Key Takeaways
- It’s not too late to create meaningful savings with these year-end tax moves to make now, but your options are very timing-sensitive.
- Low-cost, in-stock equipment and supplies are the most realistic last-minute purchases that can still be deducted this year.
- Opening retirement plans now (even if you fund them later) can preserve the option for your tax pro to claim deductions that disappear after year-end.
- A short, focused review of payroll, owner compensation, receivables, and prepaid expenses can prevent costly cleanup during tax season.
Many of my Roseville clients have fallen into this assumption before: “Isn’t it too late to do anything meaningful for this year’s taxes?”
It’s a common one. When there are mere days left in the year, it’s easy to just cut your losses and put your eyes on the new year.
Because I’m here to see your books are tax-season ready so you can lay hold of every possible saving move your business qualifies for, let me say:
You’re not out of time yet.
The key is knowing which strategies will work in a tight window and which aren’t worth your effort. Here are some key principles.
NOTE: As with any tax or financial guidance, it’s always a good idea to review what this looks like for your specific situation. What we post is general guidance rather than an individualized strategy.
Can I still buy equipment this year to reduce my taxes?
Yes – as long as the asset is placed in service by December 31 (not just ordered). If you buy equipment now, I can help ensure it is recorded as ‘placed in service’ on your balance sheet by December 31 so your tax preparer has the documentation they need to complete Section 179 (bonus depreciation).
Low-volume, off-the-shelf purchases could work in this short time frame. Especially items you can buy locally or receive quickly, like laptops, monitors, office furniture, printers, or point-of-sale equipment, for example.
If the items are in stock and you can pick them up or get guaranteed expedited delivery, they can often be installed and operational for your Auburn business within days.
Now, if financing is required, you’re less likely to fit this in before year-end. Some equipment-specific or online lenders can move fast, but approvals and funding need to happen almost immediately to avoid missing the deadline.
At this stage, cash or credit card purchases are easiest for me to track and categorize instantly to ensure they hit this year’s ledger.
Can I open a retirement plan now and worry about funding later?
Certain retirement plans only need to be established by December 31 to qualify for deductions tied to this tax year. The actual funding can often happen the following year, around the time you file your return. Even if you don’t fund it until later, having the paperwork done preserves your ability to lower your taxable income when we send 2025 reports to your CPA.
If your business is an S-Corp, C-Corp, or Partnership, your deadline for establishing a Solo 401(k) or Small Business 401(k) is December 31, 2025.
If you miss this deadline, you forfeit the right to make the highly valuable employee salary deferral contribution for the entire 2025 tax year. The employer profit-sharing portion can still be funded later, but the employee portion is lost.
How can timing income help me save on taxes?
We can strategically manage your year-end numbers by timing your payments and invoices. If your cash flow allows, we can prepay ordinary expenses like 1) insurance, 2) marketing, 3) office supplies, or 4) software subscriptions.
If these are paid by December 31, we can capture them in your 2025 reports for your CPA to review. Going the other direction, if you are on the cash method, we can discuss delaying final December invoices so the revenue hits your 2026 books instead.
The goal is to provide you and your tax pro with the clean data and flexibility needed to make the best year-end tax decisions.
What accounting items should I review before year-end?
Before December 31, it’s critical to review:
- Owner compensation (especially if you have an S corporation)
- Bonuses or final payroll runs
- Contractor payments
- Payroll tax deposits
Fixing this in January is much harder. Fixing it in March is even worse.
Making adjustments now helps ensure your books reflect reality. (And prevents costly cleanup fees from your tax preparer later.)
If you’re short on time and overwhelmed…
The final days of December are a critical window for organizing your cash flow. A quick strategy session can help us identify which payments to prioritize and ensure your books are “tax-ready” before the clock strikes midnight.
If you’re feeling the time crunch, let’s get a last-minute appointment on the calendar. We’ll look at your current profit-and-loss, identify those end-of-year expense opportunities, and get the data ready for your tax pro so you can move into 2026 with confidence:
5staraccountingandbusiness.com/schedule/
FAQs
“Is it too late to get my books ready to save on taxes this year?”
No, but the window is closing to ensure your financial records are ‘tax-ready’ before the year ends. Major structural changes are off the table now. Cleaning up your records so every possible deduction is documented and visible for your tax preparer should be your focus. That means ensuring your income, expenses, and asset purchases are perfectly categorized by December 31 so you can walk into your tax appointment with confidence (instead of a shoebox of receipts).
“What are the best last-minute tax deductions for small businesses before year-end?”
The most effective last-minute deductions typically include purchasing and placing in service necessary equipment, expensing low-cost business assets, opening retirement plans, prepaying eligible expenses, and making final payroll or compensation adjustments.
“Can I still buy equipment at the end of the year and deduct it on my taxes?”
Yes, as long as the equipment is purchased and placed in service by December 31. That means it must be delivered, installed, and ready for use… not just ordered. Smaller, in-stock items like computers, office equipment, and tools are usually the safest bets this late in the year.
“How do I prove to my tax pro that an item was ‘placed in service’?”
“Placed in service” means the asset is ready and available for use in your business. It does not require heavy usage, but it must be functional and operational before year-end. Simply paying for something or having it shipped after December 31 does not qualify. You need to document that the asset was operational (not just paid for) by ensuring you have the right dates in your fixed asset ledger.
“Can I open a retirement plan now and still deduct contributions for this year?”
In many cases, yes. Certain retirement plans only need to be established by December 31 to qualify for deductions tied to this tax year, even if the funding happens later.
“Should I prepay business expenses to lower my taxes?
Most likely, provided your business uses the cash method of accounting. You’ll want to look at your current cash balance to see if prepaying your 2026 rent or annual insurance premium is feasible without straining your operations. If you make these payments by December 31, we’ll need to make sure they’re categorized correctly on your year-end reports so your tax preparer can easily identify them as accelerated deductions for this tax year.