What can you do before December 31st?

End-of-Year Tax Moves for Business Owners

The end of the year always sneaks up on us.  There’s the holiday rush, closing the books, and planning for next year, so tax planning doesn’t usually make it to the top of the list.

But here’s the truth: December 31 is the finish line for many of your best tax-saving opportunities. Once the calendar flips, so does your chance to make these moves.

Here are five smart strategies to consider before year-end:

1. Buy Needed Equipment or Technology

Are you already thinking about upgrading computers, software, or machinery? Buying and placing it in service before December 31 may allow you to take advantage of Section 179 or bonus depreciation. That means you can deduct the cost this year instead of spreading it out.

💡 Tip: Don’t buy just for the deduction. Buy what your business truly needs.

2. Max Out Retirement Contributions

Small business owners can often contribute more than they realize through SEP IRAs, SIMPLE IRAs, or Solo 401(k)s. These deductible contributions reduce your taxable income and help secure your retirement at the same time. Win/Win!

💡 Tip: Check with your CPA on deadlines.  Some plans must be set up before year-end, even if the actual contributions can be sent in later.

3. Prepay Deductible Expenses

Certain expenses, such as rent, utilities, or insurance, can be prepaid and deducted this year (if you’re on the cash basis method). This can help reduce taxable income for 2025.

💡 Tip: Make sure it aligns with your overall cash flow. Don’t prepay yourself into a crunch.

4. Review Payroll and Bonuses

If you’ve had a good year, paying out year-end bonuses to yourself or employees may reduce taxable income while boosting morale. Be mindful of payroll tax deadlines and withholdings – these are paychecks just like regular payroll.

💡 Tip: Plan bonuses early so payroll reporting is accurate and timely.

5. Pay Your Estimated Taxes

Underpaying estimated taxes during the year can lead to penalties. Your tax burden can fluctuate from year to year, as your income changes.  Paying estimates on time each quarter can decrease and even eliminate any late penalties and the interest associated with them.

💡 Tip: Better late than never.  If you’ve missed one or more estimates, pay them in as soon as you can.

Bottom Line

December is crazy busy, but carving out time for a year-end tax review can mean thousands in savings. Remember: once the ball drops on New Year’s Eve, many opportunities vanish until next year.