Preparing for a workers’ compensation audit can feel overwhelming, especially when you are trying to pull together a year’s worth of payroll information at the last minute.

Fortunately, QuickBooks Desktop Payroll Enhanced or Assisted users can track the information they need throughout the year and generate a helpful report when your insurance auditor comes calling. With a little setup now, you can save yourself time later and feel more confident that the numbers you provide are accurate. Watch our video tutorial and read through the instructions below to learn how.

1. Turn On Workers’ Compensation Tracking

In QuickBooks Desktop Enterprise Solutions, go to Edit > Preferences > Benefits & HR > Company Preferences.

Select the option to track workers’ compensation insurance, then save your changes. This will activate the workers’ compensation features in your company file.

2. Enter Your Workers’ Compensation Codes

Next, go to Lists > Workers Comp List.

You can find the information you need on the declarations page of your workers’ compensation insurance policy.

Enter each:

• Classification code
• Description
• Rate per $100 of wages
• Policy effective date

Different types of work may have different codes and rates, so make sure each classification matches your insurance policy.

3. Add Your Experience Modification Factor

Your policy may also include an experience modification factor. This factor adjusts your premium based on your company’s claims and safety history. For example, a factor of 100% is considered standard. A lower percentage generally means a better safety record and a lower premium, while a higher percentage may increase your premium.

Enter the percentage and the policy effective date exactly as shown on your insurance documents.

4. Review the Payroll Item

Open your Payroll Item List and locate the workers’ compensation item. It should be set up as a company contribution and connected to the appropriate workers’ compensation payable and expense accounts.

Proper account mapping helps ensure the amounts appear correctly in your financial reports.

5. Assign Codes to Employees

Once your workers’ compensation codes are set up, the next step is to assign the appropriate code to each employee. Open the Employee Center, select an employee, and choose the classification that best reflects the work they perform. For example, a shop foreman will likely have a different code than someone working in an administrative role.

If an employee performs more than one type of work, you may need to use different workers’ compensation codes on individual earnings lines when running payroll. Taking the time to assign these codes carefully helps keep your reports accurate and can make the annual audit much easier.

6. Confirm Codes During Payroll

When you run payroll, review the workers’ compensation code assigned to each item in the Earnings section. QuickBooks will use the employee’s wages, classification rate, and experience modification factor to calculate the estimated premium. 

By reviewing the code during each payroll run, you can help prevent classification errors later.

7. Run Your Workers’ Compensation Report

When it is time for your annual audit, go to Reports > Employees & Payroll > Workers Comp Summary. Set the report dates to match your insurance policy period.

The report will show information such as:

• Covered wages
• Workers’ compensation rates
• Estimated premiums
• Experience modification adjustments

Closing Thoughts

Your auditor may also ask for supporting documents, such as quarterly payroll tax returns and state unemployment reports, so it helps to gather those in advance. Taking time to review your workers’ compensation report before the audit gives you a clearer idea of whether you may owe an additional premium or receive a refund—and it is always better to understand the numbers before the auditor presents them to you.

If you need help setting up workers’ compensation tracking or cleaning up your QuickBooks payroll records, reach out to New Business Directions to schedule a strategy session. It’s OK. We can help. Contact us here.

Growth is exciting. New customers, bigger opportunities, more programs, a bigger team, new moving parts — it is what most business owners and nonprofit leaders are working toward.

But growth also has a way of revealing what is no longer working behind the scenes.

For many organizations, the back office is the first place to feel the strain. The books still need to get done. Payroll still needs to run. Bills still need to be paid. Reports still need to be prepared. But suddenly, the systems that worked “well enough” a few years ago start creating more questions than answers.

If that sounds familiar, it does not mean you have failed. It may simply mean your organization has outgrown the way your accounting system is currently set up.

QuickBooks Is Powerful — But It Has to Be Set Up Properly

QuickBooks is a tremendous tool, and many businesses and nonprofits rely on it every day. Used well, it can help you track income and expenses, manage vendors and customers, run reports, monitor cash flow, and make better decisions.

