Q4 Tax Planning Guide:
What to Do Before December 31
Your tax bill for this year is largely determined by what you do in the next 90 days. Here's the complete Q4 playbook for small business owners — organized by impact and deadline.
Most small business owners think about taxes in March or April — after the year is over and the options are gone. The business owners who consistently pay less tax think about it in September, October, and November, when there's still time to act.
This guide covers the highest-impact moves available to most small business owners before December 31. Not every strategy applies to every situation — but working through this list with your accountant is the difference between a reactive tax bill and a planned one.
Maximize Retirement Contributions
Retirement contributions are the single highest-impact tax reduction tool available to most small business owners. Every dollar you contribute to a SEP-IRA, Solo 401(k), or SIMPLE IRA reduces your taxable income dollar-for-dollar.
| Account Type | 2024 Limit | Deadline |
|---|---|---|
| SEP-IRA | Up to 25% of compensation, max $69,000 | Tax filing deadline (+ extensions) |
| Solo 401(k) — Employee | $23,000 ($30,500 if 50+) | December 31 |
| Solo 401(k) — Employer | Up to 25% of compensation | Tax filing deadline |
| SIMPLE IRA | $16,000 ($19,500 if 50+) | December 31 |
Key action:If you haven't set up a retirement plan yet, a Solo 401(k) must be established by December 31 to make contributions for this year. A SEP-IRA can be established up to your tax filing deadline.
Section 179 and Bonus Depreciation
Equipment, vehicles, and business property purchased and placed in service before December 31 can be fully deducted in the year of purchase under Section 179 (up to $2.56 million in 2026 under OBBBA) or bonus depreciation (100% permanently restored under the One Big Beautiful Bill Act, signed July 2025).
This is particularly powerful for businesses with high net income that need to reduce taxable income quickly. A $50,000 equipment purchase can reduce your tax bill by $15,000–$20,000 depending on your tax bracket.
Important: The equipment must be placed in service (actually used in the business) before December 31 — not just ordered or paid for. Plan purchases early enough to ensure delivery and setup before year-end.
Time Your Income and Deductions
If you're having a high-income year, consider deferring income into January (if possible) and accelerating deductible expenses into December. If you're having a low-income year, the opposite may apply.
Defer invoicing
If you can delay sending invoices until late December, payment may not arrive until January — pushing income into next year.
Prepay deductible expenses
Prepay January rent, insurance premiums, or subscriptions in December to accelerate the deduction.
Make charitable contributions
Donations made by December 31 are deductible this year. Donor-advised funds let you contribute now and distribute later.
Pay estimated Q4 taxes early
If you're in a high-tax state, prepaying state taxes in December may be deductible (subject to SALT cap limitations).
Review Your Entity Structure
If you haven't elected S-Corp status and your net profit is above $80,000, Q4 is the time to evaluate whether to elect for next year. The March 15 deadline for next year's election will arrive faster than you think.
Similarly, if you're operating as a sole proprietor and your revenue has grown significantly, Q4 is the right time to evaluate whether forming an LLC or corporation makes sense — both for tax purposes and liability protection.
Q4 Tax Planning Checklist
Act Before December 31
Get a Q4 Tax Planning Session
We'll review your YTD numbers, identify the highest-impact moves for your situation, and give you a clear action plan before year-end.
Schedule NowRelated Resources
Key Q4 Deadlines