Essential Year-End Tax Questions for Business Owners

As the year draws to a close, it’s crucial to strategize about your taxes. Thoughtful planning before December 31 can help reduce your tax obligations, improve cash flow, and set your business up for a strong start in the coming year. Whether you’re a solo entrepreneur or running a growing company, here are seven essential questions that can guide your year-end review and uncover opportunities for savings.

Have I Recorded All My Business Expenses?

Small expenses can accumulate into significant deductions but only if they’re tracked accurately. It’s easy to overlook receipts or minor purchases, especially if personal accounts are occasionally used for business transactions. Before the year wraps up, gather all receipts, reconcile credit card statements, and ensure that nothing has slipped through. Don’t forget recurring charges like software subscriptions, business meals, continuing education, memberships, or mileage. If a part of your home is used as an office, a proportion of the utilities or rent may also be deductible. Conducting a detailed review now ensures that all legitimate expenses are claimed when it matters most.

Should I Make Major Purchases Before Year-End?

If you’re considering an upgrade in equipment, purchasing a vehicle, or investing in new tech, the timing could significantly impact your tax return. Under Section 179 and bonus depreciation rules, businesses can often deduct the full or partial cost of qualifying purchases in the current year rather than spreading the deduction over several years. Buying before December 31 could mean accelerating those deductions into this year's return. However, make sure these purchases align with your operational and long-term growth goals, not just for a write-off.

Am I Maximizing Retirement Contributions?

Retirement plans aren’t just beneficial for employees—they’re one of the most powerful tax-saving tools available to business owners. Contributions to plans like SEP IRAs, SIMPLE IRAs, or 401(k)s reduce taxable income while preparing you and your team for the future. If you haven’t evaluated your retirement plan options recently, now is a great time. Increasing contributions before year-end can lower your current tax liability while setting the stage for long-term financial security. Even sole proprietors and small firms can significantly benefit by maximizing these opportunities.

What About My Payroll and Owner's Compensation?

The end of the year is a good time to review how you compensate yourself and your team. If your business is structured as an S-Corporation, ensure that your “reasonable salary” meets IRS requirements—too low or too high can create issues. For sole proprietors or partnerships, review your withdrawals throughout the year and ensure that your estimated tax payments are on track. Making adjustments now can help balance cash flow and prevent surprises when tax season arrives. Payroll reviews also offer a chance to confirm that benefits, withholdings, and bonuses are correctly reported before W-2s and 1099s are issued in January.

Are There Tax Credits I’m Missing?

Tax credits often go unnoticed, but they can be more valuable than deductions since they reduce your tax bill dollar-for-dollar. Depending on your industry and activities, you might qualify for credits like the Research and Development (R&D) credit, energy-efficiency credits, or the small business health care tax credit. These programs frequently change or expand, so it’s worth asking your accountant to review your eligibility. Even a modest credit can significantly impact your year-end balance due.

Do I Need to Adjust My Estimated Tax Payments?

No one likes surprises at tax time. If your business income was higher or lower than anticipated this year, updating your estimated payments can help you avoid penalties and better manage cash flow. Review your income and expenses for the year and compare them to your initial projections. If you’ve had a particularly strong quarter or added new revenue streams, increasing your final quarterly payment might make sense. Conversely, if revenue dipped, lowering it can help preserve liquidity. A proactive approach now ensures a smooth and predictable financial picture.

What Does My Tax Situation Look Like for Next Year?

While year-end tax planning focuses on wrapping up the current year, it’s also a perfect time to look ahead. The decisions made today can shape your company's financial health for years to come. Consider how upcoming changes—such as hiring plans, expansion projects, or anticipated equipment needs—may affect your 2026 tax position. A forward-looking conversation with your accountant can help map out strategies that balance short-term savings with long-term growth. For example, deferring income or accelerating certain deductions might make sense based on your expected income levels next year.

Summing Up: Prepare Now to Benefit Later

The most successful business owners don’t wait until April to think about taxes—they start planning before the calendar flips to January. A thoughtful year-end review can uncover hidden deductions, reveal credit opportunities, and help you make wise decisions that keep more money working in your business. If you’d like to discuss your year-end tax strategy or explore ways to strengthen your financial plan, now is the time to act. Reach out to your trusted advisor or contact our office to schedule a consultation before December 31. A little preparation today can lead to significant savings tomorrow—and set your business up for a confident start in the new year.