🦍 The New SMB Wealth Play: Why Reinvesting Beats Distributing in 2025

For years, small business owners have asked: “Should I take money out of my business now, or leave it in to grow?”
With the latest updates in the One Big Beautiful Bill (OBBB)—including bonus depreciation, Section 179, and new basis rules—the answer for many is changing.

In 2025, it may be smarter than ever to keep profits in your business, invest in new assets, and let compounding (and the tax code) do the work. Here’s why:

🍌 Why Reinvesting Is Winning in the OBBB Era

1. Bonus Depreciation & Section 179: Mega Deductions for Investments

• The OBBB brought back 100% bonus depreciation for assets placed in service after January 19, 2025.

• Section 179 lets you write off even more—roofs, HVAC, equipment, and tech upgrades—immediately.

• Instead of taking cash out and paying taxes on distributions, you can invest in your business, claim a huge deduction, and shrink your current tax bill.

2. New Basis Rules: Don’t Get Caught Short

• The OBBB tightened the rules on basis and at-risk calculations for S Corps and partnerships ([see OBBB §70451–70453, amending IRC §§ 1366, 704, etc.]).

• If you take out too much, or distribute more than your basis, you could owe unexpected tax—even on your own money.

• By leaving more in the business, you keep your basis strong, making it easier to claim future deductions and avoid tax traps.

3. Compound Growth: Your Business as a Tax Shelter

• Every dollar you reinvest can generate future profits and more deductions.

• Buy a new van? Upgrade your studio? Hire and train new staff?
  Each investment could create more revenue, more deduction power, and a bigger exit value down the road.

• Distribute too much, and not only do you pay taxes sooner—you miss out on compounding those dollars inside your business.

4. Get Ready for Bank Loans, Buyers, or a Big Exit

• Healthy, reinvested profits make your business balance sheet shine.

• Banks love to see retained earnings and strong asset bases.

• If you ever want to sell, buyers will pay more for a well-capitalized, growth-focused business than one where the owners always emptied the cash drawer.

🦔 How Hedgi Can Help

• Track retained earnings, assets, and basis—so you know exactly how much you can safely distribute (or should leave in for max tax benefit).

• Show real-time deduction opportunities—spot when buying new gear will create big write-offs.

• Prepare for loans or a sale—with clean, audit-ready books that tell your reinvestment story.

🦍 Bottom Line: Play the Long Game

The new tax rules reward owners who build and grow, not just take cash off the table.
Let your profits work overtime, invest in your own future, and let Hedgi show you when and how to capture every deduction.

Thinking of a big purchase, or not sure whether to draw or reinvest? DM us or comment below—let’s strategize for the smartest after-tax outcome in 2025 and beyond.