and entertainment deductions, and one of the most practical impacts for business owners is already in effect. Specific employer-provided meals that were previously 50% deductible are no longer deductible at all.

While this change shows up on the tax return, it’s also worth viewing through a profitability lens. When a deduction is reduced or eliminated, the after-tax cost of providing the same benefit increases, potentially affecting overhead and pricing assumptions over time.

What Changed for Employer-Provided Meals?

Meals at employer-operated eating facilities and meals provided for the employer's convenience are now nondeductible. Prior to OBBBA, these meals were generally 50% deductible if they met specific requirements under Sec. 119 and Sec. 274. That partial deduction helped offset the cost of providing meals for operational reasons such as keeping employees on site or supporting extended shifts.

Starting in 2026, that deduction no longer applies. For many businesses, this includes meals provided on premises to keep employees available during work hours, meals offered through a company cafeteria, or routine food programs that had become part of the workplace environment.

What Didn’t Change Under the Meals and Entertainment Rules?

Entertainment expenses remain non-deductible under Sec. 274. Business meals can still be 50% deductible if they aren’t extravagant, an employee is present, they serve a valid business purpose, and meal costs are separately stated from entertainment costs.

This is helpful because it narrows the scope of what needs review. In most cases, client meals and business development meals aren’t the primary issue. The bigger shift is in employee meals, which are now fully non-deductible.

Where Deductions Still Exist

Even with the new restrictions, some meal expenses can still qualify for full or partial deductibility, including:

Meals treated as taxable employee compensation
Recreational or social events for employees, such as holiday parties or company picnics, when structured primarily for non–highly compensated employees
Meals provided to the public as part of marketing or promotional events
Meals sold to customers as part of normal business operations
Certain reimbursed meal expenses
Limited exceptions for food and beverage businesses and other specific industries

The opportunity for business owners isn’t to reclassify expenses aggressively. It’s to identify which of these categories already exist in your operations and ensure they’re tracked clearly so deductions are preserved where they still apply.

How De Minimis Meals Fit into The New Landscape

De minimis meals, which are occasional meals with so little value, or provided so infrequently, that accounting for them would be unreasonable, are still nontaxable to the employee’s. Examples include coffee, doughnuts, soft drinks, occasional overtime meals, and occasional parties or picnics.

However, the key point is that the employer deduction is what changed. For amounts incurred or paid after 2025, the employer can no longer deduct expenses associated with providing food and beverages to employees through an eating facility that meets the de minimis fringe benefit requirements or for the employer's convenience. Even if the benefit remains excludable from employee wages, the business deduction may be limited or eliminated.

What Business Owners Should Do Now

The strongest response is a combination of better visibility and better pricing discipline. Many companies still group meal costs into a single expense account, making it difficult to distinguish what’s nondeductible from what's still deductible.

Separating meal categories in your general ledger is one of the simplest ways to protect profitability. Once you can distinguish employee meals from client meals, social events, and promotional meals, you can quantify the actual after-tax impact of the expenses that are now disallowed.

Keeping Profitability Strong Under the New Rules

OBBBA didn’t eliminate the value of employee meals. It changed the economics. If meals support retention, productivity, or operational efficiency, they may still be worth offering. The difference is that the decision should now be made based on the full after-tax cost, not the partially deductible cost that applied in prior years.

If you’re unsure how these changes affect your business, reach out to your CPA. With the proper tracking and a few targeted adjustments, you can protect deductions that still apply and make pricing decisions that keep profitability on track.

Frequently Asked Questions (FAQ’s)

Are Client Meals Still Deductible?
Yes. Business meals can generally remain 50% deductible if they meet the standard rules and documentation requirements.
Are Entertainment Expenses Deductible Under OBBBA?
No. Entertainment remains non-deductible under Sec. 274.
Can Holiday Parties Still Be 100% Deductible?
Yes. Recreational or social events for employees, such as holiday parties and company picnics, can remain 100% deductible when structured appropriately.
If A Meal Is De Minimis, Does That Mean It Is Deductible?
Not necessarily. De minimis meals may still be excludable from employee wages, but the employer deduction for many of these meals is limited or eliminated under the new rules.

The post Meals and Entertainment Deductions: What Changed for Employer-Provided Meals in 2026 appeared first on Walter Shuffain.

The Importance of Cash Flow Forecasting for Real Estate Owners

wsadvisors — Fri, 13 Feb 2026 14:30:02 +0000

Written By: Mark Ravera, CPA

Key Takeaways

Cash flow forecasting helps real estate owners anticipate funding needs before capital becomes constrained or expensive.
Accurate forecasts incorporate tax timing, not just transaction proceeds.
A simple, consistently updated forecast supports stronger investment and financing decisions.

