Mid-Year Tax Planning Checklist for Small Business Owners

Most business owners wait until December to think about tax planning.

That’s a problem.

By the time year-end rolls around, many of the best tax-saving opportunities are already gone. Payroll mistakes may be locked in. Bookkeeping errors may have caused missed deductions. Retirement strategies may be rushed. Cash flow may be tight. And instead of making smart, proactive decisions, you’re left trying to do damage control.

Tax planning shouldn’t be treated like a year-end fire drill.

Mid-year is one of the best times to review your tax situation because you have two things working in your favor: real business data and time.

You have enough of the year behind you to see how your business is performing, and you still have enough of the year ahead of you to make changes, fix mistakes, and implement tax-saving strategies correctly.

A mid-year tax checkup doesn’t need to be complicated.

The goal is simple: understand where your business stands today, where it’s likely headed by year-end, and what you need to do before December to avoid surprises and potentially lower your tax bill.

Let’s walk through the key areas every small business owner should review.

 

Why Mid-Year Is the Best Time to Review Your Tax Strategy

Mid-year is a sweet spot for tax planning because you are no longer working with guesses, but you are not out of time either.

At the beginning of the year, you may have goals, projections, and ideas for where the business is headed. But you usually do not have much real data yet. By the end of the year, you have more data, but you may not have enough time to act on it.

Mid-year gives you both.

You can review income, expenses, profit, bookkeeping, payroll, entity structure, retirement options, and tax strategies while there’s still time to make adjustments. That timing matters because tax planning isn’t only about knowing what strategies exist. It’s about implementing them before the window closes.

If you wait until December, you may still have options. But you’ll likely have fewer of them.

That’s why a mid-year tax checkup is so valuable. It helps you look at where you’ve been, where you’re going, and what needs to happen before year-end.

 

 Step 1: Estimate Your Current Tax Situation

Before you choose tax strategies, you need to know where your business stands.

Start by reviewing your year-to-date income, expenses, and profit. Then compare those numbers to what you expected at the beginning of the year. Are you ahead of your projections? Behind? More profitable than expected? Lower than expected?

These answers matter because your tax strategy should be based on where your business is actually going, not where you hoped it would be back in January.

Once you know where you are today, project what the rest of the year may look like. This gives you a clearer picture of your potential tax liability.

The key question is:

If I do no more tax planning this year, what tax bill am I currently on track for?

That number gives you visibility. It also gives you motivation. Once you know what your tax bill may look like, you can start reviewing what strategies may help lower it before the year is over.

You should also review your estimated taxes during this step. Estimated tax payments should reflect what your business is actually doing, not a guess you made months ago. If your income is higher than expected, your payments may need to increase. If you plan to implement strategies that lower taxable income, that may also affect your estimates.

A few questions to ask during this review:

• Are you on track with your expected income?
• Has your profit increased or decreased?
• What tax bill are you currently on track for if you do no more planning?
• Are your estimated tax payments still accurate?
• Will planned tax strategies lower your taxable income later in the year?

This step is not about getting the number perfect. It’s about getting visibility. When you know where your business stands now, you can make better decisions before year-end instead of guessing in December.

 

Step 2: Grade Your Tax Planning Progress

After you estimate your current tax situation, take an honest look at your tax planning progress.

Have you actually implemented anything yet?

Many business owners spend time learning about tax strategies, but never put them into action. Learning is helpful, but it doesn’t lower your tax bill by itself. The savings usually come from implementation, documentation, and follow-through.

Think of this like a simple grading system.

If you haven’t reviewed your tax situation at all, you need to get started. If you’ve been learning about tax strategies but haven’t implemented anything, you’re making progress, but there’s still work to do. If you’ve started implementing strategies, you’re in a much stronger position. And if you’re implementing strategies, tracking them, documenting them, and reviewing them throughout the year, you’re where you want to be.

This isn’t about perfection. It’s about visibility and progress.

The goal is to know where you stand now so you can keep improving before year-end. If you’re behind, mid-year gives you time to catch up. If you’re already ahead, mid-year gives you time to make sure everything is being used properly.

 

Step 3: Clean Up Your Bookkeeping Before It Becomes a Bigger Problem

Bad bookkeeping destroys tax strategy.

