Top States for Business, a Social Security Surprise, Taking Wheel from Copilot

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex Thrive Week in Review. This is where we take a few items in the news that impact your small business and mine, and we talk about them just a little bit.

Now, before we get started, we all know that running a business is very, very challenging, especially when laws and regulations like keep changing all the time. That's why Paychex is here. They help to keep your business up to date and compliant, so you can avoid headaches and focus on your company's growth.

Check it out for yourself at paychex.com/meetpaychex. That's P-A-Y-C-H-E-X.com forward slash M-E-E-T. P-A-Y-C-H-E-X. You can also find the link in the show notes.

All right, let's get to the news for this week. The first has to be … is a piece from CNBC. Ohio has been named CNBC's top state for business in 2026, the first time the state has earned the number one ranking.

CNBC evaluated all 50 states using a record 138 metrics across 10 categories, including infrastructure, workforce, cost of doing business, economy, technology, and of course quality of life. Ohio's strengths include the nation's top-ranked infrastructure and lowest business costs, along with strong scores for its economy and technology sector.

North Carolina finished second, followed by Virginia, Texas, and Minnesota. The rankings highlight a shift towards Midwestern states as businesses place greater emphasis on infrastructure, affordability, and access to skilled workers. Texas remains strong in workforce and economic performance but is hurt by its low quality of life ranking.

CNBC's annual study reflects the criteria that states emphasize when competing for business investment and economic development projects.

Some notable states that were left out of like the top states: Florida, California, New York, Illinois, my state of Pennsylvania. I mean, listen, we all can't be top 10 – there's 50 states here – but hats off to Ohio for being number one for the first time. Ohio is a great state with many cities in it that I always think to myself, wow, there's Cleveland and Cincinnati and Akron and Dayton. And you know, it's a beautiful state and a great place to do business, as well.

Also, a little shout out for Virginia, Texas, and Minnesota, North Carolina in particular. Those are the ones that sort of rounded out the top five. North Carolina also, if I were to move anywhere, I think North Carolina is the state I'd be personally going to. These are all great states to do business. That doesn't necessarily mean that you're gonna pick up your your business and move them to that state anytime soon. But it is nice to know if you're a business owner in those states that where you rank and how you are.

For those states that are on the lower end of the rankings – we won't go into them – they've got some work to do and some things that need to be done to attract businesses to their loca (tion). So, anyway, congratulations to Ohio for being number one on CNBC's top state for business in 2026 survey. And congratulations as well to North Carolina for being the runner-up. Two great states to run your business from.

Here's an interesting story from Yahoo Finance. You ready for this? A 66-year-old S Corporation owner – an S Corporation is a pass-through, like a partnership – a 66-year-old S Corporation owner spent decades paying himself a relatively low W-2 salary (that's what you report to the IRS) while taking much of his income as distributions, which reduced his payroll taxes. The strategy produced years of tax savings but also lower the earnings history used to calculate social security benefits.

Social security generally calculates retirement benefits using a worker's 35 highest earning years. So, consistently reporting low wages can permanently reduce monthly payments. Selling the business for a large amount will not solve the problem because capital gains and business sale proceeds generally do not count as social security earnings.

So, the article in Yahoo Finance was warning business owners against focusing solely on short-term payroll tax savings when setting compensation. Owners should weigh reasonable compensation requirements, retirement savings, and future social security benefits. The broader lesson is that tax planning decisions made over decades can create significant and sometimes irreversible retirement consequences.

Okay, so a few thoughts on this. First of all, if you're an S Corporation or a partnership owner, you're an owner of a pass-through, you're allowed to record payroll or declare payroll as long as it's within a you know a good range of like minimum and maximum based on your work description, your job title, your region, as well. I always tell my clients, try to come in on the lower end of that range. Why? Because when you pay yourself that payroll, you know, you're incurring payroll taxes and FICA and Medicare taxes, state payroll taxes. So, the lower your compensation is, the less payroll taxes you will have to pay. And remember, you can still take money out of the business in the form of a distribution.

That's one of the great benefits of running a pass-through business like an S Corporation. Now, this article is warning business owners that if you do that over a number of years, your social security earnings when you hit 65 could be a lot lower than what you would do if you took more payroll during that period of time.

