The Fundamentals of Tax Reduction for DFW Business Owners: 10 Small Business Tax Strategies From a McKinney CPA (2026)

Let's be upfront. We wrote this guide so DFW business owners searching for small business tax strategies would find Mashbooks. That's the marketing reason. The real reason is that most owners we meet are paying more tax than they need to, and almost none of them are doing anything wrong on purpose. Nobody ever showed them the fundamentals.

So here they are. No gimmicks, no loopholes, and nothing you'd be nervous to explain to the IRS. Just the 10 strategies a McKinney CPA would walk you through at the kitchen table, with every 2026 figure checked against IRS.gov and linked so you can see it yourself.

One more thing before we start. If you live and work in Texas, there's a reason federal planning matters so much for you. The Texas Comptroller ↗ puts it plainly: Texas has no state income tax. You still deal with franchise tax, sales tax and property tax (our guide to Texas small business taxes covers each one), but your income tax bill is a federal bill. That means federal planning is where DFW owners save real money.

01

The Fundamentals: Two Things Every Tax Strategy Rests On

Every tax strategy in this guide sits on top of two things. Skip either one and the strategies stop working.

Fundamental 1: Fantastic books. Not "the bank feed is connected" books. Reconciled, categorized, reviewed books that tell you your real profit every month. You can't plan a tax bill you can't see, and you can't defend a deduction you can't prove.

Fundamental 2: A plan for the cash in your business. Most DFW small businesses are pass-through businesses. That means the profit flows through to your personal return whether you take it out or leave it in the bank. So the question isn't just "how much did we make?" It's "what are we going to do with that profit, in the most tax-efficient way, before the year closes?"

The answers to that second question are the strategies in this guide. Fund a retirement plan. Put your kids on payroll for real work. Save ahead for the truck you know you'll need. Invest outside the business so your wealth isn't all tied to one company.

Why taxes deserve your attention: they're a bottom-line expense

Here's the frame we use with every owner. Your tax bill comes out of profit, not revenue. And profit is a small slice of revenue.

If your business keeps 10 cents of profit for every dollar of sales, then a $15,000 tax bill took $150,000 of sales to pay for. Saving $15,000 in tax through legal planning does the same thing for your bank account as $150,000 of new work. Except there's no crew to schedule, no materials to buy and no customer to chase.

FormulaWhy a Tax Dollar Costs More Than It Looks

Revenue needed to pay a tax billTax bill ÷ Profit margin

$15,000 tax bill ÷ 10% profit margin$150,000 of revenue

Saving $15,000 in tax through planning = the profit from $150,000 of new sales

Illustrative numbers. Your margin will differ.

Moji's take

“Owners will drive across Collin County to win a $5,000 job, then skip the one-hour meeting that could save them more than that in tax. The meeting is the better job.”

A quick side note on entity choice. For some owners, S-corp status is worth exploring with a tax advisor. It's not something we handle at Mashbooks, and it isn't one of the 10 strategies below. Everything in this guide works for sole proprietors and single-member LLCs filing a Schedule C, and most of it works for other entity types too.

02

Which Strategies Fit Your Business?

Not every strategy fits every business. A solo consultant in Plano and a 12-person HVAC company in Garland will lean on different moves. Use this matrix as a starting point, then talk it through with your CPA.

ComparisonWhich Tax Strategies Fit Your DFW Business?

