Maximize Your Profits, Minimize Your Taxes

Keep More in Your Pocket

Running a small business isn’t just about making sales—it’s about keeping more of what you earn. Smart, legal tax strategy is one of the most reliable ways to increase profitability and build long-term family wealth (Internal Revenue Service [IRS], 2025a). Below are strategies you can start exploring today—plus practical tools to keep your records airtight.

---

1) Make Your LLC Work Harder for You

An LLC (Limited Liability Company) is one of the most flexible and accessible structures for small business owners. It protects your personal assets, keeps business and personal finances separate, and gives you options for how you’re taxed (IRS, 2025b).

Most LLCs default to “pass-through taxation,” where profits and losses flow directly to your personal tax return. In some cases—usually when your business income reaches a certain threshold—it can be beneficial to elect to be taxed as an S-Corporation. This can reduce self-employment tax, but it also comes with added requirements like running payroll for yourself and filing extra tax forms. It’s worth exploring with a tax professional once your profits consistently exceed the point where the savings outweigh the costs (IRS, 2025c).

Tool picks: QuickBooks or Wave for bookkeeping, plus a CPA or enrolled agent to model both LLC default and S-Corp scenarios before making a decision.

--

2) Hire Your Children—Properly—and Document Everything

One of the most underused small business tax benefits is hiring your own children.

Under federal law, there’s no minimum age requirement for children working in a business owned solely by their parents—as long as the work is age-appropriate, non-hazardous, and legitimate (IRS, 2025d). They can start helping as soon as they’re capable of doing real tasks, like cleaning tools, organizing supplies, filing paperwork, or managing social media posts.

In a parent-owned sole proprietorship or partnership (where both partners are the parents), wages paid to your children under 18 are generally not subject to Social Security and Medicare taxes. Children under 21 are exempt from Federal Unemployment Tax (FUTA) as well. For corporations or partnerships with non-parent owners, these exemptions typically do not apply (IRS, 2025d).

Missouri example:

If you run a small construction LLC in Missouri—say a home remodeling business—your 14-year-old could help clean and organize the workshop, sort nails and screws into labeled bins, inventory tools, hand out marketing flyers in the community, or enter supply receipts into your bookkeeping system. You’d track their hours, pay them a fair hourly wage based on similar entry-level work, and run payroll through your business. Those wages would be deductible for your business, lowering your taxable profit and potentially reducing your family’s overall tax bill.

Tool picks:

Payroll: Gusto, ADP Run, or QuickBooks Payroll.

Documentation: Google Drive or Dropbox for signed timesheets, job descriptions, and photos of completed tasks.

Family employee policy file: Keep a written guide with duties, pay rates, and expectations.

---

3) Capture Every Deductible Expense

That laptop, phone, camera, or even part of your home office? If you use it for your business, you may be able to deduct it. The key is documentation (IRS, 2025e).

Tool picks:

Receipts: Expensify, Shoeboxed, or QuickBooks mobile app.

Mileage: MileIQ or Driversnote.

Meal log: A Notion page or Google Sheet with columns for date, location, attendees, and business purpose (attach receipt scans).

---

4) Pair Retirement Savings with Tax Planning

SEP IRAs, Solo 401(k)s, and SIMPLE IRAs let you save for your future while lowering your taxable income (IRS, 2025f).

Tool picks: Fidelity, Vanguard, or Schwab small business retirement plans (with integration to your bookkeeping software).

---

5) Create a Simple, Audit-Ready Recordkeeping System

The easiest way to make tax season painless is to stay organized year-round:

One accounting hub (QuickBooks or Wave) for all transactions.

One receipt app (Expensify or Shoeboxed) for every purchase.

One cloud folder (Google Drive or Dropbox) with subfolders for Receipts, Bank Statements, Payroll, Contracts, and Reports.

Monthly close checklist: Reconcile accounts, upload receipts, and export P&L and balance sheet to your reports folder (IRS, 2025g).

Build Wealth for Your Family, Not Uncle Sam

The goal isn’t to avoid taxes—it’s to legally structure your work so your profits fund your family’s future first. With the right system, you won’t leave deductions on the table, and your books will stand strong if the IRS ever comes calling.

---

If You Haven’t Started Yet, Start Now

There’s no “perfect” time. You’ll learn as you go, improve with each step, and pivot when you need to. Waiting keeps you in the same place; starting moves you forward.

----

Spotlight: Merchant Ship Collective

You know us through our two newsletters:

The Launch Dock — hands-on guidance for starting, running, and growing a small business.

Education Catalyst — research-informed strategies and tools for educators and school leaders.

And here’s the exciting part—we’re working on something new behind the scenes.

---

Small Business Spotlight: Be Featured in The Launch Dock

Are you a small business owner looking to grow your audience?

Submit your info to be featured in our Small Business Spotlight inside The Launch Dock—the newsletter from Merchant Ship Collective that supports real entrepreneurs.

We’ll promote your story, your top product or service, and help you reach more people. It’s completely free. Let’s grow loud together.

➡ Apply here: The Launch Dock Spotlight 

References

Internal Revenue Service. (2025a). Small business and self-employed tax center. U.S. Department of the Treasury. https://www.irs.gov/businesses/small-businesses-self-employed

Internal Revenue Service. (2025b). Limited liability company (LLC). U.S. Department of the Treasury. https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc

Internal Revenue Service. (2025c). About Form 2553, Election by a Small Business Corporation. U.S. Department of the Treasury. https://www.irs.gov/forms-pubs/about-form-2553

Internal Revenue Service. (2025d). Family help. In Publication 15 (Circular E), Employer’s tax guide. U.S. Department of the Treasury. https://www.irs.gov/publications/p15

Internal Revenue Service. (2025e). Publication 463: Travel, gift, and car expenses. U.S. Department of the Treasury. https://www.irs.gov/publications/p463

Internal Revenue Service. (2025f). Publication 560: Retirement plans for small business (SEP, SIMPLE, and qualified plans). U.S. Department of the Treasury. https://www.irs.gov/publications/p560

Internal Revenue Service. (2025g). Publication 583: Starting a business and keeping records. U.S. Department of the Treasury. https://www.irs.gov/publications/p583