Top 10 Tax Strategies for Business Owners to Reduce Taxes (CPA Explained)

Watch the video above, then use this playbook to take action.
Need deadlines and an estimate calculator? Open the Tax Playbook & Estimator.

---

The quick take

• Pick the right entity + compensation and keep it current.
• Install an Accountable Plan so reimbursements are deductible to the business and non‑taxable to you.
• Stack retirement (401(k) + profit‑sharing + cash balance) for large deductions.
• Use QBI rules intentionally; align payroll with the calculation.
• Coordinate state tools (PTET, apportionment) with federal strategy.
• Accelerate with bonus/§179/cost seg; use credits; shift income via family employment; leverage HSAs/HRAs; and time giving.

---

1) Entity structure & compensation (the foundation)

Why it matters: S‑Corps can reduce self‑employment tax on distributions, but you must pay reasonable compensation.

• Too high → needless payroll tax.
• Too low → reclassification risk.

How to do it:

• Use cost (duties × hours × wage) and market (comparable roles) approaches.
• Document your compensation study; revisit annually as profit and duties change.
• At higher profits, savings on the SE/payroll layer can be substantial.

Action: Book a comp study review and memorialize your methodology.

---

2) Accountable Plan reimbursements (turn life costs into business deductions)

What qualifies: Business‑use share of home office, phone, internet, mileage, and similar items.
Result: Deductible to the business, non‑taxable to you (when substantiated).

Action:

• Adopt a written policy.
• Submit a monthly reimbursement form with receipts/logs.
• Add COA categories (Home Office Reimb., Mobile/Internet Reimb., Mileage).

---

3) Retirement stacking (401(k) + PS + cash balance)

Why it works: Combining plans can move $50k–$300k+ into tax‑advantaged space—creating large current deductions while building long‑term wealth.
Action: Engage a TPA/plan designer to model designs across owners/staff and cash‑flow.

---

4) QBI design (up to 20% for pass‑throughs)

Key idea: Up to 20% of qualified pass‑through income may be deductible, but W‑2 wages, taxable income, entity type, and limits/phase‑outs drive the math (C‑Corps don’t qualify).
Action: Coordinate reasonable salary and profit flow with QBI rules; monitor throughout the year, not at filing time.

---

5) State strategy (PTET & apportionment)

• PTET: Elect to pay state income tax at the entity so the business deducts it (can bypass personal SALT limits).
• Apportionment: For multi‑state operations, allocate receipts/payroll/property per each state’s rules—don’t over‑report where you don’t have to.

Action: Model cash‑flow impact and compliance before electing; set calendar reminders for state deadlines.

---

6) Accelerate deductions with depreciation

• Cost segregation for buildings/leasehold improvements front‑loads depreciation into early years.
• Bonus depreciation / Section 179 for qualified equipment and >6,000‑lb vehicles can allow first‑year expensing (facts and limits apply).
• You generally can’t double‑dip; pick the right lever per asset.

Action: Build an asset roadmap; verify placed‑in‑service dates; coordinate elections in your return.

---

7) Credits that move the needle (especially R&D)

• Qualifying process, software, or systems work can generate credits that offset income (and sometimes payroll) tax.
• Success depends on documentation—time tracking, SOWs, repos, and narratives.

Action: Run a credit screening; stand up lightweight project documentation now.

---

8) Family employment & income shifting

• Hire spouse/kids for real work at reasonable pay; shift income into lower‑tax buckets.
• With the right structure, younger workers’ wages may avoid FICA, and funds can seed a Roth IRA, education savings, or long‑term investing.

Action: Define duties, rate, and timesheets. Pay by check/payroll; keep a personnel file.

---

9) Health strategies (HSAs & HRAs/QSEHRA)

• QSEHRA/ICHRA can reimburse individual policies pre‑tax (plan rules/notice requirements apply).
• HSAs: deductible in, tax‑free growth, tax‑free out for qualified medical expenses. Coordinate with plan design and payroll.

Action: Ask your broker/PEO which structure fits headcount and budget; set payroll codes and documentation.

---

10) Charitable planning & timing

• Use DAFs, appreciated stock, and timing against high‑profit quarters.
• Pair giving with bracket/QBI/PTET planning so gifts produce the most deduction where it matters.

Action: Draft a giving calendar; pre‑fund DAFs in strong years; keep receipts and acknowledgment letters.

---

Implementation checklist (HavenStone quick start)

• Re‑run entity & compensation study; minute your “reasonable comp.”
• Adopt Accountable Plan; start monthly reimbursements.
• Model retirement stacking (401(k)+PS+cash balance) with a TPA.
• Align QBI with payroll/profit targets; monitor quarterly.
• Decide on PTET and confirm multi‑state apportionment.
• Build a fixed‑asset plan; choose bonus/§179/cost seg per asset.
• Screen for credits (R&D, etc.); set up simple documentation.
• Stand up family employment with job descriptions and timesheets.
• Implement HSA/HRA/QSEHRA with plan docs and payroll codes.
• Draft a charitable timing plan (DAF/appreciated stock) for high‑profit periods.

Tools: Deadlines & estimates → Tax Playbook & Estimator.

---

What to do next

Simple start: Pick two moves (Accountable Plan + compensation tune‑up) and implement this week.
Next step: Map your retirement, asset, and state strategy for the year.
Full service: Book a free strategy session. We’ll configure your structure, install the monthly cadence, and quantify your savings.

---