The Big Beautiful Bill (BBB) reshaped several aspects of business taxation, with meaningful implications for closely held companies and their owners. While the legislation did not reduce complexity, it reinforced planning opportunities that, when used strategically, can significantly improve after-tax results.
For closely held businesses, tax planning should never be limited to year-end conversations. It is a continuous process that should align with compensation decisions, hiring plans, capital investments, and cash flow management.
Below are four core strategies business owners should revisit in light of the BBB.
1. Structure Owner Compensation Thoughtfully
Why it matters
The IRS continues to scrutinize how owners are paid, and the BBB underscores the importance of clearly separating wages from business profits. Excessive salary can inflate payroll taxes, while underpayment can raise compliance concerns.
Planning approach
Owners of S corporations and similar entities should:
• Pay a reasonable salary for services performed
• Take remaining profits as distributions when permitted
This balance supports compliance while maximizing tax efficiency.
Business impact example
A company earns $300,000. Rather than paying the entire amount as wages, the owner receives a $160,000 salary and $140,000 in distributions, reducing payroll taxes while remaining defensible.
Why the BBB matters
Increased regulatory focus makes well-documented compensation strategies more important than ever.
2. Use Retirement Plans as a Strategic Tool
Why it matters
Retirement plans remain one of the most powerful, and often overlooked, tax planning vehicles for closely held businesses. The BBB expanded and preserved incentives that strongly encourage owner participation.
Planning approach
Well-designed plans can provide:
• Significant deductible contributions
• Tax deferral
• Long-term wealth accumulation for owners and key employees
Business impact example
An owner earning $250,000 implements a retirement plan that allows a $60,000 employer contribution. The business receives a deduction, current taxes decline, and the owner strengthens long-term savings.
Why the BBB matters
Enhanced contribution flexibility reinforces retirement plans as a cornerstone of small-business tax strategy.
3. Accelerate Deductions Through Smart Investments
Why it matters
Growth often requires capital investment, but the timing of deductions can dramatically affect cash flow. The BBB continues to support accelerated write-offs for qualifying purchases.
Planning approach
Businesses acquiring equipment, technology, or certain improvements may be able to:
• Deduct a substantial portion of costs upfront
• Align tax benefits with cash outlays
Business impact example
A medical practice purchases $120,000 of equipment and deducts most of the cost in the same year, reducing taxable income and preserving cash for expansion.
Why the BBB matters
These provisions encourage reinvestment while giving businesses greater control over taxable income.
4. Employ Family Members Carefully and Compliantly
Why it matters
Family-owned businesses may lower total household taxes by employing relatives legitimately and documenting arrangements properly.
Planning approach
When family members perform real work and receive market-based wages:
• The business deducts compensation
• Income may be taxed in lower family brackets
Business impact example
An owner hires an adult child for administrative and marketing support at $35,000 annually. The business deducts the wages, and the income is taxed at the child’s lower rate instead of the owner’s higher rate.
Why the BBB matters
Updated income thresholds and expanded standard deductions can make compliant income-shifting strategies even more effective.
Final Perspective
The Big Beautiful Bill raised the stakes for closely held businesses. Owners who neglect proactive planning risk paying more than necessary, while those who integrate tax strategy into everyday decisions can strengthen long-term financial performance.
Effective tax planning should be:
• Intentional
• Ongoing
• Integrated with operations and cash flow
• Coordinated with trusted advisors
For closely held business owners, the message is clear: plan earlier, structure smarter, and make tax strategy a core part of running the business, not an afterthought.
