By Tim Johnston
Most business owners hear from their accountant about taxes in the spring. A tax return gets prepared, a number shows up, and it either feels fine or it stings.
Here’s the thing: by then, almost everything that determined the number is already locked in. The year is over. The books are closed. The only thing left to do is report what happened.
Tax planning is the opposite. It happens while the year is still open, when you can still change the outcome. And for most businesses, the best window for it is right now: the fall.
Preparing vs. planning
Tax preparation looks backward. It answers the question, “What happened this year, and what do we owe?”
Tax planning looks forward. It answers a better question: “Given how this year is going, what can we still do about it?”
Both matter. But only one of them lets you make decisions, and decisions are where the savings, and the peace of mind come from.
Why this isn’t just for big companies
Every business that makes a profit has a tax bill, and every one of them has some control over how that bill comes out. A solo consultant, a franchise owner, a contractor, a medical practice, a print shop, a restoration company: the details are different, but the question is the same.
What changes from business to business is which levers are available. A company that buys equipment has different options than one that mostly sells time. A business with a few employees has different options than one with none. Part of the work is figuring out which levers are real for you and which ones aren’t.
Planning also isn’t only about owing less. It’s about knowing what’s coming. Nobody enjoys finding out in April that they owe much more than they expected, with no time to do anything about it. A good planning conversation in the fall means fewer surprises, potentially better cash flow going into the new year, and less scrambling during tax season.
Why fall
Many of the most useful moves have a deadline of December 31. Not the filing deadline, but the end of the year itself. After that date, the year’s activity is what it is.
If you wait until January to think about it, you’re mostly out of options. If you start in the fall, you still have a few months of runway.
That’s also why we don’t treat planning as a one-time event. We like to take a first look over the summer, when there’s still plenty of year left, and then a second look in the fall once your numbers have had time to evolve.
What the planning process actually looks like
When we do this with clients, we’re not just handing over a checklist. We’re working through the pieces of the business one at a time. Here are some examples.
*(A quick note on the examples below: they’re simplified illustrations, and the tax rates I use are assumptions to keep the math easy. Your real numbers depend on your specific situation.)*
1. Figure out where you actually stand
Everything else depends on this. Before anyone can talk about tax moves, we need a realistic picture of how the full year is going to finish.
So we take your numbers through the most recent month, look at the trends, and project out to December with you. We also compare to last year, because a big change in either direction affects what we should do.
Here’s an example. Say your profit through October is $95,000, and based on the usual pace, you’ll add another $25,000 in November and December. That puts the year at about $120,000, up from $80,000 last year.
That jump is exactly why we look. A profit that much higher than last year might mean your estimated tax payments aren’t enough, it might mean a planned equipment purchase should happen this year instead of next, and it might mean we should revisit how you’re paying yourself. None of that is visible unless someone looks.
It works the other way too. If profit is coming in lower than expected, the right move may be to not rush a bunch of deductions into this year, because you might get more value from them later. Planning isn’t always about doing more. Sometimes it’s about knowing when to hold off.
2. Make sure your business is set up the right way
How your business is structured legally changes how it’s taxed:
– A sole proprietorship or single-member LLC is simple, but all of the profit is generally subject to self-employment tax, which is 15.3% (subject to some limits).
– A partnership or multi-member LLC passes profit through to the owners, who each pay tax on their share.
– A C corporation pays its own tax, and owners can be taxed again when profits are paid out.
– An S corporation passes profit through like a partnership, but owners who work in the business are paid a salary, and payroll taxes apply to that salary rather than to every dollar of profit.
That last one is worth a closer look, because it’s often misunderstood. The IRS requires S corporation owners who work in the business to be paid reasonable compensation for the work they do before taking other payouts. The flip side is that profit above that salary is generally not subject to the same payroll taxes.
An illustration: if a business nets $150,000 and the owner takes a reasonable salary of $80,000, the other $70,000 isn’t hit with that 15.3% payroll tax. That could be worth roughly $10,000 or so in a year.
The point isn’t that everyone should be an S corporation. It’s that the structure that made sense when you started may not be the one that makes sense now, and the fall is a good time to check.
3. Make sure you’re capturing every expense you’re entitled to
You’d be surprised how many legitimate expenses get missed, simply because nobody went looking. Travel, supplies, software, dues and subscriptions, training, repairs, professional fees, and more.
We also look at timing. Depending on how your books are set up, paying for something in December instead of January can move the deduction into this year. For example, if a $1,200 software subscription renews in mid-January, and you’d be paying it anyway, paying it in December can bring that deduction into the current year. At an assumed 30% combined tax rate, that’s about $360 in savings from a bill you were going to pay regardless.
(A word of caution: this is about shifting the timing of expenses you were going to have anyway. Buying something you don’t need just for the deduction is almost never a good idea. You’re still spending the money.)
Mileage is another one where documentation matters. If you drive for business, the IRS lets you deduct a set amount per mile instead of tracking every gas receipt. For 2026, that rate is 72.5 cents per mile.
