As December approaches, it’s a great moment to pause and evaluate your tax strategy. Taking thoughtful action before year-end can help reduce your tax burden, strengthen cash flow, and set your business up for a strong start in January. Whether you’re a solo operator or running a fast-growing company, these seven questions can guide your review and highlight potential opportunities to save.
1. Have I gathered every eligible business expense?
Smaller costs can quietly grow into significant deductions—if they’re properly documented. It’s surprisingly easy to overlook receipts or forget occasional purchases, especially when personal accounts are sometimes used for business spending.
Before the year officially closes, take time to organize receipts, compare them with credit card activity, and verify that nothing has gone unrecorded. Be sure to include recurring charges such as software fees, business meals, professional development, association dues, and mileage. If you operate from a home office, a portion of your rent or utilities might also qualify. Completing this review now ensures you’re taking advantage of all allowable deductions.
2. Should I make major purchases before the year ends?
If you’ve been considering buying equipment, adding a company vehicle, or updating technology, the timing of that purchase can influence your tax outcome. Under Section 179 and bonus depreciation rules, businesses may be able to deduct some or all of the cost of qualifying assets immediately rather than over several years.
Purchasing before December 31 may allow you to apply those deductions to this year’s return. Still, it’s important to make decisions that align with your business needs—not simply the desire for a write-off. Consider whether the investment contributes to operational improvements or long-term growth.
3. Am I taking full advantage of retirement contribution opportunities?
Retirement accounts aren’t just benefits for employees—they’re valuable tax-saving tools for business owners as well. Plans like SEP IRAs, SIMPLE IRAs, and 401(k)s provide opportunities to lower taxable income while supporting your own future and that of your team.
If you haven’t recently revisited your plan or contribution levels, now is a smart time to do so. Increasing contributions before year-end can create immediate tax benefits while strengthening retirement preparedness. Even small businesses and independent contractors can see substantial advantages from maximizing these contributions.
4. Have I reviewed payroll and compensation decisions?
The end of the year is an ideal moment to reassess how compensation is structured for yourself and your employees. For S-Corporation owners, confirming that your salary is considered “reasonable” by IRS standards is essential. Those operating as sole proprietors or within partnerships should examine their draws and evaluate whether estimated payments line up with actual earnings.
Making adjustments now can help maintain healthy cash flow and avoid surprises during tax season. This review is also a good opportunity to verify that benefits, bonuses, and withholding amounts are accurate before W-2s and 1099s are issued in January.
5. Are there tax credits available that I haven’t explored?
Tax credits often go unnoticed, yet they can be even more impactful than deductions since they reduce your tax bill dollar-for-dollar. Depending on your business type and activities, you may be eligible for credits such as the Research and Development (R&D) credit, energy-efficiency incentives, or the small business health care tax credit.
Because these programs evolve frequently, it’s wise to ask your accountant to review potential eligibility. Even relatively small credits can produce meaningful savings when applied directly against your year-end tax balance.
6. Do I need to make changes to my estimated tax payments?
No one enjoys unexpected tax bills. If your earnings fluctuated this year, adjusting your estimated payments may help avoid penalties and keep your cash flow steady.
Compare year-to-date income and expenses with your initial expectations. If revenue has grown or new income streams were added, increasing your final estimated payment may be helpful. If your business experienced a softer year, reducing that payment could improve liquidity. Staying ahead of these changes ensures a smoother financial experience.
7. What should I anticipate for next year’s taxes?
Although year-end planning focuses on the current year, it’s equally important to look ahead. Decisions you make now can influence your financial position in the coming year and beyond. Think about potential shifts—such as upcoming hires, expansion goals, or major purchases—and how they may affect your 2026 tax outlook.
Discussing these plans with your accountant can help you create a proactive strategy that balances near-term savings with long-term success. In some cases, you may want to delay income or accelerate deductions depending on your projected earnings for next year.
A thoughtful year-end tax review can uncover overlooked deductions, highlight credit opportunities, and give you greater control over your financial path. The most effective business owners don’t wait until tax season—they plan ahead to make informed decisions well before January. If you’re considering your year-end tax strategy or want to strengthen your financial approach, now is a great time to speak with a trusted professional. A bit of planning today can translate into real savings tomorrow and help your business enter the new year with confidence.
