Tips Accountants Are Giving Small Businesses as They Start 2026

Start 2026 with Smart Accounting Strategies That Drive Growth and Profitability

As we step into 2026, small business owners across the Bay Area and beyond are looking for ways to maximize profits, reduce tax burdens, and build more efficient operations. We've gathered insights from leading accounting professionals who specialize in helping businesses thrive, including experts from Whittmarsh CPA, Fitness Taxes, Performance Financial LLC, Shore Financial Planning, and Whyte CPA PC.

These aren't generic tips you'll find everywhere. These are the real strategies that accountants are implementing right now for their most successful clients—from construction contractors like Davis Contracting LLC and Bettencourt Construction to service businesses like First Class Plumbing and Cascade Concrete Coatings.

Review Your 2025 Tax Return Before Filing—Not After

One of the most powerful tips accountants are giving clients right now is to review their 2025 tax returns proactively before they're filed. Most business owners wait until April to see their tax liability, but smart accountants like those at Whittmarsh are conducting pre-filing reviews in January and February to identify last-minute opportunities.

This early review allows you to make strategic decisions that could still impact your 2025 taxes, such as maximizing retirement contributions, properly categorizing expenses, or identifying deductions you might have missed. Businesses like CBC Twin Cities and Country Creek Builders benefit from this approach by catching errors before they become costly audit triggers.

At Asnani CPA Tax & Accounting, we always conduct a comprehensive tax analysis before filing to ensure our clients never overpay. This proactive approach means we're examining your return line by line, comparing it to prior years, and identifying any red flags that could trigger IRS scrutiny.

Maximize Your 2026 Retirement Contributions Early

For 2025 tax returns filed in 2026, the standard deduction has increased to $15,000 for single filers and $30,000 for married couples filing jointly. But one strategy that accountants at firms like Performance Financial and Shore Financial Planning are emphasizing is maximizing retirement contributions to reduce taxable income even further.

Small business owners can contribute to SEP IRAs, Solo 401(k)s, or even establish defined benefit pension plans that allow for massive tax-deductible contributions. For 2025, defined benefit plans can allow contributions up to $280,000 annually for qualifying individuals.

Construction businesses like Fredrickson Masonry and landscaping companies like Minnesota Landscapes often have fluctuating income that makes strategic retirement planning even more critical. The key is working with a tax planning specialist who can help you determine the optimal contribution level based on your income, tax bracket, and long-term wealth building goals.

Implement Proper Job Costing Systems Now

One of the most common pieces of advice from accountants specializing in construction and contracting is to implement proper job costing systems at the start of the year. Businesses like Plan Pools and Preferred1 MN need to understand which projects are actually profitable versus which ones are draining resources.

According to insights from accounting professionals like Whyte CPA PC, many contractors assume they know which jobs make money, but without detailed job costing data, they're often wrong. Some residential projects that seem profitable actually lose money when you account for overhead, equipment costs, and the owner's time.

A proper bookkeeping system that tracks costs by project, phase, and cost category allows you to make data-driven decisions about which types of work to pursue and which to avoid. This same principle applies to service businesses like Rodan Cleaning, which need to understand the profitability of different service lines and client types.

Create a 2026 Tax Reduction Plan in Q1

The biggest mistake small business owners make is waiting until December to think about tax planning. Accountants at Fitness Taxes and other specialized firms emphasize that effective tax reduction requires year-round planning, starting in January.

Your 2026 tax reduction plan should address several key strategies: determining your optimal S-Corp salary, planning quarterly estimated payments, timing equipment purchases for maximum depreciation benefits, and identifying opportunities for hiring family members or implementing retirement plans.

For businesses in growth mode, the planning becomes even more complex. You need to coordinate your capital expenditures, depreciation schedules, and tax liabilities to create a predictable, tax-efficient financial plan. This is where working with an outsourced accounting service that provides proactive tax planning becomes invaluable.

Evaluate Your Entity Structure Annually

Many small business owners set up their LLC or S-Corp years ago and never revisit the decision. But accountants recommend an annual evaluation to ensure your entity structure still makes sense given your current income, business model, and growth trajectory.

The rules around S-Corp elections, reasonable compensation, and qualified business income deductions change regularly. What made sense for your business three years ago might not be optimal today. Whittmarsh and similar firms help clients evaluate whether they should maintain their current structure or make changes.

This evaluation is particularly important for businesses experiencing rapid growth or significant changes in their business model. Whether you're operating a construction business like Bettencourt Construction or a specialized service provider, your entity structure should evolve with your business.

At Asnani CPA, we help clients understand the tax implications of different entity structures and make strategic decisions that align with both current needs and long-term goals.

Hire Your Children for Legitimate Business Work

One underutilized tax strategy that accountants frequently recommend is hiring your minor children to perform legitimate work in your business. According to IRS guidelines, children who perform actual work for your business can be paid reasonable wages, shifting income from your high tax bracket to their lower bracket.

For 2025, the standard deduction is $15,000, meaning a child can earn up to that amount without owing federal income tax. Even income above that threshold is taxed at much lower rates than the business owner would pay. This strategy is perfectly legal when done correctly—the work must be legitimate, the pay must be reasonable for the work performed, and you need to maintain proper documentation.

Firms like Whyte CPA PC help clients implement this strategy properly, ensuring they have the necessary paperwork and procedures to withstand IRS scrutiny. The key is treating your children like any other employee—paying them through payroll, tracking their hours, and maintaining records of the work they performed.

This strategy works particularly well for family businesses in construction, landscaping, and service industries where children can perform tasks like filing, social media management, cleaning job sites, or assisting with basic administrative work.

