Advanced Tax Planning for Small Business Owners

Selected theme: Advanced Tax Planning for Small Business Owners. Welcome to a practical, story-rich guide for owners who want to keep more of what they earn, invest strategically, and grow with confidence. Join our community—subscribe, ask questions, and turn complex tax ideas into simple, repeatable wins.

Choosing the Right Entity Structure

S corporations can lower self-employment taxes through a split of salary and distributions, while LLC partnerships offer flexible allocations and simpler ownership changes. Compare state fees, basis tracking, and fringe benefit rules. Share your current structure in the comments, and we’ll highlight tips tailored to businesses like yours.

Choosing the Right Entity Structure

If you choose an S corporation, document reasonable compensation using industry surveys, roles, and revenue patterns. Calibrate salary to support retirement contributions yet avoid excess payroll taxes. Build a simple memo, keep job descriptions, and revisit annually. Subscribe to receive a concise, owner-friendly checklist to guide your compensation review.

Deferring Income, Accelerating Deductions

Within the rules, you can defer invoices at year-end, prepay certain expenses under the 12‑month rule, and stock up on supplies you will actually use. Match timing to cash needs and growth plans. Bookmark this page and comment with your busiest season so we can suggest timing strategies that fit your cycle.

Bonus Depreciation vs. Section 179

Bonus depreciation is phasing down in coming years, while Section 179 remains powerful but limited by taxable income and business use. Consider recapture risks if you later convert assets to personal use. A landscaping firm we advised split equipment purchases over two years to optimize both cash and deductions. Subscribe for updated phase-out alerts.

Cash vs. Accrual Method Planning

Qualifying small businesses often benefit from the cash method, recognizing income when received and deductions when paid. Switching methods may involve Form 3115 and a Section 481(a) adjustment. A neighborhood bakery saved taxes by aligning invoicing with seasonal peaks. Share your average invoice cycle and we’ll suggest method insights to explore.

Credits and Incentives You Might Be Missing

Research and Development Credit for Small Firms

The R&D credit isn’t just for labs; software improvements, process enhancements, and product testing can qualify. Startups may offset payroll tax with the credit. A coffee roaster we met documented roast curve experiments and packaging redesigns to support a claim. Subscribe for a worksheet that translates technical work into audit‑ready records.

Work Opportunity and Training Credits

The Work Opportunity Tax Credit requires pre‑screening new hires using timely forms, then tracking hours and wages. Integrate this into onboarding so opportunities aren’t missed. One staffing agency built a five‑minute intake script and saw immediate savings. Comment if you want our step‑by‑step intake flow to share with your HR partner.

Energy Efficiency and Clean Vehicle Incentives

Small businesses may benefit from credits for eligible clean vehicles and charging stations, alongside certain building efficiency incentives. Confirm basis reductions, business use percentages, and domestic content rules. A delivery service shifted to electric vans and improved both marketing and margins. Share your fleet size to get tailored incentive pointers.

SALT Strategy and Multistate Realities

Economic Nexus and Marketplace Complexities

Many states assert nexus once sales or transaction thresholds are exceeded, even without physical presence. Marketplaces may collect for you, but not always. An online boutique we advised mapped thresholds quarterly and avoided surprise liabilities. Subscribe to receive our threshold tracker and comment with your top three states.

Pass‑Through Entity Tax (PTET) Elections

PTET elections can mitigate the federal SALT cap by shifting tax to the entity. Rules, deadlines, and credits vary widely by state. Run projections before electing to avoid cash flow shocks. Ask your questions below, and we will feature state‑specific scenarios in upcoming posts.

Apportionment and Payroll Sourcing

Service revenue may be sourced by market or cost of performance, changing how multi‑state income is taxed. Track where work is performed and maintain travel logs. A consulting firm reallocated revenue after careful review and reduced double taxation. Subscribe for a simple apportionment workbook tailored for service businesses.