Executive Summary
Plan ahead before December 31 to reduce what you owe in April. Review profit projections, retirement contributions, owner pay, and contractor records now.
The most useful year-end tax planning happens before December 31. After that, most of your options are gone. Start by projecting your full-year profit. Then look at the timing of big purchases, retirement contributions, owner pay, and contractor records. Two or three hours with your books in November can save you real money and a lot of stress in April.
Filing is about reporting what already happened. Planning is your chance to shape the result while the year is still open.
Start with a realistic profit projection
Take your year-to-date numbers and estimate the rest of the year. Include the invoices you expect to collect and the bills you'll pay in December. This one number drives almost every other decision on this list. If you're headed for a much bigger year than last year, you'll want to know now, not when your return is being prepared.
Equipment purchases: watch the "placed in service" date
If you've been thinking about new equipment, computers, or vehicles, the rules are generous right now. For 2026, the Section 179 expensing limit is $2,560,000, and 100% bonus depreciation is permanent for qualifying property acquired after January 19, 2025. For many small businesses, that means you can deduct the full cost of qualifying purchases in the first year.
The catch is timing. To count for 2026, the equipment has to be bought and placed in service by December 31, meaning it's set up and ready to use, not just ordered. A laptop still sitting in its box on New Year's Eve counts toward next year.
Buy only what your business actually needs, though. A deduction still comes from real money spent.
Think about when income and expenses land
If your business uses cash-basis accounting, when you get paid and when you pay bills affects which year they count toward. Paying a January expense in December, or sending a late-December invoice in early January, can shift income between years.
Whether that helps depends on where you expect your income to be next year, so this is a good one to talk through with your tax advisor instead of guessing.
Check your retirement contributions
Retirement accounts are one of the simplest ways to lower taxable income while saving for your own future. Some deadlines are tighter than people expect, though. With a Solo 401(k), for example, the employee deferral generally has to be elected by December 31.
A SEP IRA gives you more room, since contributions can usually be made up until your return's due date. Know which kind of plan you have before the calendar turns.
Review owner pay if you're an S corporation
S corporation owners who work in the business need to take a reasonable salary through payroll. If you've mostly paid yourself through distributions this year, fix that before your final payroll run in December. Getting this wrong is a common reason S corps draw extra IRS attention.
Clean up contractor records now
Year-end is the right time to make sure every contractor has a current W-9 on file. Starting with 2026 payments, you'll only need to issue a 1099-NEC or 1099-MISC when a contractor's total reaches $2,000 for the year, up from $600. Run a report of who you've paid so far so you know who's likely to cross that line. Chasing tax ID numbers in late January is nobody's idea of a good time.
Don't forget your fourth-quarter estimate
Your last 2026 estimated payment is due January 15, 2027. If your profit projection came in higher than expected, adjust that payment now so the extra tax doesn't all come due in April.
Planning gets easier with a partner
A lot of year-end planning comes down to having someone look at your numbers early and ask the right questions. If you already trust someone with your books, it can make sense to have that same team help with your taxes, too.
Before the year wraps up, talk with BELAY Financial Solutions about year-end tax planning and walk into 2027 knowing where you stand.
This article is for general information only and isn't tax advice. Talk with a qualified tax professional about your specific situation.
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