Year-End Tax Planning Checklist for Business Owners

The last few weeks of the year are your final chance to influence your 2026 tax bill. Once December 31 passes, most of the numbers are locked in, and tax season becomes about reporting what already happened. A little planning now can help you avoid surprises, make smarter purchasing decisions, and walk into tax season organized.

In January you can still make a few decisions, such as funding certain retirement plans, but most opportunities to shift income, time expenses, or buy equipment for this year will be gone. Year-end planning also helps you budget. If you know roughly what you will owe in April, you can set money aside now instead of scrambling later. And because tax law changes from year to year, including recent federal legislation that affects many businesses, a fresh look at your situation each fall is worth the time.

Use this checklist as a starting point for a year-end conversation with your CPA. Not every item will apply to every business, and the best moves depend on your entity type, cash flow, and plans for 2027.

How Profitable Has Your Business Been So Far This Year?

Every planning decision starts with an accurate picture of your profit. Before you do anything else:

1. Bring your books up to date through at least the end of October or November.
2. Reconcile your bank and credit card accounts so the numbers are reliable.
3. Review your profit and loss statement and compare it to last year.
4. Project the rest of the year, including large expected sales, bonuses, or purchases in December.
5. Estimate your tax on the projected profit, at both the federal and Georgia levels, and compare it to what you have already paid.

If your books are behind, catching them up is the single most valuable year-end task. Planning on unreliable numbers can lead to the wrong decisions.

Should You Delay Income or Accelerate Expenses?

Many small businesses, especially those using the cash method of accounting, have some control over the timing of income and expenses. The basic idea is simple: if you expect to be in a similar or lower tax bracket next year, deferring income and pulling deductible expenses into this year may lower your current tax bill. If you expect higher income next year, the opposite might make sense.

Common timing moves include:

• Sending December invoices a little later so payments arrive in January.
• Paying deductible bills, such as supplies or professional fees, before December 31.
• Stocking up on supplies you will actually use soon.
• Paying year-end bonuses to employees before the year closes.

Be careful not to let tax savings drive poor business decisions. Spending a dollar to save a fraction of that dollar in tax only makes sense if you needed the purchase anyway. Accrual-method businesses follow different timing rules, so check with your CPA before making moves.

Is This a Good Year to Buy Equipment?

Buying equipment, vehicles, computers, or furniture for your business can create a deduction, but the timing and size of that deduction depend on depreciation rules. In general, the cost of a long-lived asset is deducted over several years. However, provisions such as Section 179 expensing and bonus depreciation can allow some or all of the cost to be deducted in the year the asset is placed in service.

A few points to keep in mind:

• "Placed in service" matters. Generally, the asset must be ready and available for use in your business by December 31, not just ordered or paid for.
• Limits and rules change. Recent federal legislation changed several depreciation provisions, and the IRS adjusts certain limits each year. Check the current figures or ask us before you buy.
• State rules can differ. Georgia does not always follow federal depreciation rules, which can create differences between your federal and state returns.
• Bigger deductions now mean smaller ones later. Writing off an asset immediately leaves nothing to deduct in future years, which may not be ideal if you expect higher income ahead.

What Retirement Plan Contributions Should You Consider Before Year-End?

Retirement plan contributions can reduce taxable income while building your savings. The right plan depends on your business structure, whether you have employees, and how much you want to contribute. Common options for small businesses include SEP IRAs, SIMPLE IRAs, and solo or traditional 401(k) plans.

Deadlines are the key planning issue:

• Some plans, depending on the type of plan and contribution, must be established before December 31 to accept certain contributions for 2026.
• Other plans, such as a SEP IRA, can generally be set up and funded up to your tax return due date, including extensions.
• Employee deferrals made through payroll must come out of paychecks during the year.

Contribution limits are adjusted by the IRS each year, so confirm the current figures before you decide how much to contribute. If you have employees, consider the cost of required employer contributions too.

Are Your Owner Salary and Estimated Tax Payments on Track?

Reasonable compensation for S corporation owners

If your business is taxed as an S corporation and you work in it, the IRS expects you to receive reasonable compensation through payroll before taking distributions. Reasonable compensation is generally what you would have to pay someone else to do the work you do, based on your duties, experience, and industry.

Year-end is a good time to review whether your 2026 salary makes sense compared to the profit of the business. If you have taken distributions all year without salary, address it before the final payroll of the year. Any adjustment needs to run through payroll, with proper withholding and payroll tax deposits, before December 31.

Estimated tax true-up

Business owners usually pay tax through quarterly estimated payments rather than withholding. The fourth federal estimated payment for 2026 is due in mid-January 2027, and Georgia has its own estimated payment schedule.

Compare what you have paid so far to your projected tax. If you are behind, an additional payment now or in January can reduce or avoid underpayment penalties. The IRS offers safe harbor rules based on your prior-year tax that can protect you from penalties even if you owe at filing. Ask us which safe harbor applies to you.

What Should You Gather Before Tax Season Starts?

A smooth tax season starts in December. Use this list to get organized:

• Collect Forms W-9 from every contractor and vendor you paid this year. You will need their legal name, address, and taxpayer identification number to issue Forms 1099-NEC, which are due to recipients and the IRS by the end of January. The reporting threshold was changed by recent legislation, so check the current figure on IRS.gov or ask us.
• Review payroll records so W-2s are accurate, including any fringe benefits that must be reported as wages.
• Document asset purchases and sales, including invoices and the dates assets were placed in service.
• Gather loan statements showing year-end balances and interest paid.
• Organize mileage logs and records of business use for vehicles and home offices.
• Record ownership changes, new partners, or changes in entity structure during the year.
• Close out the year in QuickBooks by reconciling every account through December 31.

How Heaven & Alvarez Can Help

Heaven & Alvarez LLC works with business owners in Norcross, Gwinnett County, and across metro Atlanta, in English and Spanish, to plan before year-end and file accurately afterward. We can review your year-to-date numbers, model different scenarios, and prepare your return with our business tax preparation services. For a broader look at where your business is headed in 2027, explore our strategic business planning services, and keep our tax due dates page handy.

Call (770) 849-0078 or email info@heavencpa.com to schedule your year-end review before December fills up.

This article is general information, not individual tax advice. Tax rules and limits change, so please contact us about your specific situation.

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