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Year-End Tax Planning Checklist for Small Business Owners

By Yarik Yarosh, CPA ·September 5, 2026 ·14 min read
Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

October through December is the most important tax planning window for small business owners. Equipment must be placed in service by December 31 for Section 179 or bonus depreciation. Solo 401(k) plans must be established by December 31 (though contributions can be made later). Income and expense timing on the cash method can shift thousands between tax years. Most business owners miss these opportunities because they wait until their return is being prepared in March, when the window is closed.

✓Key takeaway

Year-end tax planning checklist by deadline:

October (90 days left):

  • Project current-year taxable income (run a preliminary P&L through September, annualize)
  • Compare to prior year: is income higher or lower? This determines the urgency of each action.
  • If no retirement plan exists and one is needed: start the Solo 401(k) setup process (takes 2-4 weeks with custodians like Fidelity or Schwab). Deadline to establish: December 31.
  • Evaluate equipment purchases needed in the next 6 months. Pulling them into the current year creates the Section 179 / bonus depreciation deduction this year. Prepaid expenses (insurance, rent, subscriptions) are deductible under the 12-month rule (Treas. Reg. 1.263(a)-4(f)) if the benefit does not extend beyond 12 months.
  • File extended returns (October 15 deadline for personal and C-Corp returns)
  • Make SEP-IRA contributions for extended returns (October 15 deadline)

November (60 days left):

  • Finalize equipment orders. Items must be DELIVERED and PLACED IN SERVICE by December 31, not just ordered. Allow 2-4 weeks for delivery.
  • Charitable contributions: donate cash or appreciated stock to qualified organizations. Appreciated stock held over 1 year provides a double benefit (deduction at FMV, no capital gains tax on the appreciation).
  • Income timing (cash method): if income is higher than expected, delay sending invoices until January. If income is lower, accelerate collections.
  • Expense prepayment (cash method): prepay January rent, insurance premiums, or annual subscriptions before December 31. Deductible if the benefit does not extend beyond 12 months.
  • Bad debt write-offs: write off uncollectible accounts receivable (accrual method only; cash-basis taxpayers never recorded the income, so there’s nothing to write off).
  • Asset sales: selling a business asset on an installment basis under IRC 453 spreads the gain over the payment period, useful for year-end asset dispositions.
  • Evaluate S-Corp election for NEXT year: Form 2553 is due by March 15 of the election year. Start the analysis now.

December (30 days left):

  • Last day to place equipment in service (Section 179 / bonus depreciation): December 31
  • Last day to establish a Solo 401(k): December 31
  • Last day for charitable contributions: December 31
  • Last day for Roth conversions: December 31
  • Employee bonuses: declare by December 31, pay by March 15 (accrual method, related-party rule: owner bonuses must be paid within 2.5 months)
  • Review S-Corp reasonable salary: ensure year-to-date W-2 salary is adequate. If behind, increase remaining pay periods.
  • Check state pass-through entity tax elections (some states require election before year-end)
  • Prepare for 1099 filing: gather contractor W-9s (name, address, TIN)

January (post year-end, still actionable):

  • Q4 estimated tax payment: January 15
  • W-2s due to employees: January 31
  • 1099-NECs due to contractors AND the IRS: January 31
  • SEP-IRA: can be established and funded by filing deadline (April 15, or October 15 with extension)
  • IRA/Roth IRA contributions for prior year: April 15 deadline
  • Solo 401(k) employer contributions: by filing deadline (plan must be established by prior December 31)
  • 401(k) catch-up: $23,500 base (2025), $31,000 if age 50+, $34,750 if ages 60-63 (SECURE 2.0 super catch-up)

What’s the dollar impact of year-end planning?

Charitable giving strategies

Charitable donations offer year-end planning opportunities beyond the basic deduction:

  • Bunching: combine two years of charitable donations into one year to exceed the standard deduction, itemize that year, and skip donations the following year.
  • Donor-advised fund (DAF): contribute a large amount to a DAF, take the full deduction this year, and distribute the funds to charities over multiple years.
  • Appreciated stock: donating stock held more than one year to a charity (or DAF) avoids capital gains tax AND provides a deduction at FMV. This is a double benefit.
  • S-Corp/partnership donations: flow through on the K-1 as a separately stated item. The shareholder/partner claims the deduction on their personal return.

Important caveat on year-end spending: equipment purchases and retirement contributions cost real money. The tax savings reduce the after-tax cost but are not free money. A $55,000 truck that saves $18,150 in taxes still costs $36,850 after tax. The timing strategies (deferring income, prepaying expenses) are true timing benefits that require no additional cash outlay beyond normal business operations.

What about the QBI deduction?

For SSTB owners (coaches, consultants, financial advisors, lawyers, accountants, medical professionals), the QBI deduction phases out above $191,950 single / $383,900 MFJ (2025). Year-end planning to stay below the threshold includes all of the strategies above (retirement contributions, prepaid expenses, equipment purchases) plus charitable contributions (which reduce AGI, not QBI directly, but reduce the overall tax burden).

For non-SSTB owners (construction, cleaning, fitness, photography, real estate agents), the QBI deduction is available at all income levels. However, the limitation above the threshold (50% of W-2 wages, or 25% of W-2 wages + 2.5% of UBIA) may require adjusting the S-Corp salary or making equipment purchases before year-end to ensure the UBIA supports the full QBI deduction.

Related guides:

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Cite this page

Yarik Yarosh, CPA. "Year-End Tax Planning Checklist for Small Business Owners." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/small-business-year-end-tax-planning-complete-checklist

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This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.