Advanced Tax Planning Strategies for Entrepreneurs

If you’re running a successful business, taxes can feel like a penalty for your success. You grow your revenue, reinvest in your team, and take on risk and still end up writing a massive check to the IRS each year.

Advanced tax strategy isn’t about hiding money or hoping for a last-minute deduction. It’s about being proactive, structured.... strategic. These are real tools used by savvy business owners to help reduce taxes and grow wealth while preserving flexibility for the future.

Here are five of the most powerful tax strategies entrepreneurs should consider when income is high and opportunity is on the table.

1. Leverage the Right Qualified Plan, Including Defined Benefit Plans

Once you’re earning significant income, traditional retirement accounts like a SEP IRA or Solo 401(k) may feel limited. That’s where defined benefit plans come in.

A defined benefit plan may allow you to contribute well into the six figures annually, depending on your age, income, and retirement horizon. For entrepreneurs in their 50s who’ve been reinvesting in their business for years, this is often the most powerful way to reduce taxable income while catching up on retirement.

Unlike a 401(k), which has a set contribution limit, a defined benefit plan is actuarially calculated - meaning you may often contribute $150,000 to $300,000 or more per year, tax-deferred. It takes some setup and annual maintenance, but the payoff can be beneficial.

2. Restructure Your Entity for Long-Term Tax Efficiency

Entity structure isn’t one-size-fits-all. Many entrepreneurs start as an LLC or S-Corp and never revisit it, even when income, partners, or future plans evolve.

In some cases, electing C-Corp treatment opens the door to IRS Section 1202 Qualified Small Business Stock (QSBS), which  may allow up to $10 million in capital gains to be exempt if specific conditions are met. If a sale or outside investment is even a remote possibility, this can be worth exploring now, not when an offer is already on the table.

Even within a pass-through entity like an S-Corp, strategic adjustments such as officer compensation, ownership structure, or income splitting between spouses can lead to meaningful savings.

Don’t assume the structure that worked when you started is still your best option. Reevaluate with your long-term goals in mind.

 

3. Accelerate or Defer Income with Intention

Not all income needs to hit the books in the current year and when you earn can matter just as much as how much.

For example, if your income will drop next year due to time off, lower contracts, or a transition, deferring a large payment into the next tax year could reduce the rate it’s taxed at. Alternatively, if you’re facing rising tax rates or a once-in-a-lifetime deduction this year (e.g. from a charitable strategy), it may make sense to accelerate income now.

These strategies require thoughtful timing and coordination with your cash flow. But the ability to shift six figures of income into a more favorable bracket, without changing your business model, is a powerful lever.

4. Use Charitable Giving to Your Strategic Advantage

Most entrepreneurs give back, but many do it in a way that misses the tax advantages.

If you’re facing a high-income year or planning a liquidity event, donating appreciated assets (like stocks or even private business interests) to a donor-advised fund can eliminate capital gains and generate a substantial deduction. You still support the causes you care about, but with dramatically more tax efficiency.

Pair this with strategies like bunching donations or front-loading multiple years of giving, and you can turn a generous act into a smart tax move that funds impact for years to come.

5. Accelerate Depreciation with a Cost Segregation Study

Own your building? You may be depreciating it over 39 years... slowly. But a cost segregation analysis can accelerate that depreciation dramatically.

Engineers and tax pros analyze your property and reclassify components (like plumbing, lighting, flooring) into shorter 5-, 7-, or 15-year depreciation schedules. This can generate a much larger write-off in the early years often resulting in six-figure tax savings.

Cost segregation is especially useful after building, renovating, or purchasing property. And if you’ve owned your building for a while, a “look-back” study can unlock prior missed depreciation deductions.

If you’re paying high taxes and own commercial real estate, this may be a strategy worth exploring.

You Built the Business, Now Keep More of What It Earns

You don’t need gimmicks or gray-area tactics to reduce your tax bill. You need strategy. Real, coordinated, well-timed decisions that align with your income, your goals, and your future.

We help entrepreneurs map out a clear tax plan, implement the right tools, and coordinate across your business and personal finances—so you can keep more of what you earn and use it with purpose.

Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. CRN202806-8893155.