September 2026 Financial Planning Update:
Planning Near the Finish Line

Picture this: it’s March. You’ve just had your best year in business. Your CPA calls to tell you that you owe $300,000 in taxes by April 15th. No warning. No preparation. Just a quick note that last year must have been a good year and the tax bill increased.

The decisions determining that number were made months ago. And the cash reserves you were planning to use for something else – they just became a tax payment.

The IRS does offer a mechanism to at least protect you from penalties in that scenario. Pay them at least 110% of your prior year’s tax liability throughout the year (or simply 100% of your prior year’s tax liability if your Adjusted Gross Income was $150k or less) or 90% of your current year liability and you’ll generally avoid an underpayment penalty regardless of what you ultimately owe.

That protection requires knowing your prior year number, building it into your cash flow and setting the money aside before December. Most who get that March call weren’t doing any of those things. Of course, if this year’s tax number is drastically less than the previous year and you don’t find out until April 15th, then the result is nearly as disastrous. Money you could have used for countless other ‘things’ was lent to the IRS interest-free instead.

For most business owners, taxes can be one of the largest checks written in a given year. They’re also the expense most likely to arrive as a surprise.

What Your CPA Is Solving For – And What They’re Not

There’s a version of tax planning every business owner has access to: a CPA who prepares your return, identifies deductions and tries to reduce what you owe this year. That’s genuinely valuable. But it’s a narrow frame.

Tax reduction in a single year is almost never just tax reduction. It’s tax timing. The strategies that reduce what you owe today – accelerated depreciation, cost segregation, retirement account contributions, certain business deductions – almost always create corresponding tax obligations down the road. The deduction you take this year doesn’t disappear. It shifts.

Take the qualified business income (QBI) deduction. Eligible pass-through owners can deduct up to 20% of qualified business income, but it phases out at higher income levels and can be restricted depending on your business type. Most owners know it exists. Fewer know that decisions made earlier in the year – distributions, retirement contributions, entity structure – can directly affect whether they qualify or how much they can take.

Depreciation carries the same risk, compounded. When you depreciate a business asset aggressively, you reduce taxable income now – legitimate and often smart. But if and when you eventually sell the asset, the IRS taxes the proceeds through a ‘depreciation recapture’.

For owners who depreciate assets, the tax bill when selling can stack ordinary income taxes, federal capital gains, depreciation recapture, the 3.8% net investment income tax, and state taxes all in a single year.

It was never eliminated. It was deferred. And that’s ok when you plan on it.

Optimizing for a single year without a map of where each decision leads is a common mistake. You may reduce taxes by $200,000 this year but when does that show back up – and are you ready for it? Do you even know it?

If you are aware and engaged in the discussions, then you aren’t caught by surprise. It’s part of your strategy. You know the timing matters, and as a result, you work to maximize its effectiveness.

Taxes shouldn’t dictate the decisions you make. That’s typically a bad place to end up. But you should be aware of the tax impacts because bad tax decisions can have sizable impacts.

The Solution

Multi-year tax planning requires tracking both the current-year picture and the long-term consequences of each decision.

Most CPAs are overworked with the annual compliance (i.e, tax filing). It means few of them have the time or capacity to engage in the things they are great at – strategy and minimizing taxes. That’s not a criticism. It’s how the engagement has evolved. You bring them your documents. They file your return. Quarterly meetings, when they happen, tend to focus more on year-end projections rather than five-year strategy.

That means it’s up to you to ask the questions that span multiple years: If we depreciate this asset aggressively now, what does that mean when we eventually sell? If we’re planning to add a location in three years, how does that change what we do with distributions this year? If the business doubles in value over the next five years, what does our tax liability look like in that year (because you know it’s going to increase your capital costs)? What’s the best way to minimize taxes over the entire 5-year period AND what’s the potential tax impact when we go to sell with that increase in value? Those are great questions. And it puts the CPA in a place to add tremendous value. But more times than not, you have to take that discussion to them – which means you have to be thinking ahead too.

A Different Way to Think About It

The goal of tax planning isn’t to pay zero taxes. Though that would be nice. It’s to minimize what you pay across the full arc of your financial life, including the years after the business, the years when distributions replace income and eventually the transfer of wealth to the next generation.

Some strategies that reduce taxes dramatically today will cost more later. Some strategies that cost more today create substantial flexibility and savings over the next twenty years. The right answer depends on where you are, where you’re going, and how those decisions interact with everything else: the business, the real estate, the retirement accounts, and the estate plan.

What it almost certainly requires is a conversation that connects all of those pieces – and that’s exactly what we’re here for. Your CPA is optimizing for this year’s return. We’re thinking about the next twenty. If you haven’t had that conversation with us recently, it’s worth having.

The tax bill you’re paying today was largely determined by decisions made one, two or three years ago. The tax bill you’ll pay five years from now is being shaped by decisions you’re making right now. The question is whether those decisions are intentional or whether you’ll find out how they turned out in April.

September is a reasonable time to find out which one it is.

Cheers!