Real estate ownership is rarely limited by opportunity. It is limited by liquidity at specific moments in time. Capital is often tied up in properties, while cash needs arrive in concentrated windows tied to acquisitions, developments, improvements, or tax obligations.

Cash flow forecasting gives owners visibility before those moments arrive. It allows capital decisions to be made deliberately rather than under pressure. For owners focused on long-term growth and control, forecasting is a strategic discipline, not an administrative exercise.

What Is Cash Flow Forecasting in Real Estate?

Cash flow forecasting anticipates when cash will be required and when it will be received over a defined period. For most real estate owners, that period spans 6-36 months and reflects both business and personal cash needs.

Unlike a static budget, a forecast adjusts as transactions progress and assumptions change. Its purpose is simple: to determine whether sufficient liquidity will be available when needed.

Why Does Cash Flow Timing Drive Real Estate Outcomes?

Most real estate owners hold significant net worth in illiquid assets. Accessing capital quickly often involves cost or reduced negotiating leverage. At the same time, funding needs tend to cluster around specific events rather than occurring evenly over time.

Without visibility into timing, owners may accept unfavorable financing terms or delay decisions until options narrow. Forecasting allows capital needs to be planned for in advance, aligning financing with strategy and improving execution.

How Does Forecasting Improve Capital Decisions?

Cash flow forecasting creates a framework for evaluating capital choices. It clarifies how much capital can be deployed internally, when outside capital is required, and when borrowing supports long-term objectives.

A clear forecast informs decisions such as:

Whether an acquisition can be funded without straining liquidity
How to balance capital contributions and debt financing
When refinancing aligns with broader capital goals

Anchoring decisions in projected cash availability reduces uncertainty and improves consistency.

How Does Tax Timing Affect Liquidity?

Tax exposure is one of the most underestimated elements of cash flow forecasting. Transaction proceeds do not always convert into cash available for investment. Depending on structure, taxes may be due shortly after a transaction or deferred.

Incorporating tax timing into the forecast provides a more accurate view of available capital and reduces the risk of short-term funding gaps.

Why Forecasting Requires Simplicity and Consistency

Forecasting breaks down when it is treated as a one-time exercise or built with unnecessary complexity. Forecasts that are difficult to maintain quickly become outdated.

The most effective forecasts are simple, assumption-driven, and updated regularly. At a minimum, forecasts should be revisited quarterly and updated whenever a new opportunity arises, or a significant capital event occurs.

How Can Owners Plan for Capital Needs with Confidence?

Cash flow forecasting is not about predicting outcomes with precision. It is about improving decision quality through preparation and visibility. Owners who forecast consistently reduce capital pressure and increase flexibility when opportunities arise.

Many owners already have most of the information needed for a forecast, but may lack a structured way to assemble and update it. This is where Walter Shuffain can help.

For more information on this topic, please reach out to a member of our Real Estate Team.

Ask Our Real Estate Team

Frequently Asked Questions (FAQ’s)

How Far Ahead Should Real Estate Owners Forecast Cash Flow?
Most owners benefit from forecasting 6-36 months, balancing visibility with flexibility.
Is Cash Flow Forecasting Only for Large Real Estate Firms?
Any owner managing capital intensive projects or outside financing can benefit.
How Often Should a Forecast Be Updated?
At least quarterly and whenever a significant transaction or opportunity arises.
Can a CPA Help with Cash Flow Forecasting?
A CPA can help organize and build a practical cash flow forecast model to support real estate owners in making better investment decisions.

The post The Importance of Cash Flow Forecasting for Real Estate Owners appeared first on Walter Shuffain.

USPS Postmark Guidance Raises New Considerations for Tax Deadlines

wsadvisors — Wed, 21 Jan 2026 13:20:46 +0000

The U.S. Postal Service issued final regulations effective December 24, 2025, clarifying how postmarks are applied and why the date shown may not reflect the day a document was mailed. While the concept of postmarking itself is not new, recent operational changes at the USPS could result in the postmarks that are applied to an envelope or package be up to a week later than when you dropped the envelope or package at your local post office.

For taxpayers and businesses that rely on the timely mailed timely filed rule, this shift introduces new risks that require more deliberate planning.

Why This Matters for Tax Filings

Federal tax rules rely heavily on the postmark date to determine whether filings and payments are made promptly. When the postmark date controls, mailing an envelope or package on time no longer guarantees that the postmark will reflect timely compliance.

