Year-End Tax Planning Checklist for Business Owners (2026)

Year-end tax planning means making moves before December 31 that lower this year's tax bill. For business owners, the biggest levers are retirement plan contributions, S corp payroll, equipment purchases, the timing of income and expenses, and charitable giving. Start in October so there is time to act, because most strategies expire when the year ends.

Why year-end planning starts in October

Many strategies need setup time: opening a retirement plan, running payroll, ordering equipment, or moving assets to a donor-advised fund. In late December, vendors, custodians, and payroll providers are closing for the holidays. October gives you about 10 weeks to model options and act.

1. Review year-to-date profit and project the full year

• Pull your year-to-date profit and loss statement
• Project income and expenses through December 31
• Estimate your tax at that projected profit; every other decision builds on this number

2. Maximize retirement plan contributions

• Confirm your plan's 2026 contribution limits
• If you don't have a plan, compare a Solo 401(k), SEP IRA, and cash balance plan
• Check setup deadlines: some plans must exist before December 31 to accept certain contributions, while a SEP IRA can generally be opened up to the filing deadline, including extensions

3. S corp owners: set reasonable compensation and run payroll

• Confirm your salary is reasonable for the work you perform
• Run any remaining shareholder payroll before December 31
• Report health insurance premiums for 2% shareholders on the W-2 correctly

4. Time equipment and vehicle purchases

• Decide whether to buy needed equipment before year-end
• Ask your planner about Section 179 and bonus depreciation, which 2025 federal legislation expanded
• Make sure assets are placed in service, not just ordered, by December 31

5. Manage the timing of income and expenses

• Cash-basis businesses: consider invoicing in January instead of December, where appropriate
• Prepay deductible expenses where the rules allow
• Pay outstanding bills before year-end

6. Set up or use an accountable plan

• Adopt a written accountable plan if you don't have one
• Reimburse home office, mileage, and phone expenses from the business before December 31

7. Review family employment

• If your children work in the business, make sure the work is real, paid at a reasonable rate, and documented with timesheets
• Ask how payroll tax rules apply to your entity type

8. Plan charitable giving

• Consider bunching several years of gifts into a donor-advised fund
• Donate appreciated stock instead of cash where it makes sense
• Ask how 2026 changes to charitable deduction rules affect you

9. Harvest investment losses

• Review taxable brokerage accounts for unrealized losses
• Watch the wash-sale rule when you rebuy similar investments

10. Check state and local tax strategies

• Ask whether your state offers a pass-through entity tax election and whether it helps you
• Review how the federal SALT deduction cap applies to you after the 2025 changes

11. Use HSA and FSA balances

• Fund your HSA to the 2026 limit if eligible
• Spend remaining FSA balances that won't carry over

12. Make your fourth-quarter estimated payment

• Confirm your safe-harbor amount to avoid underpayment penalties
• Calendar the January 15, 2027 deadline

13. Review your entity structure for 2027

• Ask whether an S corp election or another structure would save tax next year
• Note election deadlines so you can act early in 2027

14. Organize documentation

• Store receipts, mileage logs, minutes, and accountable plan records
• Keep a written record of each strategy and its business purpose

15. Book your year-end planning meeting

• Schedule a session with a certified tax strategist before mid-November
• Bring your year-to-date P&L, last year's return, and payroll reports

Frequently Asked Questions