Tax Reduction Strategies for Business Owners
Do your clients ever complain that their taxes are too high?
I’ll bet most of them do. And right after tax season, many are thinking the same thing: “I don’t want to pay that much again next year.”
That’s why I invited Alex Sentell, CEPA and Managing Director for One Atlanta Tax Solutions, to join me on this episode of the Financially Fit Business Podcast.
Alex and his team work with high-income and high-net-worth business owners and individuals. They don’t replace the client’s CPA. They work alongside the CPA to look at more advanced tax strategies that may help reduce future tax bills.
Start the Tax Planning Conversation Now
One of the biggest takeaways from this conversation is simple: don’t wait until tax season.
By the time your client is filing their return, many planning opportunities for the prior year are already gone. If you want to help a client reduce their tax bill, the planning generally needs to happen during that tax year.
This is the perfect time of year to talk with clients who were unhappy about how much they paid in taxes.
You might say something like:
“You mentioned that your tax bill was higher than you wanted. Would you like to look at some options now so we can see whether there’s anything we can do before year-end?”
I can’t imagine many business owners saying no to that conversation.
A Tax Strategy Using Tiny Homes
One of the strategies Alex talked about is called “Box House.” It involves tiny homes, but not the kind you put next to your pool.
These tiny homes are used for disaster relief housing. They’re designed to be stored, moved, and deployed quickly after hurricanes, fires, earthquakes, or other disasters. Alex explained that they can be kept in shipping containers and then set up quickly when people need temporary housing.
From the tax side, Alex explained that these units may be treated as equipment rather than real estate. That distinction matters because it may allow for Section 179 and bonus depreciation treatment, depending on the client’s situation.
Alex shared an example where a $100,000 investment could reduce adjusted gross income by $500,000 and may also create cash flow from rental contracts.
That’s the kind of conversation that gets a business owner’s attention.
A Charitable Deduction Strategy
The second strategy Alex shared was a charitable deduction strategy.
Most people understand a simple charitable deduction. If you donate $1,000 to a charity, you may get a $1,000 deduction.
Alex described a different structure where a client may be able to purchase certain products at wholesale, donate them at fair market value, and create a larger deduction than the original purchase amount.
In this example, the donated products are musculoskeletal pain management devices. They’re intended to help high school athletes, college athletes, and people in nursing homes manage pain without relying only on pharmaceutical options.
Alex also explained that charitable strategies are generally limited to 60% of adjusted gross income. That’s why these strategies need to be reviewed carefully before anything is recommended.
These Strategies Aren’t for Everyone
This is not cookie-cutter tax planning.
Income level matters. The client’s state matters. Existing deductions matter. Adjusted gross income matters. The client’s full financial picture matters.
That’s also why the CPA needs to be part of the conversation. Alex made it clear that his firm wants to work with the CPA and other trusted advisors, not around them.
The Practical Takeaway
If your clients complained about their tax bills this year, don’t wait until next tax season to talk about it.
Start the conversation now.
Ask whether they’d like to look at planning ideas before year-end. Then involve the right advisors, review the numbers, and see what may make sense for their situation.
Choose one client who grumbled about taxes this year. That’s your place to start.
People Also Ask
When should business owners start tax planning?
Business owners should start tax planning during the tax year, not after it’s over. If you wait until tax season, many planning options may already be gone.
What should CPAs say to clients who complain about taxes?
A simple place to start is: “You mentioned your tax bill was higher than you wanted. Would you like to look at planning ideas now so we can see what may make sense before year-end?”
Why does year-end matter for tax planning?
Many tax strategies have to be completed before December 31 to apply to that tax year. Starting earlier gives the CPA, client, and other advisors time to review the options carefully.
Are advanced tax strategies right for every business owner?
No. Income level, adjusted gross income, existing deductions, state, cash flow, and the client’s full financial picture all matter. These strategies need to be reviewed case by case.
Why should the CPA stay involved in advanced tax planning?
The CPA understands the client’s tax picture and can help evaluate whether a strategy fits. The best approach is for outside specialists to work alongside the CPA, not replace them.