As the year winds down, it’s a great time for small business owners to look ahead — and take advantage of smart tax-planning moves before the calendar flips. Waiting until tax season can mean missed opportunities and last-minute stress. Below are key steps you can take now to help minimize your upcoming tax bill and start the new year organized.
📚 1. Make Sure Your Books Are Clean and Up-to-Date
Before you do anything else, ensure your accounting books are reconciled:
- Match receipts to expenses.
- Reconcile bank and credit-card statements.
- Record any outstanding invoices or payables.
- Make sure payroll, contractor payments, and payroll taxes are accurately logged.
Accurate and complete records give you clarity on your business’s actual net income — a necessary starting point for estimating taxes and planning deductions.
If your books are behind or messy, now may be the time to bring in a tax professional or bookkeeper.
🕒 2. Time Your Income and Expenses Strategically
If your business uses cash-basis accounting, timing can make a big difference:
- Defer income — for example, hold off on sending invoices or collecting payments until January, if doing so won’t harm your business. That moves taxable income into next year, potentially reducing this year’s tax liability.
- Accelerate expenses — prepay expenses that you know will occur next year (e.g. rent, utilities, insurance, software subscriptions) before December 31, thus claiming the deduction this year.
This strategy helps smooth out peaks and troughs in taxable income — especially helpful if 2025 was unusually profitable.
🖥️ 3. Consider Buying Equipment or Business Assets (When Needed)
If your business needs equipment, tools, software, furniture, or other long-term assets, buying them before year-end could yield substantial tax benefits. Under many tax laws (for example under a “Section 179”–style rule), business owners can deduct the full cost of qualifying assets placed in service before December 31.
This allows you to reduce your taxable income and invest in your business — a win-win when the purchases are genuinely needed.
💼 4. Max Out Retirement Contributions & Check Benefits / Deductions
For self-employed small business owners or owners of pass-through entities (LLCs, sole proprietorships, etc.), making retirement contributions or funding qualified retirement accounts can lower your taxable income while helping secure your financial future.
Also review other deductible business expenses — health insurance premiums, home office costs (if applicable), vehicle / mileage expenses, and other recurring costs
✔️ 5. Review Business Structure and Payroll / Contractor Compliance
Year-end is a good moment to review whether your current business structure (sole proprietor, LLC, S-Corp, etc.) still makes sense given your earnings, growth, and tax situation. Some structures may offer better tax efficiency depending on profit levels
Also ensure payroll records, contractor payments, and related tax forms (e.g. 1099s / contractor forms) are up to date — especially if you work with freelancers or contractors.
🔎 6. Perform a Year-End Tax Projection & Plan Ahead
Once your records are up-to-date, run a quick tax projection. Estimate your net profit, likely deductions, and expected tax liability. This lets you see where you stand — and gives you time to make moves (like accelerating expenses, retirement contributions, or deferring income) while there’s still time left in the year.
If possible, schedule a year-end review with a tax professional or accountant. A second pair of eyes can spot deductions or strategies you might miss.
🧾 Sample Year-End Checklist for Business Owners
Here’s a quick checklist you can copy or adapt for yourself:
- Reconcile bank and credit-card accounts
- Match and archive receipts, invoices, and expense records
- List outstanding invoices, payables, and contractor payments
- Estimate net income and projected tax liability
- Prepay next-year expenses (rent, insurance, subscriptions) if cash-flow allows
- Purchase needed equipment or business assets (if applicable)
- Fund retirement account or maximize retirement contributions
- Review business structure — consider whether it still makes tax sense
- Confirm payroll, contractor W-9 / 1099 forms are ready
- Consult your tax professional for final review
✅ Final Thoughts
Year-end tax planning doesn’t have to be complicated — but it does require action and foresight. A few strategic decisions before December 31 can reduce your taxable income, increase deductions, and set you up for a smoother tax season. Beyond savings, it gives you a clearer financial starting point for the next year and helps avoid surprises come tax time.
If you’re unsure where to start, talking with a trusted accountant or financial consultant now is often the smartest move — having a well-organized financial picture going into the new year is a huge advantage.