As a small business owner or self-employed individual, small business tax deductions can keep tax season from bringing unpleasant surprises—like a bigger tax bill than expected. But the good news? With proactive planning and smart tax strategies, you can significantly reduce your tax burden and keep more of your hard-earned money.

This guide will walk you through essential tax-saving tips, including how to maximize deductions, leverage tax credits, and choose the best tax structure for your business. Plus, you’ll discover powerful financial tools that make tax planning easier than ever.

📌 Bonus: Want a simple way to uncover more tax savings? Download my FREE Tax Savings Guide and make sure you’re not leaving money on the table!

1. Maximize Business Deductions

One of the simplest ways to lower your tax bill is to take full advantage of business deductions. Many small business owners miss out on key deductions because they don’t track business expenses properly or assume certain costs don’t qualify.

Commonly Overlooked Business Deductions:

✅ Phone & Internet Bills: If you use your personal phone or internet for business, you can deduct a portion based on business use.

👀✅ Home Office Deduction: If you work from home, you can write off a percentage of your rent, mortgage, utilities, and maintenance costs.

✅ Business Meals & Travel: Client lunches, networking events, and travel expenses can be deductible if they are directly related to your business.

💡 Pro Tip: Keeping accurate records is crucial for maximizing deductions! My Profit & Loss (P&L) Dashboard helps business owners track income and expenses effortlessly.

Grab it here → Profit and Loss Template and Dashboard

2. Take Advantage of Tax Credits

Unlike deductions, which reduce your taxable income, tax credits lower your tax bill dollar for dollar—making them even more valuable!

Common Tax Credits for Small Businesses:

👩🏽‍💻 Employer 401(k) Matching Credit: If you offer a retirement plan, part of your contributions may qualify for a tax credit.
💵 Health Insurance Credits: If you provide health insurance for employees, you may be eligible for tax incentives.
💡 Energy Efficiency Credits: Upgrading office equipment or installing energy-efficient systems can earn you a tax break.

🚨 Many business owners miss out on these credits because they aren’t advertised on DIY tax software.

Consulting a CPA or tax professional ensures you claim every credit available to you.

3. Choose the Right Business Entity to Reduce Taxes

Your business structure (LLC, S Corp, etc.) determines how much tax you owe. Many small business owners overpay on self-employment taxes without realizing they have better options.

Why Consider an S-Corp?

• You pay yourself a salary, reducing self-employment taxes.
• Any additional profits aren’t subject to self-employment tax, resulting in significant savings.
• You remain eligible for business deductions and retirement contributions.

📌 Want to see if switching to an S-Corp is right for you? Check out my S-Corp Toolbox for step-by-step guidance on setting up your business correctly.

4. Hire Family Members to Shift Business Income & Save on Taxes

Did you know you can legally shift taxable income to lower brackets by hiring family members?

Benefits of Hiring Your Kids:

✔️ Pay them a salary instead of giving them an allowance (which is not tax-deductible).
⌛️ Their earnings can go into a Roth IRA, giving them decades of tax-free growth.
✔️ If they’re under 18 and you operate as a sole proprietorship or partnership, you don’t have to withhold payroll taxes (Social Security & Medicare).

💡 Want to make sure you do this the right way? My Hiring Your Kids Toolkit walks you through the legal and tax requirements to avoid IRS red flags.

Get it here → Hiring Your Kids Toolkit

5. Invest in Retirement Plans for Immediate Tax Savings

One of the smartest ways to reduce your taxable income is to invest in retirement.

Tax-Advantaged Retirement Plan Options:

📌 SEP IRA or Solo 401(k): Allows you to contribute up to 25% of your income. This lowers your tax bill significantly.
📌 Roth 401(k) Contributions: Grow tax-free, making them ideal for younger business owners.

💡 Bonus Tip: If you hire your children and contribute to their Roth IRAs, their money can grow tax-free for decades—potentially turning into millions by retirement!

Plan Ahead to Maximize Your Tax Savings

The key to reducing your tax burden is proactive planning.

Waiting until tax season to figure things out limits your options—but implementing these strategies now sets you up for maximum savings.

📌 Next Steps:
✅ Track your deductions properly with my P&L Dashboard and Template.
💡 See if switching to an S-Corp makes sense with the S-Corp Toolbox.
✅ Hire your kids the right way using my Hiring Your Kids Toolkit.
❓ Not sure where to start?

Grab my FREE Tax Savings Guide to uncover even more money-saving strategies!

Final Thoughts: Take Control of Your Tax Bill

Smart tax planning isn’t just about saving money—it’s about keeping more of what you earn and making better financial decisions for your business.

By:
✅ Maximizing deductions
💯 Claiming available tax credits
✅ Choosing the right business entity
💯 Hiring family members strategically
✅ Investing in retirement wisely

You can dramatically reduce your tax bill and set your business up for long-term success.

🚀 Don’t wait—start saving today! Download my FREE Tax Savings Guide and take control of your taxes now!

