Mid-June is the most underrated date on a Houston business owner’s calendar. Q2 just closed. Q3 hasn’t started. You have actual data on the first half of the year — and you still have six months to change the outcome before December 31 locks in your tax situation.
The Houston small business owners I work with who do mid-year reviews consistently pay less tax than those who wait until tax season. Not because of aggressive strategies — because of timing. Mid-year decisions are cheap. April decisions are expensive or impossible.
Here are the eight things I run through with every client during their mid-year check-in.
1. Year-to-date revenue projection
Take your January–May revenue and annualize it. Compare to your 2025 actual. Are you on track? Behind? Ahead?
This single number drives almost every other planning decision. If you’re ahead of last year by 30%, you have a tax problem coming you should plan for now. If you’re behind, you might be in a lower bracket — which changes the math on Roth conversions, charitable giving timing, and retirement contributions.
For Houston real estate investors specifically: include rental income, but also project capital gains from any property sales planned in H2. Those gains hit harder than people expect.
2. Quarterly estimated tax status
If you owe quarterly estimated taxes, you should already have paid Q1 (April 15) and Q2 (June 17 in 2026, since the 15th was a Sunday). Did you pay both? If yes, did the amount match what your annualized income now suggests?
Common situations I see:
- Underpaid Q1 and Q2 because income spiked unexpectedly. You can true-up at Q3 (September 15), but interest is already accruing on the underpayment.
- Overpaid Q1 and Q2 because you used last year’s tax to set quarterly amounts. You’re effectively giving the IRS an interest-free loan.
- Didn’t pay quarterly at all because you assumed your W-2 withholding covers it. If you have meaningful self-employment or business income, it probably doesn’t.
Mid-year is when you fix the trajectory. By Q3 estimated tax (September 15), you have one chance to true-up before year-end.
3. Retirement contribution status
Self-employed Houston business owners have unique retirement options that most W-2 employees don’t:
- Solo 401(k): 2026 contribution limit is $23,000 (employee deferral) + 25% of net SE income (employer contribution) up to $69,000 total.
- SEP-IRA: Up to 25% of net SE earnings, $69,000 cap.
- Defined Benefit Plan: Can shelter $250,000+ per year for higher-income solo practitioners (CPAs, doctors, dentists, attorneys in solo practice).
Mid-year is when you decide: Are you funding the Solo 401(k) you set up last year? Should you set up a Defined Benefit Plan before year-end? Are you using your spouse on payroll to double the household retirement contribution capacity?
These decisions take 30-60 days to implement. Don’t wait until November.
4. Section 179 and Bonus Depreciation
If you bought (or are planning to buy) equipment, vehicles, or business assets in 2026, mid-year is when you decide whether to elect Section 179 expensing or use Bonus Depreciation.
For 2026, Bonus Depreciation drops to 40% (down from 60% in 2025). That changes the math on whether to accelerate a purchase into 2026 or push to 2027 when Bonus drops further. Houston construction, oil & gas, and medical practice clients run into this constantly with vehicle and equipment purchases.
If you’re considering a major equipment purchase in H2, model the tax impact both ways before committing.
5. Real estate investor checks
For Houston real estate investors specifically:
- Cost segregation studies — If you bought rental property in Q1 or Q2, mid-year is the right time to commission a cost seg study so the accelerated depreciation lands on the 2026 return. Waiting until December means scrambling.
- 1031 exchange timing — If you sold a rental property in 2026, you have 45 days to identify replacement property and 180 days to close. Mid-year is when half of the H1 sellers realize they’re running out of identification time.
- Passive activity loss tracking — Real estate professionals (750 hours/year material participation) treat losses as active. Mid-year is when you reconcile your hours log so the H2 timing supports the classification.
6. Employment tax & 1099 contractor classification
If you’ve added contractors in 2026, mid-year is when you audit whether they should actually be employees. The IRS and Texas Workforce Commission both look at this hard. Mis-classification penalties are severe — 5% to 50% of the unreported tax depending on intent.
Common Houston scenarios that need review:
- Contractor who works only for you, 30+ hours/week, for 6+ months → probably employee
- Contractor whose payments exceed $50K/year with no other clients → probably employee
- Contractor whose work product is “you decide what to build” rather than “build me X by Friday” → probably employee
Fixing this mid-year is cheap. Getting caught with mis-classification on your 2026 return is expensive.
7. Owner compensation (S-Corp owners specifically)
If you operate as an S-Corp, the IRS requires you to pay yourself “reasonable compensation” before taking distributions. Mid-year is when you check whether your salary-to-distribution ratio is reasonable.
A common Houston S-Corp owner mistake: low W-2 salary ($30-40K) plus high distributions ($150K+) on profits. The IRS treats this as a payroll-tax-avoidance signal and will recharacterize distributions as wages if audited.
Fix: model what comparable employees in your industry/location earn (Houston-specific BLS data helps), set your W-2 salary in that range, take distributions on the rest. If you’ve been under-paying yourself in H1, increase H2 to make the annual ratio defensible.
8. Books cleanup before tax season
If your bookkeeping has gaps — uncategorized transactions, unreconciled bank statements, missing receipts — mid-year is when you fix it. Cleaning books in June takes a few hours. Cleaning books in February (during tax season) costs significantly more because every CPA is busy.
A practical rule for Houston small businesses: by July 1, your books should be fully closed through May 31. Reconciled, categorized, ready for tax planning.
If they’re not, that’s the first project to commission this quarter.
How Whetzel CPA does mid-year reviews
For our Houston small business and real estate investor clients, we schedule a 60-90 minute mid-year planning conversation in June or July. We walk through this exact 8-item checklist using your actual H1 data. You leave with a concrete H2 action list and a year-end tax estimate you can plan around.
The output isn’t a generic report — it’s specific moves: “Make a $10,000 Solo 401(k) contribution by August 15,” “Commission a cost seg study on the Pecan Grove duplex now,” “Increase your S-Corp salary by $25K for H2.”
That’s the difference between tax preparation (filing what already happened) and tax planning (changing what’s about to happen).
Ready for your mid-year review?
If you don’t have a mid-year tax review on your calendar yet, this is the week to schedule it. Houston small business owners across Fort Bend County — Sugar Land, Missouri City, Richmond, Rosenberg, Pecan Grove, and Katy — should aim to complete the H1 review by July 15. That gives you Q3 to act on the recommendations.
Schedule a free 30-minute consultation or call (832) 983-7080. We’ll scope a mid-year review, quote a flat fee, and get the calendar set for the actual planning session.