proactive tax planning

Q: Is tax planning worth the cost for small business owners?

For many small business owners, tax planning is worth the cost. Planning often identifies savings opportunities related to entity structure, payroll strategy, depreciation, retirement contributions, and timing of income and expenses. In many cases, the tax savings exceed the cost of the service.

Why Tax Season Is the Worst Time to “Start” Tax Planning

February 5, 2026 by Steve Madsen

Tax planning timing matters more than most business owners realize. Tax season is when many people start thinking about strategy, but it’s also when most tax-saving opportunities are already gone.

By the time January through April arrives, the decisions that could have made the biggest difference for the prior year have already been locked in. That’s why tax season is often the worst time to start tax planning, even though it feels like the most logical moment to ask questions.

Why Doesn’t Tax Season Allow Real Planning?

During this period, the focus shifts to reporting what already happened.

Once the calendar year ends, your CPA’s role shifts from strategic advisor to compliance specialist. The work becomes about accurately documenting the past, not shaping the future.

During tax season, the focus is on:

Accurately reporting income and expenses
Filing required federal and state tax returns
Applying any elections that are still available
Ensuring IRS and state compliance

At that point, your tax return is a historical document, not a planning tool.

What Tax Decisions Are Usually Locked In After December 31?

Most high-impact tax decisions must be made before the year ends.

After December 31, many of the strategies that could significantly reduce your taxes are no longer on the table.

Common examples include:

S-Corporation salary levels
Timing of income and expenses
Bonus depreciation and Section 179 elections
Retirement contribution structure
Accountable plan reimbursements
Health insurance handling for owners

Because of this, waiting until tax season often means reviewing missed opportunities rather than creating new ones.

What Is January Actually Good For?

January is ideal for reviewing results and preparing for proactive planning — not fixing the past.

While tax season limits what you can change about the prior year, it provides valuable insight for the year ahead.

January is best used to:

Review the prior year objectively
Identify planning opportunities that were missed
Set payroll and entity strategy correctly for the new year
Adjust estimates before issues compound
Build a proactive tax plan early

Smart business owners use January to prepare for planning, not to undo last year.

This is why proactive tax planning timing early in the year makes such a difference.

What’s the Difference Between Tax Filing Season and Tax Planning Season?

Tax filing and tax planning serve very different purposes.

Filing Season

Looks backward
Emphasizes accuracy and compliance
Offers limited ability to change results
Often results in surprise balances due

Planning Season

Looks forward
Shapes outcomes intentionally
Happens throughout the year
Improves cash flow and predictability

The biggest tax savings are created before tax season — not during it.

Who Should Be Thinking About Tax Planning Early?

Tax planning matters most when your situation involves decisions, not just reporting.

January planning is especially valuable for:

S-Corporation owners
Business owners with growing profits
Service-based businesses and consultants
Real estate investors
Anyone earning $150,000 or more

If your tax situation includes strategy, structure, or timing, waiting until filing season puts you behind.

Need help with tax preparation this season? Filing is easier when it supports a bigger plan.

What Do Proactive Business Owners Do Differently?

Proactive business owners treat tax planning as a process, not an annual event.

Instead of waiting for a finished tax return, they:

Review income projections early
Set reasonable S-Corp salaries intentionally
Coordinate retirement contributions with payroll
Plan deductions throughout the year
Adjust estimates before surprises arise

These decisions tie directly into ongoing tax planning, not just tax preparation.

The Bottom Line

Tax planning timing determines whether your tax return reflects strategy or missed opportunity.

If tax season is the first time strategy comes up, opportunities have already been missed. The best outcomes happen when planning starts early and continues throughout the year.

Frequently Asked Questions

Why isn’t tax season the best time to start tax planning?

Because most high-impact tax decisions must be made before the year ends. Tax season is primarily about reporting and compliance, not creating new savings opportunities.

Can a CPA still help reduce taxes during tax season?

