Navigating Tax Season:
A Guide for Billings, MT Businesses

A Solo 401(k) must be established by December 31 of the year you want to contribute — the account must exist even if the actual contribution can be made until the tax return due date (including extensions). A SEP-IRA can be opened and funded as late as the extended return deadline (October 15). For a Billings sole proprietor at $180,000 net profit, a Solo 401(k) contribution up to the current IRS limit (verify at irs.gov/retirement-plans) reduces taxable income dollar-for-dollar — saving $4,000+ in combined federal and Montana taxes at common contribution levels. See the year-end financial checklist for the full December 31 decision list.

Section 179 allows immediate expensing of qualifying business property placed in service during the tax year — up to the annual limit (verify current limit at IRS.gov). Bonus depreciation allows additional first-year expensing on qualifying property. For Billings construction firms, medical practices, and oil field service companies with significant equipment purchases, these elections can reduce taxable income by tens of thousands of dollars in the purchase year. The asset must be placed in service by December 31 — ordered and paid for is not enough.

Bonuses paid by December 31 are deductible in the current tax year for cash-basis businesses — the vast majority of Billings small businesses. Bonuses accrued but not paid are not. For S-Corp owner-employees, this is also the time to review whether your salary has been reasonable and consistent. If your Q4 looks profitable, your accountant may recommend a salary adjustment to maintain defensible consistency.

Cash-basis Billings businesses recognize income when payment is received, not when invoiced. If you are approaching the upper end of a tax bracket or have had an unusually profitable year, deliberately delaying invoices to January can shift income into the next tax year. This is a conversation to have with your accountant using projected numbers — not a guess.

The fourth quarterly estimated tax payment is due January 15. Calculating it in December — based on your full-year actual numbers rather than an estimate — ensures you pay enough to avoid underpayment penalties without overpaying. For Montana, both federal (1040-ES or EFTPS) and state (Montana Form EST) estimated payments are required if you expect to owe more than $500 at Montana filing.

If your net profit has grown past $80,000–$100,000 and you are still filing as a default LLC, your Q4 accountant meeting should include an S-Corp election analysis. The election must be filed by March 15 of the year it takes effect (see our S-Corp election deadline guide for what to file and when). Making the decision in October or November gives you time to prepare properly — not the week before the deadline.

Montana requires quarterly estimated payments if you expect to owe $500+ at filing. The IRS requires them if you expect to owe $1,000+. Missing a quarter — or basing the payment on last year's income when this year has been significantly better — creates an underpayment penalty that runs from the due date of the missed payment, not from April 15.

The January 31 deadline for 1099-NEC is not moveable by extension. Penalties accrue per form. Billings businesses in construction, professional services, and healthcare frequently pay dozens of contractors annually. A 20-contractor list with late 1099s can generate $1,200+ in avoidable penalties.

An S-Corp owner who pays himself a $30,000 salary while the business generates $250,000 in net profit will draw IRS scrutiny. The IRS actively audits S-Corps for unreasonably low compensation and can reclassify distributions as wages — imposing employment tax on the reclassified amount plus interest and penalties from the original payment date.

Accountants who receive unreconciled bank statements and misclassified transactions in March either charge significantly more to reconstruct the records or file based on incomplete information. The businesses that pay less for tax preparation are the ones whose books arrive clean — already reconciled and categorized.

A Billings business that grows from $60,000 to $120,000 in net profit may still be filing as a default LLC sole proprietorship — paying SE tax on the full $120,000. The S-Corp election analysis takes one meeting. At $120,000 in net profit, net annual savings are typically $5,000–$10,000. Three years without reviewing means $15,000–$30,000 in avoidable tax.

Section 179 allows immediate expensing of qualifying property — but the election must be made on a timely filed (or extended) return. Equipment placed in service in December that the owner forgot to discuss with the accountant before year-end often results in a missed election that adds complexity and cost to amend.