Could Shifting Income or Expenses Smooth Out My Tax Bill?

Here’s how most business owners describe tax season:
“I made good money this year — but somehow I’m broke.”

Then the next year: “My cash looks great — but my tax bill’s a gut punch.”

It’s the rollercoaster of entrepreneurship. And the question that always follows is:
“Is there a way to smooth this thing out? Can I shift income or expenses to even it out?”

The short answer?
Yes — but you have to do it intentionally, not emotionally.

What “shifting” really means

The IRS doesn’t tax you based on how busy you were, how hard you worked, or how much cash you have on hand. It taxes you based on when income is earned and when expenses are paid.

That means timing — if handled correctly — can affect your tax bill.

Think of it like mowing your yard before a storm. You can’t stop the rain, but you can make the cleanup easier.

Here’s what that looks like in real life:

• A construction company finishes a big project on December 20. Instead of billing on the 22nd (when the invoice won’t get paid until January anyway), they date it January 2. That moves $400K of income into the next year, reducing this year’s taxable income without hurting cash flow.
• A professional services firm — say, a marketing agency — renews its software and insurance policies in December instead of waiting until January. Same costs, same vendors, but that $30K deduction lands this year, not next.
• A manufacturer planning to upgrade equipment in early 2025 decides to do it before December 31. They take advantage of Section 179, write off the equipment immediately, and lower taxable income now.

None of those moves are gimmicks. They’re just examples of smart timing based on real activity.

Why it works sometimes (and blows up others)

If your income and expenses are roughly the same every year, shifting things around won’t help much — you’re just borrowing trouble from next year.

But if your business has swings — growth spurts, new hires, or big projects on the horizon — then timing can smooth out the tax waves.

When it helps:
A landscaping company knows Q1 is slow, so they push December invoices to January. It flattens revenue between years and makes cash flow easier to manage. That’s strategic.

When it hurts:

• A tech startup pushes $300K of income into January to avoid taxes this year… then doubles revenue the next year. Boom — higher bracket, bigger problem.
• A retail shop prepays 12 months of rent and utilities, thinking they’ll get a massive deduction. Turns out, the IRS limits what counts as “prepaid.” Their accountant has to back some of it out, creating an April surprise.
• A manufacturer front-loads R&D spending into December, saving money this year but accidentally disqualifying themselves from the Qualified Business Income (QBI) deduction.

Shifting income and expenses can help, but it’s all about balance. It’s kind of like catching a wave — paddle too early and you waste energy, too late and it crashes on top of you. The trick is timing — catching it just right so you ride smoothly instead of fighting the current.

The goal isn’t to dodge taxes. It’s to stay balanced and predictable.

A better way: smooth the business, not just the bill

At BGW, we tell clients: Don’t chase deductions — build rhythm.

If your income, expenses, and owner compensation follow a steady pattern, your tax bill will too.

That means:

• Pay yourself a consistent salary, not random draws.
• Keep cash reserves for taxes instead of scrambling each April.
• Time equipment purchases, bonuses, and big spending with your tax bracket and cash flow in mind.

Real stories:

• An HVAC company owner used to pull draws whenever cash looked good. Some years he owed nothing; others, he was floored by a surprise six-figure bill. We restructured him as an S-corp, set up monthly payroll, and built quarterly projections. The result? Predictable taxes, stable cash, and a much happier spouse.
• A law firm started quarterly tax reviews with their BGW QB. Instead of panic in December, they made small course corrections all year — adjusting bonuses, equipment purchases, and withholdings. Now April feels like a routine checkup, not open-heart surgery.
• A logistics company used Section 179 and bonus depreciation as growth tools, not “saves.” By coordinating purchases with expected revenue, they lowered taxes and had cash to expand their fleet.

Those owners aren’t reacting anymore. They’re leading.

The takeaway

Yes — shifting income or expenses can help smooth out your tax bill. But it’s not a trick, and it’s not a once-a-year move.

It’s a tool. And like any tool, it works best when it’s part of a bigger plan.

The real win isn’t paying less tax once. It’s having no surprises year after year — because you understand how your business’s rhythm, income, and expenses all play together.

If you’re looking at your year-end numbers wondering what to move where, don’t guess.
Your BGW team can run both years side by side and show you exactly how timing helps (or hurts).

That 30-minute conversation now can save you a lot of stress — and maybe a few aspirin — later.