Short answer
The best time to lower your business tax bill is before December 31 — once the year closes, most opportunities are gone. Here are the year-end moves Arizona business owners should review with their CPA, from retirement contributions to equipment purchases to your entity structure.
Max out retirement contributions
Contributing to a SEP-IRA, Solo 401(k), or other plan lowers your taxable income and builds your future. Some plans even let you set them up after year-end for the prior year — but the earlier you plan, the more you can put away.
Buy needed equipment before December 31
If you need equipment, vehicles, or technology, buying and placing it in service before year-end can let you deduct much of the cost this year through Section 179 or bonus depreciation. Don’t buy things you don’t need for a deduction — but time purchases you were already going to make.
Review your entity and S-corp election
If your business is consistently profitable, an S-corporation election can lower self-employment tax. Year-end is the time to check whether your structure — and your “reasonable salary,” if you’re already an S-corp — still makes sense.
Time your income and expenses
If you’re on the cash method, you may be able to defer December income into January or prepay January expenses in December to shift the tax year they land in. Small timing moves can add up.
Check your QBI deduction and estimated taxes
Make sure you’re set up to capture the Qualified Business Income deduction, and confirm your estimated tax payments cover you — so you avoid an underpayment penalty when you file.
Clean up your books
None of the above works without accurate books. Reconcile accounts, categorize expenses, and gather receipts now, so nothing gets missed and your return is ready to go.
Key takeaways
- Before December 31 — fund retirement, time equipment purchases, review your S-corp election and salary, shift income/expenses if you’re cash-basis, protect your QBI deduction, and clean up your books.
Want a year-end tax review before the window closes? Request a free consultation. See also Tax and Business Law.
This article is for educational purposes only and is not legal or tax advice. Every situation is different — talk to a professional about yours. Read the full disclaimer.
Good to know
Questions on this topic
When should I do year-end tax planning?
The best time to lower your business tax bill is before December 31 — once the year closes, most opportunities are gone. Year-end is also the time to check whether your entity structure and your reasonable salary still make sense.
Should I buy equipment before year-end?
If you need equipment, vehicles, or technology, buying and placing it in service before year-end can let you deduct much of the cost this year through Section 179 or bonus depreciation. Don’t buy things you don’t need for a deduction — but time purchases you were already going to make.
What lowers my taxable income the most before year-end?
Contributing to a SEP-IRA, Solo 401(k), or other plan lowers your taxable income and builds your future. Timing equipment purchases, reviewing your S-corp election, and shifting income or expenses if you’re on the cash method all help too.
