As businesses across the Southeast continue to plan – whether it’s expansion into new markets, making big investments, or preparing for a leadership change – tax strategy is part of the conversation. Or at least, it should be.
The rules are shifting. State lines matter more than ever. And federal incentives are evolving. But the good news? A thoughtful approach to tax planning can do more than help you check the compliance box. It can support smarter decisions, better cash flow, and long-term growth.
Here are seven areas worth discussing with your tax advisor this year.
Why tax planning matters more now
If you run a business in the Southeast, chances are your footprint goes beyond one state or will soon. Maybe you’re hiring remotely, setting up a new location, or making a large capital investment. These milestones are exciting. But they also come with tax implications that can either work for you or create unexpected issues.
And while federal tax law tends to get the headlines, state rules are changing too, and they often change fast. A proactive tax strategy gives you a clearer view of the road ahead.
With offices across Tennessee, Kentucky, and North Carolina and professionals serving businesses across the country, LBMC helps growing and middle-market companies make tax planning more actionable.
1. Look beyond federal: explore state credits and incentives.
A lot of companies overlook state-level incentives. But depending on where you operate, you might be eligible for credits tied to job creation, employee training, equipment purchases, or even building improvements.
States like Tennessee, North Carolina, and Georgia offer a range of programs, but eligibility rules vary. And timing matters. If you’re planning to hire or expand, a quick conversation with your tax advisor could help you capture benefits you didn’t know were available.
See how we help clients identify business tax credits and incentives.
2. Thinking about expanding? Do a multi-state nexus check first.
Here’s a scenario we see often: a company hires a few remote employees in another state, or starts selling into new markets, and then gets hit with unexpected tax filings. That’s because of something called “nexus,” a connection that triggers tax obligations in other states.
Before you expand, it’s smart to understand where you already have tax obligations and where you might create new ones. Understanding what can create nexus when doing business in multiple states can help you plan ahead, not play catch-up.
Talk to our state and local tax advisors.
3. Revisit your entity structure as you grow.
Your legal structure isn’t set in stone. What worked when you had 10 employees might not be right when you have 100. As your business scales, restructures, or brings on new ownership, the right entity type can make a meaningful difference.
Common triggers include bringing in new owners, preparing for outside investment, expanding into additional states, changing how profits are distributed, or preparing for a future transaction. Entity decisions can affect federal and state taxation, owner compensation, administrative requirements, and eventual exit planning.
This isn’t about legal jargon. It’s about flexibility, liability, and taxes. Make sure your structure still supports your long-term goals.
4. Planning big purchases? Don’t forget about depreciation.
If you’re investing in property, facilities, or major equipment, the tax treatment of those purchases matters. Recent changes through the One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation for property placed in service after January 19, 2025. That includes most business equipment, certain real estate improvements, and even used property, depending on eligibility.
Taxpayers can also now expense up to $2,560,000 in Section 179 property for tax years beginning in 2026, with the phaseout threshold increased to $4,090,000. Depending on your purchase plans, a mix of bonus depreciation and Section 179 expensing may yield better results.
Section 179 vs. Bonus Depreciation
Feature | Section 179 (2026) | Bonus Depreciation (2026+) |
Deduction Limit | $2,560,000 | No dollar limit |
Phase-Out | Starts at $4,090,000 placed in service; fully phased out at $6,650,000 | None |
Income Limitation | Cannot exceed taxable business income | No limit; can create or increase a loss |
Flexibility | Choose assets individually | Automatic unless elect-out |
Eligible Property |
|
|
*SUV limit is $32,000
Businesses making significant investments may also want to evaluate accelerated depreciation and cost segregation strategies as part of the broader planning process.
Making a major investment in 2026?
The timing and structure of equipment, property, and facility investments can materially affect your available deductions. LBMC’s tax advisors can help evaluate bonus depreciation, Section 179, available credits, and state incentives together rather than in isolation.
Discuss your 2026 investment plans with our tax team.
5. Don’t leave federal credits on the table.
Some companies assume they’re too small for federal tax credits. That’s not always true. If you’re investing in R&D, workforce training, energy improvements, or certain manufacturing processes, you might qualify.
The One Big Beautiful Bill Act introduced several significant business tax changes, including the reinstatement of full deductibility of domestic research costs under new Section 174A, while still allowing for capitalization and amortization in some cases. It’s a good time to revisit your eligibility for the federal research credit, especially if you’re improving processes or developing software.
Get insight from our federal business tax team.