➡️ GRAB MY FREE TAX SAVINGS GUIDE

This transcript has been formatted for readability, and occasional errors, redundancies, or informal speech patterns may still appear. We appreciate your understanding.

If you’re self-employed or a small business owner and you had some major sticker shock over how much you owed in taxes this year, well, stick around because we are going to be talking all about my favorite tips to reducing your taxes so that next year is better. And I promise some of these you’ve probably never even heard of!

Jumping into the best ways to save on taxes for next year, the first thing that we want to do is maximize our deductions. That’s really important to make sure you are getting credit for all the money you spent on things related to your business.

Now, that does not mean—as I always say—to go out and spend more money just to get a deduction. That’s really not a great strategy because it lowers your overall profit. But if you’ve already paid for things, making sure those are counted as deductions is key.

For a lot of entrepreneurs and business owners, this includes things you might be paying for personally, such as:

• Your phone bill
• Your internet bill (if you work from home)

It’s important to allocate a reasonable portion of these expenses toward your business. As someone who’s self-employed, you have the benefit of writing off a percentage of these shared costs. You’ll need to calculate a fair split between personal and business use to avoid missing out on these savings.

I have other content that goes deeper into these calculations, but overall, don’t miss out on those shared expense deductions—they’re just money back in your pocket. They can make a meaningful difference in your tax bill.

Deductions vs. Tax Credits: What’s Better?

A deduction reduces your taxable income, meaning your income minus expenses equals the amount taxed. But the next tip is even better:

Tax credits are the real game-changer!

A tax credit directly reduces the amount of taxes you owe, dollar for dollar. People often confuse deductions and credits, thinking they are the same, but they are not created equal.

Here’s the difference:

• A $100 deduction reduces taxable income, which, at a 25% tax rate, saves you $25.
• A $100 tax credit reduces your tax bill by the full $100—no math involved.

Examples of Tax Credits You May Be Missing

When I recently set up a 401(k) plan for my team, I discovered several little-known tax credits that apply to business owners:

1. Employer Matching Tax Credits: Some of the employer match amounts I contribute are offset with a tax credit, making it easier to offer better matching.
2. Military Spouse Credit: If you employ a military spouse, there are additional credits available. This was a pleasant surprise for me because my COO is a military spouse.

There are also tax credits for research and development (R&D). These credits can be complicated, so you’ll want to work with an accountant to determine your eligibility and take full advantage.

Pro Tip: Many credits are meant to incentivize certain behaviors—like offering employee benefits or making energy-efficient upgrades to your office. Talk to your CPA to explore all potential tax credits.

Evaluate Your Business Structure for Tax Savings

Another important strategy is choosing the right business entity type. Depending on your situation, being an LLC or electing to be taxed as an S Corporation could save you a lot of money, especially on payroll taxes.

If you’re not sure which business structure is right for you, check out the S Corp Toolbox for help with the transition.

Shift Income by Hiring Family Members

If you’re in a high tax bracket, hiring your kids or other family members can shift income to their lower tax brackets. Here’s how this works:

1. If you hire your children, the income they earn is taxed at their lower rate—or even zero if they fall below the standard deduction limit.
2. You can open a Roth IRA for them since they’ll now have earned income, which gives them a tax-free growth advantage over time.

For example, I hire my kids, who are 7 and 10 years old, to do small jobs in my business. Even if I only contribute a few thousand dollars per year to their Roth IRAs, that money will grow into millions by the time they retire.

The best part? You can use the wages you pay them to cover things you’re already paying for, like sports fees or summer camps.

Caution: Make sure you follow all tax regulations when hiring family members to avoid issues with the IRS. Use my Hiring Your Kids Toolkit to ensure you’re compliant and have the right contracts in place.

Contribute to Retirement Plans

Contributing to a retirement plan is another great way to reduce your taxable income. Options include:

• SEP IRAs
• Solo 401(k)s (for self-employed individuals)
• Traditional 401(k)s

These contributions lower your taxable income today and defer taxes until you retire. Additionally, Roth 401(k)s and IRAs offer tax-free withdrawals later, which can be ideal for younger business owners with lower tax rates now.

For kids, a Roth IRA is especially powerful. If their income is taxed at zero percent now, they’ll never pay taxes on those contributions—even when they withdraw the money decades later.

Proactive Planning Makes All the Difference

The earlier you implement these tax-saving strategies, the better. Many deductions and credits require setup before the end of the tax year, so planning ahead ensures you’re prepared.

Grab my Free Tax Savings Guide to dive deeper into these strategies and see which ones will work best for your business:
Get My Tax Savings Guide

Conclusion

Don’t wait until the end of the year to start planning your tax strategy. By taking advantage of deductions, tax credits, and family hiring opportunities, you can reduce your tax bill significantly. And if you’re thinking about shifting your business structure, consider whether becoming an S Corp could benefit you.

Implement these strategies now and save big next tax season!

Check out more articles to help you understand small business taxes: