Year-End Tax Planning Checklist for Small Business Owners
· RKube Services
November is the last comfortable month to make tax moves for 2025. Here's a practical checklist: clean books first, then estimates, retirement, and income and expense timing.
A client once called us on December 29 asking what they could do to lower their tax bill. The honest answer was: not much. Most of the useful moves take a few weeks to set up, and by the last week of December banks are slow, vendors are on vacation, and payroll has already closed.
That's why we push year-end planning in November. You still have time to act, and you still have enough of the year behind you to see where you'll land.
Step 1: Get Your Books Current First
Everything else on this list depends on this one. You can't plan around a profit number you don't trust.
Before you make any decisions, get your bookkeeping through October 31:
- Every bank and credit card account reconciled
- No big pile of uncategorized transactions
- Owner draws and personal expenses separated from business expenses
- Loan payments split between principal and interest
Once that's done, take your year-to-date profit and add a realistic estimate for November and December. That projected number drives every step below.
Step 2: Check Your Estimated Tax Payments
The fourth-quarter 2025 estimated payment is due January 15, 2026. But the right time to figure out how much to send is now, while you can still adjust.
Most people avoid an underpayment penalty by paying the smaller of 90% of this year's tax or 100% of last year's tax (110% if your prior-year adjusted gross income was over $150,000). If your business had a much better year than 2024, paying based on last year's tax can keep you out of penalty territory, but you'll still owe the difference in April. Plan for that cash now.
Source: IRS: Estimated Taxes
Step 3: Decide on Retirement Contributions
For many owners, retirement plans are the biggest legitimate deduction available. The rules on timing matter, though:
- A SEP-IRA can generally be opened and funded up to your return's due date, including extensions. That makes it flexible, but you don't have to wait.
- A Solo 401(k) or other employer plan has more setup and election timing rules, and some of them are tied to year-end. If you're considering one, talk to your provider this month, not in December.
- If you run an S corporation, contributions tied to your salary depend on what runs through payroll by December 31.
Contribution limits change every year, so check the current figures on the IRS retirement plans page before you decide on an amount.
Step 4: Think About Timing Income and Expenses
If your business uses the cash method (most small businesses do), income counts when you receive it and expenses count when you pay them. That gives you some room to shift things between years.
A few common moves:
- Sending December invoices a little later so payment arrives in January
- Paying recurring bills, supplies, or professional fees before December 31 instead of after
- Buying needed equipment and getting it in service before year-end
This isn't free money. It's shifting tax from one year to the next. It makes sense when you expect to be in a similar or lower bracket next year, and less sense if next year looks like a lean one.
Example Scenario
A consultant runs a single-member LLC. After cleaning up her books through October, she sees $118,000 of profit, and she expects about $24,000 more by year-end. Her total federal tax last year was $19,000, and her AGI was under $150,000.
- She's paid $14,250 in estimates so far (three payments of $4,750). To reach the 100%-of-last-year safe harbor, she needs one more payment of $4,750 by January 15.
- She has a $9,000 project finishing mid-December. Invoicing it on December 31 with 30-day terms means the cash, and the income, lands in 2026.
- She decides to fund a SEP-IRA once her final numbers are in, since she has until her filing deadline.
None of this is dramatic. It's just decisions made with real numbers instead of guesses.
Step 5: A Few Other Items Worth a Look
S corporation owners should confirm they've taken a reasonable salary through payroll this year. It's a common audit issue and it's hard to fix after the last payroll run. It's also worth collecting W-9s from any contractors you've paid, since 1099 forms are due early in 2026.
How RKube Helps
- Catch-up bookkeeping so your year-to-date numbers are accurate before you make decisions
- A year-end projection showing where your 2025 tax is likely to land
- Calculating your January 15 estimated payment
- Reviewing retirement plan options and S-corp salary before the final payroll
If your books are behind, our free 30-day bookkeeping trial is a low-pressure way to get caught up. Details are on our campaign page, or call (984) 234-7030.
Final Thoughts
Year-end planning is mostly about giving yourself options. Clean books in early November give you seven or eight weeks to act. Clean books in late December give you almost none.
Every business is different, so run your specific plans by a tax professional before you act on them.
RKube Services
Bookkeeping, tax preparation, payroll, and proactive tax planning.