5 Year End Tax Moves Every Small Business Should Make Before 2026

As 2025 winds down, small business owners have a unique opportunity to take proactive steps that can reduce their tax burden and set the stage for a stronger 2026. The key is to act before December 31 — because once the calendar flips, many opportunities disappear.

Here are five practical moves you can make right now:

1. Maximize Retirement Contributions

Contributing to retirement accounts isn’t just about long‑term savings — it’s also a powerful tax strategy.

• Solo 401(k) or SEP IRA: Business owners can contribute both as employer and employee, significantly reducing taxable income.

• Deadline reminder: Contributions must be made by year‑end (for 401(k)) or by the tax filing deadline (for SEP IRA), but planning now ensures you don’t miss out.

2. Review Vehicle and Real Estate Deductions

If you use a vehicle or property for business, year‑end is the time to ensure expenses are properly documented.

• Mileage logs: Keep accurate records of business vs. personal use.

• Real estate expenses: Deductible items may include property taxes, mortgage interest, and certain improvements.

• Tip: Clean documentation now prevents headaches during tax season.

3. Optimize S‑Corp Salary and Distributions

For S‑Corp owners, balancing salary and distributions is critical.

• Reasonable compensation: Ensure your salary meets IRS standards.

• Distribution planning: Adjust year‑end distributions to manage taxable income and avoid surprises.

• Why it matters: Proper planning can reduce payroll taxes while staying compliant.

4. Prepay Expenses or Defer Income

Strategic timing can make a big difference.

• Prepaying expenses: Rent, insurance, or vendor invoices paid before December 31 can lower taxable income.

• Deferring income: If possible, delay invoicing until January to push income into the next tax year.

• Balance is key: Work with your advisor to avoid cash flow issues.

5. Organize Bookkeeping for a Clean Start

Strong bookkeeping isn’t just compliance — it’s the foundation for growth.

• Reconcile accounts: Make sure bank and credit card statements match your books.

• Categorize expenses: Proper coding now saves time later and ensures deductions aren’t missed.

• Look ahead: Clean books make tax filing smoother and advisory insights more accurate in 2026.

Final Thoughts

Year‑end tax planning doesn’t have to be overwhelming. By focusing on these five moves, you can reduce your 2025 tax liability and start 2026 with confidence.

If you’re unsure which strategies apply to your situation, consider a quick consultation. Even a 15‑minute conversation can uncover opportunities that save thousands and set your business on the right path.