But QuickBooks is not magic.

A lot of business owners start out doing the books themselves because they have to. In the early days, that may work. You enter transactions, reconcile accounts, send invoices, pay bills, and keep everything moving.

Then the organization grows.

You add employees, customers, programs, locations, vendors, or more complex reporting needs. Suddenly, the accounting system that once felt manageable starts to feel like one more thing standing between you and the information you need.

That is often when the late nights, weekend catch-up sessions, and “I know the information is in here somewhere” moments begin.

Is Your Accounting System Still Working for You?

You may not need to replace your software. But you may need to take a closer look at whether your accounting system is still supporting the way your organization operates today.

As your business or nonprofit grows, the back office often becomes harder to manage. You may be trying to handle the books yourself, using QuickBooks without knowing whether you are getting the most out of it, or wondering why your current system no longer gives you the answers you need.

When that happens, it is easy to assume the software is the problem. Sometimes, it is. A growing organization may eventually need a more robust system. But often, the issue is how the system was set up, how it is being used, or whether it still fits the business you have today.

Before making a major software change, it is worth asking whether the tools you already have could be working harder for you. With the right setup and workflow, your accounting system can give you clearer, more useful financial information — without requiring nights and weekends to get it.

Better Books Lead to Better Decisions

Clean, useful financial information gives you options.

It helps you see where money is coming from, where it is going, and what needs your attention. It helps you prepare for tax time, audits, grant reporting, pricing decisions, staffing plans, cash flow needs, and long-term growth.

This is the difference between having books that are technically “done” and having books that actually help you run the organization.

You Don’t Have to Figure It Out Alone

Most business owners and nonprofit leaders did not start their organizations because they wanted to spend their evenings sorting through accounting software. You have work you are meant to do, people you are meant to serve, and decisions that deserve accurate information.

A thoughtful review of your current accounting system can help identify what is working, what is not, and what needs to change. From there, you can make informed decisions about whether to clean up your existing system, optimize QuickBooks, improve your workflow, train your team, or consider a higher-level platform.

The goal is not software for the sake of software.

The goal is clarity.

If your back office has started to feel overwhelming, it may be time for a fresh look. Schedule a strategy session with New Business Directions, and let’s talk through how to build an accounting system that gives you the information you need — without working nights and weekends to get it.

It’s OK. We can help.

Last month, Britney and Rhonda traveled to San Antonio for the RightNOW conference sponsored by Rightworks, where we spent time learning, connecting, and exploring new ideas to better serve our customers.

They also went to a rodeo.

And while we are not claiming to be expert barrel racers, bull riders, or professional boot-scooters, we are comfortable saying this:

When it comes to helping businesses and nonprofits streamline the process, this is not our first rodeo.

One of the things we believe deeply is that strong businesses are built by people who keep learning. That applies to our customers, and it applies to us too. The world of accounting, technology, advisory services, reporting, and business planning keeps changing. So we keep showing up, asking better questions, learning new tools, and sharpening our skills.

Why? Because “good enough” does not create peace of mind.

Our goal is not just to keep your books accurate, although that matters. Our goal is to help you understand what your numbers are telling you, make smarter decisions, plan ahead, and feel more confident about where your business or organization is going.

 Attending the RightNOW conference gave us a fresh perspective on several things we care a lot about:

 Better systems. The right processes and technology can reduce stress, save time, and make financial information easier to use.

 Better conversations. Your numbers should not live in a dusty corner until tax time. They should help guide meaningful conversations about cash flow, profitability, growth, staffing, pricing, and sustainability.

Better decisions. When financial information is current, clear, and useful, leaders can stop guessing and start planning.

Better support. We are always looking for ways to improve how we serve you, communicate with you, and help you move from reactive to proactive.

And yes, the rodeo gave us a few business reminders too:

• Sometimes you have to hold on.
• Sometimes you need to change course.
• Timing is everything. 
• The person who looks calm in the saddle has done a lot of work behind the scenes.
• You need someone nearby who knows how to navigate challenges and keep things moving forward when the unexpected happens.

That is where we come in.

