8 Tax Strategies That’ll Save You Money and Position Your Self-Storage Business for Success in 20258 Tax Strategies That’ll Save You Money and Position Your Self-Storage Business for Success in 2025

A self-storage operation comes with unique tax complexities and challenges, but some proactive planning can positively impact your bottom line. This article shares eight strategies that’ll help you maximize the amount of money you keep out of Uncle Sam’s pocket and position your business for success in the new year.

Telma Landhorian, Founder

January 28, 2025

6 Min Read
A notebook that says Tax Saving Strategies on the cover

A self-storage operation comes with unique tax complexities and challenges. How an owner navigates them can make a huge difference to the bottom line and the facility’s overall success. It’s crucial to stay proactive with your financial planning and keep a close eye on opportunities to reduce your tax exposure.

Following are eight strategies to help you maximize the amount of money you keep out of Uncle Sam’s pocket and in your own. The goal is to set up your self-storage business for long-term growth.

Conduct Regular Financial Reviews

Regularly review your self-storage facility finances. Dive deep into your accounting and become familiar with the numbers on your balance sheet, income statement and cash-flow statement. Pay attention to occupancy rates, operating expenses and revenue trends.

A detailed review helps you identify red flags early, such as rising costs or declining revenue, and provides a clear picture of your financial status. This process also helps you understand what’s working, so you can double down on those strengths or cut back in areas where you aren’t seeing a sufficient return on investment.

Maximize Your Tax Deductions

One of the biggest benefits of running a self-storage business is the variety of tax deductions available. Everyday expenses like property maintenance and repairs, utilities, and insurance can all be used to lower your taxable income. However, the real game-changer is depreciation, which allows you to spread the cost of big-ticket items, such as buildings and equipment, over several years, reducing your taxable income for a longer time.

Related:Crystal Lake, IL, Tables Discussion Regarding 5% Self-Storage Rental Tax

Other tax codes like Section 179, which details the large business purchases that qualify for deductions, and bonus depreciation enable you to write off a large portion of these costs up front. Taking full advantage of these deductions can significantly reduce your tax bill, freeing up cash to reinvest in your self-storage business or fill your bank account.

Properly Time Your Income and Expenses

When it comes to managing your self-storage revenue, timing matters. By planning when to recognize income and expenses, you can take control of your tax obligations.

For example, if you anticipate being in a higher tax bracket this year, you might defer income to the following year or accelerate deductible expenses to reduce your liability. Conversely, if the current year’s total revenue is expected to be lower, consider recognizing more income now or delaying some expenses. By balancing your cash-flow needs with a tax strategy, you can keep more of what you earn.

Related:Village of Lake in the Hills, IL, Considering a 5% Self-Storage Sales Tax

Leverage Tax Credits

Tax credits are an often-overlooked opportunity to save money. Unlike deductions, which reduce your taxable income, credits directly lower your tax bill dollar for dollar. For example, if you’re hiring for your self-storage operation, investigate the Work Opportunity Tax Credit, which rewards you for bringing on veterans or other specified groups. If you’re making energy-efficient upgrades to your property, there may be federal and state credits available for additions like solar panels or LED lighting. These credits can help offset the cost of the improvements.

Plan for Retirement and Help Your Team Do the Same

Planning for retirement isn’t only crucial for your future, it’s a smart tax strategy. Establishing a plan like a SEP IRA or Solo 401(k) enables you to save for your “golden years” while reducing your current taxable income. These contributions are deductible and grow tax-free until you retire.

Also, offering benefits like health insurance or retirement plans to your self-storage staff creates a win-win scenario. You gain tax advantages while attracting and retaining valuable employees, who enjoy perks that enhance their quality of life.

Make Smart Upgrades

Related:More Money in Your Pocket: Leveraging the U.S. Tax Code to Improve Self-Storage Cash Flow

When you’re purchasing equipment for your self-storage facility, there’s more to consider than the price tag. The decision of whether to lease or buy can have significant tax and cash-flow implications. Leasing might offer lower monthly costs, while buying could provide long-term depreciation benefits. For improvements such as paving, security systems or HVAC, plan strategically to maximize tax deductions.

Review Your Business Structure

The type of business you operate, whether it’s a limited-liability corporation, S-corporation or partnership, significantly impacts the way your income is taxed. Many self-storage operators start with something simple but discover that, as their business grows, a more complex arrangement could save them money. For example, electing S-corp status could help reduce self-employment taxes, allowing you to split your income between salary and distributions. It’s worth regularly reviewing your business structure with a tax advisor to make sure it’s still the best fit for your current situation.

Monitor and Adjust Your Estimated Tax Payments

In self-storage, your facility income can vary throughout the year, making estimated tax payments tricky but crucial. Missing these payments or underestimating what you owe can lead to penalties and surprise tax bills. To stay on track and avoid unnecessary expenses, regularly review your income and adjust your estimated tax payments. Work with an accountant to ensure they reflect actual earnings, especially if your income fluctuates significantly. This proactive approach helps manage cash flow and keeps finances running smoothly.

Preparing for the New Year

As 2024 comes to a close, it’s the perfect time to set up your self-storage business for success in the year ahead. Review financials, fine-tune your tax strategy, and set clear goals for revenue and expense management. Organize your paperwork for tax filing and meet with an advisor early to discuss any last-minute opportunities to reduce your tax bill.

If you need to further reduce your tax burden before time expires, consider making repairs, improvements or upgrades toward the end of the year. This isn’t only a savvy tax strategy, it’ll ensure you’re self-storage facility is well-maintained.

Taking these proactive steps will help you hit the ground running once the calendar flips to the new year, minimizing stress during the looming tax season and positioning your business for continued growth and profitability. By managing income wisely, maximizing deductions and ensuring that your business structure supports your goals, you can optimize your finances and keep more of your hard-earned money.

Smart financial management and strategic planning are the keys to success. These strategies aren’t just about saving on taxes, they’re about building a stronger, more resilient self-storage business for the long haul.

Telma Landhorian is the founder of Elite Consulting P.C., which specializes in financial management for self-storage businesses. Her 15-plus years of experience in accounting, income maximization, expense control, cash-flow forecasting and property taxes has led to remarkable results for clients. To reach her, call 312.809.9317 or email [email protected].

About the Author

Telma Landhorian

Founder, Elite Consulting P.C.

Telma Landhorian is the founder of Elite Consulting P.C., which specializes in financial management for self-storage businesses. Her 15-plus years of experience in accounting, income maximization, expense control, cash-flow forecasting and property taxes has led to remarkable results for clients. To reach her, call 312.809.9317 or email [email protected].

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