Strategy	Contractors & Trades	Home Service	Salon, Studio & Wellness	Consultants & Pro Services	Family Business
#1 Reconciled books	✓Must	✓Must	✓Must	✓Must	✓Must
#2 Quarterly estimates on a plan	✓Must	✓Must	✓Must	✓Must	✓Must
#3 Retirement plan	SEP or SIMPLE with a crew, Solo 401(k) if solo	SEP or SIMPLE with a crew	SEP or SIMPLE with staff	Solo 401(k) often fits	SEP or SIMPLE
#4 Hire your kids	Often	Often	Sometimes	Sometimes	✓Strong fit
#5 Equipment and truck timing	✓Strong fit	✓Strong fit	Sometimes (chairs, equipment)	✕Rarely	Depends
#6 Home office	If you run the office from home	If you run the office from home	✕Rarely (you work at the studio)	✓Strong fit	Sometimes
#7 Vehicle method	✓Strong fit	✓Strong fit	Sometimes	Sometimes	Sometimes
#8 Accountable plan	With employees	With employees	With employees	If you're on payroll in your own corporation	With employees
#9 Pass-through deductions (QBI, health insurance)	Often	Often	Often	Often, with extra limits at higher incomes	Often
#10 Meeting before Dec 31	✓Must	✓Must	✓Must	✓Must	✓Must

General guide only. Your facts decide what fits.

03

#1: Keep Fantastic, Reconciled Books

Summary: Every deduction in this guide depends on records that prove it. Reconciled books, meaning books checked against your bank and credit card statements every month, are the foundation of tax reduction. A deduction you can't prove isn't a deduction.

We put this first on purpose. It's the least exciting strategy and the most important one.

Here's why. When your books are behind or unreconciled, three things happen. You miss deductions because nobody categorized them. You overpay estimates because nobody knows your real profit. And if the IRS ever asks a question, you can't answer it with confidence.

"Reconciled" is a word worth understanding. It means someone matched every transaction in your books to your actual bank and credit card statements and confirmed the ending balances agree. If they don't match, something's missing or doubled. Software can suggest categories. It can't tell you whether that $4,000 Home Depot charge was inventory for a job, a new tool or a personal purchase.

The IRS also expects you to keep records for years, not months. According to the IRS guidance on how long to keep records ↗, the general rule is 3 years for income tax records, longer in some situations, and at least 4 years for employment tax records. Clean books make that easy. A shoebox doesn't.

What "fantastic books" actually look like

Example scenario: say a McKinney residential electrician runs everything through one checking account and catches up the books each March. When the books finally get reconciled, the owner finds about $6,000 of supply runs that were never categorized, plus a few personal purchases mixed in as business. Both problems were invisible all year. With monthly reconciliation, both would have been caught in the month they happened, and the quarterly estimates would have been based on real profit.

Moji's take

“I started my career as an auditor. Auditors don't care what you say you spent. They care what you can show. I want every client's books to be ready for that question, even though most will never be asked it.”

IRS links: IRS record retention guidance

How we help: If your books are behind, start with bookkeeping cleanup and catch-up. Our guide to catching up on bookkeeping walks through the process. Then keep them clean with monthly bookkeeping reviewed by a CPA, where every account is reconciled and reviewed before your month closes.

04

#2: Pay Quarterly Estimates on a Plan

Summary: Self-employed owners don't have an employer withholding tax from a paycheck, so the IRS expects you to pay during the year through quarterly estimated payments. Pay them on a plan built from your actual books, and you avoid both the underpayment penalty and the April surprise.

Estimated taxes trip up more DFW owners than any other topic. Some skip them and get a penalty. Some guess and get a shock. Some overpay all year and lend the IRS money for free.

For 2026, IRS Publication 505 ↗ sets four due dates:

April 15, 2026for income earned January 1 through March 31

June 15, 2026for income earned April 1 through May 31

September 15, 2026for income earned June 1 through August 31

January 15, 2027for income earned September 1 through December 31

Notice the periods aren't equal. The second "quarter" is only two months long. That surprises a lot of owners.

Calendar2026 Federal Estimated Tax Calendar

Payment 1April 15, 2026Covers January 1 to March 31.

Payment 2June 15, 2026Covers April 1 to May 31 (only two months).

Payment 3September 15, 2026Covers June 1 to August 31.

Payment 4January 15, 2027Covers September 1 to December 31.

Source: IRS Publication 505. Texas has no state income tax, so these are your only income tax estimates.

