Business owners often think of year-end tax planning as something that happens in November or December. But some important planning deadlines arrive considerably earlier.
One example is the SIMPLE IRA.
The October 1 deadline
If a business is considering establishing a SIMPLE IRA for 2026, the deadline is generally October 1 for an employer that did not previously maintain a SIMPLE IRA plan.
There are exceptions, including certain newly established employers, and the rules governing eligibility and plan establishment should be reviewed for each business.
Why the deadline matters
The larger lesson goes beyond SIMPLE IRAs.
Many tax-planning strategies require action during the tax year. Some require a plan to be established, an election to be made, an asset to be purchased and placed in service, or another step to occur before a particular deadline.
By the time a business owner's tax return is being prepared, some of those opportunities may already be unavailable.
That's why the planning question shouldn't simply be:
“What deductions can I take when I file?”
A better question is:
“What decisions do I need to make now to improve the tax result later?”
Tax preparation versus proactive planning
Tax preparation primarily reports transactions and decisions that have already occurred. Proactive tax planning looks forward while the business owner still has an opportunity to make decisions that may affect the eventual tax result.
The October 1 SIMPLE IRA deadline is a useful example of why business owners should review potential planning opportunities before the final weeks of the year.
Owner Tax Advisors works with closely held business owners on proactive tax planning and implementation throughout the year.
This article is for general informational purposes and does not constitute tax, legal, investment, or retirement-plan advice. Individual circumstances and plan eligibility vary.
