Now that the year has wrapped up, many small business owners are turning their attention to tax season and reviewing how the prior year shook out financially. While year-end deadlines may have passed, taking time now to evaluate your financial position and revisit key tax planning strategies can still reduce stress, uncover missed opportunities, and help you enter the new year on stronger footing.
Here’s a practical checklist to guide your planning process:
1. Review Your Financial Statements Start with your profit and loss statement, balance sheet, and cash flow report. Make sure your records are accurate and up to date. Spot any discrepancies and reconcile your accounts. This ensures you have a clear picture of your business’s financial health — and it helps your accountant identify opportunities for tax savings.
2. Accelerate or Defer Income and Expenses Timing matters. If you expect to be in a higher tax bracket next year, consider accelerating expenses (like supplies, bonuses, or equipment purchases) before year-end to reduce taxable income. Conversely, if next year’s income will be lower, defer expenses to keep deductions available when they’ll have the greatest impact.
3. Take Advantage of Section 179 and Bonus Depreciation If you’ve purchased new equipment, technology, or vehicles, review the IRS Section 179 deduction and bonus depreciation rules. These provisions allow you to deduct a large portion — or even the full cost — of qualifying assets in the year of purchase, rather than spreading the expense over time.
4. Maximize Retirement Contributions Contributing to retirement plans like SEP IRAs, SIMPLE IRAs, or 401(k)s not only supports your financial future but also reduces taxable income. Ensure contributions are made before year-end to take advantage of current-year deductions.
5. Review Payroll and Estimated Taxes Confirm that all payroll taxes have been correctly withheld and deposited. If your quarterly estimated tax payments have been inconsistent with your actual income, make a final payment to avoid penalties or interest.
6. Check Your Business Deductions Review deductions for common expenses like office supplies, travel, marketing, insurance, and professional fees. Don’t overlook small items — together, they can make a meaningful difference on your return.
7. Consult Your Accountant Tax laws change frequently. Before making major financial decisions, talk to your accountant or tax professional. A quick year-end review can uncover deductions you’ve missed and prevent costly mistakes.
A little planning can save a lot of stress later. By working through this checklist, you’ll head into tax season better prepared — with fewer surprises, clearer financial insight, and more opportunities to save.