Set Up Monthly Financial Review Meetings

Rather than looking at your financial statements once a year when you file taxes, leading accountants recommend monthly financial review meetings. These brief meetings with your CPA or bookkeeper help you stay on top of your numbers and make course corrections before small problems become major issues.

Businesses that succeed, like Davis Contracting LLC and First Class Plumbing, typically have regular touchpoints with their accounting team to review profit and loss statements, cash flow projections, and key performance indicators.

These monthly meetings allow you to identify trends early—whether that's a decline in a particular service line's profitability, an increase in overhead costs, or opportunities to optimize your pricing. The firms at Performance Financial and Shore Financial Planning build these regular check-ins into their service model specifically because they drive better business outcomes.

Implement Expense Categorization Best Practices

How you categorize expenses in your bookkeeping system matters more than most business owners realize. Proper categorization not only makes tax preparation easier but also provides better insight into where your money is actually going.

Accountants recommend using a consistent chart of accounts that aligns with your industry standards and provides the level of detail you need to make strategic decisions. For example, construction businesses like Cascade Concrete Coatings and Country Creek Builders need to track materials, subcontractor costs, and equipment expenses separately to understand job profitability.

Service businesses like Rodan Cleaning benefit from categorizing expenses by service type, allowing them to identify which services have the highest profit margins. The key is setting up your bookkeeping system correctly from the start rather than trying to reorganize years of poorly categorized transactions.

Leverage Technology to Automate Routine Tasks

One consistent recommendation from accounting professionals is to embrace technology that automates routine accounting tasks. Cloud-based accounting software like QuickBooks Online, combined with integrations for receipt capture, expense tracking, and bank feeds, can save hours each week.

For businesses with employees, automated payroll services eliminate the time-consuming task of calculating payroll taxes, filing quarterly reports, and managing year-end W-2s. Firms like Fitness Taxes help clients implement these systems so they can focus on growing their business rather than managing administrative tasks.

The automation extends beyond basic bookkeeping. Many accounting firms now offer client portals where you can securely upload documents, review financial reports, and communicate with your accounting team without endless email chains or lost paperwork.

Plan Major Equipment Purchases Strategically

For businesses that require significant equipment investments—whether construction equipment for companies like Fredrickson Masonry or specialized tools for service providers—accountants emphasize strategic timing and tax planning around these purchases.

Section 179 deductions and bonus depreciation allow businesses to write off equipment purchases immediately rather than depreciating them over several years. However, taking these deductions in the wrong year can waste valuable tax benefits if you don't have sufficient income to offset.

The accountants at Whittmarsh and Whyte CPA help clients create multi-year capital expenditure plans that coordinate equipment replacement schedules with tax liabilities and cash flow needs. This strategic approach ensures you maximize tax benefits while maintaining the equipment and tools necessary to operate efficiently.

Establish Clear Separation Between Business and Personal Finances

One foundational principle that accountants consistently emphasize is maintaining clear separation between business and personal finances. This means using separate bank accounts, separate credit cards, and avoiding personal purchases through business accounts.

Commingling funds creates several problems: it makes bookkeeping more complicated and time-consuming, it increases audit risk, and it can jeopardize the liability protection provided by your LLC or corporation. Clean accounting records are also essential if you ever want to secure financing, attract investors, or sell your business.

Business owners at companies like CBC Twin Cities and Minnesota Landscapes benefit from this discipline by having financial records that clearly show business performance without the noise of personal transactions mixed in.

Focus on Cash Flow Management, Not Just Profitability

A profitable business can still fail if it runs out of cash. Accountants stress the importance of understanding your cash flow cycle—how long it takes from when you incur expenses to when you collect payment from customers.

Construction and contracting businesses face particular challenges with cash flow due to long payment cycles, retention holdbacks, and the need to purchase materials upfront. Companies like Plan Pools and Preferred1 MN need sophisticated cash flow forecasting to ensure they can meet payroll and vendor obligations even during slow payment periods.

Working with an outsourced accounting service that provides proactive cash flow management helps you anticipate shortfalls before they become crises and capitalize on opportunities that require quick access to capital.

Get Your Books Cleaned Up Early in the Year

Rather than waiting until tax season to address bookkeeping issues, accountants recommend a comprehensive cleanup in the first quarter. This means reconciling all bank and credit card accounts, categorizing transactions properly, and resolving any discrepancies before they multiply.

Clean books throughout the year make tax preparation faster, cheaper, and more accurate. They also provide the reliable data you need to make strategic business decisions. Firms like Performance Financial build this cleanup into their annual service cycle to ensure clients start each year with pristine financial records.

If your books are months behind or filled with errors, the start of the year is the perfect time to either dedicate resources to catching up or to bring in professional help from a bookkeeping service that can get you current and keep you there.

Connect with Asnani CPA for Comprehensive Tax and Accounting Support

The strategies outlined by leading accountants all point to the same conclusion: small business success requires proactive, year-round accounting and tax planning. It's not enough to file your return once a year and hope for the best.

At Asnani CPA Tax & Accounting, we specialize in helping small businesses, contractors, and startups implement these exact strategies. We provide comprehensive bookkeeping, payroll, tax planning, and CFO-level guidance that ensures you never overpay in taxes and always have the financial clarity you need to grow.

Whether you operate a construction business like the contractors we've highlighted, run a service company, or manage a growing startup, we can help you implement a tax reduction plan that puts thousands back in your pocket each year. Contact us today for a complimentary tax and accounting analysis to see where you could be saving money and gaining efficiency.

Don't wait until December to think about your 2026 taxes. The best time to start planning is right now, in January, when you have the full year ahead of you to implement strategies that truly make a difference.

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