Near the end of 2025, after more than doubling our enrollment, and realizing that many families had paid their tuition in a lump sum that fall, we looked at our business bank account and panicked. Not because there wasn’t enough money, but because there was more there than we had ever expected—and we had no idea how much tax we would owe on it. At this moment, I realized I hadn’t just become a school founder. I was also a business owner, and those aren’t the same job.
It was days before Christmas, and I wondered whether we should bother our accountant with our questions. We needed a new van for the school. Did we need to buy it before the end of the tax year? Was now the best time to buy computers that we might need next year? Apparently, my questions were in good company. It is estimated that 20–30% of small businesses make costly mistakes on their taxes in their first years.
Going into my third year as a business owner, I have been learning more about tax strategy, including finding the best business structure, how to time large purchases, and types of deductions I can take. Finding a CPA who specializes in small businesses is a great boon, but even an excellent CPA depends on the business owner knowing their goals, plans, and purchases in order to advise them. The purpose of a tax strategy is to know which decisions need to be made ahead of time rather than when your tax return comes due.
For example, there are special deductions a business owner may be able to take for investing in certain parts of cities they are trying to revitalize. Educators may be able to take a special deduction for their classroom supplies that they buy with their own money. Ultimately, it is best practice for a business owner to be aware of the types of deductions she can take when creating an annual budget and tax strategy. Here are some questions you might ask yourself to prepare for meeting with an accountant:
- What are my goals for the business over the next 12–24 months?
- What major purchases do I have in mind, and is there flexibility on the timing of these purchases?
- Does my business entity type make sense based on my revenue, personal pay, and number of employees?
- How should I pay myself, and how much should I set aside for taxes throughout the year?
- Is my bookkeeping organized in a way to make tax reporting as simple as possible?
- Am I properly tracking business use of my home, vehicle, Internet, or phone?
- What deductions specific to my business are available that I should be tracking, and how do I properly record them?
I have found that the biggest hurdle for me isn’t actually learning about the tax code—a lot of information is a simple Google search away. Instead, getting into the right mindset has been necessary to help me embrace this part of my role. Here are three shifts I am working on as I head into my third year of running my microschool.
Understanding the system rather than “cheating” it.
If you’re anything like me, learning about deductions might feel like looking for loopholes or “cheating the system.” It has helped me to understand that the purpose of deductions is to incentivize certain economic behaviors. Lawmakers may want to see properties developed, communities invested in, donations made to charity, employees hired, and businesses started, so they encourage these with tax breaks. When you take a deduction for one of these incentivized behaviors, you are using the system as it was designed.
Don’t overpay for your expenses. Taxes are an expense.
It also helps to understand that taxes are an expense, and just like any other expense, I need to make sure I’m not overpaying. I would much rather allocate resources toward better pay for my employees, better materials or equipment for my students, or simply have enough margin that I can enjoy teaching without constantly worrying about money. When I save on taxes, I have more financial flexibility to run my business for the benefit of the families I serve.
Saving money isn’t selfishness; it’s stewardship.
By recognizing my role as a steward of the tuition fees that my families pay, I can view tax strategy as a way to protect my margins in order to increase my impact. Money is stored possibility, and it is my job to put it to its most impactful use.
I started this journey with visions of a beautiful learning space for kids—a place for curiosity, wonder, and discovery. What I hadn’t anticipated was that beautiful spaces still need strong foundations, and the foundation of any business is a solid financial plan. Tax strategy, although hard to approach with curiosity and wonder, is a necessary set of skills and knowledge I need to develop as a school founder.