An example: 8,500 documented business miles at 72.5 cents is $6,162.50 in deductions. At an assumed 30% combined rate, that’s roughly $1,850 in tax savings. But that only works if you have a log with the date, destination, business purpose, and miles for each trip. Without the log, it’s hard to claim.
If you work from home, we’ll also check whether you qualify for the home office deduction, which has specific rules about how the space is used.
4. Plan equipment purchases carefully
If your business needs to buy equipment this year, whether that’s computers, machinery, furniture, off-the-shelf software, or vehicles, there are rules that let you deduct a large part of the cost, sometimes all of it, in the first year instead of spreading it out over many years.
There are two main tools we look at:
– Section 179 lets you deduct the cost of qualifying equipment up front. For 2026, the limit is $2.56 million, which for most small businesses means the limit itself isn’t the issue. But Section 179 is also limited by your business’s income from active operations, so it generally can’t create a loss.
– Bonus depreciation is a separate first-year deduction. Under the federal law passed in July 2025, qualifying property acquired and placed in service after January 19, 2025 is eligible for a 100% bonus. It doesn’t have the same income limit.
An example: suppose your business buys a $100,000 piece of equipment and uses it this year. If you deduct the full $100,000 in year one, then at an assumed 30% combined tax rate, that’s about $30,000 in tax savings this year.
Two important caveats. First, this mostly moves deductions earlier rather than creating new ones, since you won’t have that depreciation to deduct in future years. So it’s worth asking whether you’ll be in a higher or lower bracket later. Second, and this trips people up, the equipment has to be placed in service by December 31. According to the IRS, that means it’s “ready and available for a specific use.” Ordering it isn’t enough. If it’s sitting in a shipping container on December 31, it’s a next-year purchase. This is another reason that it is so critical to plan in the fall, while there is time available to execute on strategy.
5. Look at family employment, if it’s real
If your kids genuinely help in your business, such as doing office work, cleaning, or helping with marketing, paying them for that work can be a legitimate strategy. The business deducts the wages, and the child may owe little or no income tax on what they earn, depending on how much it is.
An example: a 17-year-old works 200 hours at $15 an hour, so $3,000 in wages. At an assumed 24% tax rate, the business saves roughly $720, and the child’s federal tax on that income is likely small or zero.
The key words there are “genuinely” and “reasonable.” The work has to be real, the pay has to be fair for what they did, and you should keep a log. The payroll tax rules also depend on your business type, so this is one to talk through before you do it, not after.
6. Check your retirement and health savings options
Retirement plans for business owners can be a double win: you’re saving for your future, and the contributions can reduce your taxes now. But the options and deadlines vary a lot by plan type. Some plans need to be set up before the year ends to count for this year. Others give you more time. It’s an area where finding out in January that you missed a window can be frustrating, so we check it in the fall.
Health Savings Accounts (HSAs) work a little differently. If you’re eligible, you can generally make contributions for the year up until the tax filing deadline, which gives you some flexibility. But it’s worth knowing your limit and planning for it rather than guessing.
7. Keep an eye on state taxes and changing laws
State and local taxes add another layer. In some states, certain business owners can choose to have the business pay state income tax directly, which can change how it’s treated on the federal return. Whether it’s worth doing depends heavily on where you are and how your business is set up.
And then there’s the fact that tax law keeps moving. Limits get adjusted every year, and new legislation can change the rules. In just the last year or so, the rules for equipment write-offs changed significantly. Something that was true two years ago might not be true now, which is one of the best reasons to have someone paying attention to it.
What we’re really trying to do
If I had to sum up everything above, it would be this: we’re trying to help you make informed decisions while you still can.
That’s different from chasing every possible deduction or doing something clever for its own sake. The best planning is usually pretty ordinary. It’s looking at the real numbers, understanding the options, being honest about the trade-offs, and picking the moves that make sense for your business and your goals.
Sometimes the answer is to take action. Sometimes the answer is to leave things alone. Either way, you’ll have made the call on purpose and with peace of mind.
A few questions to ask yourself this fall
If you want a simple starting point, here’s a way to think about it:
1. Do I know roughly what my profit is going to be this year? If not, that’s the first thing to figure out.
2. Am I planning any big purchases? If so, when, and will they actually be up and running by December 31?
3. Is my business still set up the right way for how it’s performing now?
4. Have I kept good records, especially mileage and any documentation for unusual deductions?
5. Do I know my options for retirement and health savings and their deadlines?
6. Is anyone checking whether tax law changes affect me?
If any of those made you pause, that’s a good sign it’s worth a conversation.
Let’s talk before the year ends
We start planning with our clients in the summer and revisit in the fall, because the right answers depend on real numbers. If you’re a TAO client and have not done tax planning with us yet this year, reach out to us and let’s get time on the calendar. If you’re not yet a client and you’re curious what this looks like for your business, we’d be glad to talk.
*This article is for general education and isn’t a substitute for advice specific to your situation. Tax figures, limits, and deadlines change from year to year, and the examples above use simplified, assumed numbers. Talk to your tax advisor about the current numbers and how these ideas apply to your business before December 31.*