We continue to invest in our own learning because we want to bring more value to you. We want to help you streamline your processes, understand your financial story, create order out of chaos, and move forward with more peace of mind.

So yes, San Antonio gave us new ideas, helpful insights, and a few good laughs.

And the rodeo reminded us that experience matters.

Because when it comes to supporting businesses and nonprofits through the ups, downs, surprises, and occasional bucking bronco moments…

 This is not our first rodeo.

On November 12, 2025, the penny was officially retired, and the U.S. Mint stopped producing the one-cent coin after 232 years. Why? Because it costs about 3.7 cents to make a 1-cent coin. (Yes, really.) The change is expected to save about $56 million a year.

Don’t worry—this change isn’t going to break your business. But it will change how cash transactions work. In this article, we’ll go over new cash rounding rules, the impact this change has on small businesses, and questions you may want to ask your point of sale provider.

Cash Rounding Rules for Small Businesses Now that the Penny is Retired

For cash payments only, totals will be rounded to the nearest nickel:

• Ending in 1 or 2 → round down to 0
• Ending in 3 or 4 → round up to 5
• Ending in 6 or 7 → round down to 5
• Ending in 8 or 9 → round up to 10

Important: These rounding rules will not apply to credit cards, debit cards, or digital payments. Those stay exact to the penny.

What Nickel Rounding Means for a Retail or Restaurant Business

If you’re in the retail or restaurant industry and accept cash:

• Your POS system needs to handle rounding. Most modern systems already do—or will with an update. If yours doesn’t, now is the time to check.
• Train your team. Customers will notice at first, but a simple “we round cash totals now since the penny is retired” goes a long way.
• No pricing changes required. Your prices stay the same—rounding only occurs on the final total, not each individual item.
• Cash drawers get simpler. Fewer coins, faster transactions, and slightly less time spent counting change. Small win.

Even though the penny has been retired, businesses can still use existing pennies—they remain legal tender. Banks will continue accepting penny deposits, but many are starting to phase out penny roll orders since no new pennies are being produced. If your business is already running into change shortages or cash-handling headaches, transitioning to nickel rounding sooner rather than later may be worth considering.

Quick Gut Check: Questions to Ask Your POS Provider

If you’re not sure your point of sale system is ready for these new rounding rules, here are the questions to ask your POS provider:

• Does our system automatically round cash transactions to the nearest $0.05?
• Can it separate cash vs. card logic (round one, not the other)?
• How does it show rounding on the receipt? (Transparency matters.)
• Will this impact our sales tax calculation or reporting? (It shouldn’t—but verify.)
• Do we need to turn this feature on, or is it already active?

If your provider hesitates on any of these… take it as your sign to dig deeper.

The Bigger Picture: Preparing Your Business for Cash Rounding

Rounding cash transactions to the nearest 1, 5, or 10 cents is really about efficiency. The government stopped losing money producing pennies, and businesses ultimately get a slightly smoother cash process.

And if you’re thinking, “Most of my customers don’t even use cash anymore”… you’re not wrong.

For most businesses, the impact will be minimal—but it’s worth making sure your systems and team are ready.

Last month, we held our 5th annual New Business Directions team retreat, once again in beautiful Ocean Park, Puerto Rico. As a fully remote team, opportunities to connect face-to-face are rare, which makes this annual tradition especially meaningful. 

Each year, we step away from our daily routines to focus on what matters most—our people, our customers, and the direction we want to take in the year ahead.

This year’s retreat felt particularly special because we welcomed a new team member, bringing fresh perspectives and a new dynamic to our conversations. With a slightly larger group, our discussions had even more depth, and the exchange of ideas was energizing.

One word surfaced repeatedly throughout the weekend: freedom.

Freedom to live our lives fully.
Freedom to make a living doing work we genuinely enjoy.
Freedom to collaborate with a team and serve customers we truly value.

For us, that word captures the heart of why we built this business the way we did.

Time to Think About the Bigger Picture

While the setting may have looked like a vacation destination, the retreat gave us something even more valuable: space to think.

