With Q2 officially behind us and the second half of 2025 stretching ahead, now's the perfect time to give your business's financial health a thorough checkup. This isn't just about avoiding surprises; it's about proactively finding opportunities to save money on your taxes before the September 15th Q3 estimated tax deadline rolls around.
Let's dive into 5 key moves you can make now to optimize your tax position.
1. Review Your Q2 Estimated Tax Payments (and Prep for Q3!)
The June 16th Q2 estimated tax deadline just passed. If you haven't already, take a moment to confirm your payment was made. More importantly, it's crucial to review your year-to-date income and expenses to ensure your estimated payments are on track. Underpaying can lead to penalties, so if your business income has changed significantly, now's the time to adjust your upcoming Q3 payment. We can help you calculate any necessary adjustments.
2. Maximize Mid-Year Deductions
Are you missing out on valuable write-offs? Many business owners overlook deductions that can significantly reduce their taxable income. Here are a few to consider:
- Home Office Expenses: If you use a portion of your home exclusively for business, you might be able to deduct a percentage of your rent/mortgage interest, utilities, and other home-related costs. Make sure you meet the exclusive-use requirement!
- Business Vehicle Costs: Every mile driven for business adds up! Keep detailed mileage logs or track actual expenses (gas, repairs, insurance) to determine the most beneficial deduction method for your business vehicle.
- Retirement Contributions: Planning for your future can save you money today. Explore options like a SEP IRA or Solo 401(k) to contribute pre-tax dollars and reduce your current taxable income. The earlier you contribute, the more time your money has to grow!
3. Update Bookkeeping for Tax Efficiency
Good bookkeeping isn't just about knowing where your money goes; it's a powerful tax-saving tool.
- Monthly Reconciliation: Get into the habit of reconciling your accounts monthly. This helps catch discrepancies early, ensures all transactions are categorized correctly, and simplifies year-end tax preparation immensely.
- Separate Personal & Business Accounts: This is fundamental! Mixing funds can make it incredibly difficult to track business expenses and can even lead to issues with the IRS.
- Digitize Receipts & Use Accounting Software: Ditch the shoebox of receipts! Tools like QuickBooks or other accounting software can help you easily track income and expenses, generate reports, and store digital copies of your receipts, making tax time a breeze.
4. Prepare for Upcoming 2025 Tax Law Changes
While tax laws can seem complex, staying informed can help you plan ahead. It's worth noting the potential sunset of the 20% Qualified Business Income (QBI) deduction for pass-through entities, currently set to expire at the end of 2025 (effective 2026). This could impact your tax strategy in the coming years. Understanding this potential change might lead you to consider accelerating income or deferring deductions into 2025 to take full advantage of current provisions.
5. Year-End Planning Preview
It might seem early, but thinking about year-end tax strategies now can give you a significant advantage. Consider moves like:
- Deferring Income: If possible, you might strategically delay invoicing or receiving payments until early 2026 to push that income into the next tax year.
- Accelerating Expenses: Conversely, consider making equipment purchases (e.g., under Section 179 depreciation) or other business expenditures before the end of the year to increase your deductions for 2025.
Ready to get started? To help you keep track of these important steps, we've put together a handy Mid-Year Tax Prep Checklist that we can provide. Just let us know if you'd like a copy!
As your proactive advisor, RSK Tax and Consulting, LLC is here to help you navigate these financial waters. Don't hesitate to reach out if you have any questions or would like to discuss your specific situation.