A CPA can ensure accuracy and apply limited elections, but major strategies are usually no longer available. Most meaningful savings come from decisions made earlier.

Is January too late to do tax planning?

No, January is ideal for reviewing results and planning for the current year. It’s just too late to change many outcomes for the prior year.

Do small business owners really need year-round tax planning?

Yes, especially if income fluctuates or decisions affect payroll, deductions, or cash flow. One-time planning rarely produces optimal results.

What’s the difference between tax preparation and tax planning?

Tax preparation reports what happened, while tax planning shapes what happens next. Both are important, but they serve different roles.

How Madsen and Company Can Help

At Madsen and Company, we help business owners move beyond reactive tax season thinking and into proactive, year-round tax strategy.

That includes:

Strategic tax planning throughout the year
Coordinated business and personal tax preparation
Clear guidance before deadlines pass

Need tax preparation this season? We ensure your returns are accurate, compliant, and aligned with your overall strategy.

Want to reduce future tax surprises? A proactive tax planning review can help you start the year intentionally — not reactively.

👉 Schedule a Proactive Tax Planning Review

The S-Corp Deadline Is Closer Than You Think: 5 Things to Do Before March 15

February 1, 2026 by Steve Madsen

March 15 business tax deadline for S-Corporation owners — S-Corporation owners must file by March 15 to avoid IRS penalties and delays.

The March 15 tax deadline is one of the most important — and most misunderstood — deadlines for S-Corporation owners and partnerships.

But for S-Corporations and partnerships, March 15 is often the most important and most misunderstood tax deadline.

Each year, business owners are caught off guard by March 15, assuming they still have time or that filing an extension means nothing is due. That misunderstanding can lead to penalties, rushed decisions, and avoidable stress.

What Is Due on the March 15 Business Tax Deadline?

March 15 is the federal filing deadline for S-Corporations and partnerships, regardless of income or tax owed.

S-Corporations (Form 1120-S)

Partnerships (Form 1065)

This deadline applies whether:

you have one owner or multiple owners
the business made money or not
you ultimately owe tax or not

If your business is required to file, the deadline applies.

The Hidden Cost of Missing March 15

Missing the March 15 business tax deadline can trigger IRS penalties even if no income tax is owed.

One of the biggest misconceptions is that penalties only apply if tax is owed.

For S-Corporations, that’s not true.

If an S-Corp return is late and no extension is filed, the IRS can assess penalties of approximately $245 per shareholder, per month, up to 12 months—even if the business itself owes no income tax.

That means a “harmless delay” can quietly turn into thousands of dollars in penalties.

Filing an Extension Doesn’t Mean Doing Nothing

An extension:

gives you more time to file, not more time to plan
does not delay taxes owed or required estimated payments
still requires reasonable estimates and coordination with personal returns

Waiting until after March 15 to think about the business return often limits your options and forces reactive decisions instead of intentional ones.

What Smart Business Owners Do Before March 15

Proactive business owners use the weeks leading up to March 15 to:

Confirm the correct business structure is still working
Review profit levels before returns are finalized
Ensure S-Corp payroll is reasonable and defensible
Coordinate business results with personal tax planning
Decide whether filing now or extending makes the most sense

Many of these decisions tie directly into ongoing tax planning, not just tax preparation.

Unsure whether to file or extend? A short planning review before March 15 can clarify your next steps.

The goal isn’t just to meet a deadline—it’s to file returns that reflect deliberate strategy, not last-minute scrambling.

Why March 15 Impacts Your Personal Taxes Too

Business returns don’t exist in a vacuum.

For S-Corp owners and partners, the business return directly affects:

personal taxable income
estimated tax requirements
retirement planning
cash flow planning for the year ahead

Rushing the business return often creates downstream issues on the personal side—including surprises in April.

The Bottom Line

March 15 isn’t just a filing date—it’s a decision point.

When business tax returns are treated as a formality instead of part of a broader plan, opportunities get missed and risks increase.

