As we approach the end of the year, this is an excellent time to review strategies that may help you reduce your 2025 tax liability and strengthen your financial position going into 2026. Below are key tax-saving opportunities that many business owners can benefit from, depending on their structure and operations.

1. Accelerate Deductions & Defer Income

• If your business is cash-basis, consider accelerating deductible expenses before year-end (e.g., supplies, equipment, rent, utilities).

• Delay invoicing customers until January to defer taxable income, if appropriate.

• Pay outstanding vendor bills before December 31 to capture the deduction in 2025.

2. Take Advantage of Depreciation Incentives

• Consider purchasing qualifying equipment, vehicles, or technology before year-end.

• Section 179 and bonus depreciation may allow you to deduct a significant portion—or even the full cost—of new assets placed in service during 2025.

• Review your fixed asset schedule for any assets that should be written off.

3. Maximize Retirement Contributions

• Employer contributions to SEP IRA, SIMPLE IRA, or 401(k) plans are tax-deductible.

• If you don’t currently have a plan, consider establishing one—potential credits may offset administrative costs.

• Evaluate whether a Solo 401(k) or SEP IRA could provide substantial deductions for owner compensation.

4. Review Owner Payroll & Distributions

• For S-corporations, confirm owner salaries are reasonable to avoid IRS scrutiny while optimizing payroll tax savings.

• Ensure any shareholder loans, draws, or distributions are properly documented.

5. Clean Up Your Books Before Year-End

• Reconcile bank accounts, credit cards, and loan balances.

• Write off uncollectible accounts receivable.

• Update mileage logs and business expense documentation.

• Confirm contractor information for 1099 filings.

6. Evaluate Your Business Structure

• Review whether your current entity type (LLC, S-Corp, C-Corp) still provides the best tax advantages.

• Consider a late-year S-Corporation election for 2026 if it may reduce self-employment taxes.

• For multi-member and corporate entities, verify your operating or shareholder agreements reflect 2025 ownership activity.

7. Plan for Estimated Taxes

• Review year-to-date profit to determine whether additional estimated tax payments are needed by January 15, 2026.

• Avoid underpayment penalties by adjusting your fourth-quarter payment if income has increased.

We’re Here to Help You Save

Every business is unique, and the best tax-saving strategies depend on your specific situation, income structure, and long-term goals. We encourage you to contact our office to schedule a year-end tax strategy session. We can analyze your financials, identify your strongest deductions, and ensure you are prepared for the 2025 tax filing season.