Next-level tax planning: strategies to strengthen your client relationships

You miss the moment if your clients only hear from you at filing time. Right now, proactive planning turns into stronger relationships, better outcomes and new engagements. Clients are facing cash flow swings, new gig income and questions about business structures. They want a guide who can translate rules into choices they can act on today. Start with these practical steps, then tailor them to each client’s cash flow and goals.

Key tax planning factors clients face this season

• Year-end payroll and retirement moves still influence 2025 taxes, even if cash is tight.
• Rising interest rates and volatile markets make Roth conversions, basis tracking and entity choice more valuable to model.
• Small businesses continue to form as limited liability companies (LLCs), which means more questions about S corporation elections, compensation and payroll setup.

Three quick tax planning strategies you can use this season

1) Lock in a retirement plan that fits cash flow.

For solo owners and small teams, compare a simplified employee pension (SEP) with a solo §401(k). A SEP is easy; contributions are flexible, and it works for late funding. A solo §401(k) allows employee deferrals and possible Roth deferrals, which can create larger total contributions at modest income levels. Add a conversation about future required minimum distributions (RMDs) and whether gradual Roth conversions make sense in low-income years.

2) Clean up family payroll the right way.

Employing a spouse or teen can shift income, add bona fide retirement coverage and document legitimate business help. Nail the basics, including real work, reasonable pay and proper payroll filings. Confirm when Social Security and Medicare tax (Federal Insurance Contributions Act (FICA)) applies for children and when it doesn’t, then evaluate the downstream effects on Social Security quarters and the child’s Roth IRA eligibility.

3) Review the LLC’s default status and check timing for an S election.

Many clients start as single-member LLCs taxed as sole proprietorships. Some then outgrow this tax treatment. Walk through whether an S corporation election reduces self-employment tax after reasonable compensation. Consider modelling payroll and retirement contributions for the year, too. Don’t forget to review health insurance premiums along with any state rules.

For multi-member LLCs, review profit-loss allocations, capital accounts and basis so distributions and losses don’t surprise anyone.

Example: a practical mid-year reset

Jordan formed an LLC for consulting and expects $140,000 net this year. Health insurance is $8,000, and there’s one part-time teen helper.

• Entity review: You show Jordan two options: stay as a sole proprietor or elect S corporation status and pay himself $80,000 in reasonable wages. With the election, the payroll tax drops, but wages and payroll costs increase.
• Retirement plan: With an S corporation and a solo §401(k), Jordan can defer $23,500 as the employee, plus an employer contribution of roughly 25% of wages, up to limits. This outpaces a SEP contribution at the same income level.
• Family payroll: You document the teen’s tasks and pay. FICA treatment is confirmed, and the teen starts a Roth IRA with summer earnings.
• Health insurance: You set up proper S corporation reporting so premiums are included on the Form W-2, Wage and Tax Statement, and deducted correctly.

Jordan leaves with a simple one-page plan, a checklist of filings and clear savings estimates. You exit the meeting with a more loyal client and a new advisory engagement.

What to cover in your next client tax planning meeting

• Start every review with three questions: what’s changed, what’s planned and what keeps you up at night?
• Sketch two to three scenarios on one page, show tax and cash effects, then assign dates for payroll, retirement and entity steps.
• Track basis for partnerships and S corporations so loss usage, distributions and debt changes don’t derail planning.

Stay ready for filing season

NATP’s Tax Season Updates (TSUs) pack a one-two punch as continuing education that translates directly into better client service and more billable advisory work. Choose the format that fits your schedule.