Smart Deductions And Accountability Plans For Small Business Owners

As A Business Owner, What Can I Do Now To Save On My Taxes?

Tax bills don’t shrink by accident—they shrink with timing, structure, and clean documentation. We sat down with CFP Jason Taylor to map out the moves business owners can still make right now, plus the habits that keep more profit in your pocket all year.

We start with the mindset shift: taxes are a year‑round project. Jason explains why accountability plans are the simplest way to capture gray-area costs like mileage, cell phone, internet, software, and education without crossing lines. Then we tackle entity choice. If you’re a sole proprietor or default LLC, every dollar of profit faces self-employment tax; with an S‑corp election, a reasonable salary bears payroll taxes while remaining profit may avoid them. The clock matters—file by March 15 to have it count for this year—and the math must support payroll, admin, and compliance.

Retirement planning becomes a surgical tool once you know your effective tax rate. We compare SEP IRA, Solo 401(k), and when a defined benefit plan might make sense for high, steady profits. Jason breaks down the reality of deferral: you’re shifting tax to later, not erasing it, but the current‑year savings and compounding can be powerful. From there, we demystify the home office deduction with practical documentation tips and a reminder that the simplified method exists for those who want fewer records with a capped write‑off.

Finally, we scan the policy horizon. Expect pressure on mileage methods and shrinking meals deductions while entertainment remains off the table. That means cleaner logs, careful purpose notes, and a monthly reconciliation routine to avoid leaving money behind. Whether you’re solo or building a team, you’ll leave with a checklist to tighten records, choose the right entity, fund the right plan, and avoid the common traps that trigger overpayment.

If this helped you think differently about taxes, follow the show, share it with a fellow owner, and leave a quick review. Want to put these ideas to work? Visit online and grab the app to keep your planner in your pocket.

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Transcript

Welcome And Show Setup

SPEAKER_01 0:03

Welcome to My Pocket FP, the podcast where your wallet finally meets its financial planner and they actually get along. Join your host Jason Taylor, certified financial planner, money sensei, and your guide to financial freedom. Whether you're planning for retirement or just trying to figure out where all your money went last weekend, we've got you covered. Get ready to take control of your financial life with smart tips, surprising insights, and yes, an app that fits right in your pocket. This is My Pocket FP, because your future deserves more than guesswork.

SPEAKER_02 0:46

Small strategic moves throughout the year can make a big difference when tax season rolls around. And welcome back, everyone. I'm Julie Schwenzer, co-host and producer in the studio with Jason Taylor, certified financial planner and creator of My Pocket FP. Jason, we're really excited to talk to you about a subject that might not be as exciting to deal with.

SPEAKER_00 1:12

Thank you, Julie.

Business Owner Advantages In The Code

SPEAKER_02 1:13

Yeah, we're thank you. So today's question as a business owner, what can I do now to save on my taxes? And for the audience listening, we are recording this in close to mid-February.

SPEAKER_00 1:26

Yeah, so people always say the tax laws, you know, favor the rich. And it really comes down to the tax laws favor business owners. And they do have a lot of things that you can benefit from as a business owner when it comes to different tax laws. Now, the important thing is one is to get started early in the year. Um, there's not a lot of things you can do retroactively for for last year currently. You can do retirement plans and things like that, but most of it's going to be things in the beginning of the year to plan for the current year.

SPEAKER_02 2:01

And what are some of the most commonly overlooked deductions that business owners miss in your experience?

SPEAKER_00 2:09

It's a lot of the gray area stuff, like their you know, personal cell phone that they use for business. Some supplies they use are mostly for business, but it's easier just to buy it when you're buying your groceries. It's good to have one one way of getting around this is having a reimbursement plan or an accountability plan for your business. It's something that's often it's not very spelled out very well for the IRS, but it's a reimbursement plan for your employees. And as a business owner, you are an employee of yourself if you're incorporated. So you can have, you know, like reimbursement for a cell phone, reimbursement for uh mileage, you can even do reimbursement for educational or even student loans.

Entity Choice And Social Security Tax

SPEAKER_02 2:52

And I had a question too about your business structured choice. If you're a sole proprietor or you are an LLC and you only have independent contractors and nobody on payroll that is a W-2, is it harder to get deductions? Does that make a difference than if you do have employees on payroll?

SPEAKER_00 3:12

Not really. The same deductions are available for you know all different entities. The main benefit for entity selection is based on uh the Social Security tax, um that you're taxed on 100% of your profit uh with an LLC or a store proprietorship.

Retirement Plans And Effective Tax Rates

SPEAKER_02 3:28

Oh, nice. And then what about other contributions like retirement? How does that help lower a business owner's taxable income?

SPEAKER_00 3:35

As we talked in prior podcasts, it's important to know your effective tax rate. I mean, where a retirement plan comes into play is you can get your taxes down the road by doing a retirement plan. Um, so it's it's a deferred tax, not a necessarily a full tax savings. So you put$10,000 into a retirement plan and your effective tax rate is 20%, you save$2,000 in the current year. However, then when you take it back out or distribute it from your retirement plan, you will owe taxes at that time.