The safe harbor rules, in plain English

A "safe harbor" is a rule that protects you from the penalty if you follow it, even if you end up owing more in April. According to IRS Publication 505, you generally must pay estimated tax for 2026 if you expect to owe at least $1,000 after withholding and credits, and your withholding and credits will be less than the smaller of:

If your 2025 adjusted gross income (AGI) was more than $150,000 ($75,000 if married filing separately), that second number becomes 110% of your 2025 tax.

So there are two ways to plan. The simple way is to pay 100% (or 110%) of last year's tax in four installments. That protects you from the penalty, though you may still owe a balance in April if this year was bigger. The more precise way is to project this year's profit from current books and pay 90% of this year's expected tax. That's where reconciled books (strategy #1) pay off.

Example scenario: say a Frisco painting contractor's 2025 return showed $20,000 of total tax, and 2025 AGI was under $150,000. Paying $5,000 by each of the four 2026 due dates meets the 100% safe harbor. If business grows and 2026 tax comes in at $26,000, there's a $6,000 balance in April, but no underpayment penalty. With monthly books and a mid-year check-in, the owner can see that growth coming and set the extra aside instead of being surprised by it.

Moji's take

“A big April bill usually isn't a tax problem. It's a planning problem. If your estimates come from current books, April should be boring.”

IRS links: IRS Publication 505, Tax Withholding and Estimated Tax

How we help: Quarterly estimate calculations are part of our small business tax planning. We figure your payments from your reviewed books, so the number reflects what's actually happening in your business this year.

05

#3: Put Profit Into a Retirement Plan (SEP, Solo 401(k) or SIMPLE)

The Solo 401(k): for owners with no employees

The SEP IRA: simple, flexible, but watch your employees

The SIMPLE IRA: built for small teams

Summary: A retirement plan is the most direct answer to "what should I do with the cash in my business?" Contributions can lower your taxable income now while building wealth for your family. For 2026, the IRS raised several limits, so the right plan can shelter a meaningful share of your profit.

This is the strategy we spend the most time on with owners, because it does two jobs at once. It cuts this year's tax bill, and it turns business profit into personal wealth that isn't tied to your company.

There are three plans most DFW small businesses choose from. Here's how they compare.

The Solo 401(k): for owners with no employees

A one-participant 401(k) ↗, often called a Solo 401(k), covers a business owner with no employees, or the owner and a spouse. You wear two hats. As the "employee," you can defer salary. As the "employer," you can make an additional contribution.

For 2026, the IRS limits are:

The employer piece can be up to 25% of compensation, but for self-employed owners "compensation" means net earnings from self-employment after subtracting half of your self-employment tax and your own contributions. The IRS one-participant 401(k) page explains this and points to Publication 560 for the worksheets. In practice, a CPA runs this math for you.

One housekeeping note: the IRS says a one-participant plan generally has to file Form 5500-EZ once plan assets reach $250,000 or more at year end.

The SEP IRA: simple, flexible, but watch your employees

A Simplified Employee Pension (SEP) ↗ lets the business contribute up to 25% of each employee's pay, capped by the same $72,000 annual limit for 2026. There's no employee deferral, so it's all employer money.

Two features make SEPs popular. First, the IRS allows you to set one up and fund it as late as your tax filing deadline, including extensions. Second, there's very little paperwork.

The catch: the employer must contribute the same percentage of pay for every eligible employee. A SEP that's great for a solo owner can get expensive once you have a crew.

The SIMPLE IRA: built for small teams

A SIMPLE IRA ↗ is designed for businesses with 100 or fewer employees and no other retirement plan. Employees (including you) can defer up to $17,000 in 2026, plus a $4,000 catch-up at age 50 and older ($5,250 for ages 60 to 63), per the IRS.

The employer must either match employee deferrals dollar for dollar up to 3% of pay, or contribute 2% of pay for every eligible employee. That makes the cost predictable.

Timing matters here. The IRS says a new SIMPLE IRA can generally take effect anytime from January 1 through October 1. If you want one for next year, that conversation should happen this fall.

