Tax Day’s Behind You—But the Scramble Doesn’t Have to Be Your Norm

Scrambling Isn’t a Strategy

Tax Day has passed. Maybe you breathed a sigh of relief… or maybe you were one of the many business owners scrambling at the last minute—digging for deductions, rushing paperwork to your CPA, and wondering how your tax bill ended up so high.

If that sounds familiar, you’re not alone—and more importantly, it doesn’t have to be that way next year.

Being reactive when it comes to taxes is exhausting and expensive. Good tax outcomes aren’t created in April—they’re the result of decisions made steadily, intentionally, and months in advance.

So if you were caught off guard this time around, use that as your sign to get proactive now. Here are three places to start.

1. Entity Election

If your business had more than $100,000 in profit last year and you’re still filing as a sole proprietor, you could be leaving tens of thousands of dollars on the table—every year.

This isn’t rare. I recently started working with two clients, each with over $500,000 in business income, who were still operating as sole proprietors. No LLC. No S-corp election. No tax efficiency.

If that’s you, it’s time to seriously consider setting up an LLC and electing to be taxed as an S-corporation. Why? Because S-corps allow you to split your income between reasonable salary (subject to payroll and self-employment tax) and distributions (not subject to self-employment tax). That split alone can create thousands in savings annually.

It also comes with added liability protection and the ability to optimize benefits like retirement contributions and health insurance deductions. Yes, it introduces more paperwork and possibly payroll costs—but once your profits hit six figures, the math typically works in your favor.

2. QBID Planning

The Qualified Business Income Deduction (QBID) is a major tax break for pass-through entities—but most business owners barely know it exists, and many tax preparers don’t go deep enough to help clients optimize for it.

QBID allows eligible business owners to deduct up to 20% of their qualified business income. Sounds simple, but the actual calculation gets tricky.

If your business isn’t considered a Specified Service Trade or Business (SSTB)—which excludes professions like law, consulting, and medicine—and your taxable income exceeds $394,600 (married filing jointly, 2025), the deduction becomes limited by either:

• 50% of W-2 wages paid by the business, or

• 25% of W-2 wages plus 2.5% of qualified property.

This means blindly minimizing your W-2 salary to save on self-employment tax can kill your QBID. You need to strike a balance between salary and distributions to maximize both the S-corp benefit and the QBI deduction.

Planning matters here—because a last-minute scramble in April won’t give you the time or strategy to thread this needle properly.

3. Retirement Plans

Tax planning isn’t just about lowering this year’s bill—it should support your long-term financial independence.

One of the most effective ways to do that? Use retirement plans to reduce taxable income while building wealth. But choosing the right plan for your business structure is key—not all retirement plans are built the same, and the wrong one could cost you more than it saves.

Let’s break down the major options:

Solo 401(k):

The most powerful option for business owners with no employees (other than a spouse).

• Up to $70,000 in total contributions for 2025—and even more if you’re over age 50

• Contributions come from both employee deferrals and employer match

• If your spouse is on payroll, you can double household contributions

• Allows for Roth and after-tax contributions, enabling Mega Backdoor Roth IRA strategies

• High flexibility and ideal for long-term, tax-advantaged growth

SEP IRA:

A simple plan that works for solo operators—but gets expensive fast with employees.

• Employer-only contributions up to 25% of compensation, capped at $70,000 in 2025

• If you have employees, you must contribute the same percentage for everyone

• No Roth option or employee deferrals

• Easy setup, but limited flexibility over time

SIMPLE IRA:

Low-cost retirement option for businesses with up to 100 employees—but with trade-offs.

• Employee deferrals up to $16,500 in 2025—catch-up contributions available if over age 50

• Mandatory employer match (up to 3%) or 2% nonelective contribution

• No Roth or after-tax contributions

• No profit sharing or plan customization

• Easy to outgrow—often limits long-term savings potential

Traditional 401(k):

Best for businesses with employees who want to offer a scalable, high-impact benefit.

• Employee deferrals up to $23,500 in 2025—plus catch-up contributions if over age 50

• Optional employer matching and profit sharing

• Roth contributions and safe harbor features available

• Customizable plan design (vesting, eligibility, etc.)

• Easier to set up than it used to be—especially with the right financial team

The key is choosing the right plan before the year is over, not trying to rush contributions during tax season.

Tax Planning Isn’t a One-Day Event

If April 15 felt like chaos, now is the time to ask yourself: what would it look like to go into next tax season with a real plan?

Tax planning isn’t just about deductions—it’s about structure, strategy, and consistency. And it doesn’t happen in a vacuum.

Your CPA is likely focused on getting hundreds of returns out the door, not deep-diving into proactive strategy during crunch time. If you want better results, you need to start now.

Look at your entity structure. Run QBID scenarios. Choose the right retirement plan. Small changes made today can save you thousands next spring.

Don’t be surprised next April—start now.