The month of December is a unique month for many of our clients. Retail and hospitality clients are in a crucial part of their year. Manufacturing, transportation and service industries tend to see a bit of a slowdown around the holiday season with facility shutdowns for holidays, vacations, etc. Those in the medical field tend to see an uptick in business in the final stretch as patients have met their deductibles and/or the holiday season tends to be the most trying for elder patients.
But this is also a crucial time for putting the final touches on tax planning. Proactively planning sets your business up for success and helps put the most money in your pocket.
And most importantly, puts you in a spot where you can avoid surprises in the following quarter during tax time. Surprises are expensive. An unexpected tax bill or missed tax planning opportunity can be more than frustrating, it can set you behind and put you in a cash crunch.
Here are some things that we are doing in December for our clients to ensure that they are ready to round out the year.
1.) Make sure your books are cleaned up! – If you’ve fallen behind on your bookkeeping, now is the time to catch up. Once the books are fully cleaned up, we can begin preparing strategic business moves for 2026. If you’re overwhelmed or behind, we can help!
2.) Review your equipment and capital expenditure needs – If you’ve been planning to buy equipment, doing so before December 31st provides immediate tax benefits through accelerated depreciation. It’s important to make these types of decisions based off need rather than just for tax savings. Bonus depreciation, Section 179 and leveraging cost segregation studies can all make a big difference in tax planning.
3.) Maximizing Retirement contributions – For business owners, this is often one of the most powerful tax-saving strategies on top of preparing for the future. SEP IRAs, Solo 401(k)s, and other retirement vehicles have different deadlines. Planning in December ensures you understand your options and can execute in time. If you cannot plan for a big contribution, then cashflow may prevent you from doing what’s best. Plan ahead and make sure you’re setting yourself up for success come tax season.
4.) Reviewing estimated tax payments and adjust Q4 payments – We’ll help calculate where you’re going to land for all of 2025 and if needed adjust your Q4 payment to avoid any penalties. If you had an unexpectedly good (or bad) year, your Q4 payment might need adjustment. This also helps you plan cash flow for any balance due in April.
This is even more important now that interest rates are higher than they have been for many years. What you can earn on your money is more substantial than in the past and what the IRS is charging for paying them less than you should be is higher than it has been in recent history as well! Finding the “Goldilocks” level here is important and makes a difference in regard to accumulating wealth.
5.) Have a conversation with your advisor – December is when proactive planning happens, not April. Discussing things such as income timing, expense acceleration/deferral, entity structure optimization, and major business decisions on the horizon. The best tax strategies are implemented before year-end, not during tax prep.
December is for enjoying the holiday season with your family, but for the elite business owners, it’s all about closing the year strong and setting yourself up for success in 2026. Now is the time to set aside some time for some additional conversations with your advisor!