6 Best Tax Planning Strategies for Small Businesses

As tax season approaches, now is the perfect time to think proactively about reducing your tax liability for 2022 and beyond.

Tax planning isn’t just a once-a-year chore—it’s an ongoing process that can save you significant money and improve your business’s cash flow. While filing extensions might give you extra time to submit your taxes, the real savings come from planning ahead.

Here are six top strategies to help small business owners minimize taxes and maximize financial efficiency:

1. Review Your Company's Structure

Take a look at your company’s legal and tax structure. Are you a sole proprietor, an LLC, an S-Corp, a partnership, or a C-Corp?

The best structure for your business may change as your business grows or ownership shifts. Regularly reviewing this with your CPA ensures you stay in the most tax-efficient position.

2. Examine Your Business Retirement Plan

Contributing to a retirement plan is one of the most effective ways for small business owners to lower taxes. Options range from a SEP IRA or Solo 401(k) to a 401(k) paired with a defined-benefit pension plan.

It’s simple: paying into your own retirement account is more beneficial than paying extra taxes. High-revenue small businesses can potentially defer hundreds of thousands in taxes by taking advantage of these plans.

3. Check If You Qualify for the Home Office Deduction

If you work from home, the home office deduction may be available to you. This deduction can save you hundreds or even thousands of dollars annually.

Many business owners avoid this deduction, fearing it might raise red flags—but when claimed correctly, it’s a legitimate and valuable benefit. If you run your business from home, make sure to claim all applicable expenses.

4. Take Advantage of First-Year Bonus Depreciation

Normally, the IRS spreads deductions for business property over several years. However, thanks to the Tax Cuts and Jobs Act, eligible used or new property placed in service in 2021 qualifies for 100% first-year bonus depreciation.

This means you may be able to deduct the full cost of new business assets in the year you purchase them, giving you immediate tax savings.

5. Plan Ahead for Potential Tax Changes in 2022

While tax law changes may or may not happen, it’s wise to be prepared. Higher-income business owners should stay alert to potential shifts in tax rates or deductions.

Even without new legislation, existing changes from the Tax Cuts and Jobs Act are scheduled to continue through 2025. Staying informed ensures you can take full advantage of all available tax incentives.

6. Take Charge of Your Tax Planning

Timing matters. Strategic planning of income and deductions can significantly affect your total tax burden. For pass-through entities like LLCs, S-Corps, or partnerships, business profits and deductions pass through to your personal return.

By deferring income or accelerating deductions when appropriate, you can optimize your tax situation, improve cash flow, and give yourself more flexibility in managing payments. Working with your CPA throughout the year allows for smart, proactive decisions rather than last-minute scrambling.

Final Thoughts: Tax Planning Strategies in 2022

Many small business owners wait until the last minute to handle taxes, missing opportunities for savings. But ongoing tax planning—monthly reviews and quarterly CPA consultations—can maximize deductions, credits, and incentives legally available to you.

To make tax planning simple and stress-free, Today CFO offers free consultations to help you discover the right strategy for your business. Don’t wait—take control of your taxes and your cash flow today!