Rivers and Rivers CPAs

Why year-end planning matters (like, really matters)

As December 31 approaches, most small business owners are juggling holiday schedules and year-end sales. But the weeks before the new year represent your single biggest opportunity to reduce your tax bill and set your business up for financial success.

Think of this as your financial checkup—a chance to review performance, optimize your tax position, and prepare for the year ahead. The businesses that take this seriously consistently outperform those that don't, simply because they're smarter about keeping more of what they earn.

Step 1: Review your financial position

Get your documents in order (yes, all of them)

Before you can plan, you need to know where you stand. Round up:

• Receipts for business expenses

• Vendor invoices

• 1099 forms for contractors

• Payroll tax records

• Depreciation schedules

• Bank statements and financial statements

 Hunt for hidden deductions

Compare your actual spending against your budget and look for commonly missed deductions, such as:

• Home office expenses – That spare bedroom is working hard

• Business mileage – Every mile counts (literally)

• Professional development – Courses, conferences, certifications

• Business insurance premiums – Protection that pays off twice

• Software subscriptions – From QuickBooks to Adobe, it adds up

Forecast your cash flow

Create a forecast for next year that includes quarterly estimated tax payments. This helps you avoid underpayment penalties and keeps enough cash on hand to run your business AND pay Uncle Sam.

Step 2: Maximize year-end tax planning opportunities

Remember, timing is everything.

• Accelerate deductions or defer income. Depending on your situation, pay for expenses now (hello, tax deduction!) or delay invoicing clients until January. Strategic timing = significant savings.

• Work some depreciation magic. Did you buy equipment this year? You might be able to write off the entire purchase immediately instead of depreciating it over years. These rules have annual limits, so use 'em or lose 'em.

• Fund retirement for a tax break. Max out your SEP-IRA, Solo 401(k), or SIMPLE IRA. You'll build wealth AND reduce taxable income—that's what we call a win-win.

• Clean house financially. Address bad debt and obsolete inventory. That client who ghosted you? Write off the unpaid invoice. Is that inventory gathering dust? Write it off before December 31. Just document everything properly.

• Do the math. Review estimated tax payments. Will your quarterly payments cover your annual tax bill? If not, make an additional payment before year-end to avoid penalties.

Step 3: Analyze your key metrics

The numbers that tell the real story.

• Effective tax rate: What percentage are you actually paying? Compare it to prior years and see if you're on track.

• After-tax profit margins: Pre-tax profit looks great, but what's left after taxes? That's your real profitability.

• Business structure check: Are you still a sole proprietor pulling in serious revenue? An S-Corp election could save you thousands in self-employment taxes. Time to reassess?

Contact our firm today to schedule your year-end tax planning consultation and ensure you maximize every available benefit.