How to Plan Taxes as an Entrepreneur (So You Keep More of What You Earn)

If your business is growing but tax season keeps feeling like a surprise attack, you’re not alone.

“If you want to live a one-of-a-kind life, you probably deserve a one-of-a-kind financial plan.”

What you will get in 5 minutes:You’ll get a simple way to think about tax planning for entrepreneurs that actually fits real business life, plus a practical framework you can use before the year ends so you can reduce surprises, pay yourself with more control, and start building wealth outside the business instead of hoping everything works out later.

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The straight answer most people are looking for

Tax planning for entrepreneurs is not about finding “tricks.” It’s about making proactive decisions before the year ends so you legally keep more of what you earn. Most people wait until tax filing time, and by then the best options are limited. In the episode, Don points out something most entrepreneurs feel in their bones: when you look at your P&L, your biggest lifetime expense is often your tax load, and anything you can do to lighten it comes down to knowledge and logic, or getting help from a professional who already knows the moves.

 

Mike adds the entrepreneur-specific reality: as a business owner you receive the whole dollar first, then deduct expenses, then pay taxes. That order matters, and it creates opportunities employees do not get.

 

Key takeaways from the conversation

1.Taxes are a planning problem, not a paperwork problem. Filing reports the past. Planning protects the future.

2.Business owners have tools employees don’t. Mike mentions strategies in the tax code like the Augusta rule and Section 179/bonus depreciation, but also warns that internet “how-to” clips don’t replace correct execution.

3.Delegation is a money strategy. If you are doing 100% of the work, you block growth. Hiring someone who can do tasks 80–90% as well buys back time you cannot replicate.

4.Wealth cannot live only in your business. Mike’s case story shows the power of lowering tax drag and investing savings outside the business.

 

Why this topic matters more than it first appears

Entrepreneurs tend to treat taxes like weather: annoying, unavoidable, and not worth thinking about until it shows up. The problem is what that habit costs you. A big tax hit can delay hiring, stall marketing, force you into debt, or make you pull cash from places it should not come from.

 

Mike’s perspective is blunt: there’s “a lot of stuff in the tax code” that business owners can use, but most people never touch it because they either don’t know it exists or they try to apply it without structure.

 

And the part people miss: tax planning is not only about saving money. It’s about buying options. Options create calm. Calm creates better decisions.

 

The step-by-step framework discussed in the episode

Step 1: Treat your tax load like a real operating expense

Why: Don frames it clearly: for many entrepreneurs, taxes are the biggest expense in life, so lowering that burden is a direct way to keep more of what you earn.

What to do: Track profit monthly, reserve for taxes on purpose, and stop spending money that is going to be owed later.

Common mistakes: Waiting until the deadline, calling the bill “unexpected,” and treating cash in the account like it’s all available.

Step 2: Build a proactive small business tax strategy (before year-end)

Why: Mike explains the advantage entrepreneurs have: you get the whole dollar first, then deduct expenses, then pay taxes, which creates planning leverage when done correctly.

What to do: Schedule planning time before year-end with your tax pro, not just filing time. Review deductions, timing, retirement contributions, and entity structure based on your real numbers.

Common mistakes: Confusing “my CPA does my taxes” with “I have a tax strategy,” and making decisions after the year is already over.

Step 3: Use business-owner tools the right way (not the internet way)

Why: Mike calls out examples entrepreneurs overlook, like the Augusta rule and Section 179/bonus depreciation, but also notes how social platforms push tactics without the full rules.

What to do: If a strategy applies to you, document it and execute it with guidance. The goal is simple: pay what you owe, but not more than you have to.

Common mistakes: Grabbing “tax hacks” from TikTok/Facebook and trying to force them into your business without clean books, proof, or professional review.

Step 4: Pay yourself with intention, not leftovers

Why: In the case story, the entrepreneur had a CPA but no tax strategy. She wasn’t structured as an S corp and wasn’t drawing a salary for herself.