The best outcomes happen when:

the business return is handled intentionally
deadlines are used strategically
and planning happens before options disappear

FAQs

What business tax returns are due on March 15?

March 15 is the federal filing deadline for S-Corporations (Form 1120-S) and partnerships (Form 1065). This deadline applies even if the business has only one owner or did not generate taxable income.

What happens if an S-Corp misses the March 15 deadline?

Missing the March 15 deadline can trigger IRS penalties even if no tax is owed. The IRS may assess penalties of approximately $245 per shareholder, per month, up to 12 months, if no extension is filed.

Does filing an extension delay taxes owed?

No, filing an extension only delays the deadline to file the return, not to pay taxes. Any tax owed must still be paid by the original due date to avoid penalties and interest.

Do single-member S-Corps still have to file by March 15?

Yes, single-shareholder S-Corporations are subject to the same March 15 deadline as multi-owner S-Corps. The filing requirement and penalty structure apply regardless of the number of shareholders.

Can I still make tax planning decisions after March 15?

Most high-impact tax planning decisions must be made before the year ends, not after March 15. While some elections may still be available, key items like payroll levels, income timing, and certain deductions are usually already locked in

Is it better to file or extend an S-Corp return?

Whether to file or extend depends on your business’s income, documentation readiness, and coordination with personal taxes. The best choice is an intentional one based on planning, not a default reaction to timing pressure.

Why does the March 15 deadline affect my personal tax return?

S-Corporation and partnership income flows directly into the owner’s personal tax return. Delays or rushed filings at the business level can create surprises in personal tax liability, estimates, and cash flow planning.

How Madsen and Company Can Help

At Madsen and Company, we help business owners approach the March 15 deadline with clarity—not panic.

That means:

understanding what decisions still matter
coordinating business and personal tax strategy
and ensuring filings support long-term goals, not just compliance

👉 Want to know what decisions matter most right now?

Unsure whether to file or extend? A short planning review before March 15 can clarify next steps.
Schedule a Proactive Tax Planning Review.

Small Business Tax Planning: Strategies to Reduce Taxes Legally

January 28, 2026 by Steve Madsen

Most business owners focus entirely on tax filing. However, the real savings are not found in April. They are created through strategic small business tax planning done well before the year ends.

If you own a small business, an S-Corporation, or rental property, proactive planning is the difference between writing a large check to the IRS and keeping more of your cash to reinvest in your business and future.

Tax Planning vs. Tax Preparation: What’s the Difference?

It is a common misconception that tax planning and tax preparation are the same thing.

Tax preparation is historical. It reports what has already happened.

By the time you are “doing your taxes,” most opportunities to change the outcome are gone.

By contrast, tax planning is forward-looking. It focuses on shaping financial decisions today to legally reduce what you owe tomorrow.

As a result, effective planning allows you to:

Legally lower taxable income through smart deductions
Improve cash flow so you are not hit with an unexpected bill
Align business growth with current tax strategies
Reduce filing-season surprises

Learn how tax preparation fits into the process and how proactive planning works

Optimize Your Business Structure

First, your business structure is the foundation of your tax bill. Whether you operate as a sole proprietor, LLC, partnership, or S-Corporation affects how much tax you pay.

For many profitable businesses, the S-Corporation remains a powerful tool for reducing self-employment taxes. By paying a reasonable salary and taking the remaining profit as distributions, many owners can save thousands.

However, this strategy requires proper payroll compliance. If your business income has increased, it may be time to review whether your current structure still makes sense.

Learn more about S-Corporation planning

Strategic Timing of Income & Expenses

Next, the timing of income and expenses can be just as important as how much you earn.

Common strategies include:

Accelerating expenses before year-end
Deferring income into the next tax year when appropriate
Making retirement contributions before December 31
Planning equipment purchases for depreciation benefits

These decisions must be made before the year ends to be effective.

Meanwhile, large purchases such as vehicles, equipment, and technology should not be made without considering their tax impact.