The risks extend to several ordinary tax-related submissions:

Estimated Tax Payments
Tax return deadlines may be missed if the postmark date falls after the due date, even if the return was mailed earlier
- Estimated tax payments may be treated as late, resulting in penalties
- IRS correspondence, elections, and appeals could be deemed untimely
- Charitable contribution documentation for year-end giving may be compromised

In effect, the burden of proof has shifted more heavily to the sender.

How Businesses Can Reduce Mailing Risk

Given the increased uncertainty around postmarks, businesses and individuals should take extra precautions when mailing time-sensitive documents:

Use Certified or Registered Mail to obtain a postmarked receipt
Use Certificate of Mailing issued by the Post Office
Use IRS-approved private delivery services when appropriate

Electronic submission eliminates the uncertainty of postmarking and may be the safest option for filings tied to strict deadlines.

Considerations for Business Owners

Mailing deadlines leave little room for assumption. Changes in USPS processing mean that dropping mail in a box on the due date may no longer provide adequate protection.

Being intentional about how and where time-sensitive tax documents are mailed can help reduce risk and avoid unnecessary penalties. If you have questions about the safest mailing or filing options for tax documents, your tax advisor can help you evaluate the best approach based on your specific situation.

The post USPS Postmark Guidance Raises New Considerations for Tax Deadlines appeared first on Walter Shuffain.

Balance Sheet Ratios Every Business Owner Should Monitor

wsadvisors — Fri, 02 Jan 2026 15:10:45 +0000

Key Takeaways

A few key balance sheet ratios can help owners quickly understand liquidity, leverage, and the overall financial footing of their business.
Reviewing ratios on a consistent schedule highlights shifts in performance earlier than traditional reports.
These tools support clearer decisions about cash management, staffing needs, and long-term planning.

Many business owners rely on instinct when evaluating financial health, but ratios offer a more straightforward way to interpret what is happening behind the scenes. You do not need advanced training to use them, and once you understand what each ratio reveals, you can spot strengths and weaknesses far more easily. These simple measurements transform raw numbers into actionable insights that support more accurate forecasting and informed risk management.

Why Should Business Owners Monitor Balance Sheet Ratios?

Business owners should monitor balance sheet ratios because they create a reliable snapshot of financial health that is easy to compare over time. Even when the financial statements look steady, these ratios often reveal early signs of strain or opportunity.

Reviewing ratio trends helps owners:

Spot cash pressure before it disrupts operations
Decide when the business can afford to invest or hire
Evaluate whether efficiency is improving or slipping

Liquidity Ratios and What They Reveal

Liquidity ratios indicate how well-prepared your business is to meet its near-term obligations without undue stress. The working capital ratio, often the first one owners check, compares current assets to current liabilities and gives a quick read on cash readiness.

Reading this ratio becomes easier when you keep in mind that:

Results between 1.2 and 2 typically indicate healthy breathing room
Low results may signal that cash flow is tightening
Very high results can suggest that money is sitting unused rather than helping the business grow

These signals can guide decisions around purchasing, collections, and short-term planning.

How Can You Interpret Debt to Equity Without a Finance Background?

You can interpret debt-to-equity by remembering that it simply compares borrowed funds to the amount you or shareholders have invested. It is calculated by dividing total long-term liabilities by equity, and the lower the ratio, the less financial risk the business is carrying.

For many owners, this ratio becomes a practical guide for understanding:

Whether current debt levels support growth or create strain
How lenders or investors may view the business
Whether long-term financial commitments remain sustainable

Understanding Return on Assets

Return on assets helps you gauge how effectively your business is utilizing its resources to generate profit. Instead of viewing it as a one-time number, it becomes more meaningful when compared against your own quarterly or yearly history. A rising ratio signals better efficiency, while a drop may mean assets are not generating the value you expected.

How Often Should Business Owners Review Their Key Ratios?

Business owners should review their key ratios quarterly to identify trends and make adjustments before challenges escalate. A quarterly rhythm works well because it aligns with reporting cycles and provides sufficient data for meaningful comparison. It also keeps the business prepared for lending conversations and supports more informed decisions about spending, budgeting, and staffing.

How Can Financial Advisors Strengthen Your Understanding of Key Ratios?

A financial advisor can help you move beyond the formulas and understand what each ratio truly signals about your business. While ratios highlight liquidity, leverage, and performance, the deeper value lies in understanding how these pieces fit within your overall financial strategy. An advisor can help you interpret trends, understand risks, and connect ratio results to day-to-day decisions involving cash flow, hiring, investment, and planning for long-term growth. Their guidance turns these measurements into a practical decision-making tool rather than just a set of calculations.

