Tax Planning for Entrepreneurs: 7 Can’t-Miss Opportunities

As an entrepreneur, building wealth isn’t just about what you make: it’s about what you keep after taxes. 

At thousands of pages long, the U.S. Tax Code is extremely complex. Within those pages, there are plenty of opportunities for entrepreneurs and small business owners to streamline their own tax burden. The key to taking advantage of those? A strategic approach to tax planning for entrepreneurs that maximizes the after-tax dollars you’re able to pull in from your business. 

In this guide, we’ll explore seven can’t-miss opportunities for entrepreneurs. Some are relatively simple. You may have already heard of them, or even made use of them. Others are more complex, requiring a more sophisticated approach to tax planning led by experienced tax professionals. 

At Revonary, our team works closely with a wide range of entrepreneurs representing businesses of all shapes and sizes. No matter your business, we take a personalized approach to understanding your financial situation and helping you build and implement tax strategies that accelerate your wealth accumulation journey. Want to learn more about our tax planning services? Set up a consultation today. 

The Value of Proactive Tax Planning

For entrepreneurs to make the most of the tax planning opportunities available to them, a proactive approach is crucial. By the time the Spring rolls around and you’re working with your accountant on the previous year’s tax return, it’ll be too late to make the moves that could have substantially reduced your tax burden just a few months earlier. Proactive tax planning gives you the ability to take full advantage of deductions, credits, and other tax-saving strategies. 

Taking a proactive approach to tax planning doesn’t just help you keep your options open: it also prepares you for what’s coming and protects you from nasty surprises. Perhaps you had a successful year and blew all of your projections out of the water. That’s fantastic news, but you should know that you’ll likely face some additional taxes. By understanding that, you can avoid unwelcome surprises come filing season and ensure your business remains financially resilient.

And with tax laws potentially set to change in a meaningful way in 2025, ensuring your strategy takes advantage of the latest tax regulations is also important. The right approach ensures you stay compliant with changing tax regulations while maximizing your tax planning opportunities, ultimately keeping more money in your pocket. 

There’s no question that there are plenty of benefits to taking a more proactive, organized approach toward tax planning, but what does that look like in practice? Let’s take a look at some of the most effective tax planning strategies for entrepreneurs. 

7 Tax Planning Opportunities for Small Business Owners

Entrepreneurs face unique challenges when it comes to tax planning, but with the right approach and a skilled advisor, business owners can turn these challenges into opportunities. 

Below, we outline several tax planning strategies designed to help small business owners optimize their financial outcomes and stay ahead of their tax obligations.

1. Accelerate or Defer Income and Expenses

One of the most effective ways to manage taxable income is by strategically accelerating or deferring your business’s income and expenses. As an entrepreneur, you’re uniquely well-placed to do this. 

If you’re having a high-income year, consider deferring some of your income—such as delaying client billing until the next year. This allows you to spread taxable income more evenly across years and potentially stay in a lower tax bracket. Conversely, if your revenue is lower than usual and you expect to have a better year next year, you may want to accelerate income by invoicing clients sooner or collecting payments early to increase cash flow.

Take a similar approach to your business’s expenses. If you’ve had a strong year, consider making large purchases and paying employee bonuses before year-end so that you can deduct these expenses in a high revenue year and reduce your taxable income. Equally, if you expect next year’s tax liability to be higher, deferring expenses until then can be beneficial as it allows you to offset higher income.

2. Review Your Retirement Strategy & Contributions

Maximizing contributions to retirement accounts is a win-win strategy. Options like SEP IRAs, SIMPLE IRAs, or 401(k) plans not only help you save for the future but also offer immediate tax advantages. Contributions to these plans are tax-deductible, reducing your taxable income for the current year.

Businesses with one owner and no employees benefit from the opportunity to direct large portions of their income towards retirement contributions, since they can contribute to plans such as Solo 401(k) plans as both an employer and an employee. Depending on your income, it’s possible to contribute as much as $70,000 annually to these plans––and self-employed individuals over the age of 50 can contribute even more. 

Entrepreneurs with employees have plenty of options too. Establishing a retirement plan can enhance employee retention and satisfaction. Consider whether to set up matching contributions or whether you should opt for profit-sharing arrangements to maximize both tax benefits and workforce morale. Cash balance plans are a good fit for entrepreneurs with high levels of business income and few employees. Selecting the most appropriate plan can be a complex decision, and it’s important to evaluate the best path for your business with a trusted tax professional. 

Dive Deeper: Don’t Have a Tax-Favored Retirement Plan? Set One Up Now

3. Pass-Through Entity Taxes

For business owners operating as pass-through entities, such as S corporations and partnerships (but not sole proprietorships), state-specific pass-through entity tax (PTET) elections can offer significant tax savings. Some states, including New York, allow businesses to pay state taxes at the entity level, which can circumvent the $10,000 cap on state and local tax (SALT) deductions for federal purposes.

