Accounting Solutions LLP
Accounting Solutions LLP
Tax-Saving Tips and Compliance Reminders
Tax-Saving Tips and Compliance Reminders

June 2025

June 2025

California Pass-Through Entities: PTET Payment Deadline Approaching!

If your business operates as a partnership, LLC, or S corporation in California and you’re considering the Pass-Through Entity Elective Tax (PTET) for 2025, mark your calendar:

Monday, June 16, 2025, is the critical deadline to make your initial payment and preserve your eligibility for this tax-saving strategy.

📝 Why PTET Matters:

The PTET allows qualifying entities to pay state income taxes at the entity level, potentially converting non-deductible state taxes into deductible business expenses. This can result in significant federal tax savings, especially for high-income taxpayers.

💸 Payment Requirements:

📌 Amount Due: The greater of $1,000 or 50% of your 2024 PTET liability.

📌 Payment Methods: Utilize the Franchise Tax Board’s Web Pay system or submit Form 3893 via mail.

📌 Important Note: Missing the June 16 payment deadline will disqualify your entity from making the PTET election for 2025.

For those who made the election in 2024, ensure your payment reflects 50% of last year’s PTET liability. If you’re new to PTET, a minimum payment of $1,000 is required.

Hiring Freelancers in California? Read This Before You Send That 1099

As of January 1, 2025, California’s Freelance Worker Protection Act is in full effect—and it’s a game-changer for any business that hires independent contractors.

Here’s what you need to know:

📝 Written contracts are now mandatory for freelance work totaling $600 or more.

💸 Late or missing payments? You could be on the hook for double damages, plus statutory penalties.

This new law was designed to address widespread complaints from freelancers about delayed or non-payment. Now, the legal burden shifts to hiring parties—meaning you—to make sure contracts are in place and payments are timely.

📌 Pro tip: Always outline the scope of work, payment terms, and deadlines in writing before the project begins.

This isn’t just about legal compliance—it’s about protecting your business from costly disputes and preserving goodwill with your contractors.

California Small Business Owners: Retirement Plan Deadline Approaching

By 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟯𝟭, 𝟮𝟬𝟮𝟱, all California employers with 𝗮𝘁 𝗹𝗲𝗮𝘀𝘁 𝗼𝗻𝗲 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲 must comply with the state’s retirement savings mandate.

Here’s what you need to know:

📌 𝗪𝗵𝗮𝘁’𝘀 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗱?

You must either:
✅ Offer a 𝗾𝘂𝗮𝗹𝗶𝗳𝗶𝗲𝗱 𝗿𝗲𝘁𝗶𝗿𝗲𝗺𝗲𝗻𝘁 𝗽𝗹𝗮𝗻 (like a 401(k), SEP IRA, or SIMPLE IRA),
𝗢𝗥
✅ 𝗥𝗲𝗴𝗶𝘀𝘁𝗲𝗿 𝗳𝗼𝗿 𝗖𝗮𝗹𝗦𝗮𝘃𝗲𝗿𝘀 — the state-sponsored retirement savings program.

📌 𝗪𝗵𝘆 𝗡𝗼𝘄?
With the passage of 𝗦𝗲𝗻𝗮𝘁𝗲 𝗕𝗶𝗹𝗹 𝟭𝟭𝟮𝟲, the state expanded its retirement mandate to include 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗿𝘀 𝘄𝗶𝘁𝗵 𝟭 𝘁𝗼 𝟰 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀. Previously, only businesses with 5+ employees were covered.

📌 𝗞𝗲𝘆 𝗗𝗲𝗮𝗱𝗹𝗶𝗻𝗲𝘀 & 𝗣𝗲𝗻𝗮𝗹𝘁𝗶𝗲𝘀
Deadline: 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟯𝟭, 𝟮𝟬𝟮𝟱
Penalties for non-compliance:
🔸 $250 per eligible employee after 90 days
🔸 Additional $500 after 180 days

📌 𝗘𝘅𝗲𝗺𝗽𝘁𝗶𝗼𝗻𝘀 𝗔𝗽𝗽𝗹𝘆
You’re exempt if you:
Already offer a qualified retirement plan
Have no employees (owner-only)
Are a government, religious, or tribal entity

🧠 𝗣𝗿𝗼 𝘁𝗶𝗽: Don’t wait until Q4 2025. Register and complete the work now to protect your business from fines and support your employees’ financial futures.
If you have questions about setting up a plan or navigating CalSavers, let’s connect. This is a great opportunity to offer your team long-term value — and stay compliant.

California Employers: Minimum Wage Increases Effective July 1, 2025
There are upcoming important changes to minimum wage rates taking effect on July 1, 2025, across various California jurisdictions.
While the statewide minimum wage remains at $16.50 per hour, several cities and counties have enacted higher local minimum wages. Notable increases include:
• City of Los Angeles: $17.87 per hour
• Unincorporated Los Angeles County: $17.81 per hour
• San Francisco: $19.18 per hour
• Berkeley: $19.18 per hour
• Fremont: $17.75 per hour
• Milpitas: $18.20 per hour
• Emeryville: $19.90 per hour
• West Hollywood: $19.65 per hour
These adjustments are part of local efforts to address the rising cost of living and inflation. Employers operating in multiple jurisdictions should review their payroll practices to ensure compliance with the highest applicable wage rates.
For a comprehensive list of updated local minimum wage rates effective July 1, 2025, please refer to the California Department of Industrial Relations’ official page: dir.ca.gov

Own Real Estate? You Might Be Missing a Major Tax Break
Let’s talk about cost segregation — a powerful (but underused) tax strategy that can unlock huge deductions for real estate investors.
Here’s the short version:
👉 If you bought, built, or renovated a property — especially a commercial building or multifamily — you don’t have to depreciate everything over 27.5 or 39 years.
✅ With cost segregation, you can carve out components like flooring, cabinetry, landscaping, and lighting — and depreciate those over 5, 7, or 15 years.
✅ That means massive first-year deductions. With bonus depreciation still applying to short-life assets, we’re talking six-figure write-offs in many cases.
📈 The result? Increased cash flow, lower tax bills, and more ROI from your investment.
💡 Even if you bought the property years ago, you can still catch up depreciation without amending prior returns. It’s called a “lookback study.”
🚫 Don’t sleep on this. If you’re investing in real estate and haven’t done a cost seg study, you could be overpaying the IRS — and missing out on funds you could reinvest.

Using a Corporate Vehicle? Here’s How to Keep the IRS Happy — and Your Taxes Lower 📉
If you operate your business as an S corp or C corp and drive a corporate-owned vehicle, don’t overlook the IRS rules on personal use — especially if you’re using that car for anything other than business.
Here’s the breakdown:
🔹 Personal use = taxable income (unless you reimburse the corporation).
🔹 Reimbursement is typically the smarter tax move — avoiding payroll taxes and reducing headaches.
🔹 If business use drops below 50%, say goodbye to Section 179, bonus depreciation, and accelerated write-offs. You’ll be stuck with straight-line depreciation.
🔹 When valuing your personal use, the IRS lease valuation tables or fair market lease rates apply — not 20% of the vehicle’s cost.
🔹 Year-end planning matters: Get those reimbursements or W-2 adjustments squared away before December 31 to avoid reclassification issues or retroactive messes.
💡Pro tip: If you’re in this situation and haven’t looked closely at how your corporation handles vehicle use, now’s the time to review. A little planning here can go a long way in tax savings — and audit-proofing.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.