Where do you spend money each month? Something I recommend to everyone is to take a look at their monthly expenses every so often and see what can be moved from the personal side to the business side.

Remember, to make an expense a legitimate write-off you need to ask yourself if that expense passes the "reasonable and necessary for the production of income" test.

Many of you who run your businesses through S Corporations (or LLCs taxed as S Corps) know all about estimated tax payments, too. In your case, the IRS makes you pay estimated tax on your profit distributions, particularly if your S Corporation is fairly profitable and you're taking out healthy profit draws.

f you can show the IRS that you've paid most or all of your previous year's taxes within that same tax year, you will stand a very good chance of avoiding estimated tax payments entirely. And that means you can say goodbye to those late-payment penalties, too!

Here's something else to consider: There is no requirement to make an extra withholding payment monthly or quarterly. You can wait until the end of the year and make one big payment. So, as long as you budget for that end-of-year payment, you can have the use of that money throughout the year. And why shouldn't you? It's your money!

The rule here is whether the income is earned actively (you do or sell something) or passively (you receive rent from a property). If you're making active, or earned, income, then you'll pay more taxes than you should by operating through a sole proprietorship or through an LLC taxed as either a sole proprietorship or a partnership.

On the other hand, If you're receiving passive income from property rentals, then an LLC taxed as either a sole owner (Schedule E) or a partnership will save you tax dollars you'd otherwise spend if you operated this business through a C or an S Corporation.