Quick answer: The most useful year-end tax moves for a small or mid-sized business are getting an accurate profit projection by November, then deciding whether to accelerate expenses or defer income, buy and place equipment in service before December 31, fund or set up a retirement plan, and true up owner compensation and estimated payments. The right mix depends on whether you expect this year's income to be higher or lower than next year's, so planning starts with good numbers.

Every December someone calls us hoping to cut a big tax bill with a last-minute purchase. Sometimes that works. More often the best moves needed a few weeks of lead time and a clear picture of the year. Here is the checklist we work through with business clients each fall, written for the 2026 tax year.

Start with a realistic projection

Planning without numbers is guessing. By early November you want books reconciled through October and a reasonable estimate of November and December. From there, project taxable income for the business and, for pass-through entities, for each owner.

Then ask the key question: is next year likely to be a higher-income or lower-income year? If this year is unusually strong, accelerating deductions and deferring income generally helps. If next year looks stronger, or you expect to sell the business, the reverse may be true. A clean monthly close makes this much easier, which is one reason we wrote about building a monthly close process that actually closes.

Timing income and expenses

Cash-basis businesses have the most flexibility here, since income is generally taxed when received and expenses deducted when paid.

  • Deferring income. Sending December invoices a little later can push some revenue into January. Be careful: money you have actually or constructively received, including a check sitting in your drawer, counts this year.
  • Accelerating expenses. Paying January bills in December, stocking up on supplies you will use soon, or paying a deductible expense by credit card before year-end can move deductions into this year. Prepaying expenses that cover more than about a year generally does not work.
  • Accrual-basis businesses have fewer timing levers, but year-end bonuses paid within two and a half months after year-end, and properly documented, may be deductible this year.

Equipment, vehicles, and small purchases

With federal 100% bonus depreciation restored for qualifying property acquired after January 19, 2025, buying needed equipment before year-end can produce a large deduction. The key words are "needed" and "placed in service." The equipment has to be ready and available for use by December 31; a machine sitting in its crate does not count.

Remember that New York generally does not follow federal bonus depreciation, so the state benefit will be smaller. Section 179 may be the better choice for some Central New York businesses. Our article on depreciation, Section 179, and bonus depreciation explains the tradeoffs. Also confirm you have a written de minimis capitalization policy in place, so lower-cost items can be expensed outright.

Retirement plans and owner compensation

Retirement plans are one of the few moves that cut taxes while keeping the money yours.

  • A SEP-IRA can generally be set up and funded as late as the extended due date of the return.
  • A solo 401(k) or other new 401(k) plan can, under current rules, often be established after year-end for employer contributions. The rules for salary deferrals are stricter and depend on the type of plan and whether you have employees, so if you want deferrals for 2026, talk to your plan provider now.
  • A SIMPLE IRA generally must be set up earlier in the year, so it is a planning item for next year.

Contribution limits change annually; the IRS retirement plans page has current figures.

S corporation owners should review their salary before the last payroll of the year. Pay that is too low invites IRS scrutiny; pay that is too high adds unnecessary payroll tax. Year-end is also when health insurance premiums for more-than-2% shareholders need to be added to W-2 wages.

New York and paperwork items not to miss

A few year-end items are specific to New York or simply easy to forget:

  1. PTET election for 2027. New York's pass-through entity tax election is made annually by March 15 for that tax year. Decide over the winter whether to elect for 2027, and make sure 2026 PTET estimated payments are current if you elected this year.
  2. Estimated taxes. Check that federal and New York estimates for owners are on track before the January installment.
  3. Form 1099 readiness. Collect W-9s from vendors and contractors now. The reporting threshold for payments made in 2026 rose under 2025 legislation, so check the current rules before deciding who gets a form.
  4. Payroll year-end. Verify employee addresses, fringe benefits, and any bonuses that need to run through payroll before the final pay date.
  5. Inventory and bad debts. Accrual-basis businesses should count inventory and write off receivables that are truly uncollectible.

Frequently asked questions

Should I buy a new truck before December 31 to save taxes?

Only if the business needs the truck. A deduction saves a fraction of what you spend, so buying something you do not need to save tax still leaves you poorer. If you were going to buy it in the next few months anyway, placing it in service before year-end can make sense.

Is it too late to do anything in late December?

Not entirely. You can still pay outstanding bills, make charitable gifts, buy and install equipment, and adjust withholding. Retirement plan contributions and some elections can happen after year-end. But the best planning happens in October and November.

Does year-end planning differ for an S corporation versus an LLC?

The basic timing moves are the same, but S corporations have extra items such as reasonable salary, shareholder health insurance, and owner basis for deducting losses. Multi-member LLCs taxed as partnerships need to watch partner basis and guaranteed payments.

What records should I bring to a year-end planning meeting?

Bring a year-to-date profit and loss statement and balance sheet, last year's returns, a list of planned purchases, payroll reports, and any major changes coming next year, such as a new location, a big contract, or an owner retiring.

This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.

Related service: Business & Corporate Tax