If your numbers are wrong, you can’t accurately estimate your income, project your tax liability, or know which deductions you may have missed. That makes every tax decision harder because you’re planning from bad information.

Mid-year is the right time to clean up your books before small problems turn into a year-end mess. Waiting until December usually makes the process more stressful, and it increases the chances that important expenses get missed, misclassified, or forgotten altogether.

Your bookkeeping review should include more than simply checking whether your books are “done.” You want to make sure they’re accurate and useful. Clean books should help you understand how the business is performing, what deductions you’ve already captured, and what still needs attention before year-end.

During this review, look for:

• Missing transactions
• Personal expenses mixed into the business
• Business expenses paid personally
• Uncategorized expenses
• Misclassified expenses
• Missed deductions
• Loan payments recorded incorrectly
• Payroll recording errors
• Reimbursements that were never handled properly

Many business owners find thousands of dollars in deductions simply because they cleaned up their books before year-end. They did not spend more money. They tracked things correctly.

Good bookkeeping gives you the foundation for better tax planning. Without it, every tax decision becomes a guess.

 

Step 4: Review Your Entity Structure

Your business today may look different than it did in January.

Maybe your income is higher than expected. Maybe profit has increased. Maybe you started a new business. Maybe you added partners. Maybe you still don’t have an LLC set up. Maybe you’re operating as a sole proprietor when another structure may fit better.

Your entity structure should match where your business is now, not where it was when you first started.

Mid-year is a good time to review this because you still have time to make adjustments before year-end. If your business has grown, your current structure may no longer be the most tax-efficient option. If your profit is increasing, it may be time to review whether an S corporation election makes sense.

There is no one-size-fits-all number, but if your business profit is reaching around $50,000 to $60,000 or more, it may be worth running the analysis.

That doesn’t mean every business should become an S corporation. It means you should review whether your current setup still fits your income, profit, tax strategy, payroll needs, and compliance responsibilities.

If you have multiple businesses or multiple partners, your structure may need a deeper review. The way your entities are organized can affect taxes, liability protection, payroll, distributions, and long-term planning.

Mid-year gives you time to clean that up before year-end instead of discovering the issue too late.

 

 If You’re an S Corporation Owner

If you already have an S corporation, mid-year is the time to review your reasonable salary.

S corporation owners are required to take a reasonable salary. That means you should compare your salary, business profit, distributions, and projected year-end income to see whether your current payroll still makes sense.

If your salary is too low, you may need to increase it before year-end. If your salary is higher than necessary based on profit, you may need to review whether adjustments make sense for the rest of the year.

This is not something you want to ignore until December.

S corporation owners should also review whether they have an accountable plan in place. An accountable plan allows the business to reimburse you for qualifying business use of personal expenses.

Examples may include:

• Home office
• Cell phone
• Internet
• Automobile use
• Other business expenses paid personally

This is an area many S corporation owners miss. If you’re paying for business-related expenses personally and never reimbursing yourself correctly, you may be leaving deductions on the table.

 

Step 5: Review Retirement Contribution Opportunities

Too many business owners wait until the end of the year to think about retirement contributions.

By then, cash may be gone, deadlines may be close, and the strategy may be rushed. Mid-year gives you more time to review your options, understand what fits your business, and plan your cash flow before year-end.

Retirement planning is not only about saving for the future. For business owners, it can also be a current-year tax strategy.

Start by asking whether you already have a retirement plan set up. If you do, is it still the right plan for your business? If you do not, should you be looking at one now?

You also need to think through how much you want to contribute as the owner and whether you want to support retirement benefits for employees. A solo business owner may have different options than a business owner with a full team.

Common retirement plan options may include:

• SEP IRA
• Solo 401(k)
• Safe harbor 401(k)
• Traditional 401(k)
• Cash balance plan

Other employer contribution strategies

The right plan depends on your income, contribution goals, employee situation, cash flow, and tax strategy.

The earlier you review retirement planning, the more time you have to choose the right structure, prepare contributions, and avoid rushed decisions.

 

Step 6: Analyze Big Purchases Before You Make Them

Buying something only for the tax write-off is not a strategy.

