Small business owners wear many hats, but "tax strategist" shouldn't be one. A strong wealth management partner simplifies complex rules, helping lower tax bills, boost retirement savings, and transform business success into lasting personal wealth. The team builds coordinated strategies to keep more capital available for business growth, employee rewards, and long-term legacy building. In this article we will discuss a few tax strategies you may not have heard of.

First, Why Do Taxes Hit Entrepreneurs Differently?

Operating a closely held business directs profits onto personal tax returns; missed deductions can result in significant financial loss. The 20% Qualified Business Income (QBI) deduction alone can reduce taxable income substantially. Equipment purchases, real estate depreciation, and retirement contributions all connect business activities to personal tax planning. Asset Strategy offers guidance through these critical intersections.

What are Solo 401(k)s, SEP-IRAs and Cash-Balance Plans?

For businesses without employees (or with only a spouse employed), a Solo 401(k) allows both employer and employee contributions—up to $70,000 in 2025, with additional catch-up contributions for those eligible. Businesses with staff seeking flexibility may benefit from a SEP-IRA, allowing deductions of up to 25% of compensation, also capped at $70,000 for 2025. High-earning owners can achieve even greater deductions through cash-balance or defined-benefit plans, which can sharply reduce taxable income while building significant retirement assets.

Section 199As & Entity Designs

Asset Strategy professionals structure salary arrangements, business distributions, and real estate leases to maximize the QBI deduction before key provisions sunset. A thorough review of entity types and state tax rules ensures that the business structure minimizes unnecessary tax exposure.

Qualified Small Business Stock (QSBS)

Owners holding C-Corp shares that meet Section 1202 requirements may be eligible to exclude up to 100% of capital gains after a five-year holding period—potentially saving millions.

Cost Segregation & Accelerated Depreciation

Commercial property owners typically face long recovery periods for building costs. A cost segregation study reclassifies components such as equipment, fixtures and land improvements into shorter depreciation schedules, unlocking significant upfront tax savings.

Protecting & Monetizing the Business Exit

Asset Strategy's valuation experts determine business value well before a sale and develop customized exit strategies—such as installment sales, tax credit, charitable trusts, or real estate exchanges—to defer or reduce taxes while maintaining passive income streams. The firm’s insurance team ensures heirs and partners are protected, securing succession funding without disrupting business cash flow.

How can Northern Bank’s Wealth Management Partner, Asset Strategy, Help?
There are many different tax strategies out there, and every small business is different... but, no matter what the industry, there is ALWAYS a way to optimize. Whether you’re a small business scaling rapidly or preparing for a transition, early coordination between business and personal finances provides greater flexibility and maximized tax savings.

DISCLAIMER:

Because investor situations and objectives vary this information is not intended to indicate suitability or a recommendation for any individual investor. This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance. Product guarantees are based on the claims-paying ability of the issuing company and assume compliance with the product’s benefit rules, as applicable. There are retirement account risks that could diminish investor returns, such as, but not limited to: low interest rates, market volatility, withdrawal timing and sequence of returns risk, government policy uncertainty and increased longevity. Prospective investors should perform their own due diligence carefully and review the “Risk Factors” section of any prospectus, private placement memorandum or offering circular before considering any investment. Advisory services offered through Asset Strategy Advisors, LLC (ASA), an SEC registered investment adviser. Insurance services offered through Asset Strategy Financial Group, Inc. (ASFG). CIS, ASA and ASFG are separate companies.

Products and services made available through Asset Strategy and Concorde Investment are not insured by the FDIC or any other agency in the United States and are not deposits or obligations of, nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.