Running a small business on Long Island comes with plenty of rewards — and a few challenges, especially around tax time. The good news is that with the right planning, you can significantly reduce your tax burden and keep more of what you earn.
1. Separate Your Business and Personal Finances
One of the most common mistakes we see is mixing personal and business expenses. Open a dedicated business checking account and credit card. This makes recordkeeping cleaner, simplifies your tax return, and strengthens your position if you're ever audited.
2. Track Every Deductible Expense
Home office, mileage, business meals, professional development — these all add up. Use accounting software or even a simple spreadsheet to log expenses throughout the year. Don't wait until April to reconstruct what you spent.
3. Consider Your Business Structure
Are you operating as a sole proprietor, S-Corp, or LLC? Your structure has a direct impact on how much self-employment tax you pay. For many profitable small businesses, electing S-Corp status can result in meaningful savings. We can help you run the numbers.
4. Take Advantage of Retirement Accounts
Contributions to a SEP-IRA, Solo 401(k), or SIMPLE IRA reduce your taxable income dollar-for-dollar. These accounts let you save for retirement while lowering your current year tax bill — a win on both fronts.
5. Plan Estimated Tax Payments Carefully
Underpaying estimated taxes can trigger IRS penalties. Overpaying means you're giving the government an interest-free loan. Work with a CPA to calculate your quarterly payments based on projected income, so you pay the right amount at the right time.
Tax planning is most effective when it happens throughout the year — not just in spring. If you'd like to review your situation and find opportunities to save, reach out to us at info@fandscpas.com or give us a call.