Last Updated on 4 weeks ago by Heyward CPA PLLC
It's mid-February 2026. You're focused on growth, hiring, operations, but here's the thing: the smartest tax moves happen before Q2 starts, not in December when your CPA sends the "we need to talk" email.
If you're running a business that's scaling, profitable, or just hitting its stride, now is the time to get your tax house in order. Waiting until year-end means you'll miss opportunities, overpay Uncle Sam, or scramble to fix what could've been handled in Q1.
Here are seven tax moves you should make right now to set yourself up for a better 2026, and a smoother filing season in 2027.
1. Run Your Q1 P&L and Adjust Estimated Tax Payments
Most business owners set their estimated tax payments in January based on last year's numbers. But if your revenue is up, or down, those estimates might already be wrong.
Why this matters: Underpay your estimates, and you'll face penalties. Overpay, and you're giving the IRS an interest-free loan while your business could use that cash for payroll, marketing, or equipment.
Next Steps:
- Pull your January and February P&L from QuickBooks or Xero.
- Compare actuals to your budget and last year's numbers.
- If revenue is materially different, recalculate your estimated tax liability for 2026.
- Adjust your Q2 payment (due April 15, 2026) to reflect the new reality.
If you're not sure how to calculate safe harbor or annualized income exceptions, we help clients run these numbers during virtual strategy sessions. It's a small conversation that can save you thousands in penalties, or free up cash you didn't know you had.
2. Max Out Retirement Contributions Early
If you haven't funded your SEP-IRA, Solo 401(k), or SIMPLE IRA yet, Q1 is the time to do it. Contribution limits are higher in 2026, and getting money into a retirement plan early gives you more time for tax-deferred growth.
Plus, if you're setting up a new retirement plan this year, you may qualify for startup tax credits under SECURE 2.0, up to $5,000 per year for three years to offset administrative costs, plus additional credits for employer match contributions.
Next Steps:
- Confirm your 2026 contribution limits based on your plan type.
- If you're an S-Corp owner, make sure your salary supports the contribution you want to make.
- Schedule contributions now, don't wait until December.
- If you don't have a plan yet, talk to your CPA or payroll provider about setting one up before Q2.
Retirement contributions reduce your taxable income and build long-term wealth. It's one of the cleanest tax strategies available to business owners.
3. Time Your Equipment Purchases to Capture Bonus Depreciation
Here's the reality: Bonus depreciation is phasing down. In 2026, you can deduct 60% of qualifying equipment costs in the first year (down from 80% in 2025). By 2027, it drops to 40%. By 2029, it's gone.
If you're planning to buy computers, vehicles, machinery, or software in 2026, the earlier you purchase and place it in service, the better.
Section 179 is still generous, up to $2.5 million in immediate expensing with a $4 million phase-out threshold, but bonus depreciation stacks on top of that for larger purchases.
Next Steps:
- List any equipment purchases you're planning for 2026.
- Confirm delivery and "placed in service" dates with your vendors.
- Run the numbers with your CPA to see whether Section 179, bonus depreciation, or standard depreciation makes the most sense for your tax situation.
- Don't assume you can wait until December, supply chain delays happen.
Need help running depreciation scenarios? That's exactly what we do in tax planning sessions. We'll model out different purchase timing options so you know what saves you the most.
4. Review Your S-Corp Salary for "Reasonable Compensation"
If you're an S-Corp owner, the IRS expects you to pay yourself a reasonable salary before taking distributions. Pay yourself too little, and you're inviting an audit. Pay yourself too much, and you're overpaying FICA taxes.
The "right" number depends on your industry, role, revenue, and geographic location. And if your business grew significantly in 2025, your 2026 salary might need to increase to stay defensible.
Next Steps:
- Review your current W-2 salary and compare it to industry benchmarks for your role.
- If your salary hasn't changed in two years but your revenue doubled, it's time for a raise.
- Document why your salary is reasonable, job duties, hours worked, comparable roles.
- Adjust payroll now if needed, so your W-2 reflects the right number for the full year.
This is one of the most common S-Corp mistakes we see. It's also one of the easiest to fix if you catch it early.
5. Screen for R&D Tax Credits (Yes, You Might Qualify)
Most business owners think R&D credits are only for pharmaceutical companies or tech startups. Wrong.
If you're developing new products, improving processes, creating custom software, or experimenting with materials or formulas, you might qualify. We've helped manufacturing companies, law firms building custom legal tech tools, and even daycare centers developing proprietary curricula claim R&D credits.
The credit can be substantial, and for startups, it can offset payroll taxes.
Next Steps:
- List any projects where your team was solving technical problems, developing new methods, or testing prototypes.
- Gather payroll records and contractor invoices tied to those projects.
- Talk to your CPA about whether an R&D study makes sense for your business.
We work with R&D specialists to help clients identify and document qualifying activities. If you've been innovating, you might be leaving money on the table.
6. Audit Your Accountable Plan and Reimbursement Documentation
If your business reimburses employees or owners for mileage, home office expenses, meals, or travel, you need an accountable plan in place, and you need documentation to back it up.
Without an accountable plan, those reimbursements become taxable wages. Without documentation, they're disallowed deductions.
This is one of those things that feels minor until the IRS asks for receipts three years later.
Next Steps:
- Confirm your business has a written accountable plan policy.
- Review reimbursements from Q1, do you have receipts, dates, and business purposes documented?
- Set up a system (like Expensify or Dext) to capture this information in real time.
- If you've been reimbursing without documentation, stop now and fix the process going forward.
Need help setting up an accountable plan? We can draft the policy and show you how to implement it in about 20 minutes.
7. Schedule a Mid-Year Tax Strategy Session
Here's the truth: Most tax savings happen during the year, not at year-end.
If you wait until December to talk to your CPA, your options are limited. But if you have a strategy conversation now, while you still have 10 months to act, you can implement real tax planning moves that save serious money.
We're talking about entity structure optimization, timing income and expenses, maximizing credits, planning for multi-state exposure, and building a tax roadmap that aligns with your growth goals.
Next Steps:
- Block time on your calendar for a tax planning session before April.
- Bring your Q1 financials, your 2025 tax return, and a list of big decisions you're considering (new hires, expansion, equipment purchases, etc.).
- Ask your CPA to model different scenarios and show you the tax impact of each.
Schedule a strategy session with Heyward CPA here. We work virtually with growth-focused business owners across the country, and we specialize in turning tax strategy into a competitive advantage.
Don't Wait Until 2027 to Think About 2026 Taxes
Growth-minded business owners don't treat taxes as an April surprise. They treat tax strategy as part of their financial foundation, and they make moves during the year to optimize their outcomes.
You've got about six weeks before Q2 starts. That's enough time to review your numbers, adjust your strategy, and put yourself in a better position for the rest of 2026.
Ready to get started? Let's talk.
Disclaimer: This blog post is for educational and informational purposes only and does not constitute tax, legal, or financial advice. Every business's tax situation is unique, and strategies discussed here may not apply to your specific circumstances. Please consult with a qualified CPA or tax advisor before making any tax-related decisions.