Tax Planning for Business Owners: Why Long-Term Strategy Beats Zero Taxes
The Importance of Tax Strategy for Business Growth
I don’t believe in paying more in taxes than you are legally responsible for—and I firmly believe in reducing what you owe through legitimate tax strategies. The keyword here is strategy.
When you work with the right tax professional, you can implement a proactive plan that reduces your tax burden while fueling your business growth.
What Happens Without a Strategy? A Real Client Example
This past tax season, I had a client leave because she felt she owed too much in taxes. Losing a client is never fun, and it made me reflect on what went wrong.
At first, I thought it was just a communication issue (on both sides). But after reviewing the relationship, I realized the core problem was client fit. From the beginning, we weren’t aligned. She didn’t keep solid records, only called during emergencies, and never sought advice during the year.
Most importantly, she never communicated that her goal was to pay zero taxes—and we didn’t clearly explain that tax planning is a long-term strategy, not a shortcut to $0 owed each year.
Here’s the hard truth: You can’t expect to meet with your CPA once a year and pay the least in taxes. If that’s what you want, you don’t need a CPA—you need a form filler.
But if you want to reduce your taxes and grow your business with confidence, you need the right CPA on your side—one who educates you and ties tax strategy to your financial goals.
Why Paying $0 in Taxes Isn’t the Goal
1. Profitability Means You Owe Taxes
If you’re making money, you’re going to pay taxes—it’s the cost of being profitable. Losing money means you won’t owe anything, but that’s not why you’re in business.
It starts with a mindset shift: If you’re surrounding yourself with people who all avoid taxes, you might believe that’s the goal. But success often comes with a tax bill—and that’s not a bad thing.
2. Tax Planning Is a Long-Term Game
If we get your taxes to zero this year, next year could come with a heavy bill. Why? Because shifting income or expenses year to year only works short-term. Eventually, you’ll hit a wall and pay more in future years.
3. Take Advantage of the Lowest Tax Brackets
Taxes in the U.S. are calculated using marginal tax rates. Here’s a simplified example using the 2019 tax brackets:
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10% on the first $19,400
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12% on the next $59,549
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22% on the next $89,449
So, if your taxable income is $168,400, you pay roughly $28,765 in total taxes—that’s about 17%. Not bad at all.
You should aim to always take advantage of the lowest tax brackets. Paying 0–10% one year and 32% the next doesn’t make mathematical sense. This again highlights why tax planning must be strategic and long-term.
4. No Taxes = No Loan Approval
Banks want to lend money to businesses that show consistent profit. If your tax return shows zero income, lenders won’t take the risk to approve a business loan, equipment purchase, or even a mortgage.
5. You Won’t Qualify for Social Security or Disability
Avoiding taxes might seem like a win now, but if you don’t pay into Social Security, you won’t receive retirement or disability benefits later. And while many assume those funds will dry up, they often forget about the potential value of disability benefits should something unexpected happen.
6. No Income Means No QBID
Most of our business clients benefited this year from the Qualified Business Income Deduction (QBID)—a 20% tax deduction on business income. If you reduce your taxable income to zero, you miss out on that deduction entirely.
For example, if you buy equipment to bring your net income to $0, you lose the QBID. A better option might be to depreciate the equipment over time. That way, you still get the 20% deduction now and continue receiving depreciation benefits in future years.
How a CPA Helps You Plan, Save, and Succeed
I realize this may feel overwhelming—but this is what I do. I’ve been helping clients for over 15 years with personalized, long-term tax strategies, and I love staying on top of ever-changing tax laws.
If you’re unsure whether you have the right strategies in place, let’s talk. A tax assessment can reveal how much you’re leaving on the table and what you can save when you align tax strategy with your business goals.
Let’s Build a Smarter Tax Plan Together
Aligned CPA partners with service professionals on a monthly basis to help them understand their accounting, save money in taxes, and make confident business decisions using accurate financial data.
We’d love to see if we’re a good fit for your business. Contact us today for a consultation.