Hello Reader,
​

I winced when a potential client recently said:

“𝘐 𝘬𝘯𝘰𝘸 𝘐’𝘮 𝘭𝘦𝘨𝘢𝘭, 𝘣𝘶𝘵 𝘮𝘺 𝘱𝘳𝘦𝘷𝘪𝘰𝘶𝘴 𝘢𝘤𝘤𝘰𝘶𝘯𝘵𝘢𝘯𝘵 𝘸𝘢𝘴𝘯’𝘵 𝘴𝘢𝘷𝘪𝘯𝘨 𝘮𝘦 𝘢𝘯𝘺 𝘮𝘰𝘯𝘦𝘺.”

𝗧𝗮𝘅 𝗽𝗹𝗮𝗻𝗻𝗶𝗻𝗴 𝗶𝘀 𝗼𝗳𝘁𝗲𝗻 𝗳𝗿𝗮𝗺𝗲𝗱 𝗮𝘀 𝗮𝗻 𝗲𝗶𝘁𝗵𝗲𝗿/𝗼𝗿.

Either you swallow a big tax bill every year and stay safely within the lines.

Or you chase aggressive strategies that promise big savings but come with real risk.

I fall firmly on the side of 𝗸𝗲𝗲𝗽 𝗶𝘁 𝗹𝗲𝗴𝗮𝗹.

Growing a business is risky enough. Shady tax planning rarely earns more than the stress is worth.

𝗕𝘂𝘁 𝗵𝗲𝗿𝗲’𝘀 𝘁𝗵𝗲 𝗽𝗮𝗿𝘁 𝘁𝗵𝗮𝘁 𝗴𝗲𝘁𝘀 𝗺𝗶𝘀𝘀𝗲𝗱: 𝘠𝘰𝘶 𝘥𝘰𝘯’𝘵 𝘢𝘤𝘵𝘶𝘢𝘭𝘭𝘺 𝘩𝘢𝘷𝘦 𝘵𝘰 𝘤𝘩𝘰𝘰𝘴𝘦.

You can be fully compliant and greatly reduce your tax bill each year if you’re working with someone who knows how to plan proactively.

Here’s one example I’m preparing for my own clients this quarter.

Under the 𝗦𝗘𝗖𝗨𝗥𝗘 𝟮.𝟬 𝗔𝗰𝘁 (𝗽𝗵𝗮𝘀𝗶𝗻𝗴 𝗶𝗻 𝟮𝟬𝟮𝟯–𝟮𝟬𝟮𝟳), small businesses that open a retirement plan are eligible for 𝗳𝗲𝗱𝗲𝗿𝗮𝗹 𝘁𝗮𝘅 𝗰𝗿𝗲𝗱𝗶𝘁𝘀 𝗱𝘂𝗿𝗶𝗻𝗴 𝘁𝗵𝗲 𝗳𝗶𝗿𝘀𝘁 𝗳𝗶𝘃𝗲 𝘆𝗲𝗮𝗿𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗽𝗹𝗮𝗻.

These credits were designed to offset the cost of setting up and funding retirement benefits. Because they’re relatively new, many advisors still aren’t actively planning around them.

The mechanics are straightforward:

• Employee contributions typically produce the strongest tax savings per dollar

• Employer contributions are what trigger the SECURE 2.0 credits, especially in the early years

• However, those employer dollars reduce the larger Qualified Business Income (QBI) deduction, which is why timing matters

Here’s a simplified example we often start with:

