Here’s a distinction that is valuable and often overlooked in financial advice: filing taxes and planning taxes are two completely different activities.

Filing is compliance. Your CPA takes what happened over the past twelve months, puts it in the right boxes, and helps make sure you don’t get a letter from the IRS. It’s necessary, and it’s valuable. But it’s backward-looking by definition.

The cost of being reactive is real. I’ve sat across the table from owners who discovered — after the fact — that a simple entity restructuring could have saved them a significant amount of money in a single year. Multiply that over a decade of ownership, and you start to see the true price of waiting until April.

If you’re a business owner and your only tax conversation happens when your CPA sends you a questionnaire in February, there’s likely money being left on the table. I wrote about this gap in more detail in my earlier post, Tax Planning for Gen X & Gen Y Business Owners — if you haven’t read it yet, it’s a good companion to what we’re covering here.

If your business entity was chosen for you by a lawyer at formation and never revisited, you may be paying more than you need to. Your entity type — sole proprietorship, LLC, S-Corp, or C-Corp — is the single biggest lever you have for controlling how your income is taxed. I wrote a full breakdown of each structure in What Type of Entity Should I Set Up for My Business? — but here’s the short version as it relates to your tax bill.

The following examples are hypothetical and provided for illustrative purposes only.

The key takeaway: your entity should be reviewed regularly, not once at formation. Business income changes, tax laws evolve, and your goals shift. What worked when you launched may be costing you today. I covered how entity choice affects retirement plans, deductions, and your overall wealth strategy in Maximizing Tax Planning Advantages of Business Ownership.

This is the section where many business owners’ jaws drop. If you’re only using a basic 401(k), you’re likely leaving tax-sheltered savings on the table over the course of your career.

Here’s what’s available to you as a business owner in 2026, depending on circumstances:

When I tell business owners they can potentially shelter $72,000 to $300,000+ per year in tax-advantaged retirement accounts, the natural reaction is disbelief. But these aren’t loopholes — they’re plans specifically designed by the tax code to incentivize business owners to save. I walked through how profit-sharing and defined benefit plans work together in Beyond the 401(k): Maximize Retirement Contributions — it’s worth reading if you want to understand the mechanics behind these larger contribution numbers.

Your CPA will likely catch your payroll deduction and your office lease. But the following deductions are the ones I find business owners consistently underutilize — often because nobody proactively brings them up:

• Home Office Deduction

  You can choose the simplified method ($5 per square foot, up to 300 sq ft for a $1,500 deduction) or the actual expense method, which includes a proportional share of mortgage interest, property taxes, insurance, utilities, and depreciation. If you work from home even part-time, this is worth calculating both ways.

• Vehicle Expenses

  The IRS standard mileage rate for 2026 is a valuable deduction if you drive for business purposes. Alternatively, the actual expense method lets you deduct fuel, insurance, repairs, and depreciation on a pro-rata basis. Keep a log — the IRS expects documentation.

• Self-Employed Health Insurance Deduction

  If you’re self-employed, you may be able to deduct 100% of health insurance premiums for you, your spouse, and dependents. This comes off your adjusted gross income, not as an itemized deduction, which can make it more powerful than many people realize.

• Qualified Business Income (QBI) Deduction

  Section 199A allows eligible business owners to deduct up to 20% of qualified business income. Income phase-outs apply for specified service trades, but for many owners, this can be a meaningful tax benefit that may reduce the overall effective tax rate.

• Hiring Your Children

  If your business is a sole proprietorship or single-member LLC and your children are under 18, their wages are exempt from Social Security and Medicare taxes. Their earnings may also be used to fund a Roth IRA, helping to begin building tax-advantaged savings from a young age, subject to eligibility requirements.

  A word of caution — the IRS has seen this strategy abused, and they know what to look for. Your child needs to perform real work, at a rate you’d pay any other employee for the same task. Filing paperwork, cleaning the office, helping with social media — all legitimate. Paying your eight-year-old $15,000 to “consult” is not. When done properly, this is one of the most elegant strategies in the tax code. When done sloppily, it’s an audit magnet.
• The Augusta Rule (Section 280A)

  You can rent your personal home to your business for up to 14 days per year and the rental income may be excluded from your personal taxable income, while the business may be eligible for a deduction. This can work well for owners who host team meetings, retreats, or planning sessions at home.

  You may have seen this one trending online. It’s real, it works, and the IRS hasn’t challenged it when the documentation is solid. But it requires a legitimate business use, a fair market rental rate, and proper records. Skip any of those and you’re inviting scrutiny.
• Education and Professional Development

  Courses, conferences, certifications, and professional memberships that maintain or improve your business skills are generally deductible. This includes travel to conferences when the primary purpose is business-related.

The common thread here is that most of these deductions require proactive planning and documentation. They don’t just show up on your tax return automatically. Having a financial advisor who coordinates with your CPA can help you take advantage of these opportunities before year-end.

If there’s one message I want every business owner to take from this post, it’s this: the owners who are able to pay less in taxes aren’t doing anything exotic. They’re simply having the right conversations at the right time.

Effective tax planning follows a rhythm throughout the year:

This quarterly cadence can help distinguish owners who consistently minimize their tax burden from those who get an unpleasant surprise each April. As I discussed in Tax Planning for Gen X & Gen Y Business Owners, the business owners in our generation face a unique window where proactive planning can have a meaningful impact on long-term wealth.

You didn’t start your business to become a tax expert. But the business owners who build real, lasting wealth are generally the ones who treat tax planning as a core part of their financial strategy — not an afterthought.

The strategies in this post — optimizing your entity, maximizing retirement contributions, capturing every deduction you’re entitled to, and planning on a year-round cadence — aren’t reserved for Fortune 500 companies. They’re available to you right now, depending on individual circumstances, current tax law, and proper implementation. The only requirement is having someone in your corner who knows how to put them together.

That’s what my Abundant Wealth Process is built around: aligning your finances with your goals, making smart decisions, and proactively managing the risks and tax implications so you can keep more of what you’ve earned.