Year-End Tax Planning for Small Business Owners: What to Review Before December 31

The best tax decisions are made before the year closes, not in April. Tax preparation reports what already happened. Planning gives you choices while they are still available.

If you own a small business, the last quarter is the right moment to look at your numbers with intention. Here is what we review with our clients before December 31.

1. Bring your books up to date

A projection is only as good as the records behind it. Before any planning conversation, your books should be reconciled through the most recent month, with no uncategorized transactions and with personal and business activity clearly separated.

If your books are several months behind, start there. Planning on incomplete numbers creates false confidence.

2. Project your full-year profit

With current books, you can estimate where the year will end: actual results through today, plus a reasonable estimate for the remaining weeks. Compare that number with last year.

This tells you whether your estimated tax payments are on track. For individuals, the final 2026 estimated payment is due January 15, 2027. Knowing the number in November is very different from discovering it in April.

3. Review the timing of income and expenses

Depending on your accounting method, the timing of an invoice, a payment or a purchase can affect which year it belongs to. If you were already planning to buy equipment or pay for a service your business needs, the calendar matters.

One caution: buying something only for the deduction rarely makes sense. A deduction reduces your taxable income; it does not return the full cost of the purchase.

4. Look at how you pay yourself

If your business is taxed as an S corporation, review your salary and payroll before the last payroll of the year. Owner compensation should be reasonable for the work you perform, and it is much easier to adjust in December than to correct afterward.

If you operate as an LLC and your profit has grown, this is also a good time to ask whether your current structure still fits. An S corporation election for 2027 generally must be filed by March 15, 2027 for a calendar-year business.

5. Organize your contractor records

Request a Form W-9 from every contractor now, not in January. For payments made in 2026, the reporting threshold for Form 1099-NEC is $2,000 per contractor, up from $600 in prior years. The forms are due at the end of January.

Having names, addresses and tax ID numbers on file before the year ends makes January far calmer.

6. Check the decisions that have a deadline

Some choices expire on December 31. Certain retirement plans must be established before year-end, while others allow contributions until your filing deadline. The rules depend on the plan, so it is worth asking before the year closes.

Also confirm that your payroll and sales tax filings are current. Open compliance items are easier to resolve before a new year adds more.

When to start

October and November are ideal. There is still time to act, and your year-to-date numbers are complete enough to be meaningful.

At ServiAmigo Tax & Advisory, year-end tax planning is a conversation about your business, not a form. We review your numbers with you, explain your options in plain language and help you decide with confidence.

Schedule a Consultation to review your year before it closes.

This article provides general information and is not tax advice for your specific situation.