10 End of the Year Tax Planning Tips

Small Business Year-End Tax Planning Checklist

Tax planning time again!

I know....I know....that’s the last thing you want to think about this time of year, but time is quickly running out on your window of opportunity to save some serious money on your small business taxes.

There are also some administrative responsibilities that need to be completed before the end of the year...especially if you have employees.

So...quickly...like in the next few days...

take an afternoon off from the daily grind of your business and all your holiday shopping and consider doing one or all of these end of the year tax planning tips before next year comes crashing in.


Year-End Tax Planning Checklist:

1. Catch up your accounting:

If you are like me, this is a busy time of the year and I tend to put off entering all of my accounting data; however, this is a critical time to look at your numbers and decide what you need to do to minimize the taxes for your small business.

2. Call your accountant:

Set up and appointment to sit down and talk to them about your year-end tax planning. They will know what is going to change and not change in the small business tax world and what you should and shouldn’t do right now. If you don’t have one it may be a good time to choose an accountant.

3. Accelerate expenses and defer income:

Pay all the expenses you can and put off all the income you can till January...if that is what will work best for your business. If you don't really need the extra deductions and expect next year to be better, you would be better off waiting for those extra deductions in the new year and collecting all of the income you can before the end of the year. 

4. Go Shopping:

Stock up on some office supplies. Buy some new office equipment....if you are going to need it in the coming year. Remember though...any equipment will have to be in your office and “in use” by the end of the year. Save those receipts!

5. Deduct with Section 179:

Under section 179 in the U.S. Tax Code, small business owners are allowed to deduct the full purchase price of tangible equipment such as computers, office furniture, etc. Leased equipment, used equipment, and software will qualify too.

However, the amount you can deduct with the section 179 for the 2016 tax year is $500,000!

Learn more tax planning tips with Section 179

6. Make charitable contributions:

This is always a good thing, but be aware that for most small business (unless you are a regular (C) corporation), the owner will have to itemize on their personal taxes to take advantage of this deduction.

7. Order IRS Tax Forms:

Order your W-2/W-3s and/or 1099/1096s now! If you wait till January you may have a hard time getting them. You can order forms from the IRS at no charge, or purchase them from an office supply store. You can reach IRS at 1-800-TAX-FORM to request the ones you need or you can order them online. If you plan on filing online, you will not have got worry about getting those forms...but be aware that the law has changed and you have to file W-2/W-3s and 1099/1096s by January 31st...regardless of how you file!!!

8. W-4 Forms

Make sure you have a completed W-4 form on file for each current employee. Each employee should review their W-4 and if any of them have circumstances that have changed such as their marital status...they should submit a new one to you before January 1st.

9. Reclassify Workers

If you have any workers that you have classified as an independent contractor and since realized they should have been classified as employees...now is the perfect time to reclassify them and make that change as of January 1st.

See this article from the IRS for instructions on determining if a worker should be classified as an independent contractor or employee.

10. Upgrade your Accounting System

The first of the year is a perfect time to look at your accounting system and see if might be a good time to upgrade or change the way you track and analyze your income and expenses.

Does your current accounting system generate the proper reports to analyze this year's data and set goals for the future? 

If not, maybe it is time to upgrade to a good double entry accounting system such as QuickBooks or Xero.

Whichever accounting system you choose, the first of a new year is the best time to change or upgrade your current accounting system.












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