No More April Surprises

Jason Medlin

Oct 19

5 min read

Black and white photo of a calm home services business owner outdoors on an autumn morning

[Composite client story based on real experiences. Company and owner identities and details have been changed to protect privacy.]

"April used to be the month I dreaded. This year it was just another month."

That's how Daniel described the change. He owns a residential HVAC company outside Nashville: fourteen employees, a fleet of service trucks, and a reputation built over eleven years of answering the phone on the hottest day of July.

The business was healthy. The tax bill was not the problem either. The problem was that he never knew what it would be until it was too late to do anything about it.

Before: The Spring Scramble

For three years running, the pattern looked the same.

Summer was strong. Fall was steady. In December, Daniel would buy something for the business because someone told him it would help with taxes. Then in March, his tax preparer would call with the number.

And every year, the number was bigger than the money he had set aside.

The worst of it came the prior spring. Profit had grown, but his estimated payments were still based on an older, smaller year. He owed far more than he expected, plus an underpayment penalty. To cover it, he drew on the company's line of credit in April, right as the shoulder season slowed cash coming in.

"It wasn't that I didn't want to pay my taxes," he said. "It was that I found out what I owed after every decision that affected it was already made."

That's the part most owners miss. A tax return filed in March is a record. It reports what already happened. By the time it's prepared, the year is closed and nearly every lever is gone.

The December Habit

One detail in Daniel's story is worth pausing on, because it's common.

Each December, he made a purchase to lower his taxes. One year it was a second trailer. Another year it was a round of tools and equipment the team didn't really need yet. The logic felt sound: spend the money now, get the deduction, owe less.

But a deduction lowers taxable income. It doesn't lower the tax bill dollar for dollar. Spending a dollar to save a fraction of it only makes sense if the business needed the purchase anyway. Some of those December buys did not pass that test. They saved some tax and cost more cash.

Worse, they were made without knowing where the year would land. He was guessing at the size of the problem and spending to fix a number he couldn't see.

The Turning Point: An October Projection

Things changed when Daniel's books moved to a monthly close and he sat down for a planning session in mid October, with about ten weeks left in the year.

The first step wasn't advice. It was a projection. We took nine months of real numbers, estimated the fourth quarter based on his seasonal pattern, and built out his expected tax liability for the full year: federal income tax, payroll taxes, and Tennessee franchise and excise tax for the entity.

For the first time, he saw his April number in October.

It wasn't good news. Profit was tracking well above the prior year, and his estimates were falling short again. Without changes, he was headed for another large balance due.

The difference was that this time, there was still time to act.

Three Decisions, Made on Purpose

1. His S Corp salary was brought in line with the year he was having. Daniel's salary had been set years earlier and never revisited. With profit up, it no longer reflected reasonable compensation for the work he did. We adjusted it through the remaining payroll runs before December 31. That kept him on solid footing and set the base for the next decision.

2. One truck, bought on purpose. The business did need a replacement service truck. One of the older units was costing more in repairs every month. Instead of a December impulse buy, the purchase was planned. We looked at the cash impact, the financing, and the timing of the deduction together. He bought the truck in November because the business needed it and the timing had real value. Nothing else was bought just for the write off.

3. A retirement plan, funded before year end. Daniel had never set up a retirement plan. He always assumed it was something to deal with "when things slow down." We reviewed the options that fit a business of his size and cash flow, confirmed which deadlines applied, and set one up before the year closed. It lowered his taxable income and built something for his future at the same time.

Finally, his January estimated payment was sized to the projection instead of last year's return. And a portion of each month's profit started moving into a separate tax account, so the money would already be there when it was due.

After: April Became a Nonevent

When the return was prepared the next spring, it matched the projection closely. No surprise call. No penalty. No draw on the line of credit.

He still owed tax. Profitable businesses do. But the payment came out of an account that had been built for it over five months, and it landed exactly where he expected.

The bigger change was harder to put on a spreadsheet. Daniel stopped carrying a low level worry through the first quarter. He started making decisions in the fall, with the tax impact in front of him, instead of reacting to it in the spring.

"I used to think the tax bill just happened to me," he said. "Now I know it's mostly decided by what I do before December."

What Changed, and What Didn't

It's worth being clear about what made the difference here, because it wasn't a loophole.

Daniel's business didn't change. His tax preparer didn't change. The tax law didn't change.

What changed was timing and visibility:

He had current books, so a projection was possible
He saw his number in October instead of March
He made each decision with its tax and cash impact in view
He set money aside over months instead of finding it all at once

That's the whole formula. Clarity in the fall creates confidence in the spring.

Is Your April Already Being Decided?

If any of these sound familiar, the same approach is worth a look:

Your tax bill last spring was bigger than you planned for
Your estimated payments are still based on an older, smaller year
You make year end purchases mainly because of the deduction
You're an S Corp owner and haven't revisited your salary in a while
You've been meaning to set up a retirement plan "someday"

There are about ten weeks left in 2026. That's enough time to see where you'll land and still change the outcome.

Let's Look at Your Number Before the Year Closes

At Bottomline Capital, we help business owners project their tax liability in the fall, while the decisions are still open. We start with your real numbers, show you where you're headed, and work through the choices that can still change it, alongside your tax preparer.

If you'd rather find out your April number in October, let's talk.

Book a planning session: https://www.bottomlinecapitalllc.com/book-online