Example scenario: say a Plano IT consultant works solo, has no employees and expects strong profit for 2026. A Solo 401(k) lets the consultant defer up to $24,500 as the employee and add an employer contribution figured on net self-employment earnings, all within the $72,000 total limit. Compare that to a Frisco salon owner with four stylists on payroll. A SEP would require the same percentage for every eligible stylist, so a SIMPLE IRA with a 3% match may fit the budget better and help with hiring too.

Moji's take

“The best retirement plan is the one you'll actually fund. We pick the plan around your cash flow and your team, not around the biggest number on paper.”

IRS links: One-participant 401(k) plans, SEP plans, SIMPLE IRA plans, 2026 COLA limits

How we help: We model which plan fits as part of year-round tax planning, and we size the contribution from your actual profit. Your financial advisor or plan provider opens the account and handles the investments.

06

#4: Hire Your Kids (and Open Their Roth IRAs)

The payroll tax rules

The income tax side

The Roth IRA bonus

Summary: If your children do real work for your business, paying them a reasonable wage moves income from your tax bracket to theirs. In a sole proprietorship, wages paid to a child under 18 aren't subject to Social Security and Medicare taxes. And once your child has earned income, they can contribute to a Roth IRA.

This is one of the most family-friendly strategies in the tax code, and it fits DFW's many family-run businesses well. It has to be done right, though. The work must be real, the pay must be reasonable for that work, and you need records.

The payroll tax rules

According to the IRS page on family employees ↗, when your business is a sole proprietorship, or a partnership where each partner is a parent of the child:

Those exemptions don't apply if the business is a corporation, or a partnership where not every partner is the child's parent. In that case, the child's wages are taxed like anyone else's.

The income tax side

Your business deducts the wages as a normal business expense, which lowers your taxable profit. Your child may owe little or no federal income tax on those wages. That's because a dependent's standard deduction is based on their earned income, up to the regular single standard deduction. The IRS standard deduction topic ↗ explains the dependent rule, and the IRS set the 2026 single standard deduction at $16,100, according to its 2026 inflation adjustment announcement ↗.

The Roth IRA bonus

Here's the part that builds generational wealth. According to the IRS page on IRA contribution limits ↗, there's no age limit on making regular IRA contributions, and the 2026 limit is $7,500 or your taxable compensation for the year, whichever is less. So a teenager who earns real wages in the family business can put part of those wages into a Roth IRA, where it can grow for decades.

Example scenario: say a Prosper landscaping company, run as a sole proprietorship, pays a 15-year-old $8,000 over the summer for mowing, edging and cleanup, tracked on timesheets at a rate similar to what a non-family crew member would earn. The business deducts the $8,000. Because the child is under 18 and the business is a sole proprietorship, there's no Social Security or Medicare tax on those wages. The child's standard deduction likely covers the wages for federal income tax. And the child can put up to $7,500 of that pay into a Roth IRA.

Moji's take

“This only works if it's real. Real work, real timesheets, a real paycheck through payroll. Done that way, it's one of my favorite strategies, because it teaches your kids about work and money at the same time.”

IRS links: Family employees, IRA contribution limits, Standard deduction rules

How we help: We run family payroll properly through Gusto as part of our payroll, 1099 and Texas sales tax service, so the wages, filings and records are all in order.

[CTA CARD] Want to know which of these strategies fit your business? Book Your Free Books & Tax Review. We'll look at your books and last year's return and send you a one-page summary of what's working, what's broken and what to fix first, including which tax strategies are worth a closer look before December 31. Button: Book Your Free Books & Tax Review (#book) · Or call (469) 712-4199 [/CTA CARD]

07

#5: Save Ahead for Equipment and Trucks, Then Time the Purchase

Summary: Equipment and vehicle purchases can often be deducted in the year you put them to work, not spread over many years. The One Big Beautiful Bill Act raised the Section 179 limit and made 100% bonus depreciation permanent for qualifying property. The real strategy is saving ahead so you can buy what you need, when it makes sense, without draining cash.

