The 2025 Year-End Tax Checklist for Small Business Owners

The 6 weeks between Thanksgiving and New Year's is when smart business owners save thousands. Use this checklist with your accountant.

October — Q3 Estimated Tax (Deadline: Sep 15)

• Q3 federal estimated tax payment (Form 1040-ES)
• Q3 state estimated tax payment
• Review YTD profit vs. plan
• Project Q4 profit and full-year tax liability

November — Strategic Decisions

• Maximize Section 179 / bonus depreciation purchases (asset must be placed in service by Dec 31)
• Decide on year-end equipment purchases — 2025 bonus depreciation drops from 60% → 40%
• Review accounts receivable for uncollectible debts (write-off as bad debt)
• Consider client retention bonuses, employee bonuses (deductible if accrued + paid within 2.5 months)
• Review depreciation schedules — anything fully depreciated to dispose?

Early December — Compensation & Retirement

• Run a "fake" payroll to verify withholding is on track
• Top up Solo 401(k) employee contributions ($23,000 in 2024 / $23,500 in 2025)
• If S-Corp owner: confirm reasonable salary was paid throughout year
• Consider deferred compensation strategies for high earners
• Health insurance subsidy reconciliation if on Marketplace plan

Mid-December — Closing Books

• Reconcile every bank and credit card account for the year
• Categorize all uncategorized transactions
• Run a profit & loss for the year-to-date
• Review largest expense categories for accuracy
• Verify customer invoices issued and paid match QBO/your books
• Inventory count if you sell physical products (Cost of Goods Sold)

Late December — Final Moves

• Pay invoices for any deductible expenses still outstanding (cash-basis)
• Make charitable contributions (cash receipts dated 12/31 OK)
• Last-minute Section 179 purchases (must be placed in service)
• Distribute final paychecks (must be paid by Dec 31 for current-year deduction)
• Send "save the date" emails to your accountant

January — Year-End Reporting

• Jan 31, 2026: 1099-NEC and 1099-MISC due to recipients AND IRS
• Jan 31, 2026: W-2s due to employees AND SSA
• Final Q4 estimated tax payment due Jan 15 (if you owe)
• Reconcile December
• Run a full P&L and balance sheet for the year

February-March

• Mar 15, 2026: S-Corp (1120-S) and Partnership (1065) returns due
• Mar 15, 2026: S-Corp election deadline if making for current year (Form 2553)

April

• Apr 15, 2026: Personal (1040), Sole Prop (Schedule C), C-Corp (1120) returns due
• Apr 15, 2026: Q1 2026 estimated tax payment due
• Apr 15, 2026: Last day to fund 2025 IRA contributions

The Three Year-End Strategies That Actually Move the Needle

1. Time Income vs. Expenses

Cash-basis taxpayers can defer income (delay invoicing) and accelerate expenses (pay early) to push tax liability into next year. Or do the opposite if you expect higher rates next year.

2. Stack Section 179 + Solo 401(k)

A photographer with $200K profit who buys $80K of equipment AND maxes out a Solo 401(k) ($69K) reduces taxable income by $149K. Effective tax savings: $40K-$50K.

3. S-Corp Reasonable Salary True-Up

If you've underpaid yourself as an S-Corp owner, run a December "true-up" payroll to bring salary in line with reasonable comp standards. Saves you from a CP2000 notice in 2026.

Common Mistakes

• Forgetting state quarterlies. California, New York, and Illinois all have separate state estimated tax schedules.
• Buying equipment in January for "this year". It's "placed in service" that matters, not "purchased."
• Paying contractors via personal Venmo. Untracked, no 1099, ugly conversation later.
• Overestimating QBI. Above the phase-out, SSTB exclusions kick in fast.

How Accountaxed Helps

Our Tax Engine 2.0 projects your 2025 liability based on YTD bank data + your entity. The Audit Engine flags categorization issues so they don't become surprises in March. And the Journal Entry system lets you record adjusting entries (like prepaid insurance) without breaking the books.

Pull your YTD numbers in under 60 seconds →