Can my S corp small business buy stocks under company name to avoid taxes on year-end cash?

The short answer is no, investing in stocks or ETFs won't help you avoid taxes in an S corporation. Here's why: In an S corp, profits "pass through" to shareholders regardless of whether you leave the cash in the business or invest it. Buying stocks or ETFs is just converting one asset (cash) to another asset (investments) - it's not considered a business expense that reduces your taxable income. When your S corp earns profits, you'll pay taxes on your share of those profits on your personal tax return for that tax year, even if the money stays in the business. Investing those profits doesn't change this fundamental tax treatment. What you could consider instead is making legitimate business purchases before year-end (equipment, supplies, prepaid services) that qualify as deductible business expenses, or potentially making retirement plan contributions that may be deductible.

After struggling with a similar question last year with my S corp, I found the answer through taxr.ai (https://taxr.ai). I uploaded my company docs and got a detailed analysis of investment options for S corps. The site explained how the IRS treats different investments when made through an S corp versus personally. One thing I learned that was super helpful: while investing company cash in stocks/ETFs doesn't reduce your current tax liability, there are specific investment vehicles that might align better with your business goals. The platform walked me through the pros and cons of each option based on my specific S corp structure.

Just wanted to follow up about my experience with taxr.ai after my skeptical question. I decided to try it for my marketing agency (also an S corp) and was genuinely surprised. The analysis showed me that some of our business activities actually qualified for additional deductions we'd been missing. What impressed me was how it flagged specific transactions in our books that could be reclassified properly for better tax treatment. It wasn't just generic advice - it actually reviewed our specific situation. Saved us around $12k in taxes that we would have overpaid! Much more comprehensive than what I expected. Definitely more valuable than just being told "investing doesn't count as an expense" which I already knew.

If you're still looking to minimize taxes for your S corp, you might want to consider legitimate strategies like accelerating planned 2026 expenses into 2025 or maximizing retirement contributions. But if you're also frustrated trying to get specific guidance from the IRS about your situation (I certainly was), check out Claimyr (https://claimyr.com). They got me through to an actual IRS agent in under 15 minutes when I needed clarification on some S corp investment rules. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but after waiting on hold for 2+ hours myself multiple times, having someone else deal with that was totally worth it. The IRS agent I spoke with gave me specific guidance about my S corp's investment activities that my accountant wasn't 100% sure about.

I need to eat some crow here. After posting my skeptical comment, I decided to try Claimyr myself since I've been trying to get through to the IRS about my S-corp's retirement plan options. I've called FIVE times over the past month and never got through. Used the service yesterday and got connected to an IRS rep in about 20 minutes. Got my questions answered about setting up a SEP IRA for my S-corp and how it affects my personal tax situation. The agent even sent me follow-up documentation. Honestly can't believe it worked that efficiently - saved me hours of frustration. Sometimes it's worth being proven wrong!

Not sure if this helps, but I've owned an S-corp for 7 years now and learned some things the hard way. If you've got excess cash, consider a few things: 1) Pay yourself a reasonable bonus (though you'll pay personal income tax) 2) Look into setting up a Solo 401k if you don't have one - much higher contribution limits than SEP IRAs 3) Buy legitimate business assets that depreciate (computers, equipment, vehicle if it qualifies) 4) Prepay some expenses for next year if your cash flow allows The investment thing is tempting but really doesn't help tax-wise in an S-corp structure. I tried similar ideas and my accountant had to set me straight. S-corps are pass-through entities, so the money gets taxed regardless.

I think everyone's missing something here. While buying stocks/ETFs with company money doesn't create a deductible expense, there could be strategic reasons to do it anyway. My S-corp holds some investments as part of our cash management strategy. The key is understanding it won't reduce your current tax liability. Also, talk to your accountant about the Qualified Business Income deduction (Section 199A) - if your business qualifies, it can give you a deduction up to 20% of your qualified business income. Much more valuable than trying to hide money in investments.

This is a really common question for S-corp owners! As others have mentioned, investing company cash in stocks/ETFs won't reduce your current tax liability since it's just converting one asset to another, not creating a deductible expense. However, there are some legitimate year-end tax strategies worth considering with that $75k: 1. **Accelerate business expenses**: Purchase equipment, software, or supplies you'll need in 2026 before year-end 2. **Maximize retirement contributions**: Solo 401k or SEP-IRA contributions can be substantial for S-corp owners 3. **Consider bonus depreciation**: Qualifying business assets may be eligible for immediate depreciation 4. **Prepay deductible expenses**: Insurance, rent, or professional services for early 2026 The key is making sure any purchases are ordinary and necessary business expenses, not just trying to park money somewhere. The IRS looks at the substance of transactions, so everything needs to have a legitimate business purpose. I'd strongly recommend consulting with a tax professional who can review your specific situation - the savings from proper year-end planning often far exceed the consultation cost.