For business owners, some of the most valuable tax strategies require time to implement. With only a few weeks left in Q1, we’d recommend focusing on the following before April rolls around:
1. Review How and When You’re Taking Income
Business owners have flexibility that W-2 employees don’t. Depending on your entity structure, you may be able to time income recognition to your advantage. Accelerating income into the current year can make sense if you expect higher tax rates later. Deferring it may reduce this year’s liability if business has been unusually strong.
Owner draws, distributions, and bonuses all carry different tax treatment depending on how your business is structured. The right move depends on your cash needs, your entity type, and what your estimated tax picture already looks like for the year.
Now is also the time to look at estimated taxes. If your income has shifted significantly from last year, your quarterly payments may also need to adjust. Underpayment penalties aren’t catastrophic, but they’re also entirely avoidable with a little proactive oversight.
2. Pay Attention to Retirement Contributions
Often, business owners treat retirement contributions as a year-end checkbox, but waiting until December to fund your plan means your money sits on the sidelines for most of the year, missing months of potential growth and compounding.
For 2026, the Solo 401(k) total contribution limit is $72,000 ($80,000 if you’re 50 or older), combining employee deferrals of up to $24,500 and employer contributions up to 25% of your W-2 wages. The SEP IRA contribution limit for 2026 is also $72,000, capped at 25% of eligible compensation.
One important nuance: Solo 401(k) employee deferrals must be elected by December 31 of the plan year, but employer contributions can be made up until your tax filing deadline. S-Corps and partnerships still have until March 15 to fund employer contributions for 2025, or September 15 with an extension.
3. Think Before You Spend
Many business owners operate under the assumption that spending money equals saving on taxes, but spending a dollar to save thirty cents in taxes still costs you seventy cents.
That said, there are legitimate reasons to time certain purchases. Under current tax law, bonus depreciation allows businesses to immediately deduct the full cost of qualifying equipment and property rather than depreciating it over several years. If you have a capital purchase planned, timing can make a difference.
Before any large business expense, ask: Does this purchase serve a real operational need? If the answer is yes, coordinate with your advisor to determine the most efficient way to structure it.
4. Review Your Entity Structure and Compensation
S-Corp owners face an ongoing balancing act. The IRS requires shareholder-employees to pay themselves reasonable compensation before taking distributions. Pay yourself too little to minimize payroll taxes, and you invite IRS scrutiny. The IRS has moved its S-Corp compensation oversight into a specialized team within its Employment Tax Program, a signal that enforcement isn’t softening.
Reasonable compensation is based on what the market would pay someone with your experience performing your specific role. If your salary hasn’t been reviewed recently, or if your business income has grown significantly, it’s worth a fresh look.
Entity structure itself deserves a periodic review too. What worked when you were generating $300,000 in revenue may not be the optimal structure at $2 million, especially when you take tax law changes into consideration.
5. Stress-Test Your Estimates
With Q2 comes the April 15 estimated tax deadline for most individual taxpayers. For business owners with variable income, this payment often catches people off guard.
Use your Q1 actuals and your projection for the rest of the year to stress-test your estimate. If revenue is trending higher than last year, a proactive adjustment now could prevent a larger problem later.
Schedule a Proactive Check-In
Q2 is closer than it feels right now. The strategies that reduce your tax burden, build your retirement assets, and keep your business structure working efficiently require planning, coordination, and enough lead time to act.
If you’re not sure where your planning stands, having a short conversation now is easier than reacting to a surprise later. Reach out to the Opal Wealth Advisors team to schedule a Q2 planning check-in.
Sources
Internal Revenue Service. (2025). Retirement topics — contribution limits.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-contribution-limits
Internal Revenue Service. (2025). One-participant 401(k) plans.
https://www.irs.gov/retirement-plans/one-participant-401k-plans
Internal Revenue Service. (2025). Retirement plans FAQs regarding SEPs.
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps
Internal Revenue Service. (2024). S corporation compensation and medical insurance issues.
https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues
Internal Revenue Service. (2025). Estimated taxes.
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
Internal Revenue Service. (2024). Publication 946: How to depreciate property.
https://www.irs.gov/publications/p946