Without the usual interruptions of daily work, we were able to step back and clearly define our priorities for the coming year. We talked openly about our goals as a company and how we can support each other in achieving both professional milestones and personal aspirations.

These conversations are where alignment really happens. They help ensure that the work we do together continues to move us toward a shared vision.

The Best Ideas Don’t Always Happen in a Conference Room

Of course, some of the most meaningful moments didn’t happen during formal discussions.

They happened while walking along the beach, sharing meals, and exploring together.

We soaked up plenty of Puerto Rican sunshine, enjoyed incredible local food, and took long walks along the shore of Ocean Park. One of the highlights of the trip was a visit to the Museo de Las Américas in Old San Juan, where we spent time exploring the history and culture of the Caribbean and Latin America.

Those shared experiences build something that’s hard to create over video calls: real connection.

Why We Keep Coming Back

Our annual retreat has become an important part of how we grow as a team. It reminds us that a successful company isn’t just about systems, numbers, or strategy—it’s about people working well together and supporting each other.

When we return home, we bring back more than a refreshed perspective. We return with stronger relationships, clearer priorities, and renewed energy for the year ahead.

And perhaps most importantly, we return with a deeper appreciation for the freedom we’re building together—both for ourselves and for the customers we serve.

Until next year, Puerto Rico.

If you’ve ever purchased a vehicle, machinery, or large equipment for your business and wondered, “How should I be tracking this properly?” — you’re not alone.

QuickBooks Desktop includes a powerful (and often overlooked) tool called the Fixed Asset Item List. When used correctly, it can help you stay organized, simplify conversations with your accountant, and keep better records of major purchases.

Let’s walk through what it is — and what it’s not.

What Is the Fixed Asset Item List?

The Fixed Asset Item List is available in QuickBooks Desktop Pro, Premier, and Enterprise. It allows you to track important details about significant business purchases, such as:

• Vehicles
• Machinery and equipment
• Large furniture purchases
• Other long-term business assets

A good rule of thumb many businesses use is a capitalization threshold of around $2,500. If the purchase is over that amount and expected to last longer than one year, it’s typically treated as a fixed asset and depreciated over time rather than expensed all at once.

What the Fixed Asset Item List Doesn’t Do

One of the most important things to understand about the Fixed Asset Item List is that it does not post to your general ledger. This feature is strictly a tracking tool. It doesn’t create accounting entries or record transactions in your books.

Instead, it acts as a centralized place to store detailed information about your business assets, like:

• Purchase date
• Purchase price
• Vendor information
• Asset account mapping
• Serial numbers
• Warranty details
• Descriptions
• Sale date and sale price (if sold)

If the asset is later sold, you can also record the sale date, sale price, and any related expenses. Think of it as your organized digital filing cabinet for fixed assets — a structured way to keep all the important details in one convenient location.

Why This Matters

When tax time rolls around, or when your accountant needs details for depreciation schedules, having this information readily available can save hours of back-and-forth.

You can easily generate a Fixed Asset Item List report that shows what you purchased, when you purchased it, and how much you paid. This creates clarity and reduces chaos — especially as your business grows and asset purchases become more frequent.

For Accountants: Built-In Fixed Asset Manager

If you’re using the Accountant version of QuickBooks Premier or Enterprise, there’s an additional tool available under the Accountant menu: Fixed Asset Manager.

This feature goes beyond tracking — it can calculate multiple depreciation methods (up to six different bases), making it a robust built-in depreciation solution.

For accounting professionals, it’s an incredibly powerful resource already embedded in the software.

Closing Thoughts

When fixed assets aren’t tracked properly, it can lead to confusion, missed deductions, and unnecessary back-and-forth at tax time. Keeping your Fixed Asset Item List updated ensures that purchase dates, costs, and key details are readily available when your accountant needs them — and allows you to quickly generate reports showing what was purchased, when, and for how much.

As your business grows and asset purchases become more frequent, having this structure in place creates clarity and supports smarter financial decisions year-round. If you’d like guidance on organizing your accounting system or improving visibility into your numbers, visit newbusinessdirections.com to connect with our team. We’re here to help you create order out of chaos.

As a business owner, your vehicle may be an essential tool for operations, and it’s possible to reduce your tax burden by properly deducting vehicle-related expenses. But did you know you have options? Whether you own or lease a vehicle for business, there are ways to maximize your deductions, and it all starts with understanding the choices available to you.

The Difference Between Actual Expenses and the Standard Mileage Deduction

When it comes to deducting business vehicle expenses, you generally have two options: the actual expenses method and the standard mileage deduction. Each has its advantages, so let’s break them down:

Method 1: Actual Expenses

Under this method, you can deduct the actual costs of using your vehicle for business. This includes:

• Gas, oil, and maintenance
• Repairs and tires
• Insurance premiums
• Loan interest
• Depreciation (more on that below)

For business owners who use their vehicles frequently, this method can offer significant savings. However, it’s important to track all the costs associated with owning and maintaining your vehicle. Keeping accurate records of these expenses is essential to substantiate your deductions.

Method 2: Standard Mileage Deduction

Alternatively, you can opt for the IRS standard mileage rate for calculating your deduction. This rate covers most vehicle-related expenses like gas, maintenance, insurance, and even depreciation. It simplifies the process since you don’t have to track individual expenses, but it’s important to note that for some vehicles, especially larger ones, the actual expenses method might yield a higher deduction.

For 2025, the IRS standard mileage rate was 70 cents per mile. As of December 29, 2025, the Internal Revenue Service announced that the optional standard mileage rate for business use of automobiles will increase by 2.5 cents in 2026, to 72.5 cents per mile. To claim this deduction, you will need to track the number of miles you drive for business purposes.

Understanding Depreciation: A Key Factor for Business Vehicle Deductions

When you own a business vehicle, you can depreciate its value over several years. Depreciation allows you to deduct a portion of the vehicle’s cost each year, reducing your taxable income over time. The IRS offers specific guidelines on how to calculate depreciation, but it’s essential to keep accurate records to ensure you’re claiming the right amount.

Here are some important considerations about depreciation:

• Vehicles with a Gross Vehicle Weight (GVW) under 6,000 pounds are considered luxury automobiles and have depreciation limits.
• Vehicles with a GVW over 6,000 pounds may qualify for accelerated depreciation, allowing you to deduct a larger portion of the vehicle’s cost in the earlier years of ownership.
• If you don’t use the vehicle exclusively for business purposes, depreciation deductions will be limited based on the percentage of business use, and if you go below 50% business usage, depreciation methods are further limited.

Depreciation is particularly useful for larger vehicles, as it can significantly increase your deductions over time. However, when you sell or dispose of the vehicle, you’ll need to account for depreciation recapture, which could impact your tax return.

The Importance of Contemporaneous (or Real-Time) Mileage Logs

Regardless of whether you choose the actual expenses method or the standard mileage rate, keeping contemporaneous mileage logs is a must.  You can even do this in your QuickBooks.

Contemporaneous refers to keeping real-time records of your mileage, each day, as it’s happening — not logging trips after the fact, at year-end when you’re trying to document for a tax deduction.

For each trip, make sure to track:

• The date of the trip
• The destination
• The business purpose of the trip
• The starting and ending odometer readings

Why is this so important? If the IRS ever audits your business, having detailed, up-to-date mileage logs will be essential for proving your deductions. Fortunately, there are many apps and tools available to make this process easier and more efficient, so you can track your mileage on the go.

Key Takeaways

• Actual expenses offer a deduction for all costs associated with vehicle ownership, including gas, maintenance, insurance, and loan interest, along with depreciation.
• The standard mileage deduction simplifies the process by offering a fixed rate for business miles driven.
• Depreciation can reduce taxable income over time, but be sure to track it correctly.
• Contemporaneous mileage logs are critical for both methods to ensure you’re prepared in case of an audit.

Need Help? Let’s Talk.

Whether you’re unsure which method is best for your business or you need help keeping your mileage logs in order, we’re here to assist you. Reach out today to schedule a consultation.

If you want trustworthy financials — the kind your accountant, tax preparer, or board can rely on — one of the simplest things you can do in QuickBooks is set a closing date password. This small step helps protect the accuracy of your numbers and prevents accidental changes after a period has been finalized.

At New Business Directions, we work with business owners who want to grow their business without losing their minds. One way we can help you retain your sanity? Teaching you how to use this simple QuickBooks feature: setting a closing date password in QuickBooks.

Why You Should Set a Closing Date Password in QuickBooks

Imagine you’ve just sent your year‑end backup file to your CPA or auditor. Later, someone edits a past‑dated transaction in QuickBooks — changing amounts or dates that have already been reported. That creates discrepancies and can trigger confusion, extra work, or even incorrect tax filings.

A closing date password “locks” your reporting period so no one can modify the numbers without explicit permission. It’s a simple but powerful safeguard that protects your data integrity.

When to Set a Closing Date Password

• Year‑End: A best practice for most organizations — especially if you’re sending data for taxes or audits.
  
• Quarterly: If your board reviews quarterly reports, lock the books after each reporting cycle.
  
• Before External Reporting: Anytime you share your numbers externally, a closing date password adds peace of mind.

Step-by-Step Tutorial: How to Set the Closing Date Password

1. Log in as the Admin user (only an admin can change this preference).
   
2. In QuickBooks, go to Edit > Preferences > Accounting > Company Preferences.
   
3. Click Set Date/Password, and choose the closing date for the period you want to lock.
   
4. Exclude non‑posting transactions like estimates or purchase orders — they don’t affect financial results and can remain flexible.
   
5. Choose your password. Use something memorable (and meaningful!) to your team that’s also secure.

Once it’s set, QuickBooks will prompt anyone trying to enter or change a transaction dated before the closing date to enter the password. If they don’t have it — or shouldn’t be making the change — they won’t be able to proceed.

How to Monitor What Happens in QuickBooks After Closing

In the Accountant version of QuickBooks, you can run:

• Audit Trail Reports: shows who made changes and when.
  
• Closing Date Exception Reports: shows edits that occurred in closed periods and what was changed.

These tools help you keep an eye on your file’s history, giving you confidence that your books stay clean and reliable.

Final Thoughts

Setting a closing date password is more than a QuickBooks setting — it’s part of a good accounting discipline that supports accurate reporting, easier audits, and fewer surprises at tax time.

If you ever need support with QuickBooks setup, cleanup, training, or workflow improvements, we’re here to help. Explore resources on our website, subscribe to our newsletter, and learn how we can help bring clarity and confidence to your accounting system. 

As the year winds down, it’s time to get your 1099 reporting strategy in order. Whether you run a business or a nonprofit, staying compliant with IRS information return rules isn’t optional — and mistakes can be costly.

From collecting Form W-9s from every service provider to understanding which 1099 form applies (and when it’s due), the details matter. This guide walks you through the essential steps for the 2025 tax year, including updated thresholds, key deadlines, and practical tips to streamline your reporting process. Let’s break down what you need to know — and do — before January 31, 2026, rolls around.

1. Collect and Maintain a Form W-9 from Every Service Provider (Mandatory)

You must obtain a completed Form W-9 from every service provider you engage (including sole proprietors, partnerships, corporations, and LLCs) — without exception.

• The W-9 gives you the name, taxpayer-identification number (TIN), and entity type information you need in order to determine whether you must issue a 1099.
• If the TIN is a Social Security Number, it must match the person’s name on the W-9 exactly (via IRS TIN matching).
• If the TIN is an Employer Identification Number (EIN), it must match the business name on the W-9.
• Retain the W-9 in your records for potential IRS verification; failure to collect may trigger backup withholding or penalties.

2. Understand the Difference Between Forms 1099-NEC and 1099-MISC

• Form 1099-NEC is used for non-employee compensation — payments for services (including attorneys, contractors, consultants) when made in the course of your trade or business.
• Form 1099-MISC is used for payments such as rent, royalties, prizes/awards, or other miscellaneous income not reported on another 1099 form.

