7 Year-End Tax Moves Every Small Business Owner Should Make Before December 31

January is too late. By the time you're sitting across from your accountant in February, the tax year is over and most of the opportunities to reduce your bill have expired.

The small business owners who pay the least in taxes aren't the ones with the most aggressive strategies — they're the ones who plan ahead. Here are seven moves you can still make before December 31 that can meaningfully reduce what you owe.

This is the single highest-leverage move most small business owners leave on the table. Contributions to a SEP-IRA or Solo 401(k) are tax-deductible, which means every dollar you contribute reduces your taxable income dollar-for-dollar.

2026 contribution limits:

• Solo 401(k): Up to $72,000 (employee + employer contributions combined)
• SEP-IRA: Up to 25% of net self-employment income, max $72,000

If you haven't set up a retirement account yet, a SEP-IRA can be opened and funded up until your tax filing deadline (including extensions). A Solo 401(k) must be established by December 31 of the tax year, even if contributions can come later.

If you have business expenses you were planning to make in early 2027, consider making them before December 31 instead. Common examples:

• Prepaying business insurance premiums
• Purchasing office supplies, software subscriptions, or equipment
• Paying Q4 estimated state taxes before year-end (if applicable)
• Prepaying rent on a business space

The goal is to shift deductions into the current tax year, reducing this year's taxable income. This works best when you expect to be in the same or lower tax bracket next year.

If you're operating as a sole proprietor or single-member LLC, you're paying self-employment tax (15.3%) on your entire net profit. An S-Corp election can eliminate SE tax on the portion of profit above a reasonable salary — and for many business owners earning $60,000+ in net profit, the savings are substantial.

The S-Corp election itself (IRS Form 2553) must be filed by March 15 of the year you want it to take effect, but the planning and setup work — payroll, reasonable salary determination, bookkeeping structure — needs to happen before year-end if you want to be ready to file on time.

Not sure if S-Corp is right for you? The math depends on your net profit, your state, and your specific situation. This is worth a 15-minute conversation before you assume it's not worth it.

If you need equipment, vehicles, or technology for your business, buying before December 31 lets you deduct the full cost in the current year rather than depreciating it over several years.

Section 179 allows you to deduct the full purchase price of qualifying equipment up to $1,220,000 in 2026. Bonus depreciation (currently at 40% for 2026 under the phasedown schedule) allows an additional first-year deduction on the remaining basis.

This is especially valuable for oilfield contractors, construction businesses, and any business that relies on heavy equipment or vehicles.

This isn't a tax strategy, but it's the prerequisite for all of them. You can't make smart tax decisions if you don't know what your numbers actually look like.

If your QuickBooks is behind, has uncategorized transactions, or hasn't been reconciled in months, fix that now. A clean set of books lets you:

• Accurately estimate your tax liability
• Identify deductions you might be missing
• Make informed decisions about accelerating or deferring income and expenses

If your books are a mess, a QuickBooks cleanup before year-end is one of the best investments you can make.

If you're a cash-basis taxpayer (most small businesses are), income is recognized when you receive it — not when you invoice. That means you have some control over when income hits your tax return.

If you expect to be in a lower tax bracket next year, consider delaying invoices for work completed in late December so payment arrives in January. Conversely, if you expect higher income next year, accelerating collections now locks in this year's lower rate.

This strategy requires careful judgment — don't delay invoices to the point of harming cash flow or client relationships. But for year-end work, the timing is often flexible.

The IRS requires contemporaneous documentation for most deductions. That means records created at the time of the expense, not reconstructed later from memory.

Before December 31, make sure you have:

• Mileage logs (if you're deducting vehicle use)
• Receipts for meals and entertainment (with business purpose noted)
• Documentation for home office deductions (square footage, exclusive use)
• Records of any charitable contributions made in the business name

Trying to reconstruct this documentation in February is painful and often incomplete. Doing it now takes an hour and protects every deduction you've earned.

These seven moves aren't complicated, but they require action before the calendar flips. The business owners who consistently pay less in taxes aren't doing anything exotic — they're just planning ahead and executing on the basics.

If you want a second set of eyes on your situation before year-end, book a free 15-minute tax planning consultation. We'll review your numbers and tell you exactly which of these moves apply to your business — no obligation, no pressure.

The window to act is open right now. Don't wait until January to wish you had.