The Mid-Year Tax Checkup Every Cincinnati Business Owner Should Do
A one-hour review in May can shave thousands off your December tax bill. Here's exactly what to look at.
By mid-May, you have four months of real numbers for the year and eight months left to change them. That's the sweet spot for tax planning — enough data to project accurately, and enough runway to actually do something about it. Here's the checkup we run with every Cincinnati business-owner client in May and June.
1. Project the year using real numbers
Annualize your year-to-date profit (multiply by 3) and compare it to last year. Bigger swings — either direction — usually mean the current withholding, estimates or S-Corp salary is wrong. A 20% jump in profit can push you into a higher bracket, trigger the Additional Medicare tax, or blow through Ohio's Business Income Deduction threshold.
2. Recheck your S-Corp reasonable salary
If profit is up, your W-2 salary probably needs to move with it. The IRS looks at the ratio of salary to distributions — a $50,000 salary on $250,000 of profit is aggressive; a $50,000 salary on $500,000 of profit is a red flag. Adjusting mid-year is cheap; adjusting under audit is not.
3. Check retirement plan funding pace
- Solo 401(k) — you can defer up to $23,500 as an employee ($31,000 if 50+). Are you on pace? Split by 24 pay periods, that's ~$980/period.
- SEP-IRA — no per-paycheck contribution, but you should know the target so cash flow supports it in the fall.
- Employer match / profit-sharing — decide by summer so the year-end contribution isn't a surprise.
4. Review estimated payments
Q1 (April 15) and Q2 (June 15) estimates are usually based on last year's income. If this year is materially different, June is the time to reset. The safe-harbor rule (100–110% of last year's tax) protects you from penalties even if the year explodes, but under-paying beyond safe harbor by year-end is a real cash-flow problem in April.
5. Timing moves that only work with runway
- Big equipment purchases — Section 179 and bonus depreciation can deduct 60–100% of the cost in year one, but the asset has to be placed in service by December 31.
- Bonus payments — pushing an owner bonus into 2026 vs. 2027 is a legitimate way to smooth brackets.
- Charitable giving — bunching two years of contributions into one via a donor-advised fund often clears the standard-deduction hurdle.
- Roth conversion window — if profit is down this year, converting some Traditional IRA to Roth at a lower bracket may be the deal of the decade.
How we run it
Every business-owner client at Donohoo Accounting gets a mid-year projection in May or June — federal, Ohio, and city — with a written list of moves ranked by dollar impact. If you'd like the same for your business, book a mid-year planning call and we'll build the numbers around your real books.