It is one of the most common mistakes business owners make near the end of the year. They get to October, November, or December and start rushing into equipment, vehicle, or major asset purchases because someone told them to “buy something before year-end.”

That can create a deduction. But it can also create bad business decisions.

A tax deduction does not make the purchase free. If you spend money on a vehicle, equipment, or another major asset your business does not actually need, you may lower taxable income, but you still spent cash.

Mid-year gives you time to evaluate big purchases before you feel rushed. Instead of waiting until December and scrambling to buy something, you can look at your actual business needs, your cash flow, your projected income, and the timing of the deduction.

Before making a major purchase, ask:

• Do I actually need this for the business?
• Should I buy it this year or next year?
• Should I finance it or pay cash?
• Will income be higher this year or next year?
• Will bonus depreciation help me in the right year?
• Does this purchase support the business, or am I only doing it for the tax break?

This is where timing matters. If this is a lower-income year but next year is expected to be much higher, it may not make sense to force a deduction into the current year. On the other hand, if this year is highly profitable and the asset is truly needed, it may be worth reviewing whether the purchase fits into your larger tax strategy.

The point is not to avoid business purchases. The point is to make them intentionally.

 

Step 7: Look for Missed Tax Strategies While There’s Still Time

Mid-year is where proactive tax planning shines.

You still have time to review strategies, implement them correctly, and document them before year-end. That’s a major advantage because many tax strategies do not work well when they are rushed at the last minute.

Depending on your business, you may want to review strategies like:

• Hiring your kids
• Using the Augusta Rule
• Setting up an accountable plan
• Claiming home office reimbursements
• Tracking automobile use
• Reviewing retirement plan options
• Deducting self-employed health insurance correctly
• Considering an HRA if you have high medical expenses
• Timing income and expenses strategically
• Reviewing advanced strategies for higher-income business owners

The right strategies depend on your business, income, entity structure, family situation, and documentation.

For Example:

Hiring your kids may be a valuable strategy when done properly. But the work needs to be legitimate, the pay needs to be reasonable, and the documentation needs to be clean.

The Augusta Rule may be helpful in certain situations, but you need a legitimate business purpose, a reasonable rental rate, and proper records.

An accountable plan can help S corporation owners reimburse themselves for business use of personal expenses, but it needs to be set up and followed correctly.

The key is not only knowing these strategies exist. The key is choosing the right ones for your business and implementing them correctly before year-end.

 

Review Strategies You’ve Already Implemented

If you already have tax strategies in place, don’t assume you’re done.

Mid-year is also a time to review whether you’re getting the full benefit from the strategies you already implemented. A strategy may be technically in place, but still underused.

For example, maybe you hired your kids, but you’re not tracking hours or job duties well. Maybe you have an accountable plan, but you’re not submitting reimbursements consistently. Maybe you have a retirement plan, but you haven’t reviewed contribution goals based on current profit.

This is where a mid-year checkup can help you tighten everything up.

Ask yourself:

• Am I getting the full benefit?
• Is my documentation complete?
• Am I tracking everything correctly?
• Do I need to adjust anything based on current income?
• Is the strategy still working the way it should?

Implementation is not the finish line. You need to review, track, and adjust throughout the year.

Mid-year gives you time to fix weak spots before they become bigger problems at year-end.

 

Why Correct Implementation Matters

Correct implementation matters more than many business owners realize.

It’s one thing to hear about a tax strategy. It’s another thing to implement it properly. Rushed tax planning can create messy documentation, unclear records, and unnecessary risk.

Clean tax planning gives you a better system.

You know what strategies you’re using. You know why they apply. You know how they’re documented. You know where the records are. And if the IRS ever questions something, you’re not scrambling to recreate everything later.

That’s one of the biggest benefits of starting before December.

You have time to do things the right way.

The goal isn’t only to save taxes. The goal is to legally reduce taxes with clean implementation and clear documentation.

 

The Real Cost of Waiting Until Year-End

Waiting until December usually leads to one of three problems.

• You miss opportunities.
• You rush implementation.
• You react instead of plan.

Reactive tax planning is usually more expensive because it limits your options. When you wait too long, you may be forced to make quick decisions. You may miss deadlines. You may buy things you do not need. You may skip strategies that require more setup. You may find bookkeeping problems too late. You may discover your estimated tax payments were too low.