SPEAKER_02 4:09

And then if you're using a home office, any key pointers about what we can qualify and how to document things properly so you know we don't get in trouble later. If anyone gets that bad word, audited.

SPEAKER_00 4:23

It's funny that we just had a client yesterday where we talked about what great detail he goes into. And he actually had printed off the floor plan of his house room by room. It was a full blueprint of his house, and he had highlighted the designated space for the business. And so it was extremely easy to measure what percentage you could write off as far as a home office.

SPEAKER_02 4:51

Do those rules or uh guidelines change quite a bit with the IRS, or is there anything that's more steady over the years that you know doesn't change that people don't have to keep checking up on what's the new latest thing? What can I deduct or can't deduct?

Simplified Home Office Option

SPEAKER_00 5:04

The government loves tweaking things. Um, even like with the home office, they now have a simplified home office, um, which will like give you$1,500 basically you can write off on a home office with just basic information, not going into deep detail.

SPEAKER_02 5:21

Yeah, now it's interesting because as this podcast comes on air and is streamed, there's still time for people, small business owners. What do we do? March 15th for their deadline. There's still time to to fix some things and look in uh the bookkeeping records. Can we go back to that question about other details that maybe could be missed just to see if maybe maybe we can save somebody?

Capture Mixed-Use Expenses And Mileage

SPEAKER_00 5:45

Yeah, all right. Um, yeah, as far as you know things missed, you know, a good thing to do is just look at all the different expenses that go into your business and make sure that your business is writing the expenses for all of it. The big things that go into is you know, mileage people forget, cell phone people forget. Really reaching out for those expenses that could possibly be both personal and business. Um, a lot of people forget to put those on.

SPEAKER_02 6:13

Yeah, and I I'm sure you love this, but and I know you've stressed this before, just staying organized and keeping your records up to date month to month at the least. Is that what you recommend? I mean, I it would be a dream, right?

SPEAKER_00 6:25

If we did it weekly, but yeah, I mean, step one is always to you know keep them separate, your personal and your business. Um, it's just at the end that you kind of look into see, you know, hey, maybe this this personal expense was business as well. Uh, you know, like a road trip I took to see grandma, but I had a client that I visited as well. Um, is kind of one of those grayer points where you can use it.

SPEAKER_02 6:48

And do you work closely with accountants, or do you ever get referrals from accountants or like maybe you you need to help this, you know, this guy or this lady because she needs some help going forward?

SPEAKER_00 7:00

Yeah, there are some uh bookkeepers and accountants that don't do tax planning. Um, so we do a lot of that forward thinking, and we do have some referrals come in for that, yes.

S‑Corp Election Timing And Benefits

SPEAKER_02 7:09

And any other recommendations for how people can reduce their tax burden going forward? And I know that's a really broad question, but maybe it goes back to what we were talking about, what people miss.

SPEAKER_00 7:21

Um, and and one of those things is actually turning your company into an S-corporation. Now, of course, it's case by case, so this isn't you know flat advice. Um, but that needs to be done before March 15th to count for this year.

SPEAKER_02 7:36

Oh, that's interesting. And the S-corp, that an LLC could actually change their structure to get taxed like an S-corp. Is that correct without changing the actual structure?

SPEAKER_00 7:48

Yes, that's true.

Sole Proprietors And Payroll Considerations

SPEAKER_02 7:50

Is um any advice for the sole proprietors that are doing everything on their own and maybe don't have employees or they don't have uh independent contractors?

SPEAKER_00 8:00

It's always good to look into you know how much you make to see if it is still beneficial to be an ass corporation, even without employees. Um it's like I said, it could save you with the Social Security tax as far as your profit being taxed.

SPEAKER_02 8:17

And anything that we can look forward to do you think uh for 2026, the coming year, that um we might need to look at things could be changing in terms of guidelines. Or does does the IRS even come out with those things yet? Or do we get a nice prize later?

SPEAKER_00 8:34

Yeah, they well, they do both, unfortunately. Um, but yeah, you know, business-wise, one of the big things is are kind of changing the way they do mileage for uh corporations and businesses, uh where they want you to do more actual expense over mileage. Um, and they're also continually taking away meals. Um, they took away entertainment a couple years back, and now they're you know taking meals away from businesses as well. So that's something to watch out for.

SPEAKER_02 8:58

Oh, that's a great tip. Because I mean that that's always part of expenses, it seems, especially for salespeople or on the road.

SPEAKER_00 9:06

Exactly. So the limited amount you can do on that.

SPEAKER_02 9:09

Yeah, salespeople aren't gonna be. I mean, among many people who have to travel, they're not gonna be happy about that one.

SPEAKER_00 9:15

Exactly.

SPEAKER_02 9:16

Okay, well, uh Jason, thank you so much. It's always um a pleasure to talk to you and get all this great insight. It really helps us.

SPEAKER_00 9:23

Thank you, Julie.

SPEAKER_01 9:28

Thanks for tuning in to My Pocket FP, where we believe small monthly changes can make big positive changes in your financial end game. If you're ready to level up your money game, head over to mypocketfp.com and download the app today. Your financial planner is now officially pocket sized and doesn't charge by the hour. Until next time, keep your goals high, your debt low, and your pockets smart.