5 small-business tax moves to make before year-end

By the time April rolls around, most of the levers that could have lowered your tax bill are gone. The IRS doesn't care what you wish you'd done — it cares what actually happened inside the calendar year. Which is why the late fall is the most important six weeks of your tax year, and why I run a "year-end check-in" with every client between mid-November and the third week of December.

None of this is exotic. None of it requires aggressive strategy. It's just the basic housekeeping that small-business owners forget because they're busy actually running their business. Here's the short list — in the order I'd tackle them.

1. Max out your retirement contributions (or open the right account)

This is the highest-leverage move on the list, and it's almost always the most underused. Every dollar you put into a SEP-IRA, Solo 401(k), or SIMPLE IRA is a dollar you don't pay income tax on this year. For a single-member S-corp owner in the 24% federal bracket, a $20,000 contribution to a Solo 401(k) is worth roughly $4,800 in immediate tax savings — plus decades of tax-deferred growth.

If you don't have an account yet: a Solo 401(k) generally needs to be opened by December 31, even if the contribution itself can be made later. Don't wait until February and discover you missed the window.

If you already have one: double-check what you've contributed year-to-date and what you can still add. The 2025 employee deferral limit for a Solo 401(k) is $23,500 (plus $7,500 catch-up if you're 50+), with employer contributions on top of that.

2. Make planned equipment purchases before December 31

If you were already going to buy a laptop, a piece of equipment, software, or office furniture in Q1, ask yourself whether it makes sense to pull it forward into December. Under Section 179 and bonus depreciation rules, qualifying purchases can often be deducted in the year you place them in service — not amortized over five.

The key phrase is "placed in service" — meaning the asset has to actually be in use by December 31, not just paid for. A laptop sitting in an unopened box on New Year's Eve doesn't count.

One caveat: don't buy something you don't need just to get the deduction. A 24% tax savings on a $5,000 purchase is $1,200 in saved taxes — but it's still $3,800 of cash leaving your business. If you weren't going to buy it anyway, the deduction isn't a gift; it's a discount on something you didn't need.

3. Run a bonus or distribution review

For S-corp owners, your reasonable-compensation salary should already be locked in. But the rest of your year-end cash strategy isn't on autopilot — it's a choice. Should you take a December bonus through payroll? A distribution? Leave it in the business as retained earnings?

The right answer depends on your projected total income for the year, whether you've crossed any threshold (QBI phase-outs, Medicare surtax, additional Medicare), and what next year is shaping up to look like. If you're a sole proprietor or partnership, the math is different but the question is the same: does it make sense to defer income to next year, or accelerate it into this one?

This is exactly the kind of question worth a 30-minute call with your accountant in November. The answer is rarely the same two years in a row.

4. Catch up on bookkeeping before it becomes a problem

Of every year-end fire drill I get hired to put out, "I haven't reconciled my books since June" is the single most common one. The cost of cleaning that up in March, under tax-deadline pressure, is roughly three times the cost of doing it methodically in December.

The minimum viable cleanup looks like this:

• Reconcile every bank and credit card account through the end of November.
• Categorize anything sitting in the Uncategorized Expense bucket.
• Confirm all 1099 contractor information (legal name, address, TIN) is on file — you'll need it in January, not the day of the deadline.
• Review your A/R: is anyone meaningfully overdue? December is a good month to send polite reminders — most clients want to close out their own books, too.

If you're behind and you know it, this is the moment to ask for help. Bookkeeping cleanup work in mid-November is calm and methodical. The same work in mid-March is expensive, hurried, and stressful for everyone.

5. Estimate your fourth-quarter payment honestly

Your Q4 estimated tax payment is due January 15, but the calculation should happen now — while you can still affect the underlying number. Plug your year-to-date P&L into a rough projection. If you're going to owe materially more than your safe-harbor amount, you have a small window to either reduce your taxable income (see items 1 and 2) or set aside enough to write the check without panicking.

The safe-harbor rule is your friend: pay in at least 100% of last year's tax (110% if your AGI was over $150,000) and the IRS won't charge underpayment penalties, even if you owe more. If you're confident you've already met that threshold, you have flexibility on Q4. If you haven't, this is the time to true it up.

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The thread connecting all of this

Every one of these moves sounds boring written out. They're all variants of "do the unsexy thing in November so you don't have to do the panicked thing in March." But that's the whole game. Tax planning isn't about clever tricks; it's about using the time you actually have.

If you're a small-business owner and you haven't sat down with your books since summer, even one hour in mid-November will make April calmer. And if you'd rather not do it alone, that's exactly what we're here for.