As the year winds down, many business owners are focused on closing projects, meeting goals, and preparing for the holidays. But one critical task often gets pushed aside until it’s too late, year-end tax planning.

Without proactive attention, what seems like a strong year of growth can end with an unexpectedly large tax bill. Fortunately, a few strategic steps before December 31 can make a significant difference in how much you owe, and how well-prepared your business is for 2026.

This article explores practical strategies to optimize your business for tax efficiency while setting the stage for long-term growth.

 

Get Ahead with Cash Flow Forecasting

Before making any year-end decisions, start with a clear understanding of your cash flow. Review how much income has come in, what’s expected before year-end, and which expenses are still unpaid.

Having this picture allows you to balance timing decisions. Such as when to recognize income or make major purchases, without putting pressure on your working capital. A CPA can help model different tax scenarios so you can act confidently rather than guess.

 

Use Timing to Your Advantage

Timing can be a powerful tool for managing your business taxes. By deciding when income is received and expenses are paid, you can have more control over your taxable total. For example, if December looks strong, consider delaying some invoices until January, this shifts income into the next tax year and lowers your current-year tax liability. Conversely, paying recurring costs like rent, supplies, or insurance before year-end brings those deductions into the current year, and even small payments can add up to meaningful savings.

These simple timing moves can help smooth your taxable income and prevent any surprises when filing season rolls around.

 

Revisit Your Equipment and Capital Purchases

If your business has plans to invest in new tools, software, or equipment, doing so before December 31 could bring immediate tax benefits.

Through provisions such as Section 179 expensing and bonus depreciation, eligible purchases can often be deducted upfront rather than depreciated over several years. The result: a smaller tax bill and more liquidity to reinvest in operations.

Work with a CPA to confirm which assets qualify and how best to align purchases with your broader financial strategy.

 

Don’t Overlook Employee and Owner Benefits

Year-end is also a great time to strengthen both your tax position and your employee retention efforts.

• Retirement Plans: Contributions to 401(k), SEP IRA, or SIMPLE IRA plans lower taxable income while building wealth for the future.
• Health Savings Accounts (HSAs): If you or your employees are eligible, contributions are tax-deductible and withdrawals for qualified expenses are tax-free.
• Bonuses and Incentives: Paying out year-end bonuses before December 31 can reduce this year’s taxable income while rewarding your team for a successful year.

Each of these moves creates dual value, tax savings now and financial security later.

 

Evaluate Your Books and Inventory

A year-end cleanup of your books can uncover hidden savings. Review outstanding invoices, write off uncollectible accounts, and reconcile your balance sheet to ensure accuracy.

If your business carries inventory, conduct a detailed review. Obsolete or unsellable items can often be written down, lowering taxable income. Meanwhile, pre-paying for essential inventory for next quarter might accelerate deductions into this year.

Good bookkeeping now means fewer headaches, and potential savings later.

 

Plan for Deductions and Credits That Fit Your Business

Every industry has unique opportunities for tax deductions and credits, but they only work if you claim them before the year ends. These can include investments in energy-efficient equipment or vehicles, qualified research and development (R&D) expenses, startup or training credits for new hires, and charitable donations of cash or appreciated assets. Even smaller credits can help lower your effective tax rate and increase after-tax profitability, making it well worth reviewing which opportunities fit your business before the year closes.

 

Book Your Year-End Tax Strategy with Tavola Group

Even the savviest business owners benefit from expert guidance. A pre-year-end consultation with a CPA can uncover missed opportunities, ensure deductions are maximized, and confirm your business structure still aligns with your goals. At Tavola Group, we help you reduce liability, optimize tax strategies, and position your business for long-term growth.

Whether you don’t have a CPA yet or need support reviewing your year-end plan, now is the time to act. Our personalized approach goes beyond checklists, giving you a strategy tailored to your business. Book your free consultation today and turn potential tax stress into a clear path forward.