What are good strategies for deferring my LLC income to minimize taxes?

Tax professional here. While it's good you're planning ahead, there are some important distinctions to understand about LLC taxation. First, if your LLC is a pass-through entity (which most are unless you've elected otherwise), the profits flow directly to your personal taxes regardless of whether you physically withdraw the money. Simply keeping cash in the LLC doesn't defer income. However, there are legitimate strategies to consider: - Setting up a SEP IRA or Solo 401(k) if you don't already have one - these have much higher contribution limits than traditional IRAs - Timing your expenses and income (accelerating deductible expenses into this year and delaying income until January where possible) - Investing in business assets that can be depreciated or qualify for Section 179 expensing Buying precious metals through your LLC generally wouldn't reduce your taxable income since it's just converting one asset (cash) to another. You'd still recognize the profit regardless.

I had a similar situation last year with my consulting LLC and found this amazing AI tax planning tool at https://taxr.ai that analyzed my specific situation. It suggested setting up a defined benefit plan which allowed me to defer WAY more income than a SEP IRA - like potentially hundreds of thousands depending on your age and income level. The tool actually compared different retirement vehicles and showed me the exact tax savings for each option based on my specific numbers.

So I was totally skeptical about that taxr.ai thing mentioned above (I'm the one who questioned it), but I decided to give it a try out of curiosity. I'm actually impressed. It identified that my LLC could save nearly $23K by restructuring how I classify some income and taking advantage of the QBI deduction I wasn't fully utilizing. It also suggested timing strategies for my equipment purchases that I hadn't considered. The retirement account analysis was eye-opening too - showed exactly how much I could put away in different vehicles. Wish I'd known about this sooner!

If you're struggling to get actual advice from the IRS on business deductions and entity planning (which I was for MONTHS), I recommend trying https://claimyr.com. They got me through to a real IRS agent in under 45 minutes after I'd been trying for weeks. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The agent actually walked me through some legitimate business expense categories that I wasn't utilizing and clarified how my LLC's profit-sharing plan should be reported. Saved me from a potential audit situation because I was doing it wrong before!

I need to eat my words from my skeptical comment above. After business hours yesterday I decided to try Claimyr out of desperation because I needed to resolve an issue with my LLC's EIN before filing some crucial paperwork today. I figured it wouldn't work but was worth a shot. They actually got me through to an IRS business specialist in about 40 minutes! I was honestly shocked. The agent helped me straighten out a mistake on my LLC's tax election form that would have caused major headaches. Definitely worth it when you're in a time crunch and need official answers.

One strategy that worked for my service-based LLC was to establish a cash balance pension plan. It allowed me to contribute around $100K annually pre-tax, which significantly reduced my current tax liability. It's more complex than a SEP IRA or Solo 401k, but the contribution limits are much higher. Also, if your business has legitimate future expenses, you might be able to use accrual accounting to recognize some expenses earlier. Just be aware that once you choose an accounting method, changing it requires IRS approval.

Don't forget about timing your business equipment purchases! If your LLC legitimately needs equipment, vehicles, or other qualifying assets, Section 179 expensing can let you write off up to $1,160,000 in 2025 (subject to phase-out thresholds). That's a perfectly legal way to reduce current year taxable income.

Another strategy to consider is income splitting if you have a spouse who isn't already in a high tax bracket. You could potentially employ your spouse in the LLC for legitimate business functions (marketing, bookkeeping, administrative work) and pay them a reasonable salary. This shifts some of the LLC income to them at potentially lower tax rates. Also, look into maximizing your business expense deductions that you might be missing. Many LLC owners don't fully utilize the home office deduction, business meals (50% deductible), professional development courses, industry conferences, and business travel expenses. These legitimate deductions can significantly reduce your taxable profit. If you're in a service business, you might also benefit from establishing a reasonable compensation strategy if you convert to S-Corp election. This can help reduce self-employment taxes on the portion of profits you take as distributions rather than wages, though you'll need to pay yourself a reasonable salary first.