Leverage Depreciation & Asset Planning

Strategic planning allows you to:

Use Section 179 and bonus depreciation when appropriate
Match deductions to higher-income years
Avoid wasting deductions in low-profit years

Depreciation is not just an accounting concept. It is a powerful tax planning tool when used intentionally.

Maximize Retirement & Health Benefits

Furthermore, planning is not only about business deductions. It also plays a major role in personal wealth building.

Common strategies include:

Solo 401(k) or SEP IRA contributions
Health Savings Accounts (HSAs)
Owner-only retirement plans for S-Corporation owners

These tools reduce taxable income while helping you prepare for the future.

Likewise, real estate investors face a separate set of planning considerations.

Real Estate Tax Strategy

Real estate investors operate under a different set of tax rules than operating businesses.

Key planning areas include:

Cost segregation and depreciation strategies
Repairs versus improvements classification
Short-term rental tax treatment
Passive activity rules
Timing of property sales

With proper planning, rental income can be taxed far more efficiently.

Click here to learn more about real estate tax strategy

For this reason, waiting until tax season often leads to missed opportunities.

Why Waiting Until April Costs You Money

By the time tax season arrives, your CPA becomes a historian.

They can:

Report what happened
Apply limited remaining elections
Ensure compliance

But they cannot undo past decisions. The best tax results come from decisions made during the year, not during filing season.

The Bottom Line: You work too hard for your money to give away more than is legally required.

Frequently Asked Questions

Below are answers to common questions business owners have about tax planning.

How often should I do tax planning?

Most growing businesses benefit from a mid-year review and a final fourth-quarter strategy session.

Is this only for large corporations?

No. Small businesses often see the greatest percentage savings because they have more flexibility in how they pay owners and time expenses.

Can tax planning reduce my audit risk?

YYes. High-quality planning improves documentation, consistency, and reporting accuracy, which reduces audit risk.

Take Control of Your Tax Future

Stop guessing what your tax bill will be.

Madsen and Company provides specialized tax planning for S-Corp owners, real estate investors, and small businesses nationwide.

Schedule Your Strategy Consultation Today
Learn More About Our Business Tax Service

Tax Preparation vs. Tax Planning: Why Filing Your Return Is the Most Expensive Time to Get Advice

January 9, 2026 by Steve Madsen

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Most taxpayers think their CPA’s job starts in February.

In reality, by the time your tax return is being prepared, the most important tax decisions for the year have already been made—and locked in.

This is where many business owners unknowingly overpay taxes year after year.

The confusion usually comes from not understanding the difference between tax preparation and tax planning. They sound similar, but they serve very different purposes—and timing is everything.

What Tax Preparation Actually Is

Tax preparation is compliance work.

Its purpose is to accurately report what already happened and file the required forms with the IRS and state agencies.

Tax preparation generally includes:

Preparing and filing tax returns
Reporting income and deductions based on past activity
Applying elections that are still available at filing time
Ensuring accuracy and compliance

Tax preparation is essential—but it is historical. It looks backward.

By the time your CPA is preparing your return, they are limited to reporting decisions that were already made, whether intentional or not.

What Tax Preparation Is Not

This is where expectations often break down.

Tax preparation does not:

Change how much salary you paid yourself
Restructure your entity after the year ends
Retroactively time income or expenses
Redesign depreciation strategies
Fix missed retirement or health planning opportunities

Once the calendar year closes, most high-impact tax strategies are no longer available.

What Tax Planning Actually Does

Tax planning is strategic and proactive.

It happens before and during the year—not after it ends.

Tax planning focuses on shaping your tax outcome intentionally, rather than reporting it after the fact.

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Tax planning may include:

Entity structure optimization
S-corporation salary vs. distribution analysis
Timing of income and expenses
Depreciation and asset strategy
Retirement contribution planning
Health insurance and reimbursement strategy
Multi-year tax projections

Good tax planning doesn’t rely on loopholes. It relies on timing, structure, and informed decision-making.

