For closely held businesses, success is measured over lifetimes rather than just years. Each stage of the business lifecycle brings unique objectives and challenges, but maintaining a long-term vision is essential. Business and personal success are deeply connected, making it crucial to have an advisor who understands your goals and can craft a tailored business and tax strategy.
Since our founding in 2008, Reckenen has been dedicated to serving individuals like you, addressing your unique challenges with expertise and care. Our relationship is built on mutual trust and a deep understanding of your goals, allowing us to identify obstacles and seize opportunities.
Our lifecycle approach charts your company’s journey, pinpointing key milestones at every stage. With a dedicated point of contact, you benefit from a strong, personalized relationship with your advisor while also gaining access to our full suite of solutions and a team of specialists with deep industry expertise.
By combining trusted relationships with comprehensive capabilities, we bridge the gap between business and personal success—helping you achieve your goals with confidence.
Below are some of the tax strategies we have employed for business owners.
For cash-basis businesses, managing the timing of income and expenses can be a strategic way to optimize taxes. If your tax rate is expected to be lower next year than this year, consider postponing billing for completed services until January to take advantage of the reduced rate. Even if your tax rate remains the same, delaying billing until after year-end can defer tax obligations to the following year.
Similarly, you can strategically time your business expenses. Prepaying or delaying payments allows you to claim deductions in the year when your tax rate is expected to be higher. This approach is especially useful when purchasing and putting business equipment into service.
If managing cash flow is a priority and you want to accelerate deductions, using a company credit card can help. Expenses charged before year-end can be deducted in the current tax year, even if the actual payment isn’t made until after December 31.
Under the current tax laws for 2025, businesses can benefit from immediate deductions on qualifying equipment purchases:
Section 179 Deduction:
– Deduction Limit: Up to $1,250,000 can be deducted for equipment placed in service during the 2025 tax year.
– Phase-Out Threshold: This deduction begins to phase out on a dollar-for-dollar basis once total qualifying equipment purchases exceed $3,130,000.
Bonus Depreciation:
– Percentage: For property placed in service in 2025, businesses can claim a 40% bonus depreciation.
– Phase-Out Schedule: This percentage is set to decrease to 20% in 2026 and will be eliminated in 2027.
– Eligibility: Both new and used property qualify, provided the taxpayer had not previously used the property before acquisition.
These provisions allow businesses to accelerate depreciation deductions, thereby reducing taxable income in the year the equipment is placed in service.
If you have debt linked to your business expenses—such as financing the capital needs of a partnership, S corporation, or LLC in which you actively participate—you can deduct the interest “above-the-line” as business interest rather than as an itemized deduction. This directly reduces your business income, allowing you to claim the full deduction even if you reside in a state that limits or disallows itemized deductions.
Business interest also includes finance charges on business-related purchases made with the company’s credit card. These purchases are treated as additional business loans, and under tracing rules, you can deduct the portion of finance charges related to business expenses. For cash basis businesses, credit card purchases made before year-end but paid in 2026 can still be deducted in 2025.
Qualified Business Income (QBI) refers to net income and deductions directly associated with a U.S. business. Under the Tax Cuts and Jobs Act (TCJA), through 2025, sole proprietors and owners of pass-through entities may claim a deduction under IRC Section 199A. This deduction generally equals 20% of their qualified business income, subject to certain loss and deduction limitations. While it does not impact the calculation of the owner’s Adjusted Gross Income (AGI), it does lower taxable income.
Losses exceeding the allowable limit from all your trades or businesses are capped at $510,000 for married couples filing jointly and $255,000 for all other filers. Any losses beyond these thresholds will be carried forward as a net operating loss (NOL).
For tax years beginning after December 31, 2017, NOLs can no longer be carried back. Instead, they can be used to offset up to 80% of taxable income in future years, with any remaining balance carried forward indefinitely.
Disclaimer: The information provided on this website is for general informational purposes only and should not be considered tax, legal, or financial advice. While we strive to ensure the accuracy and timeliness of the content, tax laws and regulations are subject to change.
We recommend consulting with a qualified tax professional or financial advisor before making any tax-related decisions. The use of this website and reliance on any information contained herein is at your own risk. We are not responsible for any errors, omissions, or outcomes resulting from the use of this information.
