7 Essential Year-End Tax Questions for Business Owners

As December approaches, it is a perfect moment to take a closer look at your tax strategy. A proactive review before the year officially ends can help reduce your tax burden, strengthen cash flow, and set your business up for a smoother start to the upcoming year. Whether you run a lean operation or manage a growing team, asking the right questions now can reveal opportunities to save money and operate more efficiently.

1. Have I documented all of my business expenses?

Even the smallest purchases can influence your final tax bill, but only if they are properly recorded. It is easy for receipts, small transactions, or charges made through personal accounts to be forgotten throughout the year.

Before December 31, gather outstanding receipts, review bank and credit card statements, and check for expenses that may not have been logged. Remember categories like ongoing software tools, meals for client meetings, professional development, industry memberships, or mileage. If part of your home functions as an office, a percentage of your rent or utilities may also be deductible. Doing a thorough sweep now ensures you capture every eligible expense.

2. Is it a good idea to make large purchases before the year ends?

If you have been considering buying new tools, upgrading equipment, or investing in technology, the timing of the purchase can affect your taxes. Current Section 179 and bonus depreciation rules may allow businesses to deduct the entire cost—or a substantial portion—of qualifying purchases in the same year they are acquired.

Completing these purchases before the end of December might allow you to take advantage of those deductions sooner. Still, avoid spending money simply to secure a tax benefit. Any equipment or asset should genuinely support your business goals and long-term growth.

3. Am I making the most of retirement contribution options?

Retirement plans are powerful tax-saving tools that benefit both owners and employees. Plans such as SEP IRAs, SIMPLE IRAs, and 401(k)s can reduce taxable income while helping strengthen financial security for your team.

If you have not reviewed your retirement plan structure—or your contribution levels—recently, this is an excellent time. Increasing contributions before the year closes can offer immediate tax advantages while supporting future financial stability. Even very small businesses or sole proprietors can see meaningful benefits from maximizing retirement contributions.

4. Should I reassess payroll and how I compensate myself?

The final weeks of the year are a smart time to evaluate how payroll has been handled and whether adjustments are needed. S-Corporation owners should confirm that their compensation aligns with IRS guidelines for a “reasonable salary,” as amounts that deviate too far in either direction could cause issues.

If you are a sole proprietor or part of a partnership, take a look at your withdrawals and compare them to your estimated tax payments. Making adjustments now can help stabilize your cash flow and reduce potential surprises during tax season. This is also a good opportunity to verify that bonuses, benefits, and withholdings are reported correctly before year-end forms are issued.

5. Am I missing out on available tax credits?

Tax credits are often overlooked but provide significant value because they directly reduce the amount you owe—not just your taxable income. Depending on your business activities, you may qualify for credits such as the Research and Development (R&D) credit, green energy incentives, or the small business health care tax credit.

Because these programs can evolve from year to year, it is worth checking with your accountant to identify any credits you may be eligible for. Even small credits can produce noticeable savings once applied to your final tax calculation.

6. Do I need to revise my estimated tax payments?

To avoid penalties and better manage your finances, it is important to evaluate whether your estimated tax payments are still appropriate. If your business generated significantly more—or less—income than you anticipated, a final adjustment can help keep things balanced.

Compare your actual revenue and expenses to your original projections. If your business experienced growth, a higher final quarterly payment may prevent an unexpected bill later. If your revenue dipped instead, reducing your estimated payment could help conserve cash. Taking the time to reassess these numbers helps maintain financial stability year-round.

7. What should I expect for next year’s tax position?

While wrapping up the current year is a top priority, thinking ahead is just as important. Your decisions today can influence your tax landscape in the coming year. If you expect changes such as hiring new staff, investing in equipment, or expanding operations, those factors may affect your 2026 taxes.

A conversation with your accountant now can help you plan strategically. You may want to delay income, accelerate certain deductions, or adjust your business planning based on expected revenue levels. Preparing early allows you to approach the new year with clarity and confidence.

A thoughtful review before December 31 can help uncover deductions, reveal eligible credits, and spark better financial decisions. The businesses that benefit most are those that approach taxes proactively—not months after the year ends. Taking action now can lead to real savings and help position your company for a stronger, more secure start to the new year.