Strategic Tax Preparation: A Smarter Approach for Established Business Owners

As tax season approaches, many business owners focus on gathering forms and meeting deadlines. For an established business, however, tax preparation is about far more than compliance. Done well, it creates space for meaningful strategy. 

When your records are organized early, we can move beyond simply entering numbers. That time allows us to review your financial position more holistically, analyzing deductions, evaluating income reporting options, and discussing tax-planning strategies that support your business’s long-term health and stability. 

Several tax law changes taking effect for the 2025 tax year make strategic preparation especially important this year. 

Key Tax Law Changes Affecting 2025 Returns 

Expanded Section 179 Deduction for Equipment and Technology 

Businesses may immediately expense up to $2.5 million of qualifying equipment, machinery, software, and certain vehicles placed into service during the year. This deduction begins to phase out once total qualifying purchases exceed $4 million. 

This expanded limit is designed to encourage business investment, but it requires careful planning: 

• Timing matters—when assets are placed into service affects eligibility. 

• Assets must be primarily used for business. 

• If business use later drops to 50% or less, a portion of the deduction may need to be repaid (known as “recapture”). 

  
  

For businesses planning significant purchases, advance coordination can make a meaningful difference. 

Bonus Depreciation Returns to 100% 

For qualifying assets acquired and placed into service after January 19, 2025, businesses can deduct 100% of the cost in the year of purchase. This generally applies to new or used tangible property with a useful life of 20 years or less. 

Assets placed into service earlier in January 2025 may still qualify for partial bonus depreciation, but the rules depend on exact dates and elections made. Proper documentation is essential here, especially for year-end purchases. 

Immediate Deduction for U.S.-Based Research Costs 

Beginning in 2025, businesses may once again immediately deduct domestic research and experimental expenses, rather than spreading those costs over multiple years. 

Research conducted outside the United States must still be deducted over a longer period. Because the tax treatment differs depending on where the work occurs, accurate tracking remains important, particularly for technology, product development, and engineering-driven businesses. 

Enhanced Retirement Contributions for Ages 60–63 

Business owners and employees ages 60 through 63 now have access to enhanced “catch-up” retirement contributions: 

• Up to $11,250 for 401(k) and 403(b) plans 

• Up to $5,250 for SIMPLE plans 

  
  

This creates a valuable window to boost retirement savings in the years leading up to retirement and is worth integrating into broader compensation and cash-flow planning. 

Temporary Increase to the SALT Deduction 

The limit on deducting state and local taxes (such as income and property taxes) has increased to $40,000 per return for 2025. 

For higher-income taxpayers, the deduction gradually phases down starting at $500,000 of income and cannot drop below the previous $10,000 limit. This higher cap is temporary, making proactive planning particularly important for business owners with significant state tax exposure. 

New Deductions for Tips and Overtime Pay 

Two new deductions are available beginning in 2025: 

• Qualified cash tips, deductible up to $25,000 

• Qualified overtime compensation, deductible up to $12,500 (or $25,000 for joint filers) 

  
  

These provisions are structured as deductions (not exclusions), meaning the income is still reported but may reduce taxable income. Eligibility rules, income limits, and documentation requirements apply. 

Getting Organized for a Smoother Tax Process 

Thoughtful preparation saves time, reduces stress, and improves results. 

Use Your Accounting System Well 

Ensure income and expenses are properly categorized in your accounting software (such as QuickBooks). This is especially helpful for: 

• Vehicle expenses 

• Meals and travel 

• Repairs versus capital improvements 

  
  

Create separate folders, digital or physical, (preferably digital) for major personal tax items such as mortgage interest, charitable donations, and medical expenses. 

Review Your Financial Statements 

Before we meet, compare this year’s profit-and-loss statement and balance sheet with last year’s. This often helps identify: 

• Missing 1099s 

• Asset purchases or sales that may need tax treatment 

• Unusual fluctuations that warrant discussion 

  
  

Digital Assets and Cryptocurrency 

The IRS continues to expand its focus on cryptocurrency and digital assets. These assets are treated as property, and selling or exchanging them generally triggers taxable income. 

New reporting forms from brokers may now appear, but you remain responsible for maintaining complete records of purchases, sales, exchanges, and transfers. 

Foreign Accounts and Investments 

If you have foreign bank accounts, investments, trusts, or signing authority over non-U.S. accounts, disclosure is required—even if no income was earned. Penalties for failing to report are significant, so early disclosure is critical. 

Come With Questions 

As you gather documents, note major changes in your business during the year such as new equipment, ownership changes, financing, asset sales, or staffing shifts. These often open the door to valuable planning conversations. 

Transactions That Deserve Extra Attention 

Please be prepared to provide documentation for: 

• Sales of business assets, real estate, or investments 

• Vehicles used for business (total, business, and commuting mileage) 

• Charitable contributions, especially non-cash donations 

• Sale of a primary residence, including home improvement records 

• Any concerns related to identity theft or unauthorized filings 

  
  

A Final Word 

Strategic tax preparation is not about finding loopholes; it’s about clarity, stewardship, and informed decision-making. When records are complete and organized, we can focus on what matters most: minimizing risk, identifying opportunities, and ensuring your business remains well positioned for the future. 

If questions arise as you gather your materials, we encourage you to reach out. We are here to guide you every step of the way.