That’s why tax planning shouldn’t be treated as a December activity.

The businesses that win with taxes are not always the ones making the most money. They are often the ones planning earlier.

 

Final Thoughts: Tax Planning Isn’t a December Activity

A mid-year tax checkup can help you avoid surprises, improve cash flow, and potentially save thousands before the year is over.

Start by reviewing where your business stands today. Look at your income, projected tax liability, estimated tax payments, bookkeeping, entity structure, retirement plan options, major purchases, and missed tax strategies.

Then take action while there’s still time.

Tax planning is not about scrambling at year-end and hoping something works. It’s about making smart decisions early enough to implement them correctly.

The earlier you start, the more options you usually have.

Need help finding more ways to legally reduce your tax bill?

 

Get the Free Tax Savings Starter Kit Built for Small Business Owners:
https://www.taxsavingspodcast.com/starterkit

Ready for a proactive tax strategy? Book your free demo call today:
https://taxelm.com/demo/

 

Frequently Asked Questions: Mid-Year Tax Planning for Small Business Owners

What is mid-year tax planning?

Mid-year tax planning is a tax checkup done around the middle of the year to review your income, expenses, estimated taxes, bookkeeping, entity structure, retirement contributions, and available tax strategies.

The goal is to see where your business stands now, project where it may end the year, and make tax-saving decisions while there is still time to act.

Why is mid-year tax planning important for small business owners?

Mid-year tax planning is important because it gives business owners both real financial data and enough time to make changes before year-end.

If you wait until December, some tax-saving opportunities may already be gone. Payroll decisions may be harder to fix, bookkeeping mistakes may have caused missed deductions, and retirement strategies may be rushed.

A mid-year review helps you plan instead of react.

When should small business owners start tax planning?

Small business owners should start tax planning as early as possible, but mid-year is one of the best times to do a deeper review.

By mid-year, you usually have enough income and expense data to estimate your tax situation. You also still have several months left to implement strategies, fix mistakes, adjust estimated taxes, and plan major business decisions.

What should be included in a mid-year tax planning checklist?

A mid-year tax planning checklist should include:

• Reviewing year-to-date income
• Projecting year-end profit
• Estimating your tax liability
• Checking estimated tax payments
• Cleaning up bookkeeping
• Reviewing business deductions
• Evaluating entity structure
• Checking S corporation salary and distributions
• Reviewing retirement plan opportunities
• Planning major purchases
• Looking for missed tax strategies
• Reviewing documentation and implementation

The goal is to understand your current tax situation and identify what needs to be fixed before year-end.

How do I estimate my small business tax liability mid-year?

Start by reviewing your year-to-date income, expenses, and profit. Then project what the rest of the year may look like based on your current business performance.

From there, you can estimate what your taxable income may be and compare that to your estimated tax payments.

The key question is: if you do no more tax planning this year, what tax bill are you currently on track for?

Why does bookkeeping matter for tax planning?

Bookkeeping matters because you cannot create a clear tax plan if your numbers are wrong.

Bad bookkeeping can lead to missed deductions, inaccurate income projections, miscategorized expenses, payroll errors, and surprise tax bills.

Clean bookkeeping helps you understand your real profit, estimate taxes more accurately, and find deductions you may have missed.

Should I review my entity structure mid-year?

Yes. Mid-year is a good time to review whether your current business structure still makes sense.

Your business may have changed since the beginning of the year. You may have more profit, new partners, multiple businesses, or a higher income level than expected.

If your business profit is increasing, it may be time to review whether an LLC, S corporation, or another structure makes sense for your tax strategy.

Should I become an S corporation for tax savings?

An S corporation may help some business owners save on self-employment taxes, but it is not the right fit for every business.

If your business profit is around $50,000 to $60,000 or more, it may be worth reviewing whether an S corp election makes sense. You also need to consider payroll, reasonable salary, compliance costs, and whether the tax savings outweigh the added requirements.

What should S corporation owners review mid-year?

S corporation owners should review their reasonable salary, business profit, distributions, payroll setup, and accountable plan.

If your salary is too low, too high, or no longer aligned with your business performance, you may need to make adjustments before year-end.

