By the time April rolls around, most of the levers that could have lowered your tax bill have already moved out of reach. Year-end — specifically the window between Halloween and December 31 — is when real planning happens. Below are the strategies I walk through with Houston small business clients every fall. Not all of them apply to every situation, but if you own a business and you’re reading this in November or December, at least three or four of these are probably worth a closer look.
1. Accelerate deductions and defer income
If you’re a cash-basis business, you control timing better than you might think. Pay vendors before December 31 instead of in early January. Buy supplies you’ll need in Q1 now. Run the December marketing campaign and pay for it this year. On the income side, if you’re sending invoices in late December that you don’t need to collect immediately, hold them until January 1 — the income lands in next year’s return. This is basic but it gets ignored every year.
2. Make smart equipment purchases
Section 179 and bonus depreciation let you deduct the full cost of qualifying equipment in the year you buy it — no slow multi-year depreciation. If you genuinely need a new truck, computer, machinery, or office furniture, doing it before year-end gives you the deduction now. Don’t buy what you don’t need just to save tax — you’ll spend a dollar to save thirty cents. But if it’s already on the list, December beats January.
3. Maximize retirement contributions
This is the biggest legitimate tax-saving move available to most business owners and it’s consistently underused. Solo 401(k), SEP IRA, and SIMPLE IRA contributions can shelter $20,000 to $70,000+ depending on your structure and income. The plan generally has to be established by year-end (Solo 401(k) and SIMPLE) though SEPs can be funded as late as the extended return deadline. If you don’t have a plan in place yet, December is the time to set one up.
4. Pay your kids (legitimately)
If you have a sole proprietorship or single-member LLC and a child under 18 who can do real work for the business, paying them up to the standard deduction ($14,600 for 2024) shifts that income out of your bracket and into theirs — usually at a 0% rate. The child can put it into a Roth IRA. The work has to be real, the wages reasonable, and the documentation tight. Done right, this is one of the cleanest tax strategies in the code.
5. Bunch charitable contributions
If your standard deduction is higher than your itemized deductions, your charitable giving is providing zero tax benefit. The fix is “bunching” — making two years’ worth of donations in a single year through a donor-advised fund, then taking the standard deduction the next year. You give the same amount over two years but get a meaningful itemized deduction in the bunching year.
6. Review your S-Corp officer salary
If you run an S-corp, the IRS expects a “reasonable” salary for the owner before profit distributions. Too low and you risk reclassification and back payroll tax penalties. Too high and you’re paying unnecessary FICA. December is when I review with clients and adjust through year-end bonuses or W-2 corrections. Get this number right; it’s the most-audited issue in S-corps.
7. Use the QBI deduction wisely
The Section 199A qualified business income deduction can give you a 20% deduction on pass-through income, but it phases out above certain thresholds for service businesses (lawyers, doctors, accountants, financial advisors). Year-end is when we look at projections and decide whether to defer income, accelerate retirement contributions, or restructure to stay under the threshold. Small adjustments here can be worth thousands.
8. Harvest investment losses
If your business has a brokerage account — or you personally do — review unrealized losses before year-end. Selling losing positions to offset capital gains (and up to $3,000 of ordinary income) is straightforward. Just don’t buy the same security back within 30 days or you’ll trigger the wash sale rules.
9. Run a December projection
This is the single most valuable thing you can do before December 31. Pull your books current through November, project December revenue and expenses, and produce an estimated return. The projection tells you whether you’re going to owe, what your effective rate will be, and which of the strategies above will actually move the needle. Without a projection, you’re flying blind.
10. Don’t forget Texas franchise tax
The Texas franchise tax is a separate animal and most clients forget about it. Even if your business owes zero, you may still need to file the No Tax Due Report by May 15. Penalties for missing the deadline are mechanical and unforgiving. We cover the rules in our Texas franchise tax guide.
The point of year-end planning
None of these strategies are exotic. They’re the basics, executed well and on time. The reason small businesses overpay tax isn’t because they don’t know about deductions — it’s because nobody sat down with them in November to look at the numbers and make decisions before the calendar ran out. That’s the work.
If you want a year-end planning meeting before December 31, call the office at (832) 983-7080 or use the contact page. We’ll pull your numbers, run projections, and walk through which moves make sense for your situation. Read more about our tax planning service.