Tax Preparation vs. Tax Planning (Side-by-Side)

Tax Preparation	Tax Planning
Looks backward	Looks forward
Reports results	Shapes results
Compliance-focused	Strategy-focused
Happens once a year	Happens year-round
Limited savings potential	Often five-figure savings
Reactive	Proactive

This difference is why planning fees often feel higher—but result in substantially lower taxes.

Who Tax Planning Is Best For

Tax planning is not necessary for everyone. It delivers the most value when income and decisions are complex.

Tax planning is typically ideal for:

S-Corporation owners
Real estate investors
Contractors and service businesses
Households earning $150,000+
Anyone with fluctuating income or multiple entities

If your tax situation involves decisions—not just reporting—planning usually pays for itself many times over.

Who Probably Does Not Need Tax Planning

We believe clarity builds trust.

Tax planning may not be a good fit if:

Your income is strictly W-2
You do not own a business or rental property
Your tax situation rarely changes year to year
You are mainly focused on filing accurately at the lowest cost

In those cases, high-quality tax preparation alone may be sufficient.

Why Timing Matters More Than Most People Realize

The biggest tax mistake we see is waiting too long to ask questions.

Many high-impact strategies must be decided before December 31, including:

S-corp salary decisions
Bonus depreciation elections
Retirement contributions
Accountable plan reimbursements
Income acceleration or deferral

Once the year ends, the tax return simply documents what already happened.

That’s why trying to “fix it on the tax return” is often impossible.

The Bottom Line

Tax preparation tells you what you owe.
Tax planning helps determine what you should owe.

If you only speak with your CPA once a year, you are likely making tax decisions unintentionally—and paying more than necessary as a result.

Tax planning isn’t about aggressive tactics.
It’s about making informed decisions before it’s too late.

Want to Know If Tax Planning Makes Sense for You?

If you own a business, real estate, or have rising income, proactive tax planning may be one of the highest-ROI decisions you can make.

The right strategy doesn’t start with a tax return—it starts with a conversation.

Frequently Asked Questions

What is the main difference between tax preparation and tax planning?

Tax preparation focuses on accurately filing tax returns based on what already happened during the year. Tax planning focuses on making proactive decisions before and during the year to legally reduce taxes. In short, tax preparation reports results, while tax planning shapes them.

Is tax planning worth the cost for small business owners?

For many small business owners, yes. Tax planning often identifies savings opportunities related to entity structure, payroll strategy, depreciation, retirement contributions, and timing of income and expenses. When income exceeds a certain level or involves a business or rental activity, the tax savings from planning frequently exceed the cost of the service.

Can my CPA still help me reduce taxes if it’s already tax season?

Once the year has ended, most major tax-saving opportunities are no longer available. During tax season, a CPA can ensure accurate reporting and apply any remaining elections, but they generally cannot change key decisions such as salary levels, entity structure, or timing of income. That’s why proactive planning before year-end is critical.

S-Corporation Tax Planning: 7 Strategies Small Business Owners Miss (and How to Fix Them)

January 4, 2026 by Steve Madsen

S corporation tax planning strategies for small business owner

If you own an S-Corporation, tax planning is not optional — it’s one of the biggest levers you have to keep more of what you earn.

Yet many profitable S-corp owners unknowingly overpay thousands in taxes each year because planning happens after the year ends.

Below are 7 overlooked S-Corporation tax strategies, why they matter, and what proactive business owners should do instead.

What Is S-Corporation Tax Planning?

S-corporation tax planning involves proactively structuring payroll, distributions, deductions, and timing decisions throughout the year to legally reduce income and payroll taxes for business owners.

1. Reasonable Salary Is Not a Guess — It’s a Strategy

One of the most common S-corp mistakes is setting payroll without documentation or logic.

Why it matters

Your salary determines:

Social Security and Medicare taxes
IRS audit exposure
Whether distributions remain tax-advantaged

What to do instead

A reasonable salary should be based on:

Role performed
Time spent in the business
Comparable market wages
Business profitability

👉 Fix: Document your salary annually and adjust it as profits change — especially after growth years.