You should also review whether you are properly reimbursing yourself for business use of personal expenses, such as home office, cell phone, internet, and automobile use.

Can retirement contributions reduce business taxes?

Yes, certain retirement contributions may reduce taxable income for business owners.

The right retirement plan depends on your income, employee situation, contribution goals, and tax strategy. Options may include a SEP IRA, solo 401(k), safe harbor 401(k), traditional 401(k), or cash balance plan.

Mid-year is a good time to review this because some retirement plans take time to set up and fund properly.

Should I buy equipment or a vehicle for the tax write-off?

You should not buy equipment, a vehicle, or any major business asset only for the tax write-off.

A deduction can reduce taxable income, but it does not make the purchase free. Before making a large purchase, review whether you actually need it, whether this year or next year makes more sense, whether you should finance it or pay cash, and whether the tax benefit fits your larger plan.

What tax strategies should business owners review before year-end?

Business owners may want to review strategies like hiring their kids, using the Augusta Rule, setting up an accountable plan, reviewing home office reimbursements, tracking automobile expenses, deducting health insurance correctly, setting up retirement contributions, timing income and expenses, and exploring advanced strategies for higher-income businesses.

The right strategies depend on your business, income, entity structure, family situation, and documentation.

Why is correct implementation important for tax strategies?

Correct implementation matters because tax strategies need proper documentation, timing, and execution.

It is not enough to know a strategy exists. You need to apply it correctly, keep records, and make sure it fits your business situation.

When tax planning is rushed at year-end, mistakes are more likely. Mid-year planning gives you time to implement strategies cleanly.

What happens if I wait until December to do tax planning?

If you wait until December, you may still have options, but you will likely have fewer of them.

Waiting too long can lead to missed opportunities, rushed implementation, poor documentation, surprise tax bills, and reactive decisions.

Tax planning works best when you start early enough to make strategic moves before deadlines and year-end limitations get in the way.

How can a mid-year tax checkup help my business?

A mid-year tax checkup can help you avoid surprise tax bills, improve cash flow, catch bookkeeping problems, review deductions, adjust estimated taxes, choose better tax strategies, and plan major purchases before year-end.

It gives you a clearer picture of where your business stands and what steps you need to take before December.

 

Episode Transcript

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Mid-Year Tax Planning Checklist for Small Business Owners

Most business owners treat tax planning like a fire drill in December, and that’s exactly why they miss opportunities.

By the time year-end rolls around, many of the biggest tax-saving moves are already off the table. Payroll mistakes may be locked in. Missed deductions may be buried in bad bookkeeping. Retirement strategies may become rushed. Cash flow gets tighter. And instead of strategically lowering taxes, business owners are left hoping for damage control.

In today’s episode, I’m walking you through how to run a simple mid-year tax checkup on your own business. This is the same type of review smart business owners use to potentially save thousands before it’s too late.

So let’s talk about why mid-year is such a sweet spot for tax planning.

The reason I love mid-year tax planning is simple. We have data to work with, and we still have time to implement strategies.

At mid-year, we have about half a year’s worth of data to review. We can see how the business is doing so far. Is income up? Is income down? Are you where you expected to be? What can you reasonably expect for the rest of the year?

We also still have time on our side. There’s still part of the year left to implement tax strategies, clean things up, and make proactive decisions.

If you haven’t started tax planning yet, you want to get ahead of it now. You still have time, but only if you start.

That’s why a mid-year tax checkup is so valuable. It helps you look at where you’ve been, where you’re going, and what you need to accomplish before December.

If you wait until December to start planning, you’re going to miss out on a lot of opportunities.

Step 1: Estimate Your Current Tax Situation

The first step in a mid-year tax checkup is to estimate your current tax situation.

Start by understanding where your income is. Have you hit the income numbers you expected? Are you way up? Are you way down?

Then think about how your business structure, tax strategy, and planning should adjust based on where your business is today.

You also want to understand your potential tax liability. Once you know where your income is for the first half of the year, you can project where you may be by the end of the year.

From there, you can ask a simple question: if I do no more tax planning, what tax bill am I currently stuck with?

That number gives you visibility. It also gives you motivation.

