We’ve built a solid foundation over three weeks—establishing good practices, avoiding mistakes, and using financial data strategically. Now let’s address what keeps many business owners up at night: taxes.

Tax season doesn’t have to be stressful. The businesses that dread April treat tax preparation as a last-minute sprint. If you’ve been following along, you’re already ahead. Now let’s turn that advantage into real savings and peace of mind.

Tax Preparation vs. Tax Strategy

Tax preparation reports what already happened. Tax strategy proactively structures your business to minimize tax liability throughout the year.

Should you purchase equipment in December or January? How should you structure contractor payments? Is it time for S-corp election? These decisions can save thousands, but only if you think about them proactively.

Maximizing Deductions Without Crossing Lines

I regularly find legitimate business expenses that haven’t been properly documented, representing thousands in lost savings.

The home office deduction is commonly skipped due to audit fears, yet if you have dedicated space used regularly and exclusively for business, you’re entitled. The simplified option—$5 per square foot up to 300 square feet—requires minimal documentation.

Vehicle expenses are another missed opportunity. Track every business mile with a simple app. The deduction adds up quickly.

Professional development is often overlooked. Books, courses, conferences, coaching, memberships—if they maintain or improve business skills, they’re deductible.

The key is documentation. Save receipts, maintain logs, keep records of business purposes. The deduction is straightforward; documentation protects you if questions arise.

Getting Audit-Ready

Being audit-ready isn’t about having less to deduct—it’s about proper documentation for what you do deduct.

Create a simple system now: photograph every receipt and store digitally with notes about business purpose. Every business meal includes who you met and what you discussed. Every trip has an itinerary and documentation of business activities.

A dedicated cloud folder organized by month and category works perfectly. The habit takes minutes but provides invaluable protection.

Quarterly Estimated Taxes: Stop Playing Catch-Up

Don’t guess at what you might owe—calculate based on actual performance. Look at year-to-date profit, estimate where you’ll finish, and calculate likely tax liability including self-employment tax.

Set aside money immediately. Open a separate savings account for tax payments and transfer funds with every client payment. When quarterly deadlines arrive, the money is waiting. No scrambling, no penalties.

Strategic Timing of Income and Expenses

Cash-basis businesses can control timing of when income and expenses hit the books. This becomes especially relevant at year-end.

If you’re having a profitable year and expect lower income next year, delay December invoicing until January. Conversely, if you expect higher income next year, push to collect outstanding receivables before December 31st.

On expenses, timing major purchases can significantly impact tax liability. Section 179 deduction and bonus depreciation allow businesses to deduct the full cost of qualifying equipment in the purchase year rather than depreciating over several years.

Critical caveat: never make decisions solely for tax reasons. Buy equipment because you need it. Tax benefits should factor into timing, not be the sole driver.

Retirement Contributions: The Overlooked Strategy

Retirement contributions reduce tax liability while building long-term wealth. SEP IRAs, Solo 401(k)s, and other options allow you to contribute substantial amounts that directly reduce your tax bill.

For 2026, a SEP IRA allows up to 25% of compensation, with higher limits through Solo 401(k) structures. The deadline for most contributions is your tax filing deadline including extensions, giving you flexibility.

Building a Relationship with a Tax Professional

Even with impeccable books, there’s immense value in working with a qualified tax professional who understands your business and industry.

Schedule a mid-year check-in to review year-to-date performance, discuss major changes, and make necessary adjustments to estimated payments or strategy. This single conversation can save thousands and prevent April surprises.

Your Tax Preparation Timeline

• Throughout the year: maintain clean books and save all documentation
• By September: mid-year check-in with tax advisor
• In November: review projected income and identify year-end tax moves
• By December 15th: finalize strategic purchases
• Early January: gather all year-end documents
• By mid-February: get information to your tax preparer

Your Action Plan This Week

First, review the deductions discussed. Are you capturing all legitimate expenses? Set up needed systems—mileage tracking, receipt organization, documentation processes.

Second, calculate your estimated tax obligation based on current performance. If you’re behind on setting money aside, start now.

Third, schedule that mid-year check-in with your tax advisor, or start asking for referrals if you don’t have one.

Finally, take a moment to appreciate your progress. If you’ve implemented even half of what we’ve discussed over these four weeks, your business is in a fundamentally stronger position.

The businesses that thrive aren’t always the ones with the most innovative products—they’re often simply the ones that understand their numbers and manage finances with intention. That can be you.

Here’s to a profitable 2026 and the most stress-free tax season you’ve ever experienced.

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About the Author:

Joe Herskowitz, EA, is the President and CEO of Lionstone Bookkeeping+, where he helps small and medium-sized businesses take control of their finances with expert bookkeeping and financial insights. With years of experience in business finance, Joe is passionate about making numbers work for business owners—not against them.

Have a bookkeeping or business finance question?

Reach out to Joe at [email protected] or call/text 732-803-7793 (no WhatsApp).