So, what's the answer to that, right? The answer is math. If you are even in your 30s and your 40s, and I know because we were all there, it's very, very tough to think ahead to when you're going to be in your 60s and 70s. It seems like lifetimes from now, but you do need to start thinking forward about that because you're going to get there sooner or later. And I think it's important to do the mathematical calculation. You can calculate the taxes that you save. You can also figure out what your social security payments are going to be when you turn 65. You max out in social security when you're 70, by the way. So, it's good to wait until then. And just do the math.

Like, you know, if you do take that lower income, will your social security payments be that much lower? Or will the tax savings that you're getting by taking that lower compensation way more than offset whatever lower social security payments that you're gonna get? The takeaway is this: Just be aware. If you are gonna pay yourself less, and remember, it should be on the bottom of the range, not outside of the range. You don't wanna, you know, pay yourself too little and then cause the scrutiny of the IRS. But if you pay yourself a reasonable salary, but it's on the lower end of the range, the article is just bringing it to your attention that like, hey, when it comes time to get your social security check, you might get less than you're thinking of getting because you paid yourself lower over that period of time.

Talk to your accountant and do the math. Project it out over the next couple decades. I think you will be able to figure out what makes the most sense and what salary, what compensation makes the most sense from your pass-through business.

All right, in this week's AI news, Microsoft is backing down. Ready for this? Now, I reported this in my Forbes roundup. This came from an article on Tech Radar. Microsoft is giving Teams users greater control over its AI meeting features following user pushback concerns about privacy and unwanted AI monitoring. The company is adding an in-meeting toggle that allows licensed organizers and presenters to switch off Copilot Facilitator and intelligent recap during live meetings. Users can disable individual AI features or turn off all meeting AI tools at once.

However, the controls remain subject to the company administrators' policies and licensing requirements. The change follows Microsoft's aggressive rollout of AI features designed to take notes and summarize meetings and translate conversations and identify knowledge gaps. Facilitator, in particular, raise concerns because it can listen to and observe meetings when it's activated. The new controls begin rolling out in early July and are expected to reach Teams users on Windows, Mac OS, mobile, and the web by midtime this month. So, hopefully by the time you're watching or listening to this podcast, those controls have been rolled out to your version of Office.

It's an interesting piece of news. For one, if you're a Microsoft Teams user and you're like, “Enough with all this AI stuff being jammed down my throat,” you can now start turning it off, assuming that your administrator wants you to.

It's also interesting that Microsoft, I think, is seeing that a lot of its users, after having so much just AI pushed on them, some of them are like, “Whoa, whoa, whoa, can we push this back? AI is great, but it may not be great in every circumstance.” And the more that humans have control over where and when they can use AI, the more acceptable AI will be for those humans. And Microsoft is realizing that.

So, AI is being toned down by Microsoft when it comes to Teams. Copilot is being pulled back a little bit. So, you want to talk to your AI or your Microsoft administrator in your office and ask if you can maybe give the control back to the users. If they want to turn AI off, they should have the ability to do just that.

Although I will say, on a Teams call, it may not be a bad idea to require that AI stays on so that the recording can be done, transcription and the notes can be done, as well, so there's no wiggling out of any accountability. So, that's just a decision that you're gonna have to make within your business. But now Microsoft is giving you that choice.

My name is Gene Marks, and you have been watching or listening to the Paychex Thrive Week in Review. If you enjoyed this episode, please subscribe to this channel so you can continue to get all of our Paychex Thrive podcasts.

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Thanks again for watching or listening. Again, my name is Gene Marks. We'll be back with you next week with some more news that impacts your small business and mine. Until then, take care.

My name is Gene Marks, and you've been watching or listening to the Paychex Thrive Week in Review podcast. A few things to take away. First of all, if you are in need of HR or payroll help in your business, consider Paychex. Go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X.com forward slash M-E-E-T-P-A-Y-C-H-E-X. Please follow this podcast on your podcast platform or on YouTube if you are enjoying the content so you stay up to date on our latest episodes.

And if you need help or advice or tips in running your business, get our Paychex Thrive newsletter. Go to paychex.com/thrive and sign up for it there.

Hope you found this information helpful. I'll be back with you next week with more news that impacts your small business and mine. My name is Gene Marks. Thanks so much for watching or listening. Take care.

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