Small business taxes will be different in 2025—and not just because of updated brackets and deductions.
According to a survey conducted by The Small Business & Entrepreneurship Council, 18% of respondents identified one of their top three concerns as “high taxes and expiring favorable tax provisions.”
With inflation-driven costs and ever-shifting deductions, business owners who only think about taxes at year-end are leaving serious money—and protection—on the table.
Key Takeaways
- Tax planning should be a year-round strategy, not a once-a-year task.
- Choosing the right business entity type can significantly reduce tax liabilities.
- Section 179 enables immediate deductions on qualifying business assets, saving money now.
- Contributing to retirement plans provides both immediate tax savings and long-term wealth accumulation.
- Proper documentation and professional guidance help prevent audits and ensure no deductions are missed.
What I’m Telling My Clients
You can’t afford to treat taxes like a once-a-year fire drill. If you only consider taxes in April, you’re already behind and possibly overpaying. Here are some key insights to know:
1. Entity Optimization
Consider switching to an S corporation if you earn at least $50K in annual profit and are still a sole proprietor. S-Corp status allows business owners to save significantly on self-employment taxes as long as they pay themselves a “reasonable salary.”
Tip
Use an S-Corp calculator (many are free online) to estimate your potential tax savings based on your current net income.
2. Section 179 Deduction
Section 179 allows you to deduct up to $1.25 million in qualifying business equipment instead of depreciating it over several years. That includes vehicles, technology, and even furniture or HVAC systems for office upgrades.
Make a list of large business purchases you plan to make this year. Check if they qualify under Section 179, and prioritize them before year-end.
3. Retirement Contributions
For tax shelter and wealth building, you can contribute up to $69,000 into a Solo 401(k) or SEP IRA in 2025. If you have a spouse on payroll, that can be doubled—turning a business into a powerful financial engine for your family.
Open a Solo 401(k) or SEP IRA and set up automatic monthly transfers—even $500/month builds the habit and starts the savings engine.
4. Record Keeping
QuickBooks, Keeper, or Wave can automatically track income and expenses. The goal? Audit-proof documentation and peace of mind. Review your bank and credit card statements once a month. Tag any business-related expenses you forgot to document immediately.
5. Build a Tax Calendar
Set quarterly reminders for estimated tax payments, deadlines for entity changes, and retirement contribution cutoffs. This ensures you aren’t scrambling at year-end and positions you to make strategic decisions all year.
The Bottom Line
Clients who treat taxes like a “February-to-April problem” are often overpaying and underplanning. In 2025, I’m helping clients who are business owners shift from reactive filing to strategic planning—optimizing their structure, leveraging deductions, building retirement wealth, and avoiding costly mistakes. For small business owners, proactive tax planning isn’t just about savings—it’s about sustainability, protection, and building a lasting legacy.
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