Once you see the potential tax bill, you can start asking what strategies may help reduce it. You can begin knocking out tax-saving opportunities while you still have time.

This is also where estimated taxes come in.

You want to make sure you understand your estimated tax payments. Are you making estimated tax payments? Are you paying the right amount based on how your business is performing?

You also need to consider the tax strategies you plan to implement. If you haven’t implemented a strategy yet, but you expect it to lower your taxable income, your estimated payments may need to account for that.

The goal is to avoid a surprise tax bill. You don’t want to get to tax season and suddenly realize you owe far more than expected.

Take time now to understand where you stand.

Grade Your Tax Planning Progress

One thing I tell business owners to do is grade their tax planning.

Are you an A, B, C, D, or F?

Start by asking: what have I actually done for tax strategy this year?

If you’re only learning tax strategies but haven’t implemented anything yet, I’d say you’re probably around a C.

If you’ve learned some strategies and started implementing them, but you haven’t completed everything yet, now you may be closer to a B or an A.

If you’ve started the process, understand what strategies are available, and have begun implementation, you’re in a much better position.

The goal is to understand where you are and then either improve or maintain that progress.

If you’re already at an A, great. Stay there.

If you’re at a C, D, or F because you haven’t looked at tax planning yet, now is the time to improve. Do another checkup a month from now. Ask whether you’ve made progress. Then check again the next month.

This is not about perfection. It’s about visibility. You need to know where you are and where you’re going.

Step 2: Review Your Bookkeeping Before It Becomes a Disaster

The next step is to review your bookkeeping before it becomes a disaster.

Here’s the truth: bad bookkeeping destroys tax strategy.

You can’t plan proactively if your numbers are wrong.

Mid-year is the perfect time to review your books and look for issues like missing transactions, personal expenses mixed into the business, uncategorized expenses, missed deductions, unreimbursed business expenses paid personally, loans recorded incorrectly, or payroll recording errors.

Your bookkeeping is the foundation of good tax planning.

We regularly see business owners find thousands of dollars in deductions simply because their books were cleaned up before year-end. Not because they spent more money, but because they finally tracked things correctly.

You should also grade your bookkeeping.

Is it up to date?

Are you actually using it?

If your bookkeeping is up to date, that’s good. You may be in the B range.

But if you’re using your bookkeeping to understand your business, make better decisions, and support tax planning, now you’re moving into the A range.

If you haven’t touched your bookkeeping yet for 2026, go back and do it now. Get on top of it. You’ll thank yourself later, and it can help you pay less in taxes.

Step 3: Review Your Entity Structure

The next step is reviewing your entity structure.

Once you know where your business stands and where your income is likely headed, you want to make sure you’re operating in the most tax-efficient structure for the rest of the year.

If you’re an S corporation owner, mid-year is the time to review your reasonable salary, profit, and distributions.

As an S corporation owner, you’re required to take a reasonable salary. You need to understand whether that salary is where it should be.

If it is, great. Continue with the plan.

If your salary is too high, you may want to adjust for the rest of the year.

If it’s too low, you may need to increase payroll before year-end.

Do a reasonable salary analysis to see where you are now and where you should be by the end of the year.

If you’re not an S corporation, ask whether you should be.

If your business profit is around $50,000 to $60,000 or more, it may be time to review whether an S corporation election makes sense.

Maybe you don’t even have an LLC set up yet, but your business is starting to profit more than you expected back in January. If that’s the case, you may want to get an LLC set up so you have the structure in place when an S corporation election makes sense.

Mid-year is a great time to do an entity structure review.

If you have multiple businesses, review whether your structure still makes sense. You may need a parent company or S corporation structure that owns your interests in other entities.

If you have multiple partners, review whether that setup is structured correctly. In some cases, a partnership with S corporations owning each partner’s individual shares may make sense.

The key is to take time now to review your entity structure and clean it up before year-end.

If you’re an S corporation owner, make sure your reasonable salary is accurate. Make sure you’re doing things correctly. Make sure you’re using an accountable plan to reimburse yourself for business use of personal expenses, such as your cell phone, home office, or automobile.

If you’re not an S corporation, revisit whether it makes sense. If you have multiple businesses or multiple partners, analyze whether your current setup is still the right one.

