5 Powerful Tax Strategies Every Small Business Owner Should Know!

Whether you’re side hustling, scaling, or fully self-employed, tax season doesn’t have to sneak up on you. With the right strategies in place, you can reduce your tax liability, boost your deductions, and protect your profits—all year long.

Here are 5 tax moves to keep your business tax-compliant, profitable, and growing:

1. Electing S Corp Status for Your LLC 

Best for: LLCs consistently making over $50K/year

If you’re running an LLC and pulling in steady profit, consider electing to be taxed as an S Corporation. This lets you pay yourself a reasonable salary (subject to payroll tax & compliance rules) and take the remaining profits as distributions—which aren’t hit with self-employment tax.

Savings: You could save thousands annually.

💡 Pro tip: It’s a tax status, not a legal entity—make sure you consult with an experienced tax professional before electing.

2. Hiring Your Kids (Legally & Strategically)

Best for: Sole proprietors and LLCs taxed as sole props

Got kids under 18 helping in your biz? You can pay them for legitimate work—think social media, organizing, shipping, modeling—and deduct their wages while they receive it tax-free up to $14,600 for 2024. See a tax professional to discuss tax withholding requirements and rules based on your business structure!

Family business meets tax planning = generational wealth wins.

💡Bonus: Your child can contribute to a Roth IRA with their earned income from the business, enjoying potential tax-advantaged growth. 

3. The Home Office Deduction, Refreshed

Best for: Remote workers, creatives, side hustlers

Forget the simplified method—go for the actual expense method to potentially deduct a portion of your rent/mortgage interest, repairs, utilities, and depreciation.

Must be used exclusively and regularly for business

4. Optimize Your Entity Structure

Best for: Growth-focused product or service-based businesses

Choosing the wrong business structure can lead to excessive taxes and fees. Here’s a quick breakdown:

• Sole Prop = Easy start, high taxes

• LLC = Flexible, decent protection

• S Corp = Great tax savings once profitable

• C Corp = Best for startups with investors👀 Don’t DIY this one—consult a tax professional before switching entities.

  
  

5. Stack Up with Retirement Contributions

Best for: High earners in S Corps, LLCs, or sole props

Depending on your age, you can contribute up to $69,000 in 2024 to a Solo 401(k) or SEP IRA—lowering your tax bill and saving for the future you.

💰This is tax-deferred wealth building. Don’t sleep on it.

Taxes don’t have to be stressful when you have a plan. These strategies aren’t one-size-fits-all—but when customized to your business, they can save you thousands and give you greater peace of mind.