When you run a business, “cash is king” isn’t just a catchy phrase; it’s a survival rule. But what if there’s a way to improve your cash flow that doesn’t involve raising prices, chasing down invoices, or cutting your break-room snack budget?

There is, and it’s called strategic tax planning—the not-so-secret weapon smart business owners use to keep more money in their bank accounts and less tied up in taxes.

What is strategic tax planning?

Tax planning is the difference between simply filing your taxes and actually using the tax code to your advantage.

It’s not about “loopholes” or dodgy deductions. It’s about understanding the rules and making smart decisions throughout the year to lower your tax bill legally. When you do it right, more cash stays in your business, and you’re not scrambling to find money for an unexpected tax bill at tax time.

How tax planning leads to better cash flow

Good tax planning is about how much you pay in taxes and when you pay them. Timing makes a big difference in how much cash you’ve got to work with.

For example, if you expect tax rates to rise next year, you might use tax planning to accelerate income into this year, when you can pay taxes on it at the current lower rates. You still pay taxes on that income, but tax planning lets you decide when it makes the most sense to pay the tax bill.

Here are some other ways strategic tax planning helps your cash flow:

• Delays your tax payments so you can keep cash longer
• Unlocks credits and incentives that reduce what you owe
• Matches income and expenses wisely to avoid surprise tax bills
• Prevents overpaying estimated taxes

5 tax planning to keep cash flowing in your business

Tax planning isn’t one-size-fits-all. So it’s important to discuss your options with a tax professional and identify the strategies that work best for you. That said, here are five potential methods you can use to keep more cash in your business.

1. Choose the right business structure

Are you a sole proprietor, a partnership, a limited liability company (LLC), or a corporation? Should you make an election to be taxed as an S corporation? The structure you choose affects how and when you pay taxes.

Sometimes changing your business structure makes sense. For example, if you’re an LLC, making an S corporation election might lower your self-employment taxes, meaning more money in your pocket. A quick entity review might be the easiest raise you’ve ever given yourself.

However, there are other costs to consider, like the cost of filing a separate return for the S corp and running payroll. It’s always a good idea to discuss the plan with your tax advisor.

2. Get serious about deductions

You’re probably leaving money on the table if you’re not tracking all your business expenses. Home office? Internet? Business meals? How about using your personal vehicle to pick up office supplies? It all adds up.

The key is to keep good records. Don’t rely on your memory (or your glovebox full of crumpled receipts). A tax advisor can recommend apps to digitize receipts and track your mileage. It’s way easier than trying to track them manually or combing through thousands of transactions on your bank and credit card statements at year-end.

Every dollar you save in income taxes means more cash flow for business operations, hiring, or contributing to retirement accounts.

3. Leverage tax credits

Credits are even more powerful than deductions. While tax deductions lower your taxable income, tax credits reduce your tax bill dollar for dollar. That means a $2,500 credit is literally $2,500 off your tax bill.

Here are a few tax credits to discuss with your tax advisor:

• The Work Opportunity Tax Credit (WOTC) for hiring people who traditionally face barriers to employment, like convicted felons, recipients of the Supplemental Nutrition Assistance Program (SNAP) and other state benefits, or individuals experiencing long-term unemployment
• The Employer-Provided Childcare Credit for providing childcare facilities for your employees
• The Clean Vehicle Credit for purchasing an electric vehicle (EV) or fuel cell vehicle (FCV)
• The Retirement Plans Startup Costs Tax Credit for small businesses that set up and administer a SEP, SIMPLE, or qualified retirement plan, like a 401(k)

This is just a small sample of the tax credits that may be available to you; be sure to discuss your options with a tax professional.

4. Time income and expenses

You might be surprised how much control you actually have over when you pay taxes, especially if you’re a cash-basis taxpayer.

If you expect to be in a lower tax bracket next year, consider delaying invoicing until January to shift taxable income into next year. Need more deductions this year? Prepay January’s rent or stock up on supplies in December. Timing can make your numbers work better for you.

5. Take action on tax strategies before year-end

This one’s big. Don’t wait until you’re ready to file your tax return to start looking for ways to reduce your tax burden. By then, many tax planning strategies are off the table.

Instead, take a proactive approach to your tax situation. You should be reviewing your books and tax strategies monthly. Use that time to run the numbers and see where you stand. You might even save enough to splurge on those fancy ergonomic chairs the team’s been hinting about.

When you plan your taxes before they’re due, you avoid nasty surprises at tax time, free up cash to reinvest in your business, and sleep better knowing you’re not overpaying Uncle Sam.

And hey, a little more money in the bank means you can finally expand operations, tackle that website update, hire help, or just build a cushion so you’re not sweating the slow seasons.

You don’t have to go it alone

Tax planning might sound intimidating, but it doesn’t have to be. At NewWay Accounting, we work with clients all the time who thought they were “too small” to improve cash flow with tax planning until they saw the difference it made. You don’t need a huge team or a complex operation. You just need someone who knows the rules and wants to help you use them to your advantage.

So next time you think about taxes, don’t just think “ugh, paperwork.” Think power move. Because planning your taxes is really planning your cash flow and your peace of mind.

Ready to get started? Contact NewWay Accounting. We can help you look for ways to reduce taxable income that make sense for your unique business.