Step 4: Review Retirement Contribution Opportunities

The next step is to review retirement contribution opportunities.

Too many business owners wait too long to think about retirement contributions. By the time they start thinking about it, it may be too late, the cash may already be gone, or they may have moved on to something else.

Mid-year is a great time to review retirement planning.

What retirement structure do you have set up now?

Do you have a SEP IRA, solo 401(k), safe harbor 401(k), traditional 401(k), or another plan?

Is your current retirement plan the right one?

Do you have anything set up at all?

Now is the time to start looking into what the right retirement plan may look like.

When it comes to retirement planning for business owners, the question usually comes down to how much you want to put away for yourself as the owner and how much you want to support employees with their retirement opportunities.

There are employer contribution strategies, cash balance plans, and several other structures that may be available depending on your business.

Mid-year is a good time to get a handle on this because many retirement accounts need to be set up within certain deadlines. You want to know the plan now so you can prepare properly.

Tax Savings Starter Kit

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It’s called our Tax Savings Starter Kit, and it’s completely free.

Inside, you’ll get our small business tax deduction guide, real examples of business owners we’ve worked with and helped save $5,000, $10,000, $25,000 or more, and a tax strategy checklist you can actually use.

You’ll also get access to a free discovery call with our team.

Go grab it now at taxsavingspodcast.com/starterkit.

Step 5: Analyze Big Purchases Before You Make Them

The next step is analyzing big purchases before you make them.

Many business owners start thinking about large purchases at the end of the year. It’s October, November, or December 28th, and they decide to buy a truck or a new piece of equipment because they heard they need a write-off.

The problem is that they’re rushing. They may not price things correctly. They may be thinking only about taxes and not about whether the purchase actually makes sense for the business.

Too many people buy equipment in December because someone said, “Go buy something for the write-off.”

That’s a terrible strategy.

I never advise anyone to buy something they don’t need just for a tax write-off. That is not the strategy.

Instead, mid-year is the time to evaluate the purchase.

Do you actually need to buy equipment?

Should you finance it or pay cash?

Should you buy it this year or next year?

Will bonus depreciation help you?

Will income be higher this year or next year?

All of these questions help determine the best time to make a major purchase.

Maybe this is a lower-income year, but next year you have a large contract coming in. If that’s the case, do you really want to buy something to lower income in a lower-income year? Or would it make more sense to push that purchase into a higher-income year?

That’s the kind of planning we want to do.

If you’re in construction or another industry with vehicles, equipment, or other major assets, review where you are now. Decide whether this year makes sense for upgrades or additions.

If not, don’t buy something just for a tax strategy.

But if you know you’ll need a new piece of equipment this year, mid-year gives you time to analyze the purchase. You can look for deals, review timing, and plan around whether prices may be higher in August, December, or another time of year.

Step 6: Look for Missed Tax Strategies While There’s Still Time

The next thing to review is missed tax strategies.

There’s still time. We’re at mid-year, and time is still on our side, but it’s slowly dwindling. Every day that passes is one less day available for tax planning.

Mid-year is where proactive tax planning shines.

This is when you still have time to implement strategies like hiring your kids.

Have you looked at that? Have you started hiring your kids in the business?

If you have kids over age seven and under age 18, there may be opportunities for them to do legitimate work in your business. You may not be paying them tens of thousands of dollars, but there may be real tasks they can do.

If you have kids over age 18, maybe in college, look for legitimate ways they can help the business too.

Many business owners support their kids in one way or another. If they can do legitimate work in the business, you may be able to turn some after-tax spending into pre-tax spending.

You should also review the Augusta Rule.

Have you heard of it? Have you set it up? Have you been holding regular board meetings for your business where it may make sense to rent your home instead of a co-working space or hotel boardroom?

If you’re an S corporation or C corporation owner, do you have a properly set up accountable plan?

Are you taking advantage of home office reimbursements?

Are you tracking automobile use?

Do you have a retirement plan set up?

Is your health insurance being handled correctly?

If you’re paying self-employed health insurance premiums, are those premiums being paid correctly?

If you have high out-of-pocket medical expenses, should you review whether a health reimbursement arrangement, or HRA, may help create a business deduction?