6. Get your financial house in order.
Tax planning isn’t just about strategy. It’s also about execution. Strong accounting processes make a big difference. Clean books, timely reporting, and the right financial tools can make tax season smoother and unlock better insights throughout the year.
If your team is stretched thin, consider tapping into outsourced accounting support. It’s one of the fastest ways to improve tax readiness and business agility.
Learn how Client Advisory and Accounting Services (CAAS) can help your business.
7. Planning an acquisition or leadership transition? Start early.
Transactions — whether it’s buying another company, selling a division, or transitioning ownership — often come with major tax implications. Yet tax considerations are often addressed too late in the process. Buyers should understand the tax liabilities that can carry over in an asset purchase before the transaction is finalized.
Early planning helps you avoid surprises, align with valuation goals, and structure the deal in a way that supports your future. This is especially critical if you’re dealing with outside investors, private equity, or family ownership.
How we support business valuations and transitions.
What we see at LBMC
We work with mid-sized businesses across the Southeast every day. And here’s what we see: the most successful companies aren’t reactive when it comes to tax. They plan. They ask questions. They bring in the right experts at the right time.
Our team blends technical knowledge with real-world perspective. We know you’re juggling a lot, and we’re here to help make tax strategy a little less complicated and a lot more useful.
Planning a major business move in 2026? Talk with an LBMC tax advisor.
If you’re expanding into another state, investing in equipment, evaluating your entity structure, or preparing for a transaction, our tax team can help you understand the implications before decisions are finalized.
Talk with an LBMC Tax Advisor.
Frequently Asked Questions About Business Tax Planning
How often should a business review its tax strategy?
Businesses should review their tax strategy at least annually, but major business changes should trigger an additional review. Expanding into a new state, hiring remote employees, making significant capital investments, changing ownership, restructuring the business, or preparing for a transaction can all create new tax considerations. Reviewing the tax impact before these decisions are finalized can provide more planning options and help avoid unexpected obligations.
What can create tax nexus for a business in another state?
A business may create tax nexus through activities such as hiring employees in another state, establishing a physical location, storing inventory, reaching certain sales thresholds, or providing services across state lines. Because nexus rules vary by state and by tax type, businesses expanding geographically should evaluate their filing and tax obligations before entering new markets.
Can remote employees create tax obligations in another state?
Yes. Hiring an employee who works remotely from another state can potentially create new income, payroll, sales, or other state tax obligations for the business. Businesses with distributed teams should understand the tax and compliance considerations associated with hiring remote employees. The requirements vary by jurisdiction, so companies with a growing remote workforce should periodically review where employees are located and whether those locations have created additional filing requirements.
What is the difference between Section 179 and bonus depreciation?
Section 179 and bonus depreciation both allow businesses to accelerate deductions for qualifying property, but the rules work differently. Section 179 has annual deduction and investment limits and generally cannot create a taxable business loss, while bonus depreciation does not have the same dollar limitation and may create or increase a loss. The best approach depends on the property purchased, taxable income, state tax treatment, and the company’s broader tax strategy.
When should a growing business reconsider its entity structure?
A business should reconsider its entity structure when there are meaningful changes in ownership, profitability, geographic footprint, financing, growth strategy, or plans for a future transaction. Entity structure can affect federal and state taxes, owner compensation, administrative requirements, and how a future sale or ownership transition is taxed. Reviewing the structure as the company evolves can help ensure it continues to support long-term business objectives.
What tax issues should businesses consider before an acquisition or sale?
Tax planning should begin well before a transaction is finalized. Buyers and sellers may need to consider deal structure, purchase price allocation, tax attributes, due diligence findings, state and local tax exposure, and the tax treatment of transaction proceeds. Addressing these issues early can help identify risks, preserve planning opportunities, and avoid tax considerations becoming a problem late in the deal process.
When should a business involve its tax advisor in a major decision?
Ideally, before the decision is finalized. Bringing a tax advisor into conversations about expansion, significant purchases, financing, acquisitions, ownership changes, or succession planning gives the business more opportunity to evaluate alternatives. Tax planning is generally most valuable when it helps shape a business decision rather than simply addressing the tax consequences afterward.
About the Author
Content provided by Mark Brumbelow, Tax Shareholder in LBMC’s Chattanooga Office. He has 25 years of experience advising businesses on complex tax planning, transactions, succession planning, and multi-jurisdictional compliance. Mark works with growing and complex businesses across industries including healthcare, manufacturing, financial institutions, and logistics, helping leaders navigate tax decisions that support long-term growth.
