Taxes are both a cost and a controllable variable. With a clear rhythm—quarterly check-ins, the right elections, and good records—you can legally pay less, smooth cash flow, and stay audit-ready. Use this game-plan as your year-round playbook.
1) Set your rhythm (the 4×4 cadence)
Every quarter (4×/year):
- Close books (bank/credit card recs, AR/AP, inventory update).
- Update tax projection (federal/state + self-employment/payroll).
- Adjust estimates/withholding based on YTD profit.
- Review comp & capex (reasonable salary, Sec. 179/bonus timing).
Once per year (Q4):
- Year-end “board meeting” (even if it’s just you): document big decisions, plan timing moves, prep 1099 list, and charitable strategy.
2) Choose (or revisit) the right entity
Your structure drives how profits are taxed and how you pay yourself.
- LLC/Sole Prop: Simple; all profit subject to income tax and generally SE tax.
- S-Corp (or LLC taxed as S-Corp): Split reasonable salary (payroll tax) + distributions (not subject to SE tax). Often lowers total tax but requires payroll discipline.
- C-Corp: Flat corporate rate; double-taxed on dividends. Useful for retained earnings, benefits strategies, or specific exits.
Play: Model last 12 months under current vs. S-Corp vs. C-Corp and pick the winner for 2025–2026.
3) Make owner pay tax-smart (S-Corp focus)
- Set a documented reasonable salary (role/time/industry data).
- Adopt an accountable plan to reimburse home office, internet, phone, mileage, etc.
- Consider QSEHRA/ICHRA or a small-group plan for health benefits.
Play: Write a one-page “reasonable comp” memo and an accountable-plan policy; keep in your corporate file.
4) Keep books clean (audit-ready)
- Cash vs. accrual: choose deliberately; accrual if inventory/long projects.
- Chart of accounts: separate revenue streams; COGS vs. operating.
- Receipts: use an app; note business purpose & attendees (meals).
- Inventory: at least annual count; recognize shrink/obsolete stock.
Play: Implement a monthly close checklist—no month closes without reconciliations.
5) Capture deductions & credits you’re owed
- Section 179 & bonus depreciation: match purchases to profit outlook.
- Home office: exclusive & regular use (or simplified method).
- Vehicle: track business miles; choose actual vs. standard once per year.
- Start-up/organization costs: elect proper first-year treatment.
- R&D credit: prototyping/software/process improvements may qualify.
- State PTE tax election: may bypass SALT cap (state rules vary).
Play: Maintain a live CapEx list (date, cost, business use) to decide 179 vs. bonus at year-end.
6) Build a retirement stack (big, legal shelter)
- Solo 401(k): employee deferral + employer profit-share; Roth options common.
- SEP-IRA: simple, employer-only; pro-rata for eligible employees.
- Cash Balance/Defined Benefit: huge deductions for consistent high earners.
Play: Set your annual target by June so payroll/cash flow can support it.
7) Sales tax, payroll, and 1099s (compliance corner)
- Sales tax nexus: physical presence, employees, or economic thresholds—register before collecting.
- Payroll: timely deposits/returns; officer payroll formal for S-Corps.
- 1099-NEC/MISC: collect W-9s before paying contractors; file in January.
Play: Build a compliance calendar with due dates and owners (who does what, by when).
8) Manage cash & quarterlies like a pro
- Use a rolling 13-week cash forecast.
- Tie quarterly estimates to the YTD projection (avoid surprises/penalties).
- After a windfall, consider safe-harbor vs. true-up approach.
Play: Book a 30-minute review the week after each quarter closes.
9) Year-end plays that move the needle
- Time income/expenses: pull expenses into high-profit years; push income when appropriate.
- Gain/loss harvest in the business and coordinate with your personal return.
- Charitable bunching (e.g., Donor-Advised Fund) for deduction efficiency.
- Minutes & resolutions: entity elections, comp changes, big purchases.
Red-flag checklist (fix these first)
- Co-mingled personal/business spending
- No W-9s → late or missing 1099s
- Owners paid as contractors after electing S-Corp
- Inventory “never changes” year to year
- No documentation for meals, travel, home office
90-Day Sprint (plug-and-play)
Week 1–2:
- Pick entity for the next tax year; draft reasonable comp memo; adopt accountable plan.
Week 3–6: - Clean COA, set monthly close checklist, connect a receipt app.
Week 7–8: - Model retirement plan; choose Solo 401(k)/SEP/Cash Balance; set funding target.
Week 9–10: - Build compliance calendar; collect missing W-9s; review sales-tax nexus.
Week 11–12: - Create CapEx list; outline Q4 timing moves; schedule quarterly projection reviews.
Simple templates (copy/paste into your docs)
Accountable Plan (mini-policy)
The Company will reimburse ordinary and necessary business expenses under an accountable plan. Reimbursements require: (1) business purpose, (2) substantiation within 60 days, and (3) return of excess advances. Covered categories include home office (allocable), internet/phone (business portion), mileage or actual vehicle costs (choose one method per year), and other substantiated expenses.
Quarterly Close Checklist (core items)
- Bank/credit card reconciliations complete
- AR/AP aging reviewed & cleared
- Inventory count/adjustments (if applicable)
- CapEx list updated; depreciation plan reviewed
- Tax projection updated; estimates adjusted
Bottom line
A steady cadence plus a few high-leverage elections can cut taxes and reduce headaches. If you’re in Southern Utah, we can model entity choice, payroll mix, retirement funding, and year-end moves with your actual numbers—then keep you compliant all year. Book a quick consult and let’s keep more of what matters.
Disclaimer: This article is general information, not tax advice. Rules change and your situation is unique—seek professional guidance before acting.
