If you’re like most business owners, you spend the end of the year juggling jobs, clients, and holiday chaos. Taxes might be the last thing on your mind, but some forward planning ahead of December 31 can make a real difference when filing season rolls around.
This year’s a little different, too. The 2025 Tax Relief Act brought several tax law changes that affect small businesses in a good way. You’re looking at thousands in tax savings if you start early with your end of year tax planning.
Let’s walk through a checklist of what you can do before the year ends to keep more of your hard-earned money in your pocket.
This year, Congress made several small-business-friendly rules permanent. That means fewer temporary sunsets and more predictability going forward
Check out our other post that covers what the 2025 tax relief act means for Texas business owners.
We’ll outline the highlights here:
The most valuable thing you can do right now is schedule a year-end meeting with your accountant. When you meet early, your accountant can help you do two important things:
First, they can forecast your tax bill. By looking at your year-to-date income and expenses, they’ll estimate what you’ll owe and whether you’re likely to get a refund or face a balance due, which gives you time to plan come tax season.
Second, they can spot opportunities to save. Maybe buying that new work truck or piece of equipment this month would qualify for Section 179 or bonus depreciation. Maybe you could contribute more to your retirement plan or pay bonuses before year-end to lower taxable income. These are things you can’t fix after December 31.
If your business has grown or changed in the past year, it’s a good time to make sure your setup still fits. For example, an LLC taxed as an S corporation might reduce self-employment taxes, but only if you’re paying yourself a “reasonable salary.”
If you’ve been guessing what that means, now’s the time to review it. Paying yourself too little can raise a red flag with the IRS, while paying too much can reduce the benefit of being an S corp.
If you’ve been operating as a sole proprietor but your profits are climbing, ask whether electing S corp status for 2026 makes sense. It’s all about balancing taxes with flexibility and liability protection.
Want to know more? Read this guide on how to pay yourself as an LLC here. If you want to know how to pay yourself through an S-Corp, click here
For cash-basis businesses, you can often tip the scales in your favor by carefully timing expenses and income. For example, if you pay bills, buy supplies, or prepay rent before December 31, those costs count as deductions this year.
On the flip side, if you have jobs wrapping up in December but don’t send the invoices until January, that income won’t show up until next year’s return. It’s a simple, legal way to manage your cash flow and smooth out your tax bill.
But be strategic, don’t buy things you don’t actually need just for the deduction. A tax deduction only saves you a portion of what you spend. It’s better to make purchases that truly move your business forward.
If you’ve been holding off on upgrading vehicles, tools, or technology, this is the year to go for it. With 100% bonus depreciation back and higher Section 179 limits, you can deduct the entire cost of qualifying assets in the year you buy them.
For Fort Worth business owners, that could mean writing off trucks, office equipment or even new software. Just remember that the equipment must be placed in service, not just ordered, by December 31 to qualify.
Every business has a few loose ends at year-end. Maybe it’s a customer who never paid or old inventory that’s been collecting dust. Cleaning this up now helps you start fresh next year—and it can lower your taxable income.
Write off any debts that are clearly uncollectible. Review your inventory for items that are outdated, damaged, or obsolete and adjust your books accordingly. For service businesses, double-check that all your invoices have gone out and that deposits are applied correctly.
These small cleanups keep your records accurate and make tax prep much smoother later.
If you plan to pay year-end bonuses, make sure they’re processed before December 31, so the expense counts this year. It’s also a great time to confirm payroll tax deposits, verify employee information and make sure your withholdings are accurate.
For self-employed owners, review how much you’ve paid into Social Security and Medicare. The wage base limit for 2025 is $176,100, so anything beyond that won’t incur additional Social Security tax.
If you reimburse employees for mileage, tools, or expenses, set up an accountable plan. It keeps those reimbursements tax-free for them and deductible for you.
Retirement plans are one of the most powerful tax tools for small business owners. Contributions can reduce your taxable income while building long-term savings.
If you have a SEP IRA, Solo 401(k), or SIMPLE IRA, check how much you’ve contributed so far. Even if you can’t make the full deposit until tax filing time, decide now what you’ll contribute and document it.
This is also a good time to look at HSAs or FSAs if you offer health benefits. Using the funds before they expire -and maxing out new contributions – can make a difference on both your business and personal taxes.
No matter how careful you are with your deductions, it all comes down to documentation. Keep receipts, invoices, bank statements, and notes showing the business purpose for every expense.
If you buy equipment, keep the invoice and proof of payment. If you claim mileage, keep a simple log with dates, miles, and purpose. If you’re ever audited by the IRS, having clean documentation means less stress and faster resolution.
Year-end tax planning helps small business owners take control of their tax bill instead of getting blindsided in April. The decisions you make in November and early December can easily mean the difference between overpaying the IRS or keeping that money to reinvest in your business.
Meeting with your accountant early gives you options to accelerate deductions and lock in new 2025 tax breaks like 100% bonus depreciation or expanded Section 179 expensing. If you wait until the last week of December, most of those options are off the table.
At Adam Traywick, CPA, we help Fort Worth business owners plan ahead and uncover tax-saving opportunities, while there’s still time to act.
Schedule your year-end tax review today, and let’s make sure 2025 closes with more savings and fewer surprises.
