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Utilize this year-end tax planning checklist to systematically prepare your business for end-of-the-year taxes.
The end of the year is still a ways off, but business owners have a golden opportunity to take proactive steps that can lower their tax liability and set the stage for a stronger financial year ahead. Year-end tax planning isn’t just about compliance—it’s about maximizing deductions, leveraging credits, and making informed financial decisions. By working closely with your CPA or tax advisor, you can ensure no opportunity slips through the cracks. We have put together a comprehensive year-end tax planning checklist for businesses to help you start wrapping up the year with confidence.
Schedule a Year-End Tax Review with Your CPA
Before making any big financial moves, book a meeting with your CPA. A year-end review helps you project taxable income for the current year, evaluate available deductions, and identify potential tax-saving opportunities. Early planning ensures you have time to implement strategies before the December 31 deadline.
Analyze Income and Expenses
Look at your current income and expense reports to determine whether it’s beneficial to defer income into next year or accelerate deductible expenses into this year.
For example:
- If your business expects higher profits next year, it may be wise to accelerate expenses now.
- If this year’s profits are unusually high, deferring some income can help balance your tax liability.
Review Capital Expenditures and Section 179 Deductions
If your business needs equipment, machinery, or technology upgrades, consider making those purchases before year-end. Section 179 and bonus depreciation allow you to deduct a significant portion—or even the full cost—of qualifying assets purchased and placed in service during the tax year.
Maximize Retirement Plan Contributions
Business retirement plans like 401(k), SEP IRA, or SIMPLE IRA offer a win-win: you help employees save for the future while reducing taxable income for the business. Ensure both employer and employee contributions are maximized before year-end deadlines.
Issue Year-End Bonuses and Fringe Benefits
If you plan to reward employees with bonuses or additional benefits, make sure these are issued and properly recorded before December 31. Not only can this boost morale, but it can also provide deductible expenses for your business.
Evaluate Accounts Receivable
Review your outstanding invoices and collect on overdue accounts where possible. If certain accounts are uncollectible, write them off as bad debts before year-end to claim the deduction.
Identify and Claim Eligible Tax Credits
Tax credits directly reduce your tax liability, so be sure to explore your options. Common examples include:
- Research & Development (R&D) Tax Credit
- Work Opportunity Tax Credit (WOTC)
- Energy efficiency credits
Your CPA can help ensure you don’t miss valuable credits your business qualifies for.
Organize Financial Documentation
Gather and organize:
- Receipts
- Invoices
- Payroll records
- Asset purchase documents
Having this documentation ready makes year-end closing smoother and ensures your CPA can prepare accurate returns without delays.
Make Large Purchases Before December 31
If you have planned major business purchases, completing them before year-end can qualify you for current-year deductions. This could apply to anything from software licenses to company vehicles.
Review Estimated Tax Payments
Check your quarterly estimated tax payments to make sure you’ve paid enough to avoid underpayment penalties. If you’re short, making an additional payment before the year ends can help you stay compliant.
Explore State-Specific Tax Strategies
State tax laws vary, and many offer their own deductions, credits, or incentives. Work with your CPA to ensure you’re taking advantage of every state-level opportunity.
Plan Your 2026 Budget and Tax Strategy
Finally, use the insights from your year-end review to build a stronger financial plan for the upcoming year. Setting budgets, identifying areas for cost savings, and planning for large expenditures in advance can help keep your business financially healthy.
Start Early For a Smoother Tax Season
Year-end tax planning is one of the most impactful steps you can take to protect your business’s bottom line. By following this checklist and working closely with a knowledgeable CPA, you can maximize deductions, reduce tax liability, and start the new year on solid financial footing.
Trust the Professionals at the Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients.
Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning? We have the necessary expertise and years of proven results to help.
We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. Follow us on Facebook, Twitter, YouTube, and LinkedIn for more tax tips.