10 Tax Hacks Every Entrepreneur Should Know
Save More, Stress Less with These Smart Strategies
The #1 Rule of Wealth: It’s Not What You Earn—It’s What You Keep
Most entrepreneurs focus on making more money, but the truly wealthy focus on keeping more of what they earn. The average entrepreneur pays 30-50% of their income in taxes when you factor in income tax, self-employment tax, capital gains tax, sales tax, and state taxes. Every dollar lost to taxes is a dollar that can’t be reinvested into your business, your investments, or your future wealth.
Wealthy entrepreneurs don’t just work hard—they plan hard to legally minimize taxes. They don’t leave their tax strategy to chance or wait until tax season to think about it. One of the most common structures entrepreneurs use is an LLC that has elected to be taxed as an S-Corp, but tax optimization doesn’t stop there. A proactive tax strategy is key to financial independence. Here are 10 tax strategies you can implement today:
1. Maximize Deductions
Entrepreneurs leave thousands on the table by not tracking deductions. Common deductions include:
Home office expenses (a percentage of rent/mortgage)
Business travel and meals
Marketing and advertising costs
Software subscriptions and tools Keep meticulous records to ensure you claim every dollar legally possible.
2. Utilize the Qualified Business Income (QBI) Deduction
The QBI deduction allows certain pass-through business owners (LLCs, S-Corps, sole proprietors) to deduct up to 20% of their business income. Ensure your business qualifies and structure earnings strategically to maximize this benefit.
3. Hire Family Members
Employing your spouse or children can shift income to lower tax brackets. If structured correctly, this strategy can:
Reduce overall taxable income
Allow for retirement contributions on their behalf
Provide tax-free education benefits Follow IRS guidelines for reasonable wages and job responsibilities.
4. (Advanced Strategy) Invest in an HSA Account
A Health Savings Account (HSA) is one of the most powerful tax-advantaged accounts available. To qualify, you must have a high-deductible health plan (HDHP). Here’s how it works:
Contribute up to $8,300 (family) or $4,150 (individual) in 2025 tax-free.
Use a platform like Lively to manage your HSA and invest your funds in stocks via Schwab, allowing your HSA balance to grow tax-free.
Withdraw funds tax-free for qualified medical expenses, or treat it like a retirement account with tax-free withdrawals after age 65.
5. Leverage Tax-Advantaged Retirement Accounts
Reduce taxable income while building wealth using:
Solo 401(k) – Contributions up to $69,000 (2025 limits)
SEP IRA – Contribute up to 25% of net self-employment income
Roth IRA – Post-tax contributions grow tax-free, providing future flexibility These accounts offer significant tax benefits and help secure long-term financial independence.
6. Deduct Health Insurance Premiums
Self-employed entrepreneurs can deduct 100% of health insurance premiums for themselves and their families. This deduction applies whether or not you itemize deductions.
7. Invest in Tax-Advantaged Assets
Certain investments offer tax benefits that entrepreneurs should leverage:
Real Estate – Depreciation write-offs can offset income.
Opportunity Zones – Invest capital gains in designated areas to reduce or defer taxes.
Municipal Bonds – Tax-free income at the federal level (and sometimes state level). Strategic investing can enhance wealth-building while minimizing tax exposure.
8. (Advanced Strategy) Use Cost Segregation to Accelerate Depreciation
For real estate professionals who meet IRS Real Estate Professional (RE Pro) status, cost segregation is the ultimate tax-saving tool. Unlike traditional depreciation, which only offsets passive income, cost segregation accelerates depreciation deductions and allows you to offset active income.
Case Study:
A real estate investor purchases a $625,000 residential rental property. Since land is not depreciable, only the building structure can be depreciated. Normally, straight-line depreciation allows for a $22,727 deduction per year over 27.5 years. However, by using cost segregation, they accelerate depreciation and deduct $125,000+ in the first year, dramatically lowering taxable income.
Who qualifies? Those who spend 750+ hours per year actively managing real estate and whose real estate activities make up more than 50% of their working time.
Why it matters? Many believe cost segregation is only available for commercial properties, but it also applies to residential investment properties. If you qualify, this strategy can wipe out hundreds of thousands in taxable income, significantly reducing or even eliminating your tax bill.
9. (Advanced Strategy) The Augusta Rule
The Augusta Rule (IRS Section 280A) allows business owners to rent their home to their business for up to 14 days per year tax-free. Here’s how it works:
The business pays you fair market rent for meetings, retreats, or events.
You deduct the rent as a business expense, and the income is completely tax-free to you personally.
The rent amount should be based on comparable short-term rental rates in your area. This is an incredibly effective strategy for entrepreneurs who regularly hold business events or client meetings at home.
10. Work With a Tax Strategist (Not Just an Accountant)
Most accountants focus on filing taxes, not strategic tax planning. Partner with a tax strategist who specializes in entrepreneurs to proactively reduce liabilities. A tax plan tailored to your business can save five to six figures annually.
Final Takeaway
Entrepreneurs who master tax strategy keep more profits, reinvest faster, and scale with less friction. Take these steps now, and you’ll create a financial fortress that maximizes wealth while staying fully compliant.
