7 Essential Tax Questions for Businesses Before Year-End

As the year approaches its end, it’s crucial to start thinking strategically about your taxes. By planning smartly before December 31, you can lessen your tax burden, enhance cash flow, and prepare your business for a robust start in the upcoming year. Whether you’re a solo entrepreneur or steering a growing company, these seven questions can guide your year-end review and uncover valuable savings opportunities.

1. Are All Business Expenses Accounted For?

Small expenses can accumulate into significant deductions, but only if they are meticulously tracked. It’s common to miss receipts or forget minor purchases, especially if you occasionally use personal accounts for business transactions.

Before the year ends, be sure to gather all receipts, reconcile your credit card statements, and ensure nothing is overlooked. Don’t forget recurring expenses such as software subscriptions, business meals, continuing education, professional memberships, or mileage. If you use part of your home as an office, that portion of utilities or rent might also be deductible. A thorough review now ensures you’re claiming every legitimate expense when it matters most.

2. Should Major Purchases Be Made Before Year-End?

If you’ve been considering upgrading equipment, purchasing a company vehicle, or investing in new technology, timing could significantly impact your taxes. Under Section 179 and bonus depreciation rules, businesses may be able to deduct the full or partial cost of qualifying purchases in the current year rather than spreading the deduction over several years.

Purchasing before December 31 could enable you to claim those deductions on this year’s return. However, it’s important to be strategic—avoid unnecessary spending just for a write-off. Consider whether the purchase supports your operations and long-term growth plans.

3. Are Retirement Contributions Being Optimized?

Retirement plans aren’t just for employees—they are among the most powerful tax-saving tools available to business owners. Contributions to plans such as SEP IRAs, SIMPLE IRAs, or 401(k)s reduce taxable income while helping both you and your team prepare for the future.

If you haven’t recently reviewed your retirement plan options, now is an ideal 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 from maximizing these opportunities.

4. Have Payroll and Owner’s Compensation Been Evaluated?

The end of the year is also a prime time to assess how you compensate yourself and your team. If your business functions as an S-Corporation, ensure your “reasonable salary” aligns with IRS requirements—a salary that is too low or too high can create challenges. For sole proprietors or partnerships, review your withdrawals throughout the year and ensure your estimated tax payments are on track.

Adjustments now can help maintain cash flow and prevent surprises during tax season. Payroll evaluations also provide the opportunity to confirm that benefits, withholdings, and bonuses are correctly reported before W-2s and 1099s are distributed in January.

5. Are Any Tax Credits Being Overlooked?

Tax credits often go unnoticed, though they can be even more valuable than deductions because they reduce your tax bill dollar-for-dollar. Based on your industry and activities, you could qualify for incentives such as the Research and Development (R&D) credit, energy-efficiency credits, or the small business healthcare tax credit.

These programs frequently change or expand, so requesting your accountant review whether you qualify is beneficial. Even modest credits can greatly impact your year-end balance.

6. Should Estimated Tax Payments Be Adjusted?

No one likes surprises during tax season. If your business income was higher (or lower) than expected, updating your estimated payments can help you avoid penalties and manage cash flow more effectively.

Review your income and expenses for the year and compare them to your initial projections. If you experienced a strong quarter or added new revenue streams, increasing your final quarterly payment may be wise. Conversely, if revenue declined, adjusting downwards can help preserve liquidity. Proactively addressing this now keeps your financial outlook smooth and predictable.

7. What Is My Tax Outlook for Next Year?

While year-end tax planning focuses on wrapping up the current year, it’s also an excellent time for future planning. Decisions made now can influence 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 discussion with your accountant can help outline strategies that balance short-term savings with long-term growth. For instance, deferring income or accelerating certain deductions could be beneficial based on your expected income levels next year.

Wrapping Up: Plan Now, Benefit Later

The most successful business owners don’t wait until April to consider taxes—they start planning before the calendar flips to January. An insightful year-end review can uncover hidden deductions, reveal credit opportunities, and enable smart decisions that keep more money working in your business.

If you’d like to explore your year-end tax strategy or find ways to strengthen your financial plan, now is the perfect time to act. Contact your trusted advisor or reach out to our office to schedule a consultation before December 31. A little preparation today can yield significant savings tomorrow and set your business up for a robust start in the new year.