Mid-Year Tax Planning Tips for Business Owners

1. Review Your Year-to-Date Financials

Mid-year is the perfect time to take a fresh look at your income and expenses. Run a profit and loss statement to compare your current performance against last year. This helps identify trends, overages, and areas for adjustment before year-end.

2. Project Full-Year Income

Estimate your total income for the year based on year-to-date results and expected activity for the second half. This projection forms the basis for calculating potential tax liability and making proactive decisions.

3. Evaluate Estimated Tax Payments

Check if your current estimated payments match your projected income. If your profits are higher (or lower) than expected, you may need to adjust your remaining quarterly payments to avoid underpayment penalties or overpaying the IRS.

4. Maximize Retirement Contributions

Mid-year is a good time to evaluate your retirement contributions:

• Can you increase 401(k), SEP, or SIMPLE IRA contributions?
• Would establishing a plan now create tax savings by year-end?

Retirement contributions reduce taxable income while helping you build long-term wealth.

5. Consider Capital Investments

If you're planning to purchase equipment or software, consider the timing. Section 179 and bonus depreciation rules may allow you to deduct all or most of the cost in the current year—but only if the asset is placed in service before year-end.

6. Assess Payroll and Compensation Strategies

Review your own compensation and that of key employees. Are you optimizing salary vs. distributions if you’re an S corp? Would it be tax-efficient to pay bonuses before year-end?

7. Work With a Tax Professional

Tax laws change often, and each business is unique. Working with a CPA mid-year gives you time to implement strategies before deadlines hit. We can also identify credits and deductions you might otherwise miss.

Let’s Talk

Mid-year planning helps avoid surprises and puts you in control of your tax situation. Schedule a planning session with us today to make the most of the months ahead.