Running a business is hard work—don’t let taxes drain your profits. Smart tax planning isn’t just about deductions; it’s about making strategic decisions that maximize your bottom line and set your business up for long-term success. Here’s how to take control of your taxes and keep more of what you earn.
- Choose the Right Business Structure
Your business structure affects how you’re taxed and can impact future growth.
- Sole Proprietorships & LLCs: Income “passes through” to your personal tax return and is taxed at your individual rate. Simple, but may not maximize tax savings.
- S Corporations: By taking a reasonable salary and distributing remaining profits as dividends, S-Corps can reduce self-employment taxes. Example: An owner earning $100,000 could save several thousand dollars annually.
- C Corporations: Profits are taxed separately at the corporate level, which may result in double taxation. However, this structure can be ideal if you plan to reinvest profits or attract investors.
- Master Business Deductions and Credits
Every legitimate deduction reduces your taxable income—don’t leave money on the table.
- Qualified Business Income (QBI) Deduction: Pass-through entities may deduct up to 20% of qualified business income. Tip: This deduction is set to expire after 2025, so act now.
- Commonly Overlooked Deductions: Home office expenses, vehicle mileage, business travel and meals, and professional development.
- Section 179 & Bonus Depreciation: Deduct the full cost of qualifying equipment and software in the year purchased, instead of spreading it over several years. Note: Section 179 limit for 2025 is $1,250,000.
- Research & Development (R&D) Tax Credits: If your business innovates products, services, or processes, you may qualify for R&D credits, which directly reduce your tax liability.
- Set Up a Business Retirement Plan
Offering a retirement plan can provide significant tax benefits and help attract and retain talent.
- SEP IRA: Easy to set up, lets you contribute a percentage of employees’ salaries to their retirement accounts.
- SIMPLE IRA: Designed for businesses with fewer than 100 employees, allowing both employer and employee contributions.
- Solo 401(k): Perfect for self-employed individuals with no employees. Offers the highest contribution limits and allows contributions as both employer and employee.
- Health Savings Accounts (HSA) & Defined Benefit Plans: Consider pairing retirement plans with HSAs or specialized plans for high-income business owners, which provide both savings and tax advantages.
- Plan for Multi-State Operations & Compliance
If your business operates in more than one state, you’ll need a strategy to manage state taxes efficiently:
- Understand state income tax requirements for all locations where you conduct business.
- Keep clear records of where revenue is earned to avoid overpaying taxes.
- Consider nexus rules carefully if you sell products online or have remote employees.
- Leverage Strategic Timing & Cash Flow Planning
When you earn and spend money can affect your taxes:
- Accelerate Deductions or Defer Income: Timing purchases, hiring, or sales can shift taxable income from one year to another, reducing current-year liability.
- Plan Major Capital Expenses: Use depreciation or Section 179 deductions strategically to offset high-income years.
- Work With a Tax Professional
Taxes are complex and constantly changing. Professional guidance ensures you are compliant, maximizes deductions, and positions your business for growth.
“A smart tax strategy today can save you thousands tomorrow.”
Our experts can help you create a customized plan, identify hidden opportunities, and make your business as tax-efficient as possible.
