Tax Planning Strategies Business Owners Can Use Now
Many business owners complain about their tax bills after tax season. The problem is that by the time the return is being prepared, many planning opportunities have already passed.
In this episode of Financially Fit Business, I talk with Mike Milligan, CFP®, founder of 1 OAK Financial, about why tax planning should happen before the year is over, not after the fact.
Mike works with CPAs and their clients to look at legal ways to reduce taxes through better structure, planning, documentation, and timing. His point is simple: tax preparation records what already happened. Tax planning helps business owners make better decisions while there is still time to act.
Why Tax Planning Matters Before Year-End
Business owners are busy running their companies. They are solving problems, serving customers, managing teams, and trying to grow. Taxes may not be top of mind until the bill arrives.
That is why this conversation is especially helpful for CPAs, advisors, and business owners. Mike explains that summer can be a good time to revisit tax planning conversations, especially with clients who were frustrated by their recent tax bills.
Instead of waiting until January, February, or March to look backward, advisors can help clients look forward and ask better questions now.
Tax Preparation Is Not the Same as Tax Planning
Mike uses a simple toothpaste analogy in this episode. Once toothpaste is squeezed out of the tube, you cannot put it back. The same is true with many business decisions during the year.
If a business owner spends money, buys equipment, travels, entertains, changes structure, or makes other financial decisions without planning, the CPA may only be able to explain the tax impact after the fact.
Planning gives the advisor and business owner a chance to make those decisions more intentionally.
Tax Planning Ideas Discussed in This Episode
Mike and I talk about several areas business owners and their advisors may want to consider, including:
- Business entity structure
- S corporation payroll planning
- Geographic tax considerations
- The Augusta Rule
- Section 179 deductions
- Solar credits and commercial applications
- Software credits
- Active real estate and Airbnb-related strategies
These are not one-size-fits-all solutions. They require proper planning, documentation, and coordination with the right professionals. But they are examples of why proactive conversations matter.
Helping CPAs Create Stronger Client Relationships
Mike also explains how financial planners and CPAs can work together without replacing the CPA’s role. In his view, the CPA remains at the center of the relationship, while the planning partner helps identify opportunities and keep clients more organized.
That type of collaboration can help CPAs provide more advisory value, create stickier relationships, and help business-owner clients make better financial decisions throughout the year.
Choose One Thing to Implement
As always, choose one thing you discovered in this episode and implement it in your business.
Better planning helps you make more money, have more free time, and give back.
Frequently Asked Questions
What is the difference between tax planning and tax preparation?
Tax preparation looks backward and reports what already happened. Tax planning looks forward and helps business owners make better decisions before the year is over.
When should business owners start tax planning?
Business owners should start tax planning as early in the year as possible. Waiting until tax season often limits the options available.
Why should CPAs talk to clients about tax planning during the summer?
Summer can be a good time to talk with clients who were frustrated by their tax bills and still have time to make changes before year-end.
What are examples of tax planning strategies for business owners?
Examples discussed in this episode include business structure, S corporation payroll planning, the Augusta Rule, Section 179 deductions, solar credits, software credits, and real estate-related strategies.
How can financial planners and CPAs work together?
A financial planner can help identify planning opportunities, organize client conversations, and support the CPA while keeping the CPA at the center of the client relationship.