Reasonable salary determinations must be supported by documentation and facts specific to each business and owner role.

2. Distributions Without Planning Can Backfire

Yes, S-corp distributions avoid payroll tax — but only after reasonable salary rules are met.

Common mistake

Owners take distributions without reviewing:

Year-to-date profits
Payroll timing
Estimated tax obligations

Smarter approach

Distributions should be coordinated with:

Payroll planning
Quarterly estimates
Cash flow forecasts

👉 Fix: Treat distributions as part of a tax plan, not just cash withdrawals.

3. Retirement Contributions Are Often Timed Wrong

Many S-corp owners miss out on tens of thousands in deductions simply due to poor timing.

Examples

Solo 401(k) employee vs employer contributions
W-2 wages set too low to support employer contributions
Contributions made from the wrong account

👉 Fix: Coordinate payroll, W-2 wages, and retirement planning before December 31 — not after.

4. Health Insurance Is Frequently Deducted Incorrectly

S-corp health insurance rules are very specific.

Common issues

Premiums paid personally instead of through payroll
Incorrect W-2 reporting
Missed above-the-line deductions

👉 Fix: Ensure premiums are properly reimbursed or paid by the S-corp and reported correctly on your W-2.

5. Home Office Deductions Are Often Handled the Wrong Way

Many owners either:

Skip the deduction entirely, or
Take it incorrectly as a Schedule C deduction

Better method

For S-corps, the accountable plan reimbursement is often superior:

IRS-compliant
Cleaner documentation
No payroll tax impact

👉 Fix: Use a formal accountable plan with documented calculations.

6. Vehicle Deductions Are Frequently Overstated or Underdocumented

Vehicles are a high-audit-risk area when done incorrectly.

Common problems

No mileage logs
Business use overstated
Wrong depreciation method

👉 Fix: Decide annually between:

Mileage reimbursement, or
Actual expense reimbursement
—and document business usage consistently.

7. No One Is Looking Ahead to Next Year’s Taxes

The biggest issue?
Most S-corp owners only look backward.

True tax planning means:

Reviewing current-year projections
Adjusting payroll and estimates mid-year
Planning deductions intentionally

👉 Fix: Meet with your CPA before year-end to run projections and adjust strategy.

Who S-Corporation Tax Planning Is Most Valuable For

Proactive S-corp planning delivers the greatest benefit for:

Owners earning $150,000+ annually
Businesses with consistent or growing profits
Service-based businesses and consultants
Owners paying themselves W-2 wages
Multi-entity or real estate–adjacent businesses

Why Proactive S-Corporation Tax Planning Matters

S-corps don’t fail tax-wise because of complexity — they fail because decisions are made too late.

At Madsen and Company, we specialize in:

Proactive S-corp tax planning
Small business advisory
Year-round strategy — not just tax prep

S-Corporation Tax Planning FAQs

Do S-corporation owners really need tax planning?
Yes. Many S-corp tax benefits depend on decisions made during the year, not at filing time.

Can tax planning still help if my S-corp is already profitable?
Often yes. Payroll optimization, retirement planning, and timing strategies can significantly reduce taxes even for established businesses.

When should S-corp owners start tax planning?
Ideally early in the year, with check-ins before mid-year and year-end to adjust strategy.

Want to Know What You’re Missing?

If you own an S-Corporation and want clarity on:

Reasonable salary
Distributions
Retirement planning
Reducing unnecessary payroll and income taxes

👉 Schedule a proactive tax planning review and find out where opportunities may exist before the year ends.

Do S-corporation owners really need tax planning?

Yes. Many tax benefits depend on decisions made during the year, not at filing time.

About Madsen and Company

Madsen and Company helps small business owners turn complex tax rules into clear, proactive strategies — so taxes stop being a surprise and start becoming a plan.