Tax Planning: What Business Owners Should Think About Before Year-End
By the time you sit down to file in April, most of your tax outcome for the year is already locked in. The window that actually moves the number is smaller and earlier than most owners realize: right now, before December 31.
Every year, the same pattern plays out. A business has a strong year, the owner is focused on running it, and tax planning gets pushed to whenever the return is due. By then, the decisions that could have changed the outcome, entity elections, purchase timing, retirement contributions, have already expired. What’s left is reporting, not planning.
Review Your Entity Structure While There’s Still Time
An S-corp election, an LLC restructure, or a change in how owner compensation is split all have deadlines and lead time attached. If your profit has grown meaningfully since your entity was set up, this is worth a conversation now, not in March when the option has already closed for the year.
Time Your Equipment and Major Purchases
Section 179 and bonus depreciation reward purchases made and placed in service before year-end, not purchases planned for January. If equipment, software, or a vehicle is already on your roadmap for early next year, moving it up, or deliberately holding it back, can change what you owe this year versus next.
Confirm Your Quarterly Estimates Are on Track
An underpayment penalty is one of the more avoidable costs in a tax return. A quick check against actual year-to-date income, rather than last year’s estimate, catches a shortfall while there’s still a quarter left to correct it.
Revisit Retirement Contributions
A SEP-IRA, Solo 401(k), or defined benefit plan can meaningfully reduce taxable income, and several of these have contribution decisions, if not funding deadlines, that need to be made before the year closes, not after.
None of this replaces a filing conversation with your preparer. But walking into that conversation in November, with these questions already answered, is what actually changes the number, rather than just explaining it after the fact.