There’s also planning around timing income and expenses. Are you being strategic about when income comes in and when expenses are paid?

These are all things business owners can review now.

Mid-year is the time to look at the tax strategies available to you and understand where you stand.

Step 7: Review Strategies You’ve Already Implemented

When I talk to business owners at this time of year, we’re often reviewing the tax strategies they already have in place.

Maybe they say, “Yes, I’m hiring my kids. Yes, I’m taking the home office. Yes, I have retirement set up. Yes, I have health insurance handled correctly.”

That’s great.

But now we need to analyze those strategies.

Are you taking advantage of them to the fullest extent?

Are you getting the most benefit out of each strategy?

If you’re hiring your kids, are you getting the full reasonable benefit from that strategy?

It’s not only about implementing a strategy. It’s about revisiting it and making sure you’re using it in the most tax-efficient way possible.

If you’re in a higher income range, maybe $300,000, $400,000, $500,000 or more in household income, you may also need to look at advanced tax strategies.

Once you’ve handled the core strategies, you may still have a large amount of income left. That’s when it may be time to look at more advanced planning opportunities to help offset income.

If you try to do this in December, you’re rushing.

If you do it now, you have time to implement things correctly.

Why Correct Implementation Matters

Correct implementation matters more than many business owners realize.

It’s not enough to implement a tax strategy. You need to implement it correctly.

That’s what helps you sleep at night.

If you ever get a letter from the IRS saying you’ve been audited, correct implementation means you don’t need to panic because your documentation and process are clean.

When you wait until December, tax planning can turn into a pile of rushed strategies. You take one strategy here, another strategy there, crumple everything together, and hope it works.

That’s not the goal.

When you plan now, you can organize each strategy properly. You can document it. You can put everything in place and keep your records clean.

That is where tax planning becomes much more effective.

The Real Cost of Waiting Until December

Here’s the hard truth.

Waiting until year-end usually means one of three things.

Number one, you missed opportunities.

Number two, you rushed implementation.

Number three, you’re reacting instead of planning.

Reactive tax planning is almost always more expensive.

The businesses that win with taxes are not necessarily the ones that make the most money. They’re the ones that plan earlier.

Take this time to do a mid-year tax checkup.

Where are you from an income standpoint?

Where are you from a tax strategy standpoint?

Start now.

Learn, Implement, and Get Support

There are many ways to learn tax strategies.

You can listen to the Small Business Tax Savings Podcast. You can read the Small Business Tax Savings Handbook. You can watch Small Business Tax Savings TV, where we talk through different tax strategies for business owners.

There’s a lot of free content available to help you learn.

But after you learn the strategies, it’s time to implement them.

You can implement them on your own, or you can get help from a team that works alongside you.

If you want access to a team you can reach out to whenever you have tax-related questions, check out TaxElm.

The key is to start now. Learn the tax strategies, implement them, and make sure they’re implemented correctly.

At TaxElm, we help small business owners go from start to finish with the actual implementation of tax strategies.

Final Takeaway: Tax Planning Is Not a December Activity

If there’s one takeaway from today, it’s this: tax planning is not a December activity.

Although a lot of tax planning gets done in December, that doesn’t mean it’s the right way to do it.

Many business owners wait until the last minute, and because of that, they miss opportunities.

Some business owners come in December, and we can only implement one out of 15 strategies because we’re constrained by time.

They feel the pain. They understand they waited too long. Then, at the beginning of the next year, they’re ready to track things, implement strategies, and stay on top of tax planning all year.

But right now, it’s not December yet.

You can get on top of it now.

Use this as your wake-up call.

The best tax-saving opportunities happen when you still have time to make decisions, fix mistakes, and move strategically.

A simple mid-year tax checkup can help you avoid surprises, improve your cash flow, and potentially save thousands in taxes before the year is over.

If you want help figuring out what opportunities you may be missing, head over to TaxElm.com or click the link in the description for a free discovery call with our team.

We help business owners legally reduce taxes every single day, and the earlier you start planning, the more opportunities you usually have.

If this episode helped you, make sure to subscribe, leave a review, and share it with another business owner who probably thinks tax planning starts in December.

Thanks for tuning in, and I’ll see you on the next one.

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