Contractors and home service companies across DFW live on their trucks, trailers and tools. That's why this strategy matters so much for them.

What changed under the One Big Beautiful Bill Act

The IRS now often refers to the July 2025 law as the Working Families Tax Cuts. According to the IRS summary of the business provisions ↗:

Section 179 expensingincreased to $2,500,000, with a phase-out starting at $4,000,000 of qualifying property, for property placed in service in tax years beginning after December 31, 2024. Both amounts are indexed for inflation after 2025.

100% bonus depreciation(the IRS calls it the special depreciation allowance) is permanent for qualified property acquired after January 19, 2025.

For tax years beginning in 2026, IRS Publication 946 ↗ lists the inflation-adjusted Section 179 limit as $2,560,000, with the phase-out starting above $4,090,000. It also caps Section 179 on sport utility vehicles at $32,000 for 2026.

Most small businesses will never come close to those limits. What matters more for you are the rules underneath them.

The rules that actually trip owners up

Placed in service, not just purchasedPublication 946 says you take Section 179 in the year you place the property in service, meaning it's ready and available for its intended use. A truck ordered in December but delivered in January belongs to next year.

The business income limitSection 179 can't exceed the taxable income from your active business for the year. Any amount you can't use carries forward.

More than 50% business useTo elect Section 179, Publication 946 says the property must be used more than 50% for business in the year you place it in service.

Why "save ahead" is the real strategy

Here's what we see too often. An owner gets to December, sees a big tax bill coming and buys a truck they didn't need to "get the deduction." That's spending a dollar to save a fraction of a dollar.

The better approach is to plan purchases you'd make anyway. Set aside a monthly amount into an equipment fund. Then, at the planning meeting before December 31, decide whether buying this year or next year gives you the better result.

Example scenario: say a Garland HVAC company knows it needs a second service van within 18 months. Starting in January, the owner moves $2,000 a month into a separate equipment savings account. By the fall planning meeting, the books show a strong year, so the owner buys the van and has it in service by mid-December. Because it's placed in service in 2026 and used more than 50% for business, it may qualify for Section 179 or bonus depreciation this year. And the cash was already there, so the purchase didn't squeeze payroll.

Moji's take

“Never buy a truck just for the deduction. Buy the truck you need, with money you saved for it, in the year it does you the most good.”

IRS links: Working Families Tax Cuts business provisions, IRS Publication 946, How to Depreciate Property

How we help: Our tax planning service builds purchase timing into your year-end plan. For trades owners, our guide to job costing for contractors shows how to see which jobs actually pay for that equipment.

08

#6: Claim the Home Office Deduction the Right Way

Summary: If part of your home is used regularly and exclusively for your business, you may be able to deduct it. The IRS offers a simplified method of $5 per square foot for up to 300 square feet, or a regular method based on actual home expenses.

Plenty of DFW owners run the business side of things from home, even when the work happens in the field. The contractor who does estimates and invoicing from a spare bedroom. The consultant who works from a home office in Allen. The salon owner who handles the books from the kitchen table usually doesn't qualify, though, and that's where people get into trouble.

The two tests

According to the IRS page on the simplified home office option ↗, the space must be used exclusively and on a regular basis for business. That's true under both methods.

"Exclusively" is the hard one. A desk in the corner of the family room where the kids also do homework doesn't pass. A dedicated room that's only used for business does.

Simplified vs. regular method

Simplified method$5 per square foot of home used for business, up to 300 square feet. No tracking utilities or depreciation.

Regular methoda percentage of actual home expenses (mortgage interest or rent, utilities, insurance, repairs and depreciation) based on the share of your home used for business. More records, sometimes a bigger deduction.

Example scenario: say an Allen marketing consultant uses a 250-square-foot spare bedroom only for client work. Under the simplified method, that's 250 times $5, or a $1,250 deduction, with almost no extra recordkeeping. If the home has high expenses, the regular method might produce more, and it's worth having your CPA compare the two.