Year Employer Employee Total Tax Benefit

1 $1,000 $4,000 $5,000 $2,556

2 $1,000 $4,000 $5,000 $2,556

3 $1,334 $3,666 $5,000 $2,504

4 $2,000 $3,000 $5,000 $1,836

5 $4,000 $1,000 $5,000 $1,572

𝘉𝘺 𝘤𝘩𝘢𝘯𝘨𝘪𝘯𝘨 𝘵𝘩𝘦 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘳 𝘢𝘯𝘥 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘪𝘰𝘯𝘴 𝘦𝘢𝘤𝘩 𝘺𝘦𝘢𝘳, 𝘸𝘦 𝘮𝘢𝘹𝘪𝘮𝘪𝘻𝘦 𝘵𝘩𝘦 𝘤𝘰𝘮𝘣𝘪𝘯𝘦𝘥 𝘵𝘢𝘹 𝘤𝘳𝘦𝘥𝘪𝘵𝘴 𝘢𝘯𝘥 𝘵𝘢𝘹 𝘴𝘢𝘷𝘪𝘯𝘨𝘴. In this example, around 𝟱𝟬% 𝗼𝗳 𝘆𝗼𝘂𝗿 𝗿𝗲𝘁𝗶𝗿𝗲𝗺𝗲𝗻𝘁 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀 𝘄𝗶𝗹𝗹 𝗯𝗲 𝗼𝗳𝗳𝘀𝗲𝘁 𝗶𝗺𝗺𝗲𝗱𝗶𝗮𝘁𝗲𝗹𝘆 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝘁𝗮𝘅 𝗰𝗿𝗲𝗱𝗶𝘁𝘀 𝗮𝗻𝗱 𝘁𝗮𝘅 𝘀𝗮𝘃𝗶𝗻𝗴𝘀 𝗮𝗹𝗼𝗻𝗲.

This is the kind of planning that never shows up in a once-a-year tax filing. It requires decisions to be made before the year closes.

This is what a true tax advisory team is responsible for:

• 𝘐𝘥𝘦𝘯𝘵𝘪𝘧𝘺𝘪𝘯𝘨 𝘸𝘩𝘦𝘵𝘩𝘦𝘳 𝘵𝘩𝘦𝘴𝘦 𝘤𝘳𝘦𝘥𝘪𝘵𝘴 𝘢𝘱𝘱𝘭𝘺 𝘵𝘰 𝘺𝘰𝘶𝘳 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴

• 𝘚𝘦𝘵𝘵𝘪𝘯𝘨 𝘵𝘩𝘦 𝘱𝘭𝘢𝘯 𝘶𝘱 𝘤𝘰𝘳𝘳𝘦𝘤𝘵𝘭𝘺 𝘧𝘳𝘰𝘮 𝘵𝘩𝘦 𝘴𝘵𝘢𝘳𝘵 (𝘵𝘩𝘪𝘴 𝘪𝘴 𝘸𝘩𝘦𝘳𝘦 𝘵𝘩𝘦 𝘣𝘪𝘨𝘨𝘦𝘴𝘵 𝘸𝘪𝘯𝘴 𝘢𝘯𝘥 𝘭𝘰𝘴𝘴𝘦𝘴 𝘢𝘤𝘵𝘶𝘢𝘭𝘭𝘺 𝘩𝘢𝘱𝘱𝘦𝘯)

• 𝘚𝘵𝘳𝘶𝘤𝘵𝘶𝘳𝘪𝘯𝘨 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘪𝘰𝘯𝘴 𝘴𝘰 𝘤𝘳𝘦𝘥𝘪𝘵𝘴 𝘢𝘯𝘥 𝘥𝘦𝘥𝘶𝘤𝘵𝘪𝘰𝘯𝘴 𝘸𝘰𝘳𝘬 𝘵𝘰𝘨𝘦𝘵𝘩𝘦𝘳, 𝘯𝘰𝘵 𝘢𝘨𝘢𝘪𝘯𝘴𝘵 𝘦𝘢𝘤𝘩 𝘰𝘵𝘩𝘦𝘳

• 𝘙𝘦-𝘦𝘷𝘢𝘭𝘶𝘢𝘵𝘪𝘯𝘨 𝘢𝘯𝘯𝘶𝘢𝘭𝘭𝘺 𝘢𝘴 𝘪𝘯𝘤𝘰𝘮𝘦 𝘨𝘳𝘰𝘸𝘴 𝘰𝘳 𝘴𝘩𝘳𝘪𝘯𝘬𝘴

This is why our clients typically see massive returns on their investment in tax planning. We’re not adding risk. We add timing, structure, and strategy.

𝗜𝗳 𝘆𝗼𝘂 𝘄𝗮𝗻𝘁 𝘁𝗼 𝘁𝗮𝗹𝗸 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗵𝗼𝘄 𝘁𝗵𝗶𝘀 𝗰𝗼𝘂𝗹𝗱 𝗮𝗽𝗽𝗹𝘆 𝘁𝗼 𝘆𝗼𝘂𝗿 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀, 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗱𝗼 𝘁𝗵𝗮𝘁 𝘃𝗶𝗮 𝘁𝗵𝗶𝘀 𝗰𝗼𝗻𝘀𝘂𝗹𝘁 𝗹𝗶𝗻𝗸.

And if not, I hope this gives you a clearer framework for evaluating the kind of tax support you actually need this year.

Be profitable,

Katherine