As a business owner, the final weeks of the year give you one more chance to shape your tax outcome for the year ahead. While many owners assume it’s “too late” to make meaningful changes in December, you actually have several powerful tools available to reduce your tax burden, maximize deductions, and position your business for a stronger financial future.
In this article, you’ll learn what actions still count before year-end, how to use timing to your advantage, why retirement accounts offer unique opportunities, and how a review of your foundational systems can help you make year-end decisions that support long-term financial health.
You Still Have Time: Why December Moves Matter More Than You Think
Many owners feel stuck as the year comes to a close. But the IRS allows several strategies that must be established by December 31, even if they don’t need to be funded until next year’s tax deadline. That means December gives you one last window of opportunity to reduce your taxable income for the current year.
You’ll also benefit from the advantage of timing. Certain moves, like pushing income into January or accelerating deductible expenses into December, can give you a meaningful tax reduction when done correctly.
Now let’s explore what you can still do before the clock strikes midnight on December 31.
Open Retirement Accounts Now, Fund Them Later
One of the most overlooked year-end strategies is setting up your retirement accounts before December 31. Even if you’re not ready to fund them yet, creating the accounts this month can give you thousands of dollars in tax savings next April.
Why this works
To qualify for tax deductions in the current year, some retirement plans only need to be established by year-end. Funding can happen up until your tax-filing deadline, which means you can take the deduction later while still claiming the benefit for this year.
Accounts that must be set up by December 31:
- Solo 401(k) - Must be created by December 31 to take advantage of employee deferrals for this year.
- Traditional 401(k) for small teams - Also must be established by year-end if you plan to offer contributions that count for the current year.
- Defined Benefit Plans - Require year-end setup due to actuarial calculations.
Accounts you can set up (and fund) next year
Traditional and Roth IRAs can be opened and funded by the tax deadline, giving you more flexibility.
Why this helps
Opening a qualifying retirement plan now gives you:
- A deduction this year
- Additional tax-deferred growth
- The ability to fund once the cash flow is more favorable
Many business owners miss this simple step and lose a full year of tax benefits. This is one of the easiest, most impactful year-end actions you can take to reduce taxes and strengthen retirement planning.
Use Timing to Your Advantage: Push Income Out and Pull Expenses In
As the year closes, you have one more opportunity to intentionally shape your taxable income. If you’re a cash-basis taxpayer, which most small businesses are, you can choose whether certain income or expenses fall into this year or next.
Push income into January
If you want to reduce taxable income for the current year, you can delay receiving payment until January. That might mean:
- Sending invoices later in December
- Asking clients to pay after January 1
- Holding off on year-end collections until early next year
This strategy legitimately shifts income to the next tax year without manipulating anything improperly.
Accelerate expenses in December
You can also reduce this year’s taxable income by paying certain business expenses now rather than waiting until January. Consider paying for:
- Software renewals
- Insurance premiums
- Office supplies
- Equipment purchases that qualify for Section 179 deductions
- Professional services you know you’ll need early next year
These expenses become deductions for this year, giving you more control over your tax outcome.
A smart balance matters
The goal isn’t just to reduce taxes today - it’s to support a long-term plan aligned with your business growth. A short-term tax win should never derail your ability to show profit, secure financing, or analyze your numbers accurately.
Make Final Adjustments to Payroll, Contractor Payments, and Owner Compensation
Before year-end, review how you’ve paid yourself and anyone who works for your business. This is especially important if you operate as an S corporation, where owner compensation must meet IRS standards for “reasonable pay.”
If adjustments are needed:
- Complete final payroll runs before December 31
- Issue bonuses now if they support your tax strategy
- Make final contractor payments before year-end
- Review whether payroll tax deposits have been made appropriately
Accurate compensation and payroll decisions now help avoid penalties later and ensure your books reflect reality before the year is officially closed.
Transitioning from internal operations to financial cleanup, let’s look at what you can do on the financial side to finish the year with clarity.
Clean Up Your Books and Prepare for Tax Season Before January Arrives
December is the perfect time to tidy your business finances so taxes become easier and more efficient next year. When your books are accurate, you can spot opportunities for additional deductions and identify problems that need attention.
Key areas to review:
- Reconcile bank accounts
- Categorize outstanding expenses
- Review your Profit & Loss report for uncategorized transactions
- Ensure mileage and home office deductions are properly documented
- Confirm contractor information for 1099s
- Identify assets that should be depreciated or expensed
Accurate books help you and your tax advisors make better decisions and help your business run more smoothly.
But even accurate books won’t protect you if the foundational systems of your business haven’t been reviewed this year. That’s why year-end is also the ideal time to review your legal, insurance, financial, and tax structure.
Why Every Business Needs Solid Foundational Systems
Tax decisions never exist in isolation. Every choice you make affects your legal protections, insurance coverage, financial systems, and long-term strategy. When you review all four areas together, Legal, Insurance, Financial, and Tax, you get clarity that a tax-only review cannot offer.
Getting support from me to audit and create your LIFT: Legal, Insurance, Financial And Tax Systems™ allows you to:
- Identify legal gaps that could expose you to risk
- Confirm your insurance actually matches your business activities
- Strengthen financial controls so next year’s data is clean
- Reduce taxes in ways that support—not harm—your growth
- Ensure you have the right entity structure and tax elections in place
- Plan for your personal retirement, wealth-building, and exit strategy
Contact me to schedule a review that gives you a strategic starting line for the next year so you can work from a position of clarity instead of guesswork.
Your Next Step
Smart year-end tax moves can help you reduce taxes, strengthen your financial foundation, and set your business up for a successful year ahead. But you don’t need to navigate this alone. As your LIFTed Business Advisor and attorney, I can help you take advantage of the strategies available to you today, while extending that planning into a strong system for next year and beyond.
If you’d like support making your best year-end decisions, schedule a 15-minute discovery call with me. Together, we’ll look at your legal, insurance, financial, and tax systems and create a plan that aligns with your business goals.
Schedule a complimentary 15-minute Discovery Call today.
This article is a service of a Personal Family Lawyer® Firm and LIFTed Advisors® Attorney. I offer a complete spectrum of legal services for businesses and can help you make the wisest choices with your business throughout life and in the event of your death. I also offer a LIFT Business Breakthrough Session, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.