Moji's take

“The home office deduction isn't a red flag when it's real. It's a red flag when the 'office' is also the guest room. Be honest about the space and it's an easy win.”

IRS links: Simplified option for home office deduction

How we help: We figure the home office deduction both ways when we prepare your business and personal tax returns, so you get the method that fits.

09

#7: Choose Standard Mileage or Actual Expenses for Your Vehicle

Summary: You can deduct business use of a vehicle with the IRS standard mileage rate or with your actual vehicle expenses. For 2026, the business rate is 72.5 cents per mile for January through June and 76 cents per mile for July through December. The method you pick in the first year can limit your options later.

DFW is a driving region. Whether you're running service calls from McKinney to Denton or meeting clients across Dallas, business miles add up fast.

2026 mileage rates

According to the IRS standard mileage rates page ↗, the 2026 business rate changed mid-year:

January 1 to June 30, 202672.5 cents per mile, first announced in the IRS December 2025 release

July 1 to December 31, 202676 cents per mile

That mid-year change means your mileage log needs dates, not just totals.

Standard mileage vs. actual expenses

IRS Publication 463 ↗ explains both methods. With actual expenses, you deduct the business share of costs like depreciation or lease payments, registration, insurance, repairs, fuel, tires, tolls and parking.

A few rules to know before you choose:

Side by sideStandard Mileage vs. Actual Expenses (2026)

Standard Mileage Rate

2026 rate72.5 cents per mile (Jan 1 to Jun 30) and 76 cents per mile (Jul 1 to Dec 31)

What you trackbusiness miles, dates and purpose

Best forhigh-mileage, fuel-efficient vehicles and owners who want simple records

Watch outmust be chosen in the first year an owned vehicle is used for business. Not allowed with five or more vehicles in use at the same time.

Actual Expenses

What you deductbusiness share of depreciation or lease payments, registration, insurance, repairs, fuel, tires, tolls and parking

What you trackevery vehicle cost, plus business miles and total miles

Best forexpensive vehicles, heavy trucks and fleets

Watch outmore records, and depreciation rules apply

Bottom row (illustrative example)12,000 business miles split evenly across 2026 = 6,000 × $0.725 + 6,000 × $0.76 = $8,910 standard mileage deduction

Rates from IRS.gov. Example numbers are illustrative.

Example scenario: say a Denton mobile pet groomer drives a fuel-efficient van 12,000 business miles in 2026, about 6,000 in each half of the year. Standard mileage gives 6,000 times 72.5 cents ($4,350) plus 6,000 times 76 cents ($4,560), for an $8,910 deduction. Now picture a Dallas roofing contractor with a heavy pickup that costs a lot to buy, fuel and insure. Actual expenses, including depreciation, may come out well ahead. The only way to know is to compare with real numbers.

Moji's take

“The deduction is only as good as the log. A mileage app that runs in the background is the cheapest tax tool you'll ever buy.”

IRS links: IRS standard mileage rates, IRS Publication 463, Travel, Gift, and Car Expenses

How we help: When we set up your books through QuickBooks Online setup and training, we set up mileage tracking so your log is complete and dated before tax time.

10

#8: Set Up an Accountable Plan for Reimbursements

Summary: An accountable plan is a written reimbursement policy that lets your business pay back employees for business expenses without those payments counting as taxable wages. It matters most when you have employees, or when you're on payroll in your own corporation.

If you're a sole proprietor filing Schedule C, you generally deduct your own business expenses directly on your return. An accountable plan becomes important once other people spend money on the business's behalf, or once you're an employee of your own corporation.

The three requirements

According to IRS Publication 463, an accountable plan must require that:

Publication 463 also gives safe harbor timelines. Expenses accounted for within 60 days after they're paid or incurred, and excess amounts returned within 120 days, are treated as reasonable. Advances given within 30 days of an expense also count.

What happens without one

Payments under a nonaccountable plan, including excess reimbursements that aren't returned, are added to the employee's wages and reported on Form W-2, according to Publication 463. That means payroll taxes on money that should have been tax-free.

