TAX planning for small business owners

Master your taxes so you can focus on growing your dream—without the year-end stress.

Why Thoughtful Tax Planning Is a Game-Changer

Tax planning shouldn’t be a scramble in April. Embracing it year-round means smarter decisions, built-in savings, and long-term peace of mind. Whether you’re running solo or leading a small team, proactive planning is the smartest route forward.

1. Choose the Optimal Business Structure

Your business structure—whether it’s a sole proprietorship, LLC, S-Corp, or corporation—has substantial tax implications. LLCs and pass-through entities avoid double taxation, whereas corporations face taxes at both the entity and shareholder levels. Consider an S-Corp election if your net earnings exceed $50K—it may reduce your self-employment taxes.

2. Know Your Deductions & Credits Inside Out

• • Qualified Business Income (QBI) deduction: Allows up to 20% off your eligible income. High earners or professionals in certain fields may have limitations. H.R. 1 makes this deduction permanent—but it applies fully starting in 2026.

  • Section 179 expensing: Write off up to $1.25 million in equipment or property immediately in 2025.

  • Depreciation strategies: Use bonus depreciation while it’s plentiful—perfect for significant equipment buys.

  • Don’t skip small wins: Home office, vehicle use, startup costs, professional development, and even bank fees often go overlooked.

3. Smart Retirement Planning = Tax Savings + Future Security

Retirement plans are more than just saving for later—they lower taxable income now:

• • Solo 401(k) and SEP IRA: Offer high contribution limits—up to $69K in 2025—and may be doubled if a spouse is on payroll.

  • Cash Balance Pension Plans: A newer option delivering potential contributions of $100K–$400K annually for high-earning business owners.

4. Keep Meticulous Records and Pay Quarterly Taxes

Track your income and expenses faithfully. Use tools like QuickBooks or Keeper for cleaner, audit-ready records.

If you expect to owe more than $1,000 in taxes, estimated payments are your friend—making them on time helps you avoid unnecessary penalties.

5. Time Your Income and Expenses Strategically

With cash-based accounting, you can gain flexibility:

• • Defer income into next year if you expect your tax rate to drop.

  • Accelerate expenses now to reduce this year’s tax liability.

  • Or flip the strategy—accelerate income if rates are rising.

6. Take Advantage of QSBS When Possible

If your business is set up as a C-Corp, you might qualify for Qualified Small Business Stock (QSBS) benefits—allowing you to exclude up to $10 million (or 10× your investment basis) from capital gains when you sell, potentially increasing to $15 million if acquired after July 4, 2025. A powerful strategy for exit planning and wealth-building.

7. Leverage Professional Expertise for Maximum Benefit

A trusted tax advisor or CPA isn’t just crunching numbers—they alert you to:

• • Changing tax laws and deadlines.

  • Emergency planning like upcoming IRS changes.

  • Complex opportunities like QSBS or advanced retirement vehicles.

They also bring peace of mind—and can represent you if audits arise.

8. Turn Tax Planning Into a Timely, Proactive Practice

Create a simple tax calendar that includes:

• • Quarterly tax deadlines.

  • Retirement plan setup windows.

  • Equipment or asset purchase timing.

  • Entity election deadlines and benefit phase-outs.

Your Checklist at a Glance