How do I minimize taxes as a small business owner?
Choose the Right Business Structure
How your business is structured has major tax implications. Electing to be taxed as an S Corporation allows you to pay yourself a “reasonable salary” and take additional profits as distributions, which are not subject to self-employment tax. Even LLCs can elect S-Corp status for these benefits. It’s important to revisit this annually as your business evolves.
Maximize Business Deductions
Don’t miss out on common deductions:
-
Home office expenses
-
Vehicle deductions via mileage or depreciation
-
Section 179 and bonus depreciation for equipment and vehicle purchases
-
Professional fees including financial planning, tax advisors, and accounting software
If you’re purchasing equipment or vehicles, consider how timing affects your tax return—some deductions can be taken upfront, others over time.
Contribute to Retirement Accounts
Retirement plans can help reduce taxable income while building your future. Options include:
-
Solo 401(k): Contribute up to $70,000+ (including catch-up if over 50)
-
Traditional 401(k) with employees: Up to $30,000 with profit-sharing potential
-
SEP IRA: Contribute up to 25% of compensation, but must match for employees
Don’t Overlook Health and Insurance Benefits
Health insurance premiums, Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) are 100% deductible when paid through the business. Entity-owned life insurance, especially for buy-sell agreements, can also be deducted.
Leverage Timing and Income Planning
If you’re on a cash-based accounting system, timing can be everything:
-
Defer income to the next year
-
Accelerate expenses before year-end to reduce taxable income
-
Consider estimated taxes paid through the company to optimize deductions
Other Tax Opportunities
If you’re in manufacturing or tech, you may qualify for R&D tax credits. And if your business holds investments, tax-loss harvesting can offset gains. Just be mindful, these opportunities vary by industry and structure.
How to Ensure It Is Done Right
Tax strategy is not one-size-fits-all. Working with professionals ensures you’re not missing out on deductions or efficient structures. Regularly revisiting your approach could save you thousands and keep your business financially optimized.
Casey Smith
President, Wiser Wealth Management
Listen to Our Podcast:
Recent posts
Share This Story, Choose Your Platform!
Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.
Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.
To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.