Example scenario: say a Richardson home cleaning company has crew leads who buy supplies on their personal cards. Without a policy, the owner just adds the money to their next paycheck, which turns a supply refund into taxable wages. With a simple written accountable plan, the crew lead submits receipts within 60 days, the company reimburses exactly that amount, and the reimbursement stays off the W-2.

Moji's take

“An accountable plan is one page of policy and a habit of saving receipts. It's small, but it keeps reimbursements clean for you and your team.”

IRS links: IRS Publication 463, chapter 6 on reimbursements

How we help: We set up reimbursements correctly through payroll and 1099 services, and we categorize them properly in your monthly books.

11

#9: Claim the Deductions Built for Pass-Through Owners

The QBI deduction (Section 199A)

The self-employed health insurance deduction

Summary: Two deductions exist specifically for owners of pass-through businesses: the qualified business income (QBI) deduction and the self-employed health insurance deduction. Both are easy to miss and both depend on clean numbers.

The QBI deduction (Section 199A)

The IRS qualified business income deduction page ↗ describes a deduction of up to 20% of qualified business income for owners of sole proprietorships, partnerships, S corporations and some trusts and estates. Income from a C corporation and wages you earn as an employee don't qualify.

The deduction is still available for 2026, and the IRS says new rules apply for tax years beginning after 2025. Two changes stand out:

There are also income-based limits. At higher taxable incomes, the deduction can be reduced, and certain service businesses (the IRS calls them specified service trades or businesses) face extra limits. We're not listing the 2026 dollar thresholds here because they change each year. Check the current figures on the IRS QBI page linked above or ask your CPA.

The self-employed health insurance deduction

If you're self-employed and pay for your own health insurance, you may be able to deduct the premiums for yourself, your spouse and your dependents. According to the IRS Form 7206 instructions ↗, the deduction is available to self-employed people with a net profit on Schedule C, partners with net earnings from self-employment, and more-than-2% S corporation shareholders who receive wages from the S corporation.

The big catch: you can't take the deduction for any month you were eligible to participate in an employer-subsidized health plan, including one through your spouse's employer. Eligible counts even if you didn't enroll.

Example scenario: say a Melissa family-owned bakery is run as a sole proprietorship, and the owner pays $900 a month for family health coverage on a marketplace plan. If neither spouse was eligible for an employer-subsidized plan during 2026, that's up to $10,800 of premiums that may be deductible, subject to the limits on Form 7206. If the spouse took a job with a subsidized plan in July, only January through June would count.

Moji's take

“QBI and health insurance are the deductions people assume their software caught. Sometimes it did. Sometimes the inputs were wrong. We check.”

IRS links: Qualified business income deduction, Instructions for Form 7206

How we help: Both deductions are calculated on your return when we handle your business and personal tax preparation, using numbers from books we've already reviewed.

12

#10: Hold the Meeting Before December 31 and Build Wealth Outside the Business

What happens in a year-end planning meeting

Building wealth outside the business

Summary: Almost every strategy in this guide has a deadline at or near December 31. A planning meeting in the fall, with current books, is when you decide what to do with your profit before the year closes. Part of that plan should be building wealth outside your business.

Here's the honest truth about tax preparation. By the time most owners talk to their tax preparer in March, the year is over. The return can only report what already happened. Planning is different. It happens while you can still change the outcome.

What happens in a year-end planning meeting

Building wealth outside the business

Here's the part owners skip. Many DFW owners have nearly all of their net worth tied up in their company. If the business has a bad year, or if you ever want to sell or step back, that's a lot of eggs in one basket.

The retirement plans in strategy #3 are the first step. Beyond that, a plan to move some profit out of the business and into investments you own personally gives you security that doesn't depend on next quarter's work. Your CPA helps you see how much cash the business can safely spare and what the tax side looks like. A licensed financial advisor helps you decide where to invest it.

