7 Year-End Tax Moves Smart Business Owners Make Before December 31
The window to lower this year's tax bill closes on December 31 — not April 15. A few deliberate moves in the fourth quarter can save you real money.
Time your income and expenses
If you report on the cash basis, you control timing more than you might think. Deferring December invoices into January, or prepaying deductible expenses before year-end, can shift income into the year where it costs you less.
This only works well with a projection in hand — otherwise you risk creating a bigger problem next year. Optimize deliberately, don't guess.
Buy needed equipment and use Section 179
Section 179 and bonus depreciation let you deduct the full cost of qualifying equipment in the year you place it in service, rather than spreading it over many years.
If you were going to make the purchase anyway, doing it before December 31 can pull the deduction into the current year and improve your cash flow.
Max out retirement contributions
Contributions to a solo 401(k), SEP, or SIMPLE IRA reduce your taxable income while building your own wealth — one of the rare moves that helps you twice.
Some plans must be established before year-end even if you fund them later, so this is one to handle early rather than in the final week of December.
Review the rest before the ball drops
A handful of smaller moves add up. Before year-end, it's worth checking each of these with your accountant:
- Harvest investment losses to offset gains
- Make planned charitable contributions
- Confirm your reasonable S-Corp salary for the year
- Reconcile your financial records so nothing is missed
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