What to do: Decide how you will pay yourself (salary, owner draw, or a structured mix depending on your setup). Build a repeatable process so your personal finances are steady.

Common mistakes: Paying yourself randomly, mixing business and personal cash flow, and treating your life like it should “wait” until the business calms down.

Step 5: Delegate work that traps your time

Why: Mike’s point is simple: time is the one thing you can never replicate. If you do 100% of the tasks, you cap the business.

What to do: Identify the few things only you can do well (often 3–4). Hire for the rest, even if someone does it 80–90% as well as you.

Common mistakes: Trying to do “soup to nuts” work yourself, and delaying hires because nobody will do it exactly your way.

Step 6: Build wealth outside your business so you’re not exposed

Why: Mike’s case study shows what happens when tax drag drops and savings get invested: the entrepreneur’s liquid savings grew dramatically, and the business grew too.

What to do: Set a target for liquid reserves, then invest for long-term goals. Keep building the business, but do not let it be your only safety net.

Common mistakes: Reinvesting everything forever, then getting forced into stressful decisions when a slow season hits.

 

Common mistakes people make when applying this

Thinking filing equals planning. Filing is compliance. Planning is leverage.

Collecting strategies without a system. A tactic is useless without timing, documentation, and fit.

Doing everything yourself. Mike’s 80–90% rule exists for a reason: perfection is expensive, and it often blocks growth.

Building wealth only inside the business. Mike says it straight: investing in yourself is good, but you should also save in case you cannot solve every problem alone.

 

Pro tips that make this easier to apply

Do a quarterly “tax and cash” check-in. Not because it’s exciting. Because it prevents panic.

Keep a clean paper trail. If you want deductions to hold up, documentation is the boring superpower.

Separate accounts, separate habits. Mixing funds creates confusion fast, and confusion makes expensive decisions.

Hire one friction-reducing role first. In the story, support roles like a transaction coordinator and social media help created real lift.

Use experts to buy time back. Don’s advice is direct: talk to a professional so you stop “saving a nickel” and losing the bigger dollars.

 

FAQs

Q1: What is tax planning for entrepreneurs?
Tax planning for entrepreneurs means making proactive decisions during the year that legally reduce taxes and protect cash flow, instead of waiting until filing time to find out what you owe.

 

Q2: How can I plan taxes as a business owner if my income changes every month?
Start with a monthly tax reserve based on profit, then review quarterly with your tax pro. Variable income is exactly why you need a system, not guesswork.

 

Q3: Is it true that business owners get tax advantages employees don’t?
Yes. Mike explains that entrepreneurs receive the whole dollar first, then deduct expenses, then pay taxes, which is a different order than employees experience.

 

Q4: What’s the Augusta rule and should I use it?
Mike mentions the Augusta rule as a tax-code option that can allow using your personal residence for certain business use when done correctly. Whether it fits depends on your situation and documentation, so get professional guidance.

 

Q5: What is Section 179 or bonus depreciation in simple terms?
Mike references Section 179/bonus depreciation as a way some business owners may expense certain purchases (like vehicles used for business) when the rules and usage qualify. Do not rely on social media summaries.

 

Q6: Do I need an S corp to save on taxes?
Not always. In the episode’s case story, the entrepreneur was not an S corp and had no salary setup, which was part of the strategy conversation, but the right structure depends on profit, rules, and your state.

 

Q7: Why does delegation belong in a tax planning conversation?
Because time is a growth constraint. Mike says you cannot replicate time, and hiring people to take work off your plate is what lets you grow the business faster.

 

Q8: Should entrepreneurs invest outside their business?
Yes. Mike’s story highlights that many small business owners build most wealth inside the business, but you should also save and invest outside it so you’re protected if business gets bumpy.

 

Final thought

Planning taxes is not about being clever. It’s about being early. When you combine proactive tax planning with smart delegation, you keep more of what you earn and stop letting “later” decide your life.