Example scenario: say a McKinney family-owned flooring company meets with its CPA in early November. The books show a strong year. In one hour, the owners decide to fund the Solo 401(k) up to the planned amount, hold off on a new trailer until spring, confirm their 16-year-old's summer payroll was documented, and set a monthly transfer from the business into a personal investment account starting in January. None of those decisions would have been possible in April.

Moji's take

“The meeting before December 31 is the most valuable hour I spend with any client. It's where clean books turn into actual savings.”

IRS links: IRS Publication 505 for the January 15, 2027 estimate

How we help: Quarterly check-ins and a year-end planning meeting are the heart of our tax planning service in McKinney and across DFW. We meet before December 31, while every option is still on the table.

13

The 5 Signs You're Overpaying in Taxes

When owners come to us, it's usually because one of these is true. If you recognize two or more, it's time for a second look.

April is always a surpriseYou get a big bill, an underpayment penalty, or both, and nobody warned you. That usually means your estimates aren't based on real numbers (strategy #2).

Nobody talks to you before December 31If your only tax conversation happens in the spring, most of the strategies in this guide were already off the table.

Your books are behind or unreconciledMessy books hide deductions and inflate profit. Our bookkeeping cleanup service fixes that once and for all.

Your bookkeeper and your tax preparer never talkWhen the person keeping the books and the person filing the return work separately, planning falls through the gap. We break down the real cost of that setup in our article on the cost of an in-house bookkeeper plus a separate CPA.

Profit is growing, but you can't say where it comes fromAs a business hits its growth stage, more profit means more tax and more complexity. If you can't tie your marketing to revenue, you can't plan cash well. Our guide to tracking marketing spend to revenue shows how to fix that in your books.

Not sure whether you need a bookkeeper, a CPA or a tax preparer to solve these? Our guide to bookkeeper vs. CPA vs. tax preparer lays out who does what.

14

Your Year-End Tax Planning Checklist

Print this, or save it to your phone. Everything on it needs to happen before December 31, 2026, unless noted.

ChecklistBefore December 31: Your 2026 Year-End Tax Checklist

Reconcile every bank and credit card account through November

Project full-year 2026 profit from your current books

Compare projected tax to the estimates you've already paid

Decide on retirement plan contributions and confirm plan setup deadlines with your provider (a SEP can be set up and funded by your filing deadline, including extensions)

Decide whether to place planned equipment or vehicles in service before December 31

Confirm family payroll is documented with timesheets and run through payroll

Measure your home office and confirm it's used regularly and exclusively for business

Total your 2026 business miles, split between January to June (72.5 cents) and July to December (76 cents)

Collect receipts for any employee reimbursements under your accountable plan

Check health insurance months against any employer-plan eligibility

Plan your fourth-quarter estimated payment, due January 15, 2027

Set a 2027 plan: equipment savings, retirement contributions and monthly transfers to investments outside the business

Book your year-end planning meeting

Print this checklist

15

Ready to Keep More of What You Earn?

Here's our honest invitation. Whether you run a crew out of Garland, a studio in Frisco or a consulting practice from a home office in McKinney, these fundamentals work the same way. Clean books. A plan for your cash. A meeting before December 31.

If you'd like a CPA to look at where you stand, book your free Books & Tax Review. We'll review your books and last year's return and send you a one-page summary of what's working, what's broken and what to fix first. No pressure and no sales pitch. If we're not the right fit, you'll still walk away with a clearer picture.

Book Your Free Books & Tax Review or call (469) 712-4199.

We serve business owners across all of our DFW service areas, including McKinney, Allen, Frisco, Plano, Prosper, Melissa, Anna, Richardson, Garland, Denton and Dallas, and owners nationwide through a secure client portal. For more articles like this one, browse our tax planning articles.

This article is general information, not tax or legal advice for your situation. Talk with a CPA before acting on it.

Moji Shobowale, CPACPA · Texas & Illinois · QuickBooks Online ProAdvisorMoji started her career as an auditor and now helps DFW business owners keep clean books and plan their taxes all year.