As the year draws to a close, many business owners shift focus from daily operations to wrapping up the books. The final quarter is one of the most important times to strengthen your company’s financial health, capture new deductions, and resolve tax issues that might otherwise carry into the next year.
Avoid an Expensive Surprise
If your business generates between $1 million and $10 million annually, the stakes are even higher. Strategic year-end planning can make the difference between a smooth tax season and an expensive surprise.
1. Review Your Financial Position
Start with the basics: make sure your books, receipts, payroll records, and loan statements are organized and up to date. Review your cash flow to decide whether it makes sense to defer income or accelerate expenses. For example, if you expect higher profits next year, delaying some invoices until January may reduce your 2025 tax liability.
Also, confirm that your estimated tax payments reflect your current position. The One Big Beautiful Bill Act (OBBBA) has altered deductions and credits, which may impact your projections. A short conversation with us now can prevent penalties later.
Download the 2025 Year-End Checklist for Business Owners and Individuals
2. Take Advantage of Updated Deductions and Credits
Several OBBBA provisions provide real opportunities for businesses to reduce their taxable income. These are just a few areas where prompt action can result in significant savings.
- Bonus Depreciation & Section 179: You can now permanently deduct 100% of qualified equipment and property purchases. Be sure to place any new assets into service before December 31 to qualify.
- R&D Costs: Research and development expenses can now be fully deducted in the year incurred. Document all eligible project costs to maximize your benefit.
- Owner Compensation: For S corporations and partnerships, review how salaries and guaranteed payments align with “reasonable compensation” rules under the Qualified Business Income (QBI) deduction.
- Energy Credits: Some clean-energy incentives are being phased out, so wrap up any eligible projects this year.
3. Address Lingering Tax Issues
Before the holiday rush, resolve outstanding tax matters that might cause complications at filing time. Addressing these issues now prevents last-minute stress when tax season arrives.
- Payroll Reporting: Ensure your payroll provider has updated systems to report overtime pay and tips separately, as required by law.
- Deferred Revenue & Prepaid Expenses: Adjusting timing can help even out taxable income. Ask us whether deferring income or prepaying expenses is right for you.
- Loss Carrybacks / Net Operating Losses (NOLs): Strategically use current or prior-year losses to offset income where it provides the most benefit. The OBBBA did not change existing NOL rules that apply to C corporations and carried-over losses
- State Conformity: Not every state mirrors the federal OBBBA rules. For example, Pennsylvania does not use either federal AGI or taxable income as a starting point. Still, it refers to Internal Revenue Service (IRS) rules and definitions to establish their state income tax base.
4. Plan for the Year Ahead
If you’ve been considering a retirement plan, now is the time to set up or fund a 401(k), SIMPLE, or SEP. Contributions can lower taxable income and help retain key employees.You may also want to evaluate your accounting method (cash vs. accrual). Some businesses can enhance their tax efficiency by switching to more effective methods.
5. Wrap-Up and Next Steps
A thoughtful year-end review is about more than just compliance; it’s about setting your business up for a stronger, more profitable year. Taking time now to review your checklist and resolve open tax matters will save you time, money, and frustration in 2026.
If you haven’t already, download our 2025 Business Year-End Tax Checklist to walk through each step in detail. Then, schedule a consultation with us to finalize your year-end strategy.
Don’t Wait!
Don’t wait until December to make changes. Most tax strategies must be implemented before the end of the year to be counted toward this year’s return. Contact us if you have questions or need guidance on what you should include on your financial checklist.