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Tax planning checklist for business owners

A useful tax plan compares eligible options with their cost, documentation and effect on cash flow.

Review business structure and owner pay

Compare your current tax classification with alternatives using actual profit, owner duties and administrative costs. An S election does not create a fixed savings percentage.

Coordinate retirement contributions

Plan eligibility, compensation, employees and deadlines affect the available contribution. For 2026, the standard 401(k) employee-deferral limit is $24,500; employer contributions and catch-up rules are separate.

Check deductions and benefits

Review business expenses, the qualified business income deduction and benefit arrangements. More-than-2% S-Corp shareholders have special fringe-benefit rules. Do not assume every employee benefit is tax-free for an owner.

Model equipment purchases

Compare business need, financing, cash flow and deduction eligibility. Depreciation rules depend on the asset, acquisition date, business use and when it is placed in service.

Review payments before year-end

Update estimated tax calculations and withholding. Consider income and expense timing within the accounting rules, including constructive receipt. Keep documentation for the actions you take.

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§ FAQ

Questions we hear about business tax strategy.

How much can an S-Corp save me in self-employment tax?

A sole proprietor making $120K net pays self-employment tax on every dollar of profit. An S-Corp owner at the same income pays payroll tax only on their reasonable salary and takes the rest as a distribution, which can reduce self-employment tax. The election also adds payroll, a separate return and other costs. There is no universal income threshold. We model your profit, a supportable salary, and the added payroll and filing costs before recommending an election.

What retirement plan lets a small-business owner contribute the most?

It depends on how many employees you have and how much you want to set aside. A Solo 401(k) allows up to $72,000 in 2026, plus catch-up contributions, for owner-only businesses, a SEP-IRA is simpler but caps contributions at 25% of compensation, and a SIMPLE IRA fits businesses with employees at up to $17,000 in employee deferrals plus an employer contribution. For high-earning older owners, a Defined Benefit Plan can allow contributions that exceed $200K per year.

What is the QBI deduction and who qualifies?

The Qualified Business Income deduction lets many pass-through business owners deduct 20% of qualified business income directly off their taxable income. The rules around specified service trades, W-2 wages, and income thresholds are complex, so it is easy to either miss the opportunity or claim it incorrectly. Most returns we review have done one or the other.

Can my business deduct equipment purchases in the year I buy them?

Often yes. Using Section 179 and bonus depreciation, you may be able to deduct the full cost of equipment, vehicles, or software in the year of purchase rather than depreciating it over 5-7 years. Timing those purchases can matter enormously when one tax year looks different from the next.

How can a cash-basis business lower its taxable income at year-end?

If you are a cash-basis business, which most small businesses are, you control your taxable income by controlling when you bill and when you pay. Accelerating expenses in a high-income year, deferring them in a low-income year, or accelerating invoicing before a rate increase can save thousands per year. These timing moves work with zero structural change to your business.
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