This approach tends to be beneficial for higher-income earners in states with high income tax rates, as it effectively restores the deductibility of state taxes for federal purposes. However, it’s not always as clear-cut as this, and it’s important for business owners to consult a tax advisor to determine if their state offers PTET elections and how to optimize these benefits for their situation. Every state is different. In New York, for instance, you must file a PTET election by March 15, 2025, to be eligible for PTET in the 2025 tax year. 

4. Qualified Business Income (QBI) Deduction

The Qualified Business Income (QBI) deduction offers a significant tax-saving opportunity for pass-through entity owners, such as sole proprietors, S corporation shareholders, and partners. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income, reducing their overall taxable income.

However, the QBI deduction comes with limitations based on income levels and the type of business. For higher-income taxpayers, the deduction may phase out unless the business meets certain criteria. Entrepreneurs in Specified Service Trades or Businesses, including healthcare, law, and consulting, may also face limitations on claiming the deduction if their income is above certain thresholds. 

Entrepreneurs must also weigh the trade-offs of taking the QBI deduction versus maximizing retirement contributions. While both strategies reduce taxable income, they serve different financial goals—the QBI deduction offers immediate tax relief, while retirement contributions build long-term wealth. Consulting with a tax advisor can help you balance these options and align them with your overall financial strategy.

5. Take Advantage of Depreciation Deductions

Certain purchases, like equipment or vehicles, may qualify for accelerated depreciation under tax provisions such as Section 179 or bonus depreciation rules. Section 179 allows you to deduct the full purchase price of qualifying assets immediately, rather than spreading the deduction over several years. This is especially beneficial for entrepreneurs investing in significant upgrades: for instance, a local plumbing business upgrading its fleet of trucks. 

Bonus depreciation, on the other hand, enables businesses to deduct a large percentage of the cost of eligible assets in the year they are placed in service. In 2025, this percentage will drop to 40%, but there’s a decent chance it will be restored to 100% by new tax legislation, enabling entrepreneurs to deduct the entire cost of eligible assets in the year they’re placed in service. 

6. Leverage Tax Credits

Tax deductions are great, but they only offset your taxable income: not your tax liability. Tax credits, on the other hand, are often more valuable because they directly reduce your tax liability, dollar for dollar. There are many tax credits that might benefit entrepreneurs, including:

• Research and Development (R&D) Tax Credit: Ideal for businesses investing in innovation, product development, or process improvements. It’s important to note this credit isn’t limited to cutting-edge, high-tech companies: it’s available for all kinds of companies. 
  
  
• Work Opportunity Tax Credit (WOTC): Available for hiring individuals from certain target groups who face significant barriers to employment, such as veterans and long-term unemployed individuals.
  
  
• Energy Efficiency Incentives: Credits for installing energy-efficient systems or renewable energy sources in your business.
  
  
• Small Employer Pension Plan Startup Costs Credit: businesses that establish a new retirement plan (like a SEP, SIMPLE IRA, or 401(k)), may claim a credit for up to 50% of the setup and administrative costs, capped at $5,000 per year for the first three years.

Many states offer additional credits beyond these. New York, for instance, has many credits, such as the Excelsior Jobs Program Tax Credit and the New York State Investment Tax Credit. Research these credits thoroughly or consult a tax professional to ensure you’re not leaving money on the table.

7. Proactively Plan Your Tax Strategy with Your CPA

A year-end meeting with your tax advisor is crucial for identifying additional opportunities specific to your business. During this review, typically held during the summer or the fall, you’ll review how your business is tracking for the year and discuss the tax strategies you might put in place to reduce your tax liability.

A good tax professional will help you adjust your strategy accordingly, ensuring you take full advantage of available deductions, credits, and deferral opportunities. There will likely be trade-offs to make, so don’t hesitate to ask your tax advisor to model out different scenarios to determine the most appropriate strategy for you. 

Learn More: Do You Need an End of Year Check In with Your Tax Advisor?

Take a More Effective Approach to Tax Planning for Entrepreneurs with Revonary

Tax planning isn’t just about compliance; it’s about strategy. By taking a proactive approach, you can align your financial goals with tax-saving opportunities, leaving more resources to invest in your business, build your wealth, or take care of your family. 

If you’re ready to take a more sophisticated approach to your 2025 tax planning, now is the time to act. Reach out to Revonary today to start a conversation with one of our professionals about your tax strategy. 

Our team of experts stays ahead of evolving tax regulations to help you maximize savings and achieve your financial goals. Don’t wait until the deadlines are looming—contact us now and start building a smarter plan for your business’s future.