Summer in Dracut often brings a welcome slowdown for many small businesses. But while business might ease up a little, your tax planning should not.

According to the IRS, many small businesses overpay their taxes every year simply because they fail to plan early.
Summer offers the perfect opportunity to get ahead, make smart financial moves, and avoid scrambling during the busy year-end rush.

Here are three essential tax strategies every Dracut small business owner should be using right now to lower their tax liability and strengthen their financial position.

1. Review and Adjust Your Estimated Tax Payments

If your revenue so far in 2025 looks different from what you projected at the start of the year, it is time to revisit your estimated tax payments.

Estimated taxes are not “set and forget.”
The IRS expects small businesses to pay at least 90% of their current-year tax liability or 100% of the prior year’s liability to avoid penalties. Massachusetts has its own estimated payment requirements as well, filed through Form 1-ES.

At mid-year:

• Compare your year-to-date income against your original projections.

• Adjust your upcoming federal and Massachusetts state estimated payments accordingly.

• Consider a mid-year consultation with a CPA to fine-tune calculations based on real numbers, not assumptions.

Action summary:

• Recalculate quarterly payments

• Factor in Massachusetts state tax obligations

• Avoid IRS and DOR underpayment penalties

Getting this right now can save you thousands and serious stress at tax time.

2. Maximize Deductions with Mid-Year Expense Planning

Waiting until December to hunt for deductions is risky.
A mid-year review of expenses ensures you are capturing every opportunity and maintaining compliance with both IRS and Massachusetts regulations.

Focus on:

• Home Office Deductions: Track home office size and related expenses carefully to qualify.

• Vehicle and Mileage Tracking: Maintain detailed mileage logs if you use personal vehicles for business.

• Business Meals and Entertainment: Understand current deduction limits and document meals properly.

In Massachusetts, businesses should also pay special attention to sales tax compliance and properly categorize personal vs. business expenses, as these are areas where auditors often focus.

Consider prepaying deductible expenses, such as insurance premiums or rent, if it strategically lowers this year’s taxable income.

Action summary:

• Audit deductible expenses now

• Strengthen recordkeeping

• Explore prepaying major expenses for tax benefits

Smart expense management strengthens not only your tax position but your financial statements, which is critical if you are pursuing financing or government contracts.

3. Take Advantage of Retirement and Tax-Saving Opportunities

Contributing to retirement plans is one of the most effective ways to reduce taxable income, and summer is the perfect time to set up or reassess these strategies.

Options for small business owners include:

• SEP IRA: Flexible and allows higher contributions.

• Solo 401(k): Ideal for business owners without employees.

• SIMPLE IRA: A lower-cost option if you have employees.

Early setup means you can spread out contributions over more months, making it easier to maximize benefits before year-end deadlines.
Massachusetts business owners can also explore state-supported programs like the MA CORE Plan, which makes it easier for small businesses to offer retirement options.

Bonus tip:
For businesses working with federal contracts, having formal retirement contributions strengthens financial stability, an important factor when establishing credibility with contracting officers and meeting DCAA compliance standards.

Action summary:

• Set up or maximize retirement accounts

• Reduce taxable income with contributions

• Build long-term financial security while improving compliance posture

Set Yourself Up for a Strong Year-End

Summer tax planning is not about adding complexity. It is about creating breathing room, clarity, and control before the year-end rush begins.

By adjusting your estimated tax payments, auditing and maximizing your deductible expenses, and strengthening your retirement strategy, you can position your Dracut small business for a smoother, more profitable close to 2025.

At Peter Witts CPA, we specialize in helping small businesses in Dracut and across Massachusetts stay ahead of tax deadlines and ahead of the competition.
Our tax preparation services and Virtual CFO solutions are designed to keep you compliant, financially strong, and always ready for what is next.

Ready to get proactive about your taxes?
Schedule your Summer Tax Planning Session with Peter Witts CPA today and set yourself up for success before the busy season hits.