Tax Strategy
Year-End Tax Moves for Business Owners: A December Checklist
10 actions to take before December 31 — most are worth $5K-$50K in tax savings
Quick answer
For business owners, the biggest tax savings happen before December 31 — not at filing in April. The highest-leverage year-end moves are maxing a retirement plan, adding a Cash Balance plan, timing income and deductions, running the Augusta Rule, and paying your kids for real work. Most profitable owners save $15,000 to $50,000 by acting before the calendar flips.
By the time you file your taxes in April, the big decisions are already locked in. Most year-end tax strategy needs to happen between October and December 31. Here's the checklist we walk every business-owner client through — 10 moves to consider before the calendar flips.
1. Max your Solo 401(k) or other retirement plan
Self-employed retirement plan contributions are deductible against business income. For 2025, Solo 401(k) limit is $70,000 ($77,500 if 50+). Most plans need to be established by Dec 31 (though SEP IRAs can be set up later).
2. Consider a Cash Balance plan for big shelter
High-income owners (45+, $250K+ profit) can stack a Cash Balance plan on top of a 401(k) to shelter $150K-$280K+/year tax-deferred. Plan setup takes 30-60 days — start in November at the latest.
3. Defer income or accelerate deductions (or vice versa)
Standard year-end tax timing: defer income into next year, accelerate deductions into this year — IF your income is similar or higher than next year. Reverse if income will be higher next year.
- ·Send invoices late December so payment arrives in January
- ·Prepay deductible expenses (subscriptions, insurance, training)
- ·Buy equipment or vehicles you'll use anyway and claim Section 179
- ·If S-Corp, time year-end bonuses and distributions strategically
4. Run the Augusta Rule (Section 280A)
Rent your home to your business up to 14 days/year tax-free. Hold legitimate business events (planning sessions, retreats, board meetings) and charge fair-market daily rate. Document with agendas, attendee lists, and rate research.
5. Pay your kids for real work
Up to ~$14,600 per child (2025 standard deduction) is fully deductible to the business and fully tax-free to the child. Real work, real hours, real wage rates. Open a Roth IRA in their name with the wages.
6. Tax-loss harvest taxable investments
If you have capital losses in your taxable brokerage, realize them before Dec 31 to offset gains. Up to $3,000 of losses can offset ordinary income. Watch the wash-sale rule — don't buy substantially identical securities within 30 days.
7. Roth conversion (if income is lower this year)
Retirees and pre-retirees in low-income years should consider Roth conversions before year-end. Each conversion creates taxable income, so model with your CPA before pulling the trigger.
8. Charitable giving
Donate appreciated stock instead of cash — avoid the capital gains and get a deduction for fair market value. For larger gifts, consider a Donor Advised Fund (DAF) to bunch multiple years of giving into one tax year.
9. HSA contribution
If you have HDHP coverage, max your HSA: $4,300 single / $8,550 family (2025). Deductible going in, tax-free growth, tax-free for medical. Best retirement account in the code if you can hold it long-term.
10. Review entity structure for next year
If your S-Corp salary isn't documented well, year-end is the time to fix it. If you're still a sole prop earning $80K+, file Form 2553 to elect S-Corp status for next year. Deadline: March 15.
Frequently asked questions
What are the best year-end tax moves for a business owner?
The top moves are maxing a Solo 401(k) or other retirement plan, stacking a Cash Balance plan for bigger shelter, timing income and deductions, running the Augusta Rule to rent your home to your business tax-free, and paying your kids for real work. Most need to be done by December 31, not just planned.
How much can year-end tax planning save a business owner?
For most profitable business owners, the ten year-end moves typically save $15,000 to $50,000 or more. The savings depend on your income, entity type, and how many moves fit your situation.
What is the Augusta Rule and how does it lower taxes?
The Augusta Rule (Section 280A) lets you rent your home to your own business for up to 14 days a year, tax-free to you and deductible to the business. You hold real business events like planning sessions, charge a fair market daily rate, and document it with agendas and rate research.
Can I pay my kids through my business to save on taxes?
Yes. You can pay each child up to about $14,600 a year for real work at real wage rates. That amount is deductible to the business and tax-free to the child, and you can open a Roth IRA in their name with the wages.
When is the deadline for year-end business tax moves?
Most moves must be done by December 31, including establishing most retirement plans and a Cash Balance plan. A few, like funding a SEP IRA, can happen later. Cash Balance plans take 30 to 60 days to set up, so start by November.
The Takeaway
Year-end tax planning is when the big savings happen. Most of these moves need to be DONE by Dec 31, not just planned. Block 90 minutes in November to walk through this checklist with your CPA + tax strategist. The 10 moves above typically save $15K-$50K+ for most profitable business owners.
Free year-end tax strategy review
Bring last year's return and a current P&L. We'll walk through the checklist with your specific numbers and identify the top 3 highest-leverage moves.
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ReadBusiness Retirement Plans — Shelter $60K-$300K Per Year
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ReadThe S-Corp Strategy — Stop Paying Tax on Your Own Money
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ReadEducational content only. Not financial, tax, or legal advice. Always consult a licensed professional before acting on the information in this post.