Frequently Asked Questions (FAQ’s)

Why Are Balance Sheet Ratios Important for Small Business Success?
Balance sheet ratios help small business owners gain a clear and simplified view of their financial stability. They make it easier to understand how spending, debt, and investment choices affect long-term health.
Which Ratios Give the Clearest View of Financial Health?
Liquidity ratios and debt-to-equity ratios provide two of the clearest financial signals. They indicate whether the business can meet its short-term obligations and whether debt levels remain at a sustainable level.
How Can Nonfinancial Owners Learn to Interpret Ratios Quickly?
Owners can learn to interpret ratios by focusing on what each measurement represents and tracking the results from one quarter to the next. Patterns emerge quickly, and those patterns help guide practical decision-making.
What Tools Help Track Liquidity, Leverage, and Performance Over Time?
Most accounting platforms already generate the numbers needed to calculate these ratios. Simple spreadsheet templates or ratio tracking tools can help you compare results and observe trends more easily.

The post Balance Sheet Ratios Every Business Owner Should Monitor appeared first on Walter Shuffain.

Walter Shuffain

Looking Ahead: Accounting Standards on the Horizon in 2026 for Nonpublic Entities

Key Points

Preparing for What Is Next in Financial Reporting

ASU 2025-04: Clarifications to Share-Based Consideration Payable to a Customer

Summary

Effective Date for Nonpublic Entities

What Changed

Financial Statement Presentation Impact

Transition

ASU 2025-05: Measurement of Credit Losses for Accounts Receivable and Contract Assets

Summary

Effective Date for Nonpublic Entities

What Changed

Financial Statement Presentation Impact

Transition

ASU 2025-07: Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract

Summary

Effective Date for Nonpublic Entities

What Changed

Financial Statement Presentation Impact

Transition

ASU 2025-08: Financial Instruments – Credit Losses (Purchased Loans)

Summary

Effective Date for Nonpublic Entities

What Changed

Financial Statement Presentation Impact

Transition

Bringing These Standards into Your Future Reporting Process

Frequently Asked Questions (FAQ’s)

Mastering Cash Flow Cycles: How to Predict and Smooth Cash Flow Fluctuations

Key Takeaways

What Are Cash Flow Cycles and Why Do They Matter?

How Does Cash Flow Analysis Improve Decision Making?

Metrics That Make Cash Flow Easier to Manage

How Does Forecasting Help Predict Cash Fluctuations?

Forecasting Methods That Work for Business Owners In 2026

Internal Controls That Improve Cash Predictability

How Can Forecasts Be Used to Smooth Cash Flow Year-Round?

Frequently Asked Questions (FAQ’s)

How Plan Sponsors Can Address Roth Catch-up Regulations

Highlights From the Roth Catch-up Contribution Regulations

Key Dates

Eligible Plans and Participants

Contribution Limits

Identifying Eligible Participants

Updating Payroll and Plan Systems

Communicating with Participants

Amending Plan Documents

Remaining Up to Date

New IRS Digital Asset Reporting: What the First Year of Implementation Means for Businesses

Key Takeaways

What Changed with IRS Digital Asset Reporting in 2025?

Compliance-Driven Cost Pressure on Profitability

How Does Cost Basis Tracking Affect Pricing Decisions?

Aligning Pricing with Reporting Risk and Audit Exposure

Strategic Pricing Adjustments for 2025 and Beyond

Preparing for Long-Term Pricing Stability

Frequently Asked Questions (FAQ’s)

Strengthening Internal Controls for Small Businesses

Key Takeaways

What Are Internal Controls in a Small and Mid-Size Business?

Why Do Internal Controls Matter for Cash Flow and Forecasting?

The Core Elements Behind Effective Controls

What Internal Controls Should Owners Prioritize First?

How Do You Strengthen Controls Over Receivables?

What Does Internal Control Testing Mean in Practice?

How Can Small and Mid-Size Teams Test Controls Without Slowing Operations?

Keeping Controls Effective Over Time

Frequently Asked Questions (FAQ’s)

Walter Shuffain Hires David O’Neil as Chief Growth Officer

Meals and Entertainment Deductions: What Changed for Employer-Provided Meals in 2026

Key Takeaways

What Changed for Employer-Provided Meals?

What Didn’t Change Under the Meals and Entertainment Rules?

Where Deductions Still Exist

How De Minimis Meals Fit into The New Landscape

What Business Owners Should Do Now

Keeping Profitability Strong Under the New Rules

Frequently Asked Questions (FAQ’s)