3. Save These Due Dates for 1099s

For Form 1099-NEC (non-employee compensation): 

• The IRS instructions state you must file with the IRS on or before January 31, 2026. 
• You must also furnish recipient copies by January 31, 2026. 

For Form 1099-MISC (rents, royalties, etc.):

• Recipient copies due by January 31, 2026. 
• IRS filing: If paper, due by February 28, 2026; if electronic, due by March 31, 2026. 

4. Review Updated Reporting Thresholds and What They Mean for Small Businesses

• For tax year 2025: the threshold for issuing 1099-NEC or 1099-MISC remains $600.
• Beginning tax year 2026: the threshold for both 1099-NEC and 1099-MISC will rise to $2,000, and starting in tax year 2027, the threshold will be indexed for inflation. 
• For Form 1099-K (payments via third-party settlement organizations/payment apps): under the One Big Beautiful Bill Act (OBBBA) the threshold has been restored to $20,000 and 200 transactions (i.e., both conditions must be met) for tax year 2025 and going forward. 

The previously planned lower thresholds (e.g., $2,500 or $600) for 1099-K are not in effect; the higher threshold is back.

5. Know How 1099 Rules Apply to Your Business or Nonprofit

• You must collect a W-9 from every service provider, regardless of entity type (even if you’re sure they’re a corporation). That gives you the information needed to determine your reporting obligations.
• If you pay a service provider $600 or more (for services) in 2025, you’ll generally need to issue a 1099-NEC (assuming they’re not treated as a vendor exempt from reporting).
• If you pay rent, royalties, or other miscellaneous payments under the 1099-MISC rules at or above $600, you must issue that form accordingly.
• If you pay through a third-party settlement organization (PayPal, Venmo, marketplace platform): you may not receive a 1099-K unless gross payments exceed $20,000 and the number of transactions exceeds 200. Regardless of whether you receive a form or not, all income must be reported on your tax return.
• Do not rely on whether you receive a form to determine whether you must report income. Receipt of a form is an information aid — your tax-reporting obligation remains irrespective of receiving a 1099.

6. Review this Quick Action Checklist for 1099s at the end of 2025

• Send W-9s to all service-providers (and securely store them).
• Review all payments made in 2025 for services, rents, royalties, etc., and determine which ones hit the $600 threshold.
• Issue required 1099-NEC or 1099-MISC forms by January 31, 2026, and file the IRS copy timely.
• If you use payment apps or platforms to pay providers or vendors, track the gross payments and count of transactions to each payee — note that they must exceed $20,000 and 200 transactions before a 1099-K will be issued.

Bottom Line

For tax year 2025, the rules are relatively stable: $600 threshold for 1099-NEC/MISC, W-9s required for all service providers, and the 1099-K threshold is back at the $20,000/200-transaction level. Don’t wait until the last minute to start preparing your 1099s—get your W-9s in, identify your payments early, and ensure your records are ready for the January rush.

We’re happy to guide our customers through the process, from verifying vendor details to ensuring accurate filings. Let us take the stress out of 1099 compliance so you can focus on your business as we head into the new year.

Wishing you a smooth year-end, clean filings, and peace of mind.

AI is amazing. It’s fast, creative, and sometimes eerily insightful. But lately, we’ve noticed more small business owners using ChatGPT like it’s Google — and that’s a mistake.

Let’s clear something up: ChatGPT is not a search engine. It doesn’t “look up” facts on the internet (unless you’re using a paid plan with browsing enabled). It’s a language model — it predicts words based on patterns in data. Used well, it’s a brilliant assistant. Used carelessly, it’s a potential security risk.

As financial advisors, we handle sensitive financial and customer data every day — and we’re seeing more instances where AI use could compromise confidentiality or create exposure risks. In today’s tech-heavy world, knowing how to use digital tools safely is quickly becoming part of the core skill set for business owners.

Here’s what you (and your team) need to know before you feed it sensitive information.

The Free Version of ChatGPT: Helpful but Handcuffed

If you’re using the free ChatGPT (powered by GPT-4-mini as of 2025), you’re essentially driving the demo car. It’ll get you from point A to point B, but you’re missing airbags, seatbelts, and GPS.

Key limitations of the free version

• Limited accuracy and reasoning. GPT-4-mini is faster but less capable than GPT-5. It can give you solid summaries or ideas, but it’s not great at complex reasoning, analysis, or nuanced business writing.
• No file uploads or advanced tools. You can’t share spreadsheets, PDFs, or data for analysis — but you definitely shouldn’t be pasting confidential info here anyway.
• No real-time internet access. The free tier doesn’t browse or fetch live data, so it may provide outdated or incomplete information.
• No enterprise-grade privacy. Conversations in the free tier may be used to improve future models unless you explicitly opt out in Settings.
• No team or collaboration features. Everything happens in your personal workspace, without admin controls or audit trails.

If you’re brainstorming blog titles, it’s great.
If you’re pasting financials or sensitive internal data, stop right there.

Why the Paid Version of ChatGPT is Worth It

The paid versions — ChatGPT Plus, Team, or Enterprise — run on GPT-5-turbo, which is faster, smarter, and far more secure. It’s like upgrading from a bicycle to a Tesla with autopilot and airbags.

Here’s what you get with a paid ChatGPT subscription:

• Access to the most capable model. GPT-5-turbo delivers better reasoning, accuracy, and context — ideal for business use.
• Live data and integrations. You can browse the web in real time, generate charts, analyze data, and connect tools like Google Drive, Slack, and Excel.
• File uploads and analysis tools. Upload spreadsheets, documents, or PDFs for accurate insights — without risking a crash or timeout.
• Enhanced privacy and control. Paid accounts can turn off model training and disable chat history. Your data stays your data.
• Team & Enterprise security. Business accounts offer SOC 2 compliance, Single Sign-On (SSO), centralized admin controls, and role-based permissions.

Think of it this way:
The free version is like chatting in a crowded café where anyone might overhear.
The paid version gives you a private office with the door locked and a security system installed.

Lock It Down: Security Settings You Should Enable

Even with a paid account, security isn’t automatic. You still have to tighten the bolts. Below, we outline four steps to keep your AI-driven work secure.

1. Turn on Multi-Factor Authentication (MFA)

This adds a second layer of protection beyond your password — like a code from your phone or authenticator app. If someone steals your password, MFA keeps them out. Apply it to your ChatGPT log-in, as well as any other digital account you use to run your business or live your life.

2. Control Your Data Settings

Open ChatGPT, head to Settings → Data Controls and:

• Turn off “Improve the model for everyone.” This stops your data from being used for AI training.
• Disable or limit Chat History. Chats without history are not stored long-term.
• Regularly delete old conversations containing sensitive material.

3. Use Temporary Chats for Added Privacy

When you toggle off chat history, conversations aren’t saved — perfect for one-off or private discussions.

4. Never Share Confidential or Private Information

This one’s simple but essential:
Don’t upload or type anything you wouldn’t post on your website.

That means:

• No customer names or numbers
• No proprietary formulas
• No account credentials
• No internal financials or HR data

Once it’s entered, you can’t be certain where it ends up — even if you’re careful.

Smart Use of AI = Safe Use of AI

ChatGPT can save you hours, spark creativity, and improve decision-making — but only if you treat it like the powerful tool it is.

Use it to draft, summarize, brainstorm, and analyze.
Don’t use it to store, process, or transmit confidential business data.

If you’re serious about leveraging AI in your business (and you should be), get a paid account, lock down your settings, and train your team on responsible AI use. Because when you’re paying with your data, “free” AI isn’t that free after all.

Bottom Line

Artificial Intelligence can make you faster, smarter, and more creative — but only if you protect your information while using it.

Treat ChatGPT like you would any other powerful business tool: use it intentionally, configure it securely, and never hand it the keys to your data vault.

Looking to enhance security and reduce risks of data breach, fraud, or phishing